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RomeoStevens comments on Unemployment explanations - Less Wrong
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I think that simple location is a massive friction and not fully accounted for. Look at how much commuting saps happiness. Look at how unwilling people are to relocate (above and beyond the costs of doing so). Look at how little companies recruit outside their immediate area.
Skills are another friction...indeed several frictions. Academia often lags industry requirements, employers don't like investing in training, etc,
And, of course, encouraging homeownership makes this worse. Good thing that most of the Western world hasn't made that an explicit policy goal for the past decade...
Try three.
Is this a reference to this saying?
Homeownership makes employees less willing to relocate, but also more tolerant of short-term decreases in the demand for their skills, since they can postpone maintenance on a house (or perform it inefficiently themselves with the surplus time) more safely than they can miss rent payments to a landlord.
This is not the same as unemployment, technically. "I want to get a job, but the commute sucks" is not really any different from "I want to get a job, but not getting to play video games in my pajamas all day sucks." The latter individual is nonemployed, and so is the former, I suppose.
Economic frictions are not simply anything that makes getting a job difficult, but things that interfere with the equilibrating function of the price mechanism.
Which then pushes up the cost of living in their immediate area, making the salaries they do pay not go as far, forcing up their labor costs to attract good employees...
(LOOKING AT YOU, BAY AREA TECHNOLOGY SECTOR...)
Unless I'm parsing it wrong, recruiting from outside your local area would drive the cost of living up, not down. For the present, most jobs still require physical presence from the employee, so recruiting from outside the local area would create a steady population of people who need to move to the local area and are willing to pay a modest premium to do so quickly.
Yes, that's exactly what I was saying.
Your comment above is saying the opposite thing.
Currently, most companies don't recruit people from distant places. They hire from the local population, which means that for the most part, hiring moves people around a local area and doesn't create price pressure unless the local industries are growing significantly or salaries are increasing significantly.
If companies started hiring globally, there would be increased pressure on prices as the locations of successful companies had a steady stream of people moving in.