The Mobility Bank: Increasing Residential Mobility to Boost Economic Mobility

Jens Ludwig and Steven Raphael


The paper proposes the creation of a “mobility bank” at a government cost of less than $1 billion per year to help finance the residential moves of U.S. workers relocating either to take offered jobs or to search for work, and to help them learn more about the employment options available in other parts of the country. Whereas those with college degrees and savings are much more likely to move in response to job loss and to improve their job market outcomes, those with less skills and no savings may have difficulty financing such transitions. The government should target mobility bank loans toward displaced, unemployed, and underemployed people in depressed areas of the country and should help to insure people against job-outcome uncertainty by making repayment terms contingent on the borrower’s postmove employment and income. This proposal extends government support for work-related moves that already are included in the U.S. tax code but that primarily benefit higher income households. Calculations suggest that the benefits compare favorably with the costs from alternative federal efforts. Perhaps more importantly, our proposal helps address a persistent market failure that limits the ability of low-income families to borrow against future earnings to “invest” in job-promoting residential moves.