How the Internet Should Increase Geographic Mobility - Pacific Standard

How the Internet Should Increase Geographic Mobility

We're adjusting to a world where more and more interactions are not face-to-face and trust can be cultivated online.
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(ILLUSTRATION: TORIA/SHUTTERSTOCK)

(ILLUSTRATION: TORIA/SHUTTERSTOCK)

You go where you know. Relocation is risky business. Another law of migration from Ernest George Ravenstein: "Most migrants only proceed a short distance, and toward centers of absorption." Moving far from home is the exception, not the rule.

Knowledge doesn't travel very well. A successful transfer of ideas usually requires face-to-face interaction. The geography of venture capital looks a lot like the distance decay of migration:

Fiber networks cross the world. Data bits move at light speed. The globe has been flattened, and national boundaries obliterated. Yet in Silicon Valley, the one place that is responsible more than any other for creating the network technology that supposedly renders geography irrelevant, physical distance is very much on the minds of the investors who provide venture capital.

Meet the “20-minute rule” that guides fateful decisions in Silicon Valley. Craig Johnson, managing director of Concept2Company Ventures, a venture capital firm in Palo Alto, California, who has 30 years of experience in early-stage financings, said he knew many venture capitalists who adhered to this doctrine: If a start-up company seeking venture capital is not within a 20-minute drive of the venture firm’s offices, it will not be funded.

Mr. Johnson explained that close proximity permits the investor to provide in-person guidance; initially, that may entail many meetings each week before investor and entrepreneur come to know each other well enough to rely mostly on the phone for updates. Those initial interactions are fateful. “Starting a company is like launching a rocket,” Mr. Johnson said. “If you’re a tenth of a degree off at launch, you may be 1,000 miles off downrange.”

Proximity and trust go hand in hand. The world is spiky, not flat. Geography still matters. The Internet hasn't changed much of anything. Or, has it:

Yes, the Internet. In fact, the study notes, marriage rates are between 13 percent and 30 percent higher than they’d be without the advent of broadband technology.

The basic intuition here is that stuff like online dating makes it easier for people to find potential partners—or, as University of Montreal economist Andriana Bellou puts it, the Internet “has the potential to reduce search frictions.” That’s not utterly implausible. Researchers have already noted that the Internet allows us to find jobs and homes more easily. Why not spouses?

The Internet has the potential to reduce search frictions. First, we have to adjust to a world where more and more interactions are not face-to-face. The 20-minute rule didn't disappear the moment you switched on your high-speed modem. Social innovation had to catch up with technological innovation.

In time, the Internet should increase the distances people migrate. Expanding where you know doesn't require travel. Trust can be cultivated online. Marriage rates are up, thanks to broadband.

Which brings me to a conundrum, the decline of geographic mobility in the United States:

Yet a more uniform job distribution alone cannot account for falling mobility. As Messrs Kaplan and Schulhofer-Wohl point out, mobility has fallen for manufacturers, where jobs are more dispersed, as well as for service-sector workers. What is more, if workers know that they can find jobs they want in different places, they may become more willing to move for other reasons—to be by the coast, for example, or to savour a particular music scene. Yet survey data reveal that moves for these other reasons have not risen. The authors suggest another force is also reducing migration: the plummeting cost of information.

Young workers in particular used to have to move to gather information: to see whether they could stand a Boston winter, say, or cared enough about the Californian climate to pay Californian rents. In recent decades, however, it has become much easier to learn about places without moving house. Deregulated airlines and innovative online-travel services have slashed travel costs, allowing people to visit and assess different markets without moving. The Web makes it vastly easier to study every aspect of a potential new home, from the quality of its apartment stock to the surliness of its baristas, all without leaving home. Falling mobility isn't simply caused by labour-market homogenisation, the authors argue, but also by greater efficiency. People are able to find the right job in the ideal city in fewer hops than before.

Thanks to the Internet, migration is more efficient. That is to say, geographic mobility declines. I don't buy it. More intimate knowledge of a place should encourage relocation, mitigate risk. The efficiency gains turn stayers into movers. However, the story about marriage suggests the authors are on to something. Replace "marriage" with "migration." One no longer needs to try a few times before finding the right fit.

I think we are getting ahead of the trend. A virtual sense of place remains elusive. Besides, you might go on dates with 20 different online matches before finding your soul mate. What's the equivalent for migration? For now, Ravenstein still rules.

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