Spatial labor markets and the distribution of transaction costs

Incomplete information regarding the location of job offers, their contractual conditions, and tenure prospects typifies US labor markets. Crises of spatial coordination and the allocation of labor demand and supply, amongst other issues, are argued to result from such uncertainties. Assisted-mobility and spatial job-matching programs have been promoted as solutions to problems of inadequate information. These programs, however, ignore the fact that uncertainty is part of any rule-oriented exchange process. These programs also neglect the power relations between employers and employees which structure and sustain labor-market transaction costs. The crucial issue is the distribution of transaction costs between contracting parties. These principles are applied to a recent legal case in Michigan involving interregional labor migration.