The Intended and Unintended Effects of Promoting Labor Market Mobility

Arbeitspapier

Subsidizing the geographical mobility of unemployed workers may improve welfare by relaxing their financial constraints and allowing them to find jobs in more prosperous regions. We exploit regional variation in the promotion of mobility programs along administrative borders of German employment agency districts to investigate the causal effect of offering such financial incentives on the job search behavior and labor market integration of unemployed workers. We show that promoting mobility - as intended - causes job seekers to increase their search radius, apply for and accept distant jobs. At the same time, local job search is reduced with adverse consequences for reemployment and earnings. These unintended negative effects are provoked by spatial search frictions. Overall, the unconditional provision of mobility programs harms the welfare of unemployed job seekers.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 15011

Classification and Topics

• Classification: Wirtschaft ; Geographic Labor Mobility; Immigrant Workers ; Mobility, Unemployment, and Vacancies: Public Policy ; Microeconomic Policy: Formulation, Implementation, and Evaluation ; Single Equation Models; Single Variables: Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions
• Subject: job search ; active labor market policy ; labor market mobility ; unintended consequence ; search frictions

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Caliendo, Marco ; Künn, Steffen ; Mahlstedt, Robert
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/250672
• Last update: 10.03.2025, 11:45 AM CET