TY - JOUR

T1 - The return to labor market mobility

T2 - An evaluation of relocation assistance for the unemployed

AU - Caliendo, Marco

AU - Kuenn, Steffen

AU - Mahlstedt, Robert

PY - 2017/4

Y1 - 2017/4

N2 - In many European countries, labor markets are characterized by high regional disparities in terms of unemployment rates on the one hand and low geographical mobility among the unemployed on the other hand. In order to counteract the geographical mismatch of workers, the German active labor market policy offers a subsidy covering moving costs to incentivize unemployed job seekers to search/accept jobs in distant regions. Based on administrative data, this study provides the first empirical evidence on the impact of this subsidy on participants' prospective labor market outcomes. We use an instrumental variable approach to take endogenous selection based on observed and unobserved characteristics into account when estimating causal treatment effects. We find that unemployed job seekers who participate in the subsidy program and move to a distant region receive higher wages and find more stable jobs compared to non-participants. We show that the positive effects are (to a large extent) the consequence of a better job match due to the increased search radius of participants.

AB - In many European countries, labor markets are characterized by high regional disparities in terms of unemployment rates on the one hand and low geographical mobility among the unemployed on the other hand. In order to counteract the geographical mismatch of workers, the German active labor market policy offers a subsidy covering moving costs to incentivize unemployed job seekers to search/accept jobs in distant regions. Based on administrative data, this study provides the first empirical evidence on the impact of this subsidy on participants' prospective labor market outcomes. We use an instrumental variable approach to take endogenous selection based on observed and unobserved characteristics into account when estimating causal treatment effects. We find that unemployed job seekers who participate in the subsidy program and move to a distant region receive higher wages and find more stable jobs compared to non-participants. We show that the positive effects are (to a large extent) the consequence of a better job match due to the increased search radius of participants.

KW - Evaluation

KW - Active labor market policy

KW - Labor market mobility

KW - Instrumental variable approach

U2 - 10.1016/j.jpubeco.2017.02.008

DO - 10.1016/j.jpubeco.2017.02.008

M3 - Journal article

VL - 148

SP - 136

EP - 151

JO - Journal of Public Economics

JF - Journal of Public Economics

SN - 0047-2727

ER -