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The Intended and Unintended Effects of Promoting Labor Market Mobility

Author

Listed:
  • Marco Caliendo

    (University of Potsdam, IZA Bonn, DIW Berlin, and IAB Nuremberg)

  • Steffen Künn

    (Maastricht University and ROA, IZA Bonn)

  • Robert Mahlstedt

    (University of Copenhagen, IZA Bonn, and DFI)

Abstract

We investigate the causal effects of financial incentives supporting geographical mobility among unemployed workers on their job search behavior and labor market outcomes. Exploiting regional variation in the promotion of mobility programs along administrative borders of German employment agency districts, 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. A detailed analysis of the underlying mechanisms suggests spatial search frictions as the driver of the unintended adverse labor market effects.

Suggested Citation

  • Marco Caliendo & Steffen Künn & Robert Mahlstedt, 2026. "The Intended and Unintended Effects of Promoting Labor Market Mobility," The Review of Economics and Statistics, MIT Press, vol. 108(2), pages 421-435, March.
    • Handle: RePEc:tpr:restat:v:108:y:2026:i:2:p:421-435
    DOI: 10.1162/rest_a_01397
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