IDEAS home Printed from https://ideas.repec.org/p/cep/sercdp/0199.html
   My bibliography  Save this paper

Location, Search Costs and Youth Unemployment: Experimental Evidence from Transport Subsidies in Addis Ababa

Author

Listed:
  • Simon Franklin

Abstract

Do high search costs affect the labour market outcomes of job seekers living far away from jobs? I randomly assign transport subsidies to unemployed youth in urban Ethiopia. Treated respondents increase job search intensity, and are more likely to find good employment. Subsidies also reduce participation in temporary work during job search. I explain these results with a dynamic model of job search, in which cash constraints cause workers to give up search too early. The predictions of the model closely match the trajectory of treatment effects over time, which I estimate using a weekly phone call survey.

Suggested Citation

  • Simon Franklin, 2016. "Location, Search Costs and Youth Unemployment: Experimental Evidence from Transport Subsidies in Addis Ababa," SERC Discussion Papers 0199, Centre for Economic Performance, LSE.
  • Handle: RePEc:cep:sercdp:0199
    as

    Download full text from publisher

    File URL: http://cep.lse.ac.uk/pubs/download/sercdp0199.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bruno Crépon & Esther Duflo & Marc Gurgand & Roland Rathelot & Philippe Zamora, 2013. "Do Labor Market Policies have Displacement Effects? Evidence from a Clustered Randomized Experiment," The Quarterly Journal of Economics, Oxford University Press, vol. 128(2), pages 531-580.
    2. Miriam Bruhn & David McKenzie, 2009. "In Pursuit of Balance: Randomization in Practice in Development Field Experiments," American Economic Journal: Applied Economics, American Economic Association, vol. 1(4), pages 200-232, October.
    3. Gharad Bryan & Shyamal Chowdhury & Ahmed Mushfiq Mobarak, 2014. "Underinvestment in a Profitable Technology: The Case of Seasonal Migration in Bangladesh," Econometrica, Econometric Society, vol. 82(5), pages 1671-1748, September.
    4. McCall, Brian P, 1996. "Unemployment Insurance Rules, Joblessness, and Part-Time Work," Econometrica, Econometric Society, vol. 64(3), pages 647-682, May.
    5. Robert Jensen, 2012. "Do Labor Market Opportunities Affect Young Women's Work and Family Decisions? Experimental Evidence from India," The Quarterly Journal of Economics, Oxford University Press, vol. 127(2), pages 753-792.
    6. Pablo Ibarraran & Laura Ripani & Bibiana Taboada & Juan Villa & Brigida Garcia, 2014. "Life skills, employability and training for disadvantaged youth: Evidence from a randomized evaluation design," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-24, December.
    7. Diego Puga, 2010. "The Magnitude And Causes Of Agglomeration Economies," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 203-219, February.
    8. Daron Acemoglu & Robert Shimer, 1999. "Efficient Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 107(5), pages 893-928, October.
    9. Deaton, Angus, 1991. "Saving and Liquidity Constraints," Econometrica, Econometric Society, vol. 59(5), pages 1221-1248, September.
    10. Taryn Dinkelman, 2011. "The Effects of Rural Electrification on Employment: New Evidence from South Africa," American Economic Review, American Economic Association, vol. 101(7), pages 3078-3108, December.
    11. Wasmer, Etienne & Zenou, Yves, 2002. "Does City Structure Affect Job Search and Welfare?," Journal of Urban Economics, Elsevier, vol. 51(3), pages 515-541, May.
    12. Raj Chetty, 2008. "Moral Hazard versus Liquidity and Optimal Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 116(2), pages 173-234, April.
    13. David Card & Raj Chetty & Andrea Weber, 2007. "Cash-on-Hand and Competing Models of Intertemporal Behavior: New Evidence from the Labor Market," The Quarterly Journal of Economics, Oxford University Press, vol. 122(4), pages 1511-1560.
    14. Diamond, Peter A, 1982. "Aggregate Demand Management in Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 881-894, October.
    15. Smith, Tony E. & Zenou, Yves, 2003. "Spatial mismatch, search effort, and urban spatial structure," Journal of Urban Economics, Elsevier, vol. 54(1), pages 129-156, July.
    16. Pieter Serneels, 2007. "The Nature of Unemployment among Young Men in Urban Ethiopia," Review of Development Economics, Wiley Blackwell, vol. 11(1), pages 170-186, February.
    17. Getinet, Astatike Haile, 2009. "The Nature of self-employment in Urban Ethiopia," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 17(1), pages 1-80, February.
    18. McKenzie, David, 2012. "Beyond baseline and follow-up: The case for more T in experiments," Journal of Development Economics, Elsevier, vol. 99(2), pages 210-221.
    19. Raj Chetty, 2008. "Moral Hazard versus Liquidity and Optimal Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 116(2), pages 173-234, April.
    20. Wheeler, Christopher H., 2006. "Cities and the growth of wages among young workers: Evidence from the NLSY," Journal of Urban Economics, Elsevier, vol. 60(2), pages 162-184, September.
    21. Jeffrey R Kling & Jeffrey B Liebman & Lawrence F Katz, 2007. "Experimental Analysis of Neighborhood Effects," Econometrica, Econometric Society, vol. 75(1), pages 83-119, January.
    22. Robert Garlick & Kate Orkin & Simon Quinn, 2016. "Call Me Maybe: Experimental Evidence on Using Mobile Phones to Survey Microenterprises," CSAE Working Paper Series 2016-14, Centre for the Study of African Economies, University of Oxford.
    23. Betcherman, Gordon & Olivas, Karina & Dar, Amit, 2004. "Impacts of active labor market programs : new evidence from evaluations with particular attention to developing and transition countries," Social Protection Discussion Papers and Notes 29142, The World Bank.
    24. Alan B. Krueger & Andreas I. Mueller, 2012. "Time Use, Emotional Well-Being, and Unemployment: Evidence from Longitudinal Data," American Economic Review, American Economic Association, vol. 102(3), pages 594-599, May.
    25. Erica Field, 2007. "Entitled to Work: Urban Property Rights and Labor Supply in Peru," The Quarterly Journal of Economics, Oxford University Press, vol. 122(4), pages 1561-1602.
    26. Francisco Buera, 2009. "A dynamic model of entrepreneurship with borrowing constraints: theory and evidence," Annals of Finance, Springer, vol. 5(3), pages 443-464, June.
    27. Manuela Angelucci, 2015. "Migration and Financial Constraints: Evidence from Mexico," The Review of Economics and Statistics, MIT Press, vol. 97(1), pages 224-228, March.
    28. Harry J. Holzer, 1991. "The Spatial Mismatch Hypothesis: What Has the Evidence Shown?," Urban Studies, Urban Studies Journal Limited, vol. 28(1), pages 105-122, February.
    29. Phillips, David C., 2014. "Getting to work: Experimental evidence on job search and transportation costs," Labour Economics, Elsevier, vol. 29(C), pages 72-82.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Clement Imbert & Marlon Seror & Yifan Zhang & Yanos Zylberberg, 2022. "Migrants and Firms: Evidence from China," American Economic Review, American Economic Association, vol. 112(6), pages 1885-1914, June.
    2. Jacobus Johannes de Jongh, 2019. "Understanding the Drivers of Long-Term Youth Unemployment: Micro-Level Evidence from South Africa," Proceedings of International Academic Conferences 9912297, International Institute of Social and Economic Sciences.
    3. Kevin Donovan & Jianyu Lu & Todd Schoellman, 2018. "Labor Market Flows and Development," 2018 Meeting Papers 976, Society for Economic Dynamics.
    4. Juliana MESÉN VARGAS & Bruno VAN DER LINDEN, 2017. "Is there always a trade-off between insurance and incentives? The case of unemployment with subsistence constraints," LIDAM Discussion Papers IRES 2017014, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    5. Girum Abebe & Marcel Fafchamps & Michael Koelle & Simon Quinn, 2019. "Learning Management Through Matching: A Field Experiment Using Mechanism Design," CSAE Working Paper Series 2019-11, Centre for the Study of African Economies, University of Oxford.
    6. Fox,Louise & Kaul,Upaasna, 2018. "The evidence is in : how should youth employment programs in low-income countries be designed ?," Policy Research Working Paper Series 8500, The World Bank.
    7. Moreno-Monroy, Ana I. & Posada, Héctor M., 2018. "The effect of commuting costs and transport subsidies on informality rates," Journal of Development Economics, Elsevier, vol. 130(C), pages 99-112.
    8. Juliana Mesén Vargas, 2018. "Income Effect on Labor Outcomes for People Living in Poverty: the case of PROGRESA," LIDAM Discussion Papers IRES 2018015, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    9. Nath,Shanjukta & Wieser,Christina, 2021. "What Explains Wage Differentials for Urban Wage Earners? : Returns to Education for Ethiopia’s UrbanWage Employed," Policy Research Working Paper Series 9879, The World Bank.
    10. Poschke, Markus, 2019. "Wage Employment, Unemployment and Self-Employment across Countries," IZA Discussion Papers 12367, Institute of Labor Economics (IZA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Simon Franklin, 2018. "Location, Search Costs and Youth Unemployment: Experimental Evidence from Transport Subsidies," Economic Journal, Royal Economic Society, vol. 128(614), pages 2353-2379, September.
    2. Simon Franklin, 2015. "Location, search costs and youth unemployment: A randomized trial of transport subsidies in Ethiopia," CSAE Working Paper Series 2015-11, Centre for the Study of African Economies, University of Oxford.
    3. Girum Abebe & Stefano Caria & Marcel Fafchamps & Paolo Falco & Simon Franklin & Simon Quinn, 2016. "Curse of Anonymity or Tyranny of Distance? The Impacts of Job-Search Support in Urban Ethiopia," CSAE Working Paper Series 2016-10, Centre for the Study of African Economies, University of Oxford.
    4. Girum Abebe & A Stefano Caria & Marcel Fafchamps & Paolo Falco & Simon Franklin & Simon Quinn, 2021. "Anonymity or Distance? Job Search and Labour Market Exclusion in a Growing African City [Endogenous Stratification in Randomized Experiments]," Review of Economic Studies, Oxford University Press, vol. 88(3), pages 1279-1310.
    5. repec:hrv:faseco:34330197 is not listed on IDEAS
    6. Tom Krebs & Martin Scheffel, 2016. "Labor Market Institutions and the Cost of Recessions," CESifo Working Paper Series 6262, CESifo.
    7. Rothstein, J & von Wachter, T, 2016. "Social Experiments in the Labor Market," Department of Economics, Working Paper Series qt7957p9g6, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    8. Beam, Emily A., 2016. "Do job fairs matter? Experimental evidence on the impact of job-fair attendance," Journal of Development Economics, Elsevier, vol. 120(C), pages 32-40.
    9. Nicola Brandt, 2012. "Reducing Poverty in Chile: Cash Transfers and Better Jobs," OECD Economics Department Working Papers 951, OECD Publishing.
    10. Raj Chetty & Amy Finkelstein, 2012. "Social Insurance: Connecting Theory to Data," NBER Working Papers 18433, National Bureau of Economic Research, Inc.
    11. Christoph Basten & Andreas Fagereng & Kjetil Telle, 2016. "Saving and Portfolio Allocation Before and After Job Loss," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 48(2-3), pages 293-324, March.
    12. Romain Duval & Prakash Loungani, 2021. "Designing Labor Market Institutions in Emerging Market and Developing Economies: A Review of Evidence and IMF Policy Advice," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 63(1), pages 31-83, March.
    13. Raj Chetty, 2008. "Erratum: Moral Hazard versus Liquidity and Optimal Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 116(6), pages 1197-1197, December.
    14. Konstantinos Tatsiramos & Jan C. Ours, 2014. "Labor Market Effects Of Unemployment Insurance Design," Journal of Economic Surveys, Wiley Blackwell, vol. 28(2), pages 284-311, April.
    15. Johannes F. Schmieder & Till von Wachter, 2016. "The Effects of Unemployment Insurance Benefits: New Evidence and Interpretation," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 547-581, October.
    16. Serdar Birinci & Kurt Gerrard See, 2018. "How Should Unemployment Insurance vary over the Business Cycle?," 2018 Meeting Papers 69, Society for Economic Dynamics.
    17. David McKenzie, 2017. "How Effective Are Active Labor Market Policies in Developing Countries? A Critical Review of Recent Evidence," The World Bank Research Observer, World Bank Group, vol. 32(2), pages 127-154.
    18. Jan Eeckhout & Alireza Sepahsalari, 2020. "The Effect of Wealth on Worker Productivity," Bristol Economics Discussion Papers 20/731, School of Economics, University of Bristol, UK.
    19. Sebastian Koehne & Moritz Kuhn, 2015. "Should unemployment insurance be asset-tested?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(3), pages 575-592, July.
    20. Johannes F. Schmieder & Till von Wachter & Stefan Bender, 2016. "The Effect of Unemployment Benefits and Nonemployment Durations on Wages," American Economic Review, American Economic Association, vol. 106(3), pages 739-777, March.
    21. Andrew C. Johnston, 2021. "Unemployment Insurance Taxes and Labor Demand: Quasi-Experimental Evidence from Administrative Data," American Economic Journal: Economic Policy, American Economic Association, vol. 13(1), pages 266-293, February.

    More about this item

    Keywords

    job search; spatial mismatch; unemployment; cash constraints; urban; transpor;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cep:sercdp:0199. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://cep.lse.ac.uk/_new/publications/serc-papers/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (email available below). General contact details of provider: https://cep.lse.ac.uk/_new/publications/serc-papers/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.