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The Return to Labor Market Mobility: An Evaluation of Relocation Assistance for the Unemployed

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  • Caliendo, Marco

    (University of Potsdam)

  • Künn, Steffen

    (Maastricht University)

  • Mahlstedt, Robert

    (University of Copenhagen)

Abstract

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. This is somewhat surprising and raises the question of why only minor shares of unemployed job seekers relocate in order to find employment. 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.

Suggested Citation

  • Caliendo, Marco & Künn, Steffen & Mahlstedt, Robert, 2015. "The Return to Labor Market Mobility: An Evaluation of Relocation Assistance for the Unemployed," IZA Discussion Papers 9183, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp9183
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    1. Caliendo, Marco & Künn, Steffen & Mahlstedt, Robert, 2017. "Mobility Assistance Programmes for Unemployed Workers, Job Search Behaviour and Labour Market Outcomes," IZA Discussion Papers 11169, Institute of Labor Economics (IZA).
    2. Benoît Schmutz & Modibo Sidibé, 2019. "Frictional Labour Mobility," Review of Economic Studies, Oxford University Press, vol. 86(4), pages 1779-1826.
    3. Lang, Julia, 2018. "Employment effects of language training for unemployed immigrants," IAB Discussion Paper 201821, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    4. Caliendo, Marco & Cobb-Clark, Deborah A. & Hennecke, Juliane & Uhlendorff, Arne, 2019. "Locus of control and internal migration," Regional Science and Urban Economics, Elsevier, vol. 79(C).
    5. Yamagishi, Atsushi, 2021. "Minimum wages and housing rents: Theory and evidence," Regional Science and Urban Economics, Elsevier, vol. 87(C).
    6. Michael Christl, 2020. "A Beveridge curve decomposition for Austria: did the liberalisation of the Austrian labour market shift the Beveridge curve?," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 54(1), pages 1-15, December.

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    More about this item

    Keywords

    labor market mobility; active labor market policy; evaluation; Instrumental variable approach;
    All these keywords.

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation

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