IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp9183.html
   My bibliography  Save this paper

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp9183.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Conny Wunsch & Michael Lechner, 2008. "What Did All the Money Do? On the General Ineffectiveness of Recent West German Labour Market Programmes," Kyklos, Wiley Blackwell, vol. 61(1), pages 134-174, February.
    2. Michael Bräuninger & Andreia Tolciu, 2011. "Should I Stay or Should I Go? Regional Mobility and Social Capital," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 167(3), pages 434-444, September.
    3. Victoria Hosegood & Anne Case & Cally Ardington, 2009. "Labor Supply Responses to Large Social Transfers: Longitudinal Evidence from South Africa," American Economic Journal: Applied Economics, American Economic Association, vol. 1(1), pages 22-48, January.
    4. Olle Westerlund, 1998. "Internal Migration in Sweden: The Effects of Mobility Grants and Regional Labour Market Conditions," LABOUR, CEIS, vol. 12(2), pages 363-388, July.
    5. Frölich, Markus & Lechner, Michael, 2010. "Exploiting Regional Treatment Intensity for the Evaluation of Labor Market Policies," Journal of the American Statistical Association, American Statistical Association, vol. 105(491), pages 1014-1029.
    6. Arntz, Melanie, 2005. "The Geographical Mobility of Unemployed Workers: Evidence from West Germany," ZEW Discussion Papers 05-34, ZEW - Leibniz Centre for European Economic Research.
    7. Decressin, Jorg & Fatas, Antonio, 1995. "Regional labor market dynamics in Europe," European Economic Review, Elsevier, vol. 39(9), pages 1627-1655, December.
    8. Herbert Brücker & Parvati Trübswetter, 2007. "Do the best go west? An analysis of the self-selection of employed East-West migrants in Germany," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 34(4), pages 371-395, September.
    9. Michael Lechner & Ruth Miquel & Conny Wunsch, 2011. "Long‐Run Effects Of Public Sector Sponsored Training In West Germany," Journal of the European Economic Association, European Economic Association, vol. 9(4), pages 742-784, August.
    10. Jens Ludwig & Jeffrey R. Kling, 2007. "Is Crime Contagious?," Journal of Law and Economics, University of Chicago Press, vol. 50, pages 491-518.
    11. Marco Caliendo & Jens Hogenacker, 2012. "The German labor market after the Great Recession: successful reforms and future challenges," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-24, December.
    12. James J. Heckman & Edward Vytlacil, 2005. "Structural Equations, Treatment Effects, and Econometric Policy Evaluation," Econometrica, Econometric Society, vol. 73(3), pages 669-738, May.
    13. Núria Rodríguez-Planas & Benus Jacob, 2010. "Evaluating active labor market programs in Romania," Empirical Economics, Springer, vol. 38(1), pages 65-84, February.
    14. Puhani Patrick A., 2001. "Labour Mobility: An Adjustment Mechanism in Euroland? Empirical Evidence for Western Germany, France and Italy," German Economic Review, De Gruyter, vol. 2(2), pages 127-140, May.
    15. Rogers, Cynthia L., 1997. "Job Search and Unemployment Duration: Implications for the Spatial Mismatch Hypothesis," Journal of Urban Economics, Elsevier, vol. 42(1), pages 109-132, July.
    16. Fertig, Michael & Schmidt, Christoph M. & Schneider, Hilmar, 2006. "Active labor market policy in Germany--Is there a successful policy strategy?," Regional Science and Urban Economics, Elsevier, vol. 36(3), pages 399-430, May.
    17. Bernd Fitzenberger & Aderonke Osikominu & Robert Völter, 2008. "Get Training or Wait? Long-Run Employment Effects of Training Programs for the Unemployed in West Germany," Annals of Economics and Statistics, GENES, issue 91-92, pages 321-355.
    18. Joseph G. Altonji & Todd E. Elder & Christopher R. Taber, 2005. "An Evaluation of Instrumental Variable Strategies for Estimating the Effects of Catholic Schooling," Journal of Human Resources, University of Wisconsin Press, vol. 40(4), pages 791-821.
    19. Lawrence F. Katz & Jeffrey R. Kling & Jeffrey B. Liebman, 2001. "Moving to Opportunity in Boston: Early Results of a Randomized Mobility Experiment," The Quarterly Journal of Economics, Oxford University Press, vol. 116(2), pages 607-654.
    20. Florian Lehmer & Johannes Ludsteck, 2011. "The returns to job mobility and inter‐regional migration: Evidence from Germany," Papers in Regional Science, Wiley Blackwell, vol. 90(3), pages 549-571, August.
    21. Abramitzky, Ran, 2009. "The effect of redistribution on migration: Evidence from the Israeli kibbutz," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 498-511, April.
    22. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 1-76.
    23. Arntz, Melanie & Gregory, Terry & Lehmer, Florian, 2011. "Unequal pay or unequal employment? What drives the skill-composition of labor flows in Germany?," ZEW Discussion Papers 11-074, ZEW - Leibniz Centre for European Economic Research.
    24. Reinhard Hujer & Paulo J.M. Rodrigues & Katja Wolf, 2009. "Estimating the macroeconomic effects of active labour market policies using spatial econometric methods," International Journal of Manpower, Emerald Group Publishing, vol. 30(7), pages 648-671, November.
    25. Terry Gregory & Melanie Arntz & Florian Lehmer, 2011. "Unequal Pay or Unequal Employment? What Drives the Self-Selection of Internal Migrants in Germany?," ERSA conference papers ersa11p972, European Regional Science Association.
    26. Borjas, George J. & Bronars, Stephen G. & Trejo, Stephen J., 1992. "Self-selection and internal migration in the United States," Journal of Urban Economics, Elsevier, vol. 32(2), pages 159-185, September.
    27. Stephen Nickell, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer.
    28. Alan B. Krueger & David Card, 2000. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Reply," American Economic Review, American Economic Association, vol. 90(5), pages 1397-1420, December.
    29. Chiburis, Richard C. & Das, Jishnu & Lokshin, Michael, 2012. "A practical comparison of the bivariate probit and linear IV estimators," Economics Letters, Elsevier, vol. 117(3), pages 762-766.
    30. Chiara Bentivogli & Patrizio Pagano, 1999. "Regional Disparities and Labour Mobility: the Euro‐11 versus the USA," LABOUR, CEIS, vol. 13(3), pages 737-760, September.
    31. Janice Compton & Robert A. Pollak, 2007. "Why Are Power Couples Increasingly Concentrated in Large Metropolitan Areas?," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 475-512.
    32. Eberle, Johanna & Schmucker, Alexandra, 2015. "IZA/IAB Administrativer Evaluationsdatensatz (AED) 1993 - 2010," FDZ Datenreport. Documentation on Labour Market Data 201503_de, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    33. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    34. Heckman, James J. & Robb, Richard Jr., 1985. "Alternative methods for evaluating the impact of interventions : An overview," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 239-267.
    35. George J. Borjas, 2021. "Native Internal Migration and the Labor Market Impact of Immigration," World Scientific Book Chapters, in: Foundational Essays in Immigration Economics, chapter 10, pages 275-312, World Scientific Publishing Co. Pte. Ltd..
    36. 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.
    37. Imbens, Guido W & Angrist, Joshua D, 1994. "Identification and Estimation of Local Average Treatment Effects," Econometrica, Econometric Society, vol. 62(2), pages 467-475, March.
    38. Nicola Fuchs‐Schündeln & Matthias Schündeln, 2009. "Who stays, who goes, who returns?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 17(4), pages 703-738, October.
    39. Michael Roos, 2006. "Regional price levels in Germany," Applied Economics, Taylor & Francis Journals, vol. 38(13), pages 1553-1566.
    40. repec:adr:anecst:y:2008:i:91-92:p:15 is not listed on IDEAS
    41. Burda, Michael C., 1993. "The determinants of East-West German migration: Some first results," European Economic Review, Elsevier, vol. 37(2-3), pages 452-461, April.
    42. Ludwig, Jens & Duncan, Greg J. & Pinkston, Joshua C., 2005. "Housing mobility programs and economic self-sufficiency: Evidence from a randomized experiment," Journal of Public Economics, Elsevier, vol. 89(1), pages 131-156, January.
    43. Jennifer Hunt, 2006. "Staunching Emigration from East Germany: Age and the Determinants of Migration," Journal of the European Economic Association, MIT Press, vol. 4(5), pages 1014-1037, September.
    44. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2007. "The German Socio-Economic Panel Study (SOEP) – Scope, Evolution and Enhancements," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 127(1), pages 139-169.
    45. Bonin, Holger & Eichhorst, Werner & Florman, Christer & Hansen, Mette Okkels & Skiöld, Lena & Stuhler, Jan & Tatsiramos, Konstantinos & Thomasen, Henrik & Zimmermann, Klaus F., 2008. "Geographic Mobility in the European Union: Optimising its Economic and Social Benefits," IZA Research Reports 19, Institute of Labor Economics (IZA).
    46. Razin, Assaf & Yuen, Chi-Wa, 1997. "Income convergence within an economic union: the role of factor mobility and coordination," Journal of Public Economics, Elsevier, vol. 66(2), pages 225-245, November.
    47. James Heckman, 1997. "Instrumental Variables: A Study of Implicit Behavioral Assumptions Used in Making Program Evaluations," Journal of Human Resources, University of Wisconsin Press, vol. 32(3), pages 441-462.
    48. Jim Taylor & Steve Bradley, 1997. "Unemployment in Europe: A Comparative Analysis of Regional Disparities in Germany, Italy and the UK," Kyklos, Wiley Blackwell, vol. 50(2), pages 221-245, May.
    49. Terra Mckinnish, 2008. "Spousal Mobility and Earnings," Demography, Springer;Population Association of America (PAA), vol. 45(4), pages 829-849, November.
    50. Taylor, Jim & Bradley, Steve, 1997. "Unemployment in Europe: A Comparative Analysis of Regional Disparities in Germany, Italy and the UK," Kyklos, Wiley Blackwell, vol. 50(2), pages 221-245.
    51. Marco Caliendo & Armin Falk & Lutz C. Kaiser & Hilmar Schneider & Arne Uhlendorff & Gerard van den Berg & Klaus F. Zimmermann, 2011. "The IZA Evaluation Dataset: towards evidence-based labor policy making," International Journal of Manpower, Emerald Group Publishing, vol. 32(7), pages 731-752, October.
    52. repec:iab:iabfda:201503(de is not listed on IDEAS
    53. Giannetti, Mariassunta, 2002. "The effects of integration on regional disparities: Convergence, divergence or both?," European Economic Review, Elsevier, vol. 46(3), pages 539-567, March.
    54. repec:adr:anecst:y:2008:i:91-92 is not listed on IDEAS
    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. 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.
    2. Antonio Di Paolo & Ada Ferrer‐i‐Carbonell, 2022. "Regional borders, local unemployment, and life satisfaction," Journal of Regional Science, Wiley Blackwell, vol. 62(2), pages 412-442, March.
    3. Marco Caliendo & Steffen Künn & Robert Mahlstedt, 2022. "The Intended and Unintended Effects of Promoting Labor Market Mobility," CEPA Discussion Papers 42, Center for Economic Policy Analysis.
    4. 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).
    5. Benoît Schmutz & Modibo Sidibé, 2019. "Frictional Labour Mobility," Review of Economic Studies, Oxford University Press, vol. 86(4), pages 1779-1826.
    6. 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].
    7. 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).
    8. Julia Lang, 2022. "Employment effects of language training for unemployed immigrants," Journal of Population Economics, Springer;European Society for Population Economics, vol. 35(2), pages 719-754, April.
    9. Yamagishi, Atsushi, 2021. "Minimum wages and housing rents: Theory and evidence," Regional Science and Urban Economics, Elsevier, vol. 87(C).

    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. 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).
    2. 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).
    3. Marco Caliendo & Steffen Künn & Robert Mahlstedt, 2022. "The Intended and Unintended Effects of Promoting Labor Market Mobility," CEPA Discussion Papers 42, Center for Economic Policy Analysis.
    4. Emmler, Julian & Fitzenberger, Bernd, 2020. "The role of unemployment and job change when estimating the returns to migration," IAB-Discussion Paper 202037, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    5. Galiani, Sebastian & Lamarche, Carlos & Porto, Alberto & Sosa-Escudero, Walter, 2005. "Persistence and regional disparities in unemployment (Argentina 1980-1997)," Regional Science and Urban Economics, Elsevier, vol. 35(4), pages 375-394, July.
    6. Marco Caliendo & Stefan Tübbicke, 2020. "New evidence on long-term effects of start-up subsidies: matching estimates and their robustness," Empirical Economics, Springer, vol. 59(4), pages 1605-1631, October.
    7. Fendel Tanja, 2016. "Migration and Regional Wage Disparities in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 236(1), pages 3-35, February.
    8. Guilhem Bascle, 2008. "Controlling for endogeneity with instrumental variables in strategic management research," Post-Print hal-00576795, HAL.
    9. Marelli, Enrico, 1999. "Convergence and asymmetries in the employment dynamics of the European regions," ERSA conference papers ersa99pa120, European Regional Science Association.
    10. Bender, Stefan & Dorner, Matthias & Harhoff, Dietmar & Hinz, Tina & Hoisl, Karin, 2016. "Social Ties for Labor Market Access - Lessons from the Migration of East German Inventors," CEPR Discussion Papers 11601, C.E.P.R. Discussion Papers.
    11. Gong, Jie & Lu, Yi & Xie, Huihua, 2020. "The average and distributional effects of teenage adversity on long-term health," Journal of Health Economics, Elsevier, vol. 71(C).
    12. Christian Bayer & Falko Juessen, 2012. "On the Dynamics of Interstate Migration: Migration Costs and Self-Selection," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(3), pages 377-401, July.
    13. Marco Caliendo & Stefan Tübbicke, 0. "New evidence on long-term effects of start-up subsidies: matching estimates and their robustness," Empirical Economics, Springer, vol. 0, pages 1-27.
    14. Tangian, Andranik S., 2005. "Composite indicator of German regional policy and its use for optimizing subsidies to regional labour markets," WSI Working Papers 138, The Institute of Economic and Social Research (WSI), Hans Böckler Foundation.
    15. Jennifer Hunt, 2000. "Why Do People Still Live in East Germany?," NBER Working Papers 7564, National Bureau of Economic Research, Inc.
    16. Björn Alecke & Timo Mitze & Gerhard Untiedt, 2010. "Internal migration, regional labour market dynamics and implications for German East-West disparities: results from a Panel VAR," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 30(2), pages 159-189, September.
    17. Dionissi Aliprantis, 2011. "Assessing the evidence on neighborhood effects from moving to opportunity," Working Papers (Old Series) 1101, Federal Reserve Bank of Cleveland.
    18. Baum-Snow, Nathaniel & Ferreira, Fernando, 2015. "Causal Inference in Urban and Regional Economics," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 3-68, Elsevier.
    19. Schündeln, Matthias, 2007. "Are Immigrants More Mobile Than Natives? Evidence from Germany," IZA Discussion Papers 3226, Institute of Labor Economics (IZA).
    20. Emmler, Julian & Fitzenberger, Bernd, 2020. "The Role of Unemployment and Job Change When Estimating the Returns to Migration," IZA Discussion Papers 13740, Institute of Labor Economics (IZA).

    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

    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:iza:izadps:dp9183. 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://edirc.repec.org/data/izaaade.html .

    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: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    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.