The Intended and Unintended Effects of Promoting Labor Market Mobility

Marco Caliendo, Steffen Künn () and Robert Mahlstedt ()
Additional contact information
Steffen Künn: Maastricht University
Robert Mahlstedt: University of Copenhagen

No 15011, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Subsidizing the geographical mobility of unemployed workers may improve welfare by relaxing their financial constraints and allowing them to find jobs in more prosperous regions. We exploit regional variation in the promotion of mobility programs along administrative borders of German employment agency districts to investigate the causal effect of offering such financial incentives on the job search behavior and labor market integration of unemployed workers. 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. These unintended negative effects are provoked by spatial search frictions. Overall, the unconditional provision of mobility programs harms the welfare of unemployed job seekers.

Keywords: unintended consequence; labor market mobility; active labor market policy; job search; search frictions (search for similar items in EconPapers)
JEL-codes: C21 D04 J61 J68 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2022-01
New Economics Papers: this item is included in nep-eur, nep-lab and nep-ure
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Published - published online in: Review of Economics and Statistics , 29 November 2023

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Working Paper: The Intended and Unintended Effects of Promoting Labor Market Mobility (2022)
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