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

Marco Caliendo, Steffen Künn () and Robert Mahlstedt ()
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Robert Mahlstedt: University of Copenhagen

No 9183, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: labor market mobility; active labor market policy; evaluation; Instrumental variable approach (search for similar items in EconPapers)
JEL-codes: C26 D04 J61 J64 J68 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2015-07
New Economics Papers: this item is included in nep-eur, nep-lab, nep-ltv and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published - revised version published in: Journal of Public Economics, 2017, 148, 136-151

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Journal Article: The return to labor market mobility: An evaluation of relocation assistance for the unemployed (2017)
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