The Intended and Unintended Effects of Promoting Labor Market Mobility

Marco Caliendo, Steffen Künn () and Robert Mahlstedt ()
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Steffen Künn: Maastricht University and ROA, IZA Bonn
Robert Mahlstedt: University of Copenhagen, IZA Bonn, DFI

No 42, CEPA Discussion Papers from Center for Economic Policy Analysis

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: Job Search; Active Labor Market Policy; Labor Market Mobility; Unintended Consequence; Search Frictions (search for similar items in EconPapers)
JEL-codes: C21 D04 J61 J68 (search for similar items in EconPapers)
Date: 2022-01
New Economics Papers: this item is included in nep-eur, nep-lab, nep-mig and nep-ure
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https://doi.org/10.25932/publishup-53522 (application/pdf)

Related works:
Working Paper: The Intended and Unintended Effects of Promoting Labor Market Mobility (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:pot:cepadp:42

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