Abstract
We investigate the causal effects of financial incentives supporting geographical mobility among unemployed workers on their job search behavior and labor market outcomes. Exploiting regional variation in the promotion of mobility programs along administrative borders of German employment agency districts, 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. A detailed analysis of the underlying mechanisms suggests spatial search frictions as the driver of the unintended adverse labor market effects.
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© 2023 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology. Published under a Creative Commons Attribution 4.0 International (CC BY 4.0) license.
2023
The President and Fellows of Harvard College and the Massachusetts Institute of Technology
This is an open-access article distributed under the terms of the Creative Commons Attribution 4.0 International License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. For a full description of the license, please visit https://creativecommons.org/licenses/by/4.0/legalcode
