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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
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    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. 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).
    4. 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).
    5. 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.
    6. Kleifgen, Eva & Lang, Julia, 2022. "Should I Train Or Should I Go? Estimating Treatment Effects of Retraining on Regional and Occupational Mobility," VfS Annual Conference 2022 (Basel): Big Data in Economics 264069, Verein für Socialpolitik / German Economic Association.
    7. Benoît Schmutz & Modibo Sidibé, 2019. "Frictional Labour Mobility," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(4), pages 1779-1826.
    8. 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.
    9. Neffke, Frank & Nedelkoska, Ljubica & Wiederhold, Simon, 2024. "Skill mismatch and the costs of job displacement," Research Policy, Elsevier, vol. 53(2).
    10. 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].
    11. 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).
    12. Jakob Molinder, 2022. "How effective are mobility subsidies in targeting the unemployed? Lessons from the Swedish Model, 1965–1975," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 43(4), pages 1724-1746, November.
    13. Yamagishi, Atsushi, 2021. "Minimum wages and housing rents: Theory and evidence," Regional Science and Urban Economics, Elsevier, vol. 87(C).
    14. Joanna Venator, 2022. "Dual-Earner Migration Decisions, Earnings, and Unemployment Insurance," Boston College Working Papers in Economics 1052, Boston College Department of Economics.

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    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

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