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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. In order to counteract the geographical mismatch of workers, 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.
Low female labor market participation is a problem many developed countries have to face. Beside activating inactive women, one possible solution is to support the re-integration of unemployed women. Due to female-specific labor market constraints (preferences for flexible working hours, discrimination), this is a difficult task, and the question arises whether active labor market policies (ALMP) are an appropriate tool to help. It has been shown that the effectiveness of traditional (ALMP) programs-which focus on the integration in dependent (potentially inflexible) employment-is positive but limited. At the same time, recent evidence for Austria shows that these programs reduce fertility which might be judged unfavorable from a societal perspective. Promoting self-employment among unemployed women might therefore be a promising alternative. Starting their own business might give women more independence and flexibility to reconcile work and family and increase labor market participation. Based on long-term informative data, we find that start-up programs persistently integrate former unemployed women into the labor market, and the impact on fertility is less detrimental than for traditional ALMP programs.