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Abstract:

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SERC/Urban and Spatial Programme Discussion Paper
Location, Search Costs and Youth Unemployment: Experimental Evidence from Transport Subsidies in Addis Ababa
Simon Franklin May 2016
Paper No' SERCDP0199:
Full Paper (pdf)

JEL Classification: J64; C93; J61; O18


Tags: job search; spatial mismatch; unemployment; cash constraints; urban; transpor

Do high search costs affect the labour market outcomes of job seekers living far away from jobs? I randomly assign transport subsidies to unemployed youth in urban Ethiopia. Treated respondents increase job search intensity, and are more likely to find good employment. Subsidies also reduce participation in temporary work during job search. I explain these results with a dynamic model of job search, in which cash constraints cause workers to give up search too early. The predictions of the model closely match the trajectory of treatment effects over time, which I estimate using a weekly phone call survey.