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Journal article
Location, Search Costs and Youth Unemployment: Experimental Evidence from Transport Subsidies

September 2018
Paper No' :

Tags: experimental study; labor market; subsidy system; transportation system; unemployment; urban population; young population; ethiopia

Do high search costs affect the labour market outcomes of jobseekers 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, permanent, jobs. Subsidies also induce a short-term reduction in temporary work. I use a high-frequency phone call survey to track the trajectory of search behaviour over time to show that the subsidies significantly increased job search intensity and the use of formal search methods. The evidence suggests that cash constraints cause young people to give up looking for good jobs too early. © 2017 Royal Economic Society