Location, Search Costs and Youth Unemployment: Experimental evidence from transport subsidies in Addis Ababa

November 15 2017

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. 

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Simon Franklin is a Postdoctoral Research Economist at LSE. His research focuses on Development, Labour, and Urban Economics.