Monday, April 22, 2013

An experimental confirmation of the Spatial Mismatch Hypothesis

Self-recommending: Getting to Work: Experimental Evidence on Job Search and Transportation Costs, by David Phillips.

In urban areas job vacancies often exist but poor, minority residents tend to be concentrated in neighborhoods with limited geographic access to these jobs. Using a randomized field experiment with public transit subsidies, I test whether this spatial mismatch of workers from jobs causes poor labor market outcomes. Randomly selected clients of a non-profit employment agency received a public transit subsidy to assist in applying to jobs and attending interviews with potential employers. I find evidence that the transit subsidies have a large, short-run effect in reducing unemployment durations with treatment causing the probability of finding employment within 40 days to increase by 9 percentage points, from 0.26 to 0.35. After 90 days, this difference narrows to a large but statistically insignificant 5 percentage points. I find weaker evidence that this decrease in unemployment duration results from more intense search behavior, with the transit subsidy group applying to more jobs and jobs further from home. To my knowledge, these results provide the first experimental confirmation that spatial mismatch of workers from jobs can cause adverse labor market outcomes for poor, urban individuals.
This study was presented last year at a conference on 'Research on Urban Mass Housing' that took place at Oxford. Nice programme, by the way.