Spatial Search Frictions and Transport Subsidies
RCTReview
High transportation costs create spatial search frictions that restrict low-income job seekers to localized geographic areas. Financial constraints prevent unemployed individuals from traveling to central commercial hubs, reducing job search intensity and match quality.
Picture this
Imagine living in an isolated suburban town with no money for bus fare; job searches are restricted strictly to walkable neighborhood stores. Providing a free bus pass enables travel to the city center, allowing exploration of a wider market with higher-paying job opportunities.
What the evidence says
In Ethiopia, transport subsidies helped youth secure higher-quality employment and reduced job seeker discouragement. In South Africa, transit subsidies to access city centers adjusted wage expectations toward realistic market rates and increased acceptance of jobs closer to home. In Jordan, direct cash transfers significantly increased job search effort, employment rates, and total earnings among refugees.
- Who was studied
- Unemployed youth in Addis Ababa (Ethiopia), job-seeking youth in Johannesburg (South Africa), and displaced Syrian refugees in Jordan.
- How
- Randomized Controlled Trials (RCTs) testing cash transfers and transport subsidies for job search activities.
What to do
Distribute targeted transit subsidies or cash stipends via public employment centers to low-income unemployed individuals during active search periods.
From the source
"In Ethiopia, one evaluation showed that transport subsidies helped youth find better quality work but did not increase overall employment (Franklin, 2018); the study also found that the program reduced worker discouragement."
ENG_Job-search-assistance.pdf