“The Effects of Unemployment Insurance on Geographical Mobility”

This paper investigates the effects of unemployment insurance generosity on workers’ geographical mobility decisions. Identification is based on an unanticipated reform that reduced the unemployment insurance (UI) replacement rate (RR) in Spain for workers who were laid-off after July 14, 2012. Using administrative data from social security records and a regression discontinuity design, I find that the UI cut increased the probability to migrate to a different province by 4 percentage points, which represents a 25 percent increase with respect to the pre-reform mean. This result is driven by young educated men with no family responsibilities, and at the top 25 percent of the sample income distribution. The findings also suggest that the increase in mobility is due to actual changes in the province of residence, rather than to an increase in commuting distances.