The effects of subsidized transit on the unemployed youth: A regression discontinuity design

Abstract

I assess the effects of a simple and low-cost intervention targeted at the youth: subsidized public transport. Using a regression discontinuity design in the Spanish region of Madrid, I examine the short-term effects of a price cut in public transport that reduced job search and commuting costs for unemployed youths under 26. In particular, I compare the future labor market outcomes of unemployed assistance recipients who were laid off just before and after turning 26. Results suggest that subsidized transit may bring meaningful employment gains for young assistance recipients. Specifically, I estimate a (local) treatment effect of 23 percentage points on the job-finding probability and 30 days on the number of cumulative days in work six months after layoff. Finally, I find supporting evidence that these gains are driven by increased geographical mobility among those living farther away from jobs.