Labor Mobility and Local Labor Markets : Case of Sweden 2005-2011

Abstract: The awareness of an aging population and high, stubborn unemployment in Sweden, led us into this research area. This paper presents a quantitative study, analyzing if municipal policies are effective in attracting native- and international labor migration. Further we observe if the labor mobility has any stabilizing impact on the local labor market. By using data from 2005 - 2011, the two way fixed effect regression shows that all of our three policies, social benefits, tax rate and childcare costs have significant, but modest negative effect on native location choices. When we run the same test for foreign migration, we did not find such effect at all. The same happens when we investigating if the in- and outmigration have stabilizing effect on the unemployment/vacancy ratio which measure the local labor market, we could not obtain any significance in the tests.