Public Services and Migration : A comparison between Swedish rural and urban municipalities

Abstract: The purpose of this thesis is to examine the relationship between expenditures on local public services and the net migration rate for Swedish urban and rural municipalities. Data from Statistics Sweden over all Swedish municipalities between 2004 and 2014 was used for the empirical analysis. The data also included control variables to control for differences in economic and demographic conditions in the municipalities. The result found using pooled OLS with instrumental variables reveals great differences on the significance of local service expenditure in relation to migration for the two types of municipalities. Childcare was found to be of great significance for rural regions. In contrast, social assistance had a positive association in urban regions while it had a negative insignificant correlation in rural regions. Moreover, culture and education were found to be insignificant in relation to migration for both regions. The results also showed similarities such as elderly care and local taxes were significantly negatively correlated with migration in both type of regions. Overall, the results show that certain local services, such as childcare, are correlated with migration. Nevertheless, economic conditions such as low local taxes, presence of a university campus and having low unemployment are as well of importance to attract residents to both types of municipalities.