Swedish labour market and the free movement of labour

Abstract: Ever since Sweden decided to join the EU in 1995 the debate regarding effects of the free movement of labour has been discussed. This discussion intensified when the union were faced with its largest expansion, to date, in 2004. Not only were ten new countries becoming members, and thus allowed to use the right of free movement of labour, but most of these were geographically close to Sweden and at the same time they were significantly poorer. This caused scholars, politicians and trade unions to raise a flag of warning that this would be unfavourable to the Swedish labour market. This study aims to examine how the Swedish labour market actually reacts to immigration from the EU/EES countries. By regressing the effects of percentage EU/EES immigrants in a municipality on average yearly wages and unemployment the effects of the free movement of labour will be assessed. The report concludes that the labour market is not negatively affected by EU/EES immigration, on the contrary it shows positive effect on total and female employment.