Scandinavian Working Papers in Economics

Umeå Economic Studies,
Umeå University, Department of Economics

No 880: Internal Migration of Young Adults – Heterogeneity in Effects on Labour Income by School Grades

Sofia Tano ()
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Sofia Tano: Department of Economics, Umeå School of Business and Economics, Postal: Umeå University, S 901 87 Umeå, Sweden

Abstract: The present paper estimates the relationship between migration across labour-market regions and the subsequent changes in earnings in Sweden by using the individual’s grade point average (GPA) from the final year of comprehensive school as a proxy for ability. This measure aims to capture heterogeneity in the effects of mobility on earnings for individuals conditional on educational attainment and other observed traits. Register data from Sweden, including two whole cohorts of individuals, is used. A difference-in-difference propensity score matching estimator is applied to estimate the relationship between income and migration up to seven years after migrating. The results show variation between different ability groups with respect to the return to regional migration. There are indications of larger gains for individuals holding top grades, while the bottom half seems to benefit less, or have slightly negative returns. The difference in return to migration across GPA quartiles is larger for women than for men.

Keywords: Human capital; income; internal migration; propensity score matching

JEL-codes: J24; J31; J61; R23

29 pages, February 26, 2014

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