Scandinavian Working Papers in Economics

Umeå Economic Studies,
Umeå University, Department of Economics

No 882: Migration and Regional Sorting of Skills

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

Abstract: This thesis consists of an introductory part and four papers. Paper [I] estimates jointly the choice of whether to enroll in education and the choice of location among young people. Being a particularly mobile group, the location choices of young individuals shape much of the regional distribution of human capital, growth, and local public sector budgets. Applying Swedish register data on nest leavers, we seek to determine factors deciding the education and location choice of young people. The results indicate a systematic selection higher education based on school grades and preferences for locations with higher per capita tax bases and with lower shares of elderly people. The importance of family networks for the choice of location is confirmed. Paper [II] examines how individual ability, reflected by the grade point average (GPA) from comprehensive school affects the probability of migration among university graduates. The econometric analysis applies detailed micro-data of two entire cohorts of young individuals retrieved from the Swedish population registers. The results indicate that individual abilities are strongly influential both concerning completion of a university degree and for the migration decision. In addition, we find a positive relationship between the GPA and migrating from regions with lower per capita tax bases and/or a relatively small share of highly educated individuals. Analogously, individuals with a high GPA tend to stay in more densely populated regions, suggesting a clustering of human capital vis-à-vis school grades. Paper [III] estimates the relationship between migration across labour market regions and the subsequent changes in earnings by using the GPA from the final year of comprehensive school as a proxy for ability. This measure aims to capture heterogeneity in the returns to migration for individuals conditional on education attainment. Using Swedish register data on young adults, a difference-in-difference propensity score matching estimator is applied to estimate income differences measured up to seven years after migration. The results show variation between different ability groups regarding the returns to regional migration. There are indications of larger gains for individuals holding top grades, while the bottom half seems to benefit less, or face slightly negative effects. Paper [IV] examines whether power couple formation and the location choice of such couples are driven by factors already inherent in young people during their formative school years. The paper also extends the analysis by modeling location choice among different sizes of labor market areas, given different power statuses of the couples. Based on analysis of Swedish register data, we produce evidence that power spouses evolve from the population of high achieving school age individuals; the latter is identified by high academic performance during their years of compulsory school. Regarding location choice, the results indicate that power couples display a relatively high tendency to migrate from their regions of origin to large cities.

Keywords: Agglomeration; early markers; human capital; income; interregional migration; individual ability; location choice; marital matching; propensity score matching; regional clustering; skills; university graduates

JEL-codes: I21; I23; J12; J24; J31; J61; R23

198 pages, March 4, 2014

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