Is Migration Important for Regional Convergence? Comparative Evidence for Norwegian and Swedish Counties, 1980–2000

Abstract

Regional convergence studies have relied on net migration data in assessing the impact of migration. With heterogeneous labour, the implied symmetrical treatment of immigration and emigration cannot be justified a priori.. Because of heterogeneity among migrants, gross migration flows may lead to considerable interregional redistribution of human capital even when net migration is zero. Moreover, the effects of regional economic conditions on gross in-and outmigration flows may not be symmetric.. In this comparative study of regional growth and migration, the net and the gross migration approaches are compared. The results confirm ex post that the net approach cannot be justified and, despite Sweden and Norway being similar in many ways, migration has very different effects on convergence in these two countries.Key words: regional growth, comparative study, Nordic countries, convergence, gross migration 3 IntroductionOne of the substantial features that often distinguish models of regional economics from models of international economics is the presence or absence of migration, reflecting the view that migration between countries is unimportant in comparison to internal migration within one country. 1 Accordingly, regional economic growth studies should allow for internal migration effects and be based on models that take into account the possible interdependence between migration and growth. In this study, the effect of migration on economic convergence of regions is examined. The empirical analysis is based on a panel data set forNorwegian and Swedish counties, and the results are interpreted in terms of a neoclassical model. 2 In the neoclassical growth model, diminishing returns to scale imply that out of steady state, regions with low capital intensity will grow faster than those with high intensity, ceteris paribus. When labour is homogeneous, migration adds to this convergence process by increasing the capital intensity in regions with net out-migration and decreasing it in regions with net in-migration. When labour is heterogeneous, the effect of migration on convergence is unclear as the migrants embody human capital. If the migrants are more productive than the non-migrants, the loss in human capital per worker may outweigh the increase in physical capital per worker and slow down growth. Moreover, if the migrants possess more human capital than workers in the host region, the increase in human capital per worker in the host region may dominate the effect of the decrease in physical capital per worker. Migration will then boost growth in the host region and thereby counteract convergence between regions, and may even result in economic divergence. The ambiguous effect of migration on growth and convergence, once labour heterogeneity is taken into account, has been recognized as 4 important in order to mitigate the gap between theory and previous empirical research (Dolado, Goria and Ichino, 1993, Friedberg andHunt, 1995). However, there is some skepticism as to whether the shifts in human ca...

Does Labour Mobility Reduce Disparities between Regional Labour Markets in Germany?

“…Thus, ignoring the contribution of labour mobility to the decline of income disparities gives rise to upward-biased estimates of the convergence rate. Østbye and Westerlund (2007) confirm that migration has an effect on the rate of convergence in Sweden and Norway. However, whereas mobility supports the decline of income disparities in Sweden, it counteracts convergence in Norway.…”

“…Next, we consider gross mobility flows as proposed by Østbye and Westerlund (2007) in order to investigate whether in-and out-migration (commuting) work symmetrically. The estimates point to significant positive effects of in-migration on differences in regional unemployment rates.…”

“…Moreover, in contrast to the majority of comparable analyses that pay little attention to the role of commuting we consider both the impact of migration and commuting. Finally, we allow for asymmetric effects of in-and out-migration (-commuting) as proposed in Østbye and Westerlund (2007).…”

Migration and Regional Wage Disparities in Germany

“…Molho (1995) assumes that people in inaccessible areas who have fewer out-migration opportunities, stay unemployed for longer periods. Østbye and Westerlund (2007) estimate a neoclassical growth model with a System GMM estimator to consider endogeneity of the migration variable. The effect of migration on changes in GDP per capita is examined for Norwegian and Swedish counties over the time period 1980-2000.…”

Built to last: population aging and long run development in metropolitan Europe

“…An analysis without labour differentiation is performed by Maza (2006), who concludes that interregional migration flows have had a convergence effect in Spain over the period 1995-2002. Ostbye and Westerlund (2007 analysed the case of Norway and Sweden over 1980-2000 considering the heterogeneity across migrants as a key factor affecting the endowment of human capital in recipient areas.…”