Why Do People Stay? The Insider Advantages Approach: Empirical Evidence from Swedish Labor Markets

Abstract

Migration research has been quite successful in explaining changes in migration flows. Less satisfactory are its answers as to why the overwhelming majority of people remains immobile, despite persistent regional wealth differences and economic integration proceeding. We suggest complementing traditional theories with an insider advantages approach towards immobility. Most people do not move because by staying immobile they have accumulated work- and leisure-oriented insider advantages that are location-specific and would be lost in case of emigration. Therefore, the longer people have stayed and the more insider advantages they have accumulated, the less likely they are to move. Using a new micro dataset covering all people resident in Sweden in 1994 and their mobility experience since 1985, we find a strong positive duration dependence of the probability to stay even after controlling for a large set of alternative factors. Traditional micro-economic characteristics prove helpful in explaining immobility, while regional macro-economic differences have very little impact on individual mobility decisions. A large number of moves between Swedish labor markets seem related to specific life-course events, of which getting unemployed is only one. Factors that are not dependent on one's own work but ought to increase location-specific insider-advantages (like having a working partner, children or owning a house), increase the probability of staying even further.

JEL Classification: F22, J60, R23