DP1952 Why do People Stay? The Insider Advantages Approach: Empirical Evidence from Swedish Labour Markets

Author(s): Peter A Fischer, Einar Holm, Gunnar Malmberg, Thomas Straubhaar
Publication Date: August 1998
Keyword(s): immobility of people, insider advantages, Migration, Swedish labour markets
JEL(s): F22, J60, R23
Programme Areas: Human Resources
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=1952

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 remain 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 microeconomic characteristics prove helpful in explaining immobility, while regional macroeconomic differences have very little impact on individual mobility decisions. A large number of moves between Swedish labour 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, having children or owning a house), increase the probability of staying even further.