The relationship between local labour market conditions and regional migration has been widely discussed within research. In Sweden, where interregional migration reached a peak in the 1960s but decreased substantially in the 1970s, the role of economic policy has been especially contended in light of the Swedish model and its official stress on regional mobility. By collecting and creating a new and unique dataset on net-migration, vacancy rates, employment and labour income by county, the pattern of interregional migration in Sweden is analysed over a period of time that also covers the early postwar period (1945– 1985), allowing for a detailed evaluation of the drivers of migration at different times. My results suggest that there was no significant change over time in the responsiveness of migration to local labour market conditions. The changing patterns of regional migration were therefore more likely the result of changes in the pace and direction of structural change. I discuss the implications of these results for previous accounts of the Swedish model and of the decline in migration after 1970.

The Swedish model has been seen as way to combine rapid growth with small wage gaps. The solidaristic wage policy negotiated by peak organizations between 1956 and 1983 was designed to induce restructuring by reducing wage differences across the economy. Several authors have linked this to decreased wage dispersion and rapid structural change, especially during the 1960s. However, there is disagreement on when the policy started to affect dispersion and little evidence exist before the 1970s. Using new wage data, I examine differentials using a regression–decomposition framework. The results show that inequality was stable before the late-1960s but declined rapidly thereafter. According to the decomposition, the decline in the 1970s was the likely result of deliberate union policy while developments in the 1960s were unrelated to union action. In contrast to what some authors have argued, this study shows that decreased wage dispersion coincided with a fall in growth and structural change.

It has been suggested that Swedish policy during the early postwar period was strongly directed towards mobility increasing expenditures, most notably relocation allowances, aimed at moving labor from north to south. While this view has dominated the academic discussion on labor market policy there is little direct evidence. We make three claims. First, the relocation allowances have to be evaluated against the regional policy. Second, by doing so we show that the mobility oriented policy was predominant only for a short period of time. In the early 1970s, there was a decisive shift towards a policy directed at stimulating employment in the north. Third, drawing on this, we reevaluate the previous view on policy making in Sweden. Our analysis suggests that the Social Democratic government acted in a voter maximizing way. The relocation allowances were introduced at the behest of the Trade Union Confederation (LO). The regional subsidies were expanded when voter sentiment turned against the perceived depletion of rural regions. However, this strategy interacted with the political and institutional environment. The new election law in 1970 and political competition from the Center Party pushed the Social Democrats to shift their policies on regional subsidies.

The Swedish model was built on the notion that mobility from high- to low-unemployment areas could be achieved without large wage differentials if active labor market policy was used to aid in the movements across places. While Sweden pioneered the use of relocation allowances on a large scale in the late 1950s, very little is known about the actual implementation of this program. Its role during the large out-migrations from northern Sweden during the 1960s is especially underresearched. In this essay, I study the usage of the program through a case study of  Västernorrland county from 1965 to 1975. The analysis shows that in the 1960s there was a strong selection into the program by younger persons, newly examined students and from certain sectors. After 1970, there was a shift in government policy with the aim of reducing the outflow of migrants from the northern counties and to keep allowance migration within counties. Between 1970 and 1975 there was also a drop in both regular and allowance out-migration by 20 %. Within the group of allowance migrants, however, there was no change in the likelihood of staying within Västernorrland after controlling for age, sex and occupation. The share of out-migrations that took place with support from the program also remained constant at 20 %. This suggests that the decline in out-migration was probably not caused by lower mobility but was rather more likely the consequence of structural change and alterations to public policy after 1970, which improved the labor market situation in the northern counties.