State Sector Relocations in Sweden : A Municipality-Level Panel Data Analysis on the Effects of Relocation on Regional Development

Sammanfattning: In this thesis, the effects that state sector relocations have on regional development in Sweden are investigated. In January 2017, a government report was released, suggesting the relocation of 10 000 state sector jobs from the capital of Stockholm to other parts of Sweden in order to enhance the preconditions for regional development in the destination localities. This thesis aims to investigate which effects that state sector relocations and state sector jobs have on regional development. Three determinants were used to find these effects: the share of state sector employees, the state sector employee growth rate and a dummy variable which denoted four separate occasions of larger relocations. Three of those relocations were executed as a compensation for military base closures. With a fixed effect panel data analysis, it was possible to investigate the effects of these three determinants and a number of control variables on two regional development variables: average income growth and net migration rate. The data used consists of panel data for the years 2006-2015 on a municipality level, with 264 included municipalities, in Sweden and derived from Statistics Sweden. The results showed that the state sector employee growth rate-variable had a positive effect on average income growth. However, the state sector relocation dummy had a negative effect on average income growth. These contradictory results, might be due to the military base closures which occurred a couple of years before the relocations, blurring the positive effects from the relocations. The state sector job-variables had no significant effect on net migration rate, and no obvious long-term effects were found as the share of state sector employees did not show any significant effects on average income growth.