Using Spatial Econometrics to Analyze Local Growth in Sweden

This paper investigates factors that determine the average income growth and net migration using Swedish data. The main issue is to test the hypothesis that the growth rate in one municipality is affected by the growth rates in its neighboring municipalities. Our results support this hypothesis: we found a positive correlation between the growth rates in neighboring municipalities. In addition, we found a negative correlation between the initial level of average income and the subsequent average income growth, which can be interpreted in terms of conditional convergence. We also found that local government policy variables such as local public investments, expenditures, and income tax rates were important determinants of net migration and average income growth.Inom EU-finansierade projektet Urban Design.Revised and extended in CERUM Working Paper no 2003:67.Published in Regional Studies ISSN 0034-3404 2006 vol 40 no 3 pp 303-316. Taylor & Francis. doi:10.1080/00343400600631566Changesmay have been made to this work since it was submitted for publication