Labour Mobility, Fiscal Leakages, and Municipal Outcomes : Evidence from Swedish Mining Regions

Sammanfattning

Resource-rich regions are often expected to benefit from increased economic activity throughstronger employment, income growth, and improved local public finances. However, whenworkers are geographically mobile, the fiscal benefits generated by economic activity maynot be fully retained within the municipalities where production takes place. This thesisexamines whether labour mobility influences the extent to which Swedish municipalitiescapture fiscal benefits from mining-related economic activity. Using a balanced panel of all290 Swedish municipalities covering the period 2010–2024, the analysis combines variationin global iron ore prices with measures of labour mobility and mining exposure within a shiftshareframework. The study focuses on two dimensions of labour mobility: fly-in fly-out(FIFO) labour intensity and net commuting integration. Contrary to the expectation thatgreater labour mobility would weaken local fiscal outcomes, the results provide limitedevidence that municipalities with higher reliance on mobile labour capture fewer fiscalbenefits from mining activity. Instead, the findings suggest that the relationship betweenlabour mobility and municipal fiscal outcomes is more complex than a simple fiscal leakagemechanism would imply. Additional evidence indicates that labour mobility within northernSwedish mining regions is characterized by substantial regional labour circulation, whichmay contribute to the continued retention of fiscal benefits within mining-intensive areas.The thesis contributes to the literature on labour mobility, regional adjustment, and localpublic finance by providing new evidence on how resource-related economic shocks aretransmitted through spatially integrated labour markets.