Convergence or segregation? Regional imbalances and labor market flows

In this project we aim to uncover and discuss the mechanisms and factors that contribute to regional convergence and/or widening divergence and segregation while also furthering insights into the causes and consequences of domestic migration.

Project details

Project manager
Jørgen Heibø Modalsli
Project participants

Norwegian research council, VAM programme

Project term
1 June 2012 - 31 December 2016
Project status
Research field

About the Project


All economies seem to exhibit large regional heterogeneity in terms of productivity, wages, housing prices, unemployment levels, employment, and welfare benefit use. Furthermore, such regional differences are often quite persistent, even when theory suggests that market forces should contribute to convergence. Incentives to migrate arise both as a result of more or less transitory shocks and from long term developments in relative productivity; migration also varies in different segments of the workforce according to age, education level and type, and industry.

Differences in response to migration incentives which arise from differences in local labor market across time and place will be analyzed and parts of the project will focus on certain groups of particular interest, i.e. younger cohorts with varying skill compositions, immigrants from the new EU countries, refugees etc. We attack these questions using a variety of methods and data.

Primary objectives

* To increase understanding of how economic differences between regions influence labor flows and how labor flows contribute to convergence and/or divergence between regions as well as improve individual outcomes

* Further understanding on how mobility contributes to economic Growth

Secondary objectives:

* Exploit differences in mobility to examine whether increased mobility speeds up or hampers regional convergence

* Study how local labor markets/economic regions respond to labor demand shocks.

* Uncover whether there are "tipping points" for economic development from which point regions fall into trajectories of economic decline

* Understand how immigrants migrate throughout the country in response to attributes of local labor markets, with special focus on labor migrants from the new EU-countries

* Uncover how initial refugee settlement affects later migration and labor market outcomes

* Study how reallocation of labor affects economic growth 

The research project is a cooperation between Statistics Norway and the The Institute for Social Research (ISF)


- Lasse Sigbjørn Stambøl: Regional branch composition, firm size, job growth and job reallocation / 52nd Congress of the European Regional Science Association in Bratislava, Slovakia (21-25. August 2012)

- Lasse Sigbjørn Stambøl: Student mobility - Recruitment to studies and supply of post-graduates in a geographical perspective / 53rd Congress of the European Regional Science Association in Palermo, Italy (27-31. August 2013)

 - Pål Schøne: Bidrar innvandring til å "smøre hjulene" i det norske arbeidsmarkedet / Institutt for samfunnsforskning, august 2013

 - Jørgen Modalsli: Intergenerational mobility in Norway, 1865-2011 / Forskningsseminar, Universitetet i Oslo, 2014

 - Jørgen Modalsli: Intergenerational occupational mobility in Norway, 1865-2011 / Utrecht Social Mobility Workshop, 7. mars 2014

- Jørgen Modalsli: Geographic determinants of intergenerational mobility / Kent FRESH workshop, 5. juni 2014

- Jørgen Modalsli: Intergenerational occupational mobility in Norway, 1865-2011 / Forskermøtet for samfunnsøkonomer, Oslo, januar 2014

- Jørgen Modalsli: Intergenerational mobility in Norway, 1865-2011 / HCEO Conference on Social Mobility, University of Chicago

- Lasse Sigbjørn Stambøl: Settlement and migration patterns among immigrants in Norway / 54th Congress of the European Regional Science Association in St. Petersburg, Russia (26-30. August 2014).

- Lasse Sigbjørn Stambøl: Immigrant settlement, migration and labour mobility / VAM-seminar, Oslo, november 2014

- Jørgen Modalsli: Intergenerational mobility in Norway, 1865-2011 / Workshop on historical social mobility, University of Tromsø, 2015

- Jørgen Modalsli: Intergenerational mobility in Norway, 1865-2011 / Forskningsseminar, Universitetet i Bergen, 2015

- Jørgen Modalsli: Intergenerational mobility in Norway, 1865-2011 / Forskningsseminar, University of Kent, 2015

- Jørgen Modalsli: Intergenerational mobility in Norway, 1865-2011 / Allied Social Science Association Meetings, Boston, januar 2015

- Lasse Sigbjørn Stambøl: Migration, allocation and re-allocation of immigrants in the regional labour markets / 55th Congress of the European Regional Science Association in Lisbon, Portugal (25-29. August 2015)

- Lasse Sigbjørn Stambøl: A cohort integration analysis of work and education participation among internal mobile and non-mobile immigrants by reason for immigration / 56th Congress of the European Regional Science Association in Vienna, Austria (23-26. August 2016).

- Marianne Røed and Bernt Bratsberg: Immigration and labour market convergence Global perspectives - new boundaries / The 18th Nordic Migration Conference, Oslo, 2016 2016

Working Papers

- Jørgen Modalsli: Estimating occupational mobility with covariates. Statistics Norway Discussion Paper 804, 2015

- Jørgen Modalsli: Intergenerational mobility in Norway, 1865-2011. Statistics Norway Discussion Paper 798, 2015

- Henning Finseraas and Pål Schøne: Does a Boom in the Local Labor Market Reduce Disability Pensioning Up-Take?. SSRN Working paper, 2016


- Marianne Røed, Pål Schøne: Does immigration increase labour market flexibility?. Labour Economics 19, 2012

- Erik Dyrstad: Local Employment Multipliers in Norway. Master thesis, University of Oslo, 2014

- Jørgen Modalsli: Estimating occupational mobility with covariates. Economics Letters 133, 2015

- Lasse Sigbjørn Stambøl: Immigrants' settlement and participation in the Norwegian labor markets since the turn of the millennium. Forthcoming book chapter, "Immigrants and labor markets", 2016

- Lasse Sigbjørn Stambøl: From migrants to workers in the regional labor markets of Norway. Forthcoming article, Nordregio-News, 2016

- Anna Godøy: Local labor markets and earnings of refugee immigrants. Empirical Economics, forthcoming 2016

- Henning Finseraas and Pål Schøne: Lokalt etterspørselssjokk, mobilisering av arbeidskraft og Trygdebruk.  Søkelys på arbeidslivet 32, 2016

- Jørgen Modalsli: Intergenerational mobility in Norway, 1865-2011. Scandinavian Journal of Economics, fortchoming 2016

- Stambøl, Lasse Sigbjørn (2016): From migrants to workers in the regional labour markets of Norway. In Nordregio News, 3 - 2016: “Migration and integration”. Nordregio, Stockholm, October 2016.

Status October 2016

The article "Does immigration increase labour market flexibility?" by Schøne and Røed examines three stages in the regional mobility of refugees and labour immigrants: First, the settlement pattern of newly arrived immigrants, second, their subsequent mobility between regions and, third, their eventual exit from the regional labour market to abroad. In all three stages, the geographical mobility of immigrants is sensitive to regional economic opportunities. In that sense, immigrants do "grease the wheels" of the labour markets. With regard to natives, we do not find any strong evidence for "greasing the wheels" effects.

Røed and coauthors study the relationship betwen immigration and equalization of differences in wages and unemployment between Norwegian labor market regions. Preliminary results indicate that immigration reduces the difference in unemployment between regions, but does not affect the speed of regional wage convergence.

Schøne and coauthors, studying regional demand shocks, show that employment and wages increased in Hammerfest during the construction of the Snøhvit offshore gas field in the region. However, this effect is driven by individuals moving into Hammerfest as a response to the positive shock.

Stambøl has conducted regional analyses on the relationship between firm composition and job reallocation. It is the creation of jobs within mature firms that contributes most to the supply of new jobs, especially high-educated jobs. Moreover, studies have been undertaken on the relationship between the regional origin of students and their settlement after studies have been finished. National average indicates a higher local supply of post-graduates compared with the local recruitment. Finally, investigations "mapping" the regional settlement and migration patterns among immigrants are carried out. Refugees and their families show strong and positive relationship between domestic migration and regional employment change due to strong migration towards central areas, while labour immigrants show weak and partly negative relationship between migration across regions and regional employment change.

Anna Godøy's paper "Local Labor Markets and Earnings of Refugee Immigrants" estimates how local conditions at the time of immigration influence later outcomes for refugee immigrants to Norway, exploiting the quasi-experimental nature of the Norwegian system for settlement for "quota" or resettlement refugees. Using a unique administrative dataset with assigned settlement municipalities, the causal effect of initial location characteristics can be identified even when individuals sometimes don't comply with assignment decisions. Being placed in a labor market where other non-OECD immigrants do well increases own annual labor earnings up to 6 years after immigration. Extended models suggest that this effect is not driven by individual scarring effects: when controlling for the contemporaneous employment rate in the assigned region, effects of initial conditions disappear. Rather, the effects appear to be due to persistence in local labor market conditions combined with limited geographical mobility in response to adverse labor market conditions.

The article "Intergenerational mobility in Norway, 1865-2011" by Jørgen Modalsli shows that intergenerational mobility (measured as father's and son's occupation) has increased significantly during the last 150 years. This development is not driven by geographic differences, but movers experience higher occupational mobility than non-movers. There is also a methodological article published ("Estimating occupational mobility with covariates", Economics Letters). The article "Regional income in Norway, 1900-2010" documents regional variations in income levels in Norway throughout the twentieth century, as a contribution to a common European database of regional GDP variation during the last 110 years.