Losing a job and (dis)incentives to move: Interregional migration in Finland

Abstract

Traditional theories of migration frequently fail to fully explain the real-world patterns of interregional mobility. Empirical studies indicate that individuals may not always migrate for economic reasons such as poor employment and income prospects. Which characteristics drive people to stay or move after job displacement? Using information on establishment closures, we analyse the economic and social determinants of interregional mobility following job loss. We base our empirical analysis on nationwide individual-level register data from Finland for 1997–2015. We find that receiving earnings-based unemployment benefits substantially weakens the economic incentives for interregional mobility. This negative association is particularly strong for the lower educated and those living in more rural areas. Moreover, our results show that the migration decisions of displaced workers are strongly affected by homeownership, differences in regional housing prices, and social connections, as measured by childhood family relations.