Internal Migration in Sweden: The Effects of Mobility Grants and Regional Labour Market Conditions Olle Westerlund Abstract. The main purpose of this study is to investigate whether variations in mobility grants have affected internal migration in Sweden. The paper also contains an exploration of how changing labour market conditions influence the migratory behaviour of the unemployed in comparison with other individuals. The results indicate that total migration flows respond to changes in labour market conditions in accordance with predictions from economic theory. This finding seems mainly to stem from the migratory behaviour of the unemployed. Furthermore, non-matching migration subsidies at the levels employed are not found to be migration enhancing. 1. Introduction The ability of a country’s labour market to respond to changing supply and demand conditions is a key factor in the battle to achieve low unemployment and inflation rates. Sluggish growth, increasing rates of unemployment and inflation accompanied by indications of less flexible labour markets during the 1970s, led to a growing interest in various aspects of the supply-side of the economy, among them the geographical mobility of labour. Together with many other European countries, Sweden experienced falling migration rates Olle Westerlund, University of Ume˚ a, Department of Economics, S.901 Ume˚ a, Sweden. The author acknowledges helpful comments and valuable suggestions from Roger Axelsson, Kurt Br¨ ann¨ as and Karl-Gustaf L¨ ofgren at Ume˚ a University, Per-Anders Edin at Uppsala University, Michael Wyzan at Bulgarian Ministry of Finance, and an anonymous referee. Financial support has been received from the Delegation for Labour Market Policy Research (EFA), Swedish Ministry of Labour. Received on 5 July, 1995 and approved by the Editorial Board on November 6, 1997. LABOUR 12 (2) 363–388 (1998) JEL J61 © Fondazione Giacomo Brodolini and Blackwell Publishers Ltd 1998, 108 Cowley Road, Oxford OX4 1JF, UK and 350 Main Street, Malden, MA 02148, USA.