Abstract
Rural-urban migration theory suggests that one gains economically by moving from a rural to an urban area. The popular juxtaposing notion is: “If you stay, you lose.” But given the rapid increase in housing costs in bigger cities, are losses from staying in rural areas still necessarily the rule? If so, how big is the economic loss for those who stay in rural regions? Using Swedish micro data, we focus on the income effects of rural-urban migration among young individuals. We find that staying in a rural region is negatively related to an individual's income levels, but the loss is mostly insignificant. After controlling for housing costs, it is even beneficial for many people to stay in their rural areas, except for the most highly educated individuals who can benefit by moving to an urban area.
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