Investigating Spatial Inequalities

Cover of Investigating Spatial Inequalities

Mobility, Housing and Employment in Scandinavia and South-East Europe



Table of contents

(14 chapters)

Section I Spatial Divergence


The aim of this chapter is to investigate regional inequality and centralization tendencies in Sweden. For this, we use official data from Statistics Sweden on house prices and employment. The data is on the municipality level and covers the period 1985–2014. The research question then becomes, in relation to employment and house prices, which municipalities have gained and which have lost during this period? The time period has been divided into three subperiods that reflect different phases in the process of economic structural change. Two major economic crises are used to signal the end and the start of new structural phases in the Swedish economy. The study uses two dimensions of local economy: employment rates and house prices in municipalities in relation to the national mean. The results indicate increasing divergence between Swedish municipalities over the period. However, the magnitude of the divergence differs within the studied period. Particularly, when it comes to house prices, the third subperiod (2009–2014) shows increasing divergence between Stockholm and Gothenburg in relation to Malmö and the rest of country. Further, when we study the two dimensions simultaneously in accordance with our model, the number of municipalities with above-national-mean employment rates and house prices decreases over time. In the last period, 2009–2014, municipalities with means above the national mean are concentrated in urban agglomerations mainly located close to Sweden’s three largest cities.


This chapter examines observed regional inequalities and centralization tendencies in Norway. Small, rural, municipalities experienced a favourable population development from 1970 to the mid-1980s. After this, the percentage population growth has been strongest in the largest municipalities/cities, and this tendency has accelerated during the last 10–15 years. Data post-1970 strongly support the reasonable hypothesis that population growth is positively related to centrality. The major source of changes lies within the labour market regions, whereas the changes between the regions are modest. Jobs have not become more centralized than households over the period.

A conceptual model is developed, offering a useful taxonomy of municipalities in three dimensions: the unemployment rate, the employment growth, and housing prices. This provides a classification that contributes to clarify the changes in the urban-rural divide. The discussion demonstrates that distinguishing between different categories is important, since different explanations of centralization and regional disparities call for different menus of policy instruments.

We study the relationship between population growth, unemployment rates, and employment growth in Norwegian municipalities, to distinguish between disequilibrium and equilibrium explanations of the situation in regional labour markets. At a national level our results indicate that neoclassical adjustments dominate weakly over amenity-based mechanisms. However, results from many regions support the hypothesis that amenity-based adjustments are dominant for municipalities within a labour market region. One possible explanation is that the diversity in job opportunities is considered as an amenity. A thicker labour market is better fit to meet the demand of workers with specific qualifications.


The chapter aims to explore the size and evolution of spatial inequality in Croatia and Serbia with emphasis on labour market developments. The analysis focuses on municipalities (LAU 2 level) in both countries to explore patterns of change in the labour market. We estimate spatial inequality based on the distribution of population, employment, unemployment rates, and wages. We find that regions with major cities in both countries are leading in the recovery from the recent recession, while rural areas are lagging behind. Further, there is a durable trend of both population and job concentration in the capital city area, or in urban areas generally.


This chapter investigates how night-time light images acquired from the Defense Meteorological Satellite Program’s Operational Linescan System provide spatial and temporal insight into the economic impact of the disintegration of Yugoslavia. First, the chapter provides an overview of the economic development in Yugoslavia using conventional statistics, and second, it presents an analysis of the disintegration of the federation by comparing official statistics with night-time light data. Evaluating the impact of the disintegration of Yugoslavia as a federation and the conflicts arising in the wake of the break up is challenging since reliable data is missing. Therefore, satellite images, as one of the few sources of objective information, are potentially of great importance. We used yearly Operational Linescan System composites covering the period 1992–2013. The analysis is divided into small geographical units (districts) based on the republics in the former Yugoslavia.

Section II Housing and Institutional Perspectives


Many recent studies have highlighted the importance of quality of governance and institutions for economic performance. According to New Institutional Economics, the quality of governance and institutions is a fundamental precondition for sustained increases in prosperity, well-being, and territorial cohesion. The quality of governance influences people’s health, their access to basic services, social trust, and political legitimacy. Governance encompasses the traditions and institutions by which authority in a country is exercised, and its performance can be measured. In this chapter we use the World Bank’s measure Worldwide Governance Indicators (WGI). The aim of the chapter is to highlight the variation of the quality of government between regions of Scandinavia and South East Europe and to analyse recent changes in South East Europe. Not surprisingly, Scandinavian regions outperform all other EU regions in quality of government, and the situation has been stable over time. In South East Europe, the situation has improved, although at a slow pace. Whereas the rule of law and government efficiency seem to be steadily increasing, the fight against corruption has been less successful.


While some EU countries have successfully reduced unemployment and increased employment, others could only accomplish partial success; therefore, unemployment rates across the EU are still much higher than in the 1970s. There are still large regional differences in terms of unemployment despite considerable region-specific transactions to counter-act such differences. Different employment outcomes are the consequence of many factors – such as the demographic trends, the general economic situation, the structure of the economy, the existing welfare and labour market situation, or the level of employment protection – but it may also be the outcome of the effectiveness of the local labour market measures. Local action is important for effective employment policies. Where national policies and implementation measures are sufficiently flexible and adjustable, local level actors can develop integrated approaches to economic growth, maximizing employment opportunities and helping to lessen inequalities and social exclusion in their communities. Mobilization and activity of local communities in combating unemployment are essential to translate national and regional strategies into action on the ground. Local actors purportedly best understand local conditions, aspirations, and needs. There is no magic button for overcoming obstacles and problems, but there are some positive experiences that can be applied or adjusted. The chapter describes the activities and experiences of EU and local initiatives and the problems of institutional organizations.


Transaction costs on the housing market are, arguably, inevitable. They are also diverse. While fees and taxes are easily identified and observed, transaction costs can arise from the functioning of the market and its regulatory framework. For instance, there are costs related to obtaining information. Lack of information creates uncertainty, which increases risk, which increases transaction costs. Thus, market transparency affects the level of transaction costs. For the regulatory framework to be effective, rules must be effectively enforceable; accordingly, the judicial and administrative institutions must function properly. Thus, there is a clear, albeit complex, relation between transaction costs on the one hand and market transparency, government efficiency, regulatory quality, and property rights protection on the other.

The aim of this chapter is to discuss transaction processes and transaction costs in real estate conveyances for both the seller and the buyer with respect to taxes, fees, and obtaining information. To that end, we compare the transaction processes and costs involved in Croatia and Sweden, respectively.

Neither Croatia nor Sweden displays prohibitive costs, yet Croatian transaction costs are significantly higher than those in Sweden. This is hardly surprising given that the Croatian transaction process features at least one additional party to be remunerated compared to the Swedish process. Thus, it would seem that the Swedish regulatory regime – where the estate is charged with handling the legal aspects of the transaction – render lower transaction costs.

There is also the issue of how and to whom fees are paid. For instance, there are more bank fees in Croatia, whereas in Sweden more of the fees are paid to the state. On the other hand, Croatia is one of the few countries where no capital gains tax is levied on real estate conveyances, whereas Sweden has a capital gains tax of 22 per cent – a tax that may hamper movement from one region to another with differences in property prices. Overall, however, with the exception of the capital gains tax for the seller, it is clear that the Swedish transaction process carries lower and more predicable costs than its Croatian counterpart.


Transaction costs, responsive housing supply, rent controls, tenant protection, and access to credit affect residential mobility – these different parts of housing policy are included in what has been defined as housing regimes, which embrace regulations, laws, norms, and ideology as well as economic factors. In this chapter, we investigate how these regimes change by using institutional theories of path dependence. We use Sweden as an example and study three Swedish housing market reforms during the past decades that may have affected residential mobility, each related to one of the main institutional pillars of housing provision: tenure legislation, taxation, and finance. More precisely, we study the development of the rental regulation since the late 1960s, the tax reform in 1991, and the new reforms on mortgages since 2010. What caused these reforms? What were the main mechanisms behind them, and why did they occur at the time they did? We argue, besides affecting residential mobility, these reforms have the common feature of including interesting elements of path dependence and forming critical junctures that have led the development on to a new path. Institutions of tenure legislation, housing finance, and taxation are often claimed to have effects on residential mobility. Although they are seldom designed with the explicit aim of supporting (or counteracting) residential mobility, they may sometimes do so as more or less unintended consequences.


The socialist approach to housing in Croatia was to give tenants strong, and to some extent rigid, rights. During this paradigm, market renting was also discouraged. The policy privileged tenants and gave them subsidized rent, but it also limited their spatial mobility if they did not want to lose that privileged status. After independence, two vital processes on the housing market were undertaken: the privatization of socially owned housing stock and denationalization. Consequently, the stock of apartments previously owned by the companies and the state was sold to the ‘tenancy right’ holders for just a small part of its market value, resulting in more than 80 per cent of apartment users becoming legal owners. That is a positive outcome from a social policy perspective, but it could endanger the mobility of the Croatian labour force. Price developments and turnover dynamics are still bounded by underdeveloped and outdated cadastre as well as strong regional differences.

Section III Mobility


Geographical mobility is often considered fundamental to a well-functioning labour market, and thus to the economy as a whole. Typically, geographical mobility can be achieved either through commuting or through migration. Commuting can be considered important for households to have access to job market opportunities and for business to access labour, skills and competencies. Previous research has found commuting patterns to differ between men and women, for example, in the sense that women travel shorter distances and rely more on public transport. However, we also know that factors such as higher education can influence an individual’s decision to commute, possibly because of specialization and a higher salary. As women’s education level approaches, or surpasses, that of men’s, one would expect to see more similarities between the travel behaviour of the two genders. In this study, we analyse gender patterns of commuting in Norway, Serbia and Sweden. We specifically address the issue of gender gap in commuting. Findings show that though there are signs of convergence, there are large regional variations. The gender gap is decreasing primarily in the more urban regions, while it is decreasing less, and even increasing, given the various levels of aggregation, in the more rural areas.


Large regional disparities lead, among other things, to significant internal migration flows. Internal migrations, on the other hand, reinforce existing regional disparities by causing a lack of human capital in underdeveloped regions. In this chapter, we apply the Multiple Criteria Decision Aiding (MCDA) sorting method, ELECTRE Tri-C, to determine the current internal migration potential for districts in Serbia. The method will provide four classes of migration potential, ranging from strong emigration to strong immigration potential, based on the main drivers of internal migration. The main determinants of internal migration flows fall into three groups: (1) economic and labour market indicators, (2) demographic indicators and (3) housing market and amenities indicators.

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