We analyse how conditions in the housing market affect labour mobility to the Stockholm region. The backdrop of the paper is emerging signs of declining migration to high productivity areas due to restrictions in the housing market and increasing regional differences in housing prices.

Using detailed population-wide micro level data, the paper focuses on how regional variation in housing prices and homeownership influence the individual’s decision whether to accept a job offer in the Stockholm region and the interrelated choice between migration and commuting as the mobility mode. The empirical results indicate that high relative housing prices in the Stockholm area reduce labour mobility to the region in general and labour mobility in terms of migration in particular. The estimates also show that homeowners are less likely to be mobile and to choose migration as mobility mode. Marginal effect analyses indicate that the negative influence on mobility of high relative housing prices and homeownership tend to be larger for young persons compared to older persons and for high skilled individuals compared to low skilled individuals.