44th Congress of the European Regional Science Association: "Regions and Fiscal Federalism", 25th - 29th August 2004, Porto, Portugal
This article has a dual purpose. Firstly, it presents the nature and the recent development of migration to and from the Åland Islands by means of a probit model. Secondly, the model is estimated in such a fashion that its results are usable in a simulation model. The analysis is conducted by using individual data from longitudinal population censuses, which enables the use of individual-specific characteristics and a panel data specification in the analysis. The results lend support to Harris-Todaro –type expected wage hypothesis, as well to several suggestions of the human capital theory of migration. The results even support an insider advantage hypothesis by showing that staying in Åland is state and duration dependent, i.e. those who already live in Åland, have stayed longer, and are native Ålanders are more probable stayers. However, the results also reveal that there is a time trend in the tendency for native Ålanders to move away from Åland at an increasing rate, whereas the probability of Finnish-born migrants to stay in Åland has slightly risen during the 1990s. The author suggests that this development may be due to a growing internalisation, e.g. through the EU membership, as well as due to a failure to adjust the education policy to changing demand of language skills.