Returns to Education across the Urban-Rural Hierarchy

Returns to education are mainly influenced by the characteristics of the individual. However, returns also depend on location characteristics, suggesting location premia can exist for educational attainment. This paper analyzes regional variations to returns from education using Swedish municipalities. The political geography of Sweden assists the analysis since it can be divided into four categories based on size and commuting patterns. Based on the obtained results, the often-assumed hypothesis of equal returns to education for all regions in a country can be rejected. The highest returns to education are found in municipalities at the top of the urban-rural hierarchy (dense and large municipalities), and the lowest are in the most peripheral municipalities.