| Summary: | The earned income differ across municipalities in Sweden, where Stockholm is the location with the highest average earned income. One can ask whether this is depending on higher educational attainment, the disparity in population size and house prices. This paper aims to explain which parameter affects the income disparities between large and small cites. Using data from Statistics Sweden between the years 1991-2017. The above-mentioned topics are used in the three statistical models; Ordinary Least Squares, Pooled OLS, and Fixed-Effects. From this analyze, this paper can conclude that human capital is essential to explain earned income disparities. The discussion part includes limitations of the dataset and its consequences depending on geographical choice. Another exciting explanation of earned income differences is mentioned in the discussion, namely happiness level in each region.
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