The purpose of this paper is to study what factors determined the average income growth and net migration at the municipal level in Sweden during the 1980s. To do this, we allow for a broad set of possible determinants of the local growth pattern such as economic "opportunity" variables, local policy and national policy decisions (including local public investments), the political stability within the local council, and the local socio-economic structure. Our results suggest a negative correlation between the initial level of average income and the subsequent average income growth, which can be interpreted in terms of conditional convergence. We also find local government policy variables to be important determinants of net migration and average income growth.