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Shrinking population and the urban hierarchy

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  • Kim, Ho Yeon
Abstract
This paper examines whether population shrinkage leads to changes in urban hierarchy in terms of their relative size and function from the standpoint of the new economic geography. We find some salient patterns in which small cities in the agglomeration shadow become relatively bigger as medium industries spill over on them. This appears to be quite robust against a variation in the rate of natural change among cities. Thus, rank-size relationship and the urban hierarchy are partly disrupted as population shrinks. Regarding the welfare of the residents, a lower demand for land initially causes rent to go down, which boosts the utility. However, the illusion is short-lived because markets soon begin to shrink and suppress wages. We also find that it is better to maintain a slow pace of overall population decline in the long-term perspective. More importantly, it is crucial to sustain the relative livability of smaller cities to minimize the overall loss of utility.

Suggested Citation

  • Kim, Ho Yeon, 2012. "Shrinking population and the urban hierarchy," IDE Discussion Papers 360, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper360
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    More about this item

    Keywords

    South Korea; Economic geography; Population; Urban societies; Local economy; Industry; Population shrinkage; Rank-size rule; Central place theory;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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