Multiple Equilibria in the Urban Spatial Structure: Evidence from the Hanshin Earthquake

Despite the theoretical predictions that multiple equilibria exist in urban spatial structure, there remains a dearth of related empirical literature. This study adopts the 1995 Hanshin earthquake, which devastated the major city of Kobe (Japan), as a natural experiment to investigate the existence of multiple equilibria. Using municipality-level population data for the period of 1988–2011 and synthetic control approach, the analysis reveals that 16 years after the earthquake, the urban spatial structure in quaked areas persistently differs from the pre-quake pattern, although the total population recovered. Because of the seismic damage to Kobe, residents from around it migrated to areas close to Osaka, another major city close to the epicenter but less damaged. The major motivation underlying the migration is the demand for services provided in major cities. This tendency was not reversed even after Kobe was reconstructed, because the equilibrium of population dynamics moved to a new steady state.