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Optimal City Size with Endogenous Fertility

Author

Listed:
  • Rainald Borck

    (Department of Economics, University of Potsdam, Berlin School of Economics and CESifo)

  • Tadashi Morita

    (Faculty of Economics, Department of International Economics, Kindai University)

  • Yasuhiro Sato

    (Faculty of Economics, The University of Tokyo)

Abstract

We build a dynamic quantitative spatial model with mobile households and en- dogenous fertility to analyze the efficiency of equilibrium fertility choices and city size distribution. City size affects the economy through three channels: a larger city population increases productivity, affects amenity levels (positively or negatively), and increases the cost of child care. We find that the competitive equilibrium is in- efficient due to the intergenerational externality. We calibrate our model to German county data and find that excessively large cities have excessively low fertility rates, which yields a 14% welfare loss.

Suggested Citation

  • Rainald Borck & Tadashi Morita & Yasuhiro Sato, 2026. "Optimal City Size with Endogenous Fertility," CIRJE F-Series CIRJE-F-1269, CIRJE, Faculty of Economics, University of Tokyo.
    • Handle: RePEc:tky:fseres:2026cf1269
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    References listed on IDEAS

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    More about this item

    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)
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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