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Living in a ghost town: The geography of depopulation and aging

Author

Listed:
  • Elisa Giannone
  • Yuhei Miyauchi
  • Nuno Paixao
  • Xinle Pang
  • Yuta Suzuki

Abstract

How do depopulation and population aging evolve differently across regions within a country, and what are their implications for aggregate economic activity and regional inequality? Using spatially disaggregated data from Japan over the past several decades, we show that rural areas have experienced significantly faster depopulation and aging than urban areas, driven by low fertility and sustained out-migration of young cohorts. Regions undergoing these trends face declining local amenities and rising per-capita public service costs. To study the future evolution and economic consequences of these dynamics, we develop and calibrate a dynamic life-cycle spatial general equilibrium model. The model predicts widening geographic disparities in depopulation, aging, and economic activity in the coming centuries. While subsidies to declining regions can lower regional inequality, they come at the cost of lower aggregate efficiency and higher public service expenditures.

Suggested Citation

  • Elisa Giannone & Yuhei Miyauchi & Nuno Paixao & Xinle Pang & Yuta Suzuki, 2026. "Living in a ghost town: The geography of depopulation and aging," Economics Working Papers 1944, Department of Economics and Business, Universitat Pompeu Fabra.
    • Handle: RePEc:upf:upfgen:1944
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    References listed on IDEAS

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    1. Morris Davis & Jesse M. Gregory, 2021. "Place-Based Redistribution in Location Choice Models," NBER Working Papers 29045, National Bureau of Economic Research, Inc.
    2. Carl Gaigné & Jacques‐François Thisse, 2009. "Aging Nations And The Future Of Cities," Journal of Regional Science, Wiley Blackwell, vol. 49(4), pages 663-688, October.
    3. Rebecca Diamond, 2016. "The Determinants and Welfare Implications of US Workers' Diverging Location Choices by Skill: 1980-2000," American Economic Review, American Economic Association, vol. 106(3), pages 479-524, March.
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    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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