Abstract
The purpose of this paper is to analyze the effects of transportation and mobility costs on the mobility of workers and the overall population between old and new capital cities. First of all, mobility costs clearly have a negative effect on utility; higher commuting costs could lead to the spatial dispersion of workers. In addition, if the monthly commuting cost exceeds 1290 USD between Seoul (the old capital) and Sejong (the new capital), it would be efficient for workers in Seoul to move to Sejong. Finally, the interregional population equilibrium could be achieved when the share of transportation cost to commodity price reaches 60.1%.
Highlights
Economic concentration in Seoul, the capital city of Korea, has had a negative impact on urban sustainable growth, interregional balanced development, the housing market, and environmental pollution [1]
Sejong City aims to grow into a sustainable self-sufficient city with a population of 500,000 by 2030, but the population size remains at roughly 40% of the population goal
What are the practical policy options for the government to achieve this planning target? In the sense that spatial economic activities have been assessed in terms of transportation costs and agglomeration economy, this paper is concerned with the economic contribution of transportation and mobility costs to the migration between the old and the new capital cities
Summary
Economic concentration in Seoul, the capital city of Korea, has had a negative impact on urban sustainable growth, interregional balanced development, the housing market, and environmental pollution [1] To tackle this issue with policy tools, the Korean government decided to relocate 36 government ministries and agencies from Seoul to Sejong city (approximately 160 km south of Seoul, the capital city of Korea), the new administrative capital, in 2007, with the Presidential Office, the National Assembly, and all the foreign embassies remaining in Seoul. The purpose of this paper is to analyze the effects of transportation costs on the mobility of workers and the general population between the old and new capital cities using a two-region growth model. The paper proceeds as follows: Section 2 presents a literature review on the effect of transportation costs and migration; Section 3 develops a simple two-region model; Section 4 explores the comparative analysis; Section 5 performs a numerical simulation with the use of transportation and commuting costs; and Section 6 summarizes this paper and discusses further research issues
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