On the implications of declining population growth for regional migration

Abstract

Although many advanced economies nowadays experience decreasing populations, migration in models of economic growth has so far been almost exclusively analyzed for the case of non-negative population growth rates. This paper considers decreasing and possibly negative population growth rates in two two-sector growth models. As long as preferences are homothetic, neither a decrease in population growth rates nor an actual population decline does induce migration in either direction. Introducing quasi-linear preferences implies that a decline in population growth leads to migration from the rural to the industrial region. A complete depopulation of the rural region takes place if the population growth rate falls short of minus the rate of physical capital depreciation. These results reinforce pessimistic expectations about a rural exodus.