Regional Inequality: how Roots hold Us Back

in today’s global economy, some areas offer far more job opportunities and better access to education than others.This happens because, as economic models show, jobs requiring specialized skills tend to cluster in a few major cities. It wouldn’t be a problem if people could easily move to where the opportunities are. Ideally, someone born in a struggling area could move to a city for education and a better career.

But that’s not what we see. People from lower-income areas frequently enough have fewer chances to get the education they need. And even if they don’t get advanced education themselves, they should be able to move to a city so their children and grandchildren can. Over time,this could lessen regional differences. However, highly skilled workers do move to wealthier areas, while low-skilled workers often don’t – and sometimes even move away from them. This concentration of opportunity actually widens social gaps and makes things less fair.

Our research looks at what keeps people tied to their hometowns and how this impacts where human capital – skills and knowledge – ends up. We’ve taken existing economic models and added factors that explain why people stay connected to their place of origin. This helps us understand how these connections affect the accumulation of skills and whether they make regional inequality worse. We’ll use this understanding to evaluate different policies.

For exmaple, we’ll consider whether expanding the size and reach of local governments, like the proposed “Doshu” system, would help. We’ll also examine how social security for older people might work differently depending on where skilled workers are concentrated and how strongly people feel connected to their hometowns.

One key factor we’re focusing on is what we call “family public goods.” These are benefits that families create for each other simply by living near one another – things like childcare support, help with errands, and emotional support.

Human capital Program (6th period: FY2024-2028)
“Economic analysis of the declining birthrate and aging population in Japan and China during the coronavirus pandemic” project

Disclaimer: This summary presents policy implications based on our analysis and isn’t part of the full research report.Please refer to the complete report for detailed findings. The views expressed here are those of the authors and don’t necessarily reflect the opinions of their organizations or the Research Institute of Economy, Trade and Industry.