Economic prosperity characteristics in depopulating cities: evidence from 146 cities in South Korea

Young Eun Kim (), Saehoon Kim () and Jae Seung Lee ()
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Young Eun Kim: Hongik University
Saehoon Kim: Seoul National University
Jae Seung Lee: Seoul National University

The Annals of Regional Science, 2025, vol. 74, issue 2, No 23, 30 pages

Abstract: Abstract Many cities worldwide achieving economic growth despite population declines can be classified as complementary economic growth (CEG) cities. These cities outperform in economic growth relative to their population decrease; yet, the factors enabling their prosperity amid population loss remain underexplored. To address this gap, an analysis was conducted on 146 South Korean cities using demographic, economic, social, and physical indicators, utilizing descriptive statistics and multinomial logistic regression. This study aims to identify the unique factors and characteristics that set CEG cities apart from traditional urban growth or shrinkage models. The findings highlight that knowledge-intensive services (KIS) industries drive economic growth in CEG cities, while high housing prices significantly contribute to population decline. Despite job availability, corporate presence, and tourism vibrancy, CEG cities' prosperity depends on the interplay between KIS industries and housing affordability challenges. This research contributes to the discourse on urban and regional development by demonstrating that population decline need not preclude economic growth. The study emphasizes the need for policymakers to leverage the economic potential of CEG cities by fostering KIS industries, addressing housing affordability, and formulating adaptive urban policies. These findings offer valuable insights for tackling the intertwined challenges of population decline and economic sustainability, positioning CEG cities as critical models for innovative urban strategies.

Keywords: R11; R23; J11 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s00168-025-01388-0

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