Optimal City Size with Endogenous Fertility

Rainald Borck, Tadashi Morita and Yasuhiro Sato

No 12595, CESifo Working Paper Series from CESifo

Abstract: We build a dynamic quantitative spatial model with mobile households and endogenous fertility to analyze the efficiency of equilibrium fertility choices and city size distribution. City size affects the economy through three channels: a larger city population increases productivity, affects amenity levels (positively or negatively), and increases the cost of child care. We find that the competitive equilibrium is inefficient due to the intergenerational externality. We calibrate our model to German county data and find that excessively large cities have excessively low fertility rates, which yields a 14% welfare loss.

Keywords: optimal city system; mobility; endogenous fertility; agglomeration (search for similar items in EconPapers)
JEL-codes: J13 R12 R13 (search for similar items in EconPapers)
Date: 2026
New Economics Papers: this item is included in nep-dge, nep-geo and nep-uep
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_12595

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