Living in a ghost town: The geography of depopulation and aging

Elisa Giannone, Yuhei Miyauchi, Nuno Paixao, Xinle Pang and Yuta Suzuki

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: How do depopulation and population aging evolve differently across regions within a country, and what are their implications for aggregate economic activity and regional inequality? Using spatially disaggregated data from Japan over the past several decades, we show that rural areas have experienced significantly faster depopulation and aging than urban areas, driven by low fertility and sustained out-migration of young cohorts. Regions undergoing these trends face declining local amenities and rising per-capita public service costs. To study the future evolution and economic consequences of these dynamics, we develop and calibrate a dynamic life-cycle spatial general equilibrium model. The model predicts widening geographic disparities in depopulation, aging, and economic activity in the coming centuries. While subsidies to declining regions can lower regional inequality, they come at the cost of lower aggregate efficiency and higher public service expenditures.

Date: 2026-04
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