S9 Ep48: What price to save Japan's ghost towns?

In the oldest Japanese municipalities, close to half the residents are already over 65. As young people move to cities, the retailers close, then the clinics, then the bus that used to reach the next town. Rural Japan is not simply ageing: it is emptying.

Elisa Giannone (CREI, CEPR) and her co-authors have analysed Japan's 1,741 municipalities from 1980 onwards. The oldest quarter of them lost around 26% of their population by 2010; the youngest quarter grew by 22%, and the gap between them is still widening.

Taxing city dwellers could reverse the trend. But that's a century-long policy, that would also lower national income per head by about 1.3%. There is no version of this without a bill attached, she warns.

The research behind this episode:

Giannone, Elisa, Yuhei Miyauchi, Nuno Paixão, Xinle Pang, and Yuta Suzuki. 2026. "Living in a Ghost Town: The Geography of Depopulation and Aging." CEPR Discussion Paper 21447 (gated).

To cite this episode:

Phillips, Tim, and Elisa Giannone. 2026. "What price to save Japan's ghost towns?" VoxTalks Economics (podcast).

About the guest

Elisa Giannone is a researcher at CREI, an Adjunct Professor at Universitat Pompeu Fabra, an Affiliated Professor at the Barcelona School of Economics. She works on internal migration, regional income divergence, the spatial consequences of local shocks and the question of why people move.

Research cited in this episode

Social and natural population change. Demographers separate population movements through migration, known as social change, from births and deaths, known as natural change. Giannone's team runs both counterfactuals separately. Shut down migration and the oldest municipalities still age, but the population loss between 1980 and 2010 falls from nearly 0.3 log points to under 0.1. The framework follows Stanley Smith, Jeff Tayman and David Swanson's standard treatment of state and local population projections.

Scale economies in local public services. A 1% increase in local population is associated with a 0.53% fall in municipal government spending per head. Roads, schools, clinics and administration carry a large fixed cost, so the cost of serving each remaining resident rises as a town shrinks. This is the fiscal arithmetic that makes depopulation expensive.