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Regional Migration and Economy [BOK Issue Note 2023-29]

Group : Monetary Issues
Research Department (02-759-4077) 2024.05.08 14509

The Seoul Metropolitan Region (SMG) is disproportionately over-concentrated, squeezing more than half of the population into a space just 12% of South Korea’s total land area. The density has worsened from continued influx of young population. From 2015 to 2021, youth migrants were behind a 78.5% increase in the population of the capital region, while dealing respective declines of 75.3%, 87.8%, and 77.2% in Dongnam, Honam, Daegyeong Regions during the same period.


The persistent hemorrhage of productive youth force poses serious problems for the non-capital areas. Depopulation has accelerated as the result of birth deficiency. In Honam, the birth loss due to fewer young population across last two decades was equivalent to 49.7% of the number of newborns in 2021. The setback ratio was 31.6% for Daegeyeong and 21.9% for Dongnam Regions. The shortage of youth force deepened labor mismatch and damaged employment outside the capital region, worsening their environment to host companies. The phenomenon portends secular implications for human capital and growth potential outside the capital area due to the loss of the young with tertiary education.


The government paid utmost attention to regional development for decades to deter polarization, but obviously to little avail as evinced by the increased concentration around the capital. The consequence demands a reexamination in the even-growth model for regional development by concentrating resources to breed core municipalities to maximize policy effects and benefits from the economies of agglomeration.


Youth mobility pivoted towards the capital region stems not just from higher income expectations but also from the disparities in social amenities such as entertainment and medical facilities. All non-capital regions cannot grow to be as resourceful as Seoul area, given the demographic and fiscal constraints. The most practical policy option would be vitalization of core municipalities through maximization of agglomeration and spillover benefits. Empirical studies of other countries support the effectiveness of big metropolitan areas in mitigating over-concentration around the capital and population decline.


On the upside, big cities in non-capital areas have recently been drawing young migrants and commuters from nearby areas through improvements in their attributes. To add traction to the momentum, core municipalities must invent idiosyncratic identities through infrastructure and knowledge enhancement.

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