Natural Disasters, Migration and Regional Development

抄録

As described in this paper, a simple matching theory is constructed to ascertain the manner by which natural disasters affect regional economic activities and migration. First, a simple matching theory model based on previous studies is introduced. Then, elements of natural disasters are integrated into the model. It is assumed that agglomeration increases not only productivity but also congestion costs. When a natural disaster affects an area, production factors are decreased, thereby reducing productivity. Consequently, people move from affected areas to other cities:population drain occurs. Next, the model is extended to analyze regional loyalty. Presuming that the utility difference between the domicile and other regions is low, then people tend to remain in their hometown even if monetary gains can be made by migrating to other areas. In that case, multiple steady states exist. Lastly, we assume that productivity depends on public capital, which is degraded by a natural disaster. Results show that once migration and a population drain occur, fiscal policies to recover public capital may degrade the regional economy further and might engender further population outflow.

JEL Classifications: C78, Q54, R11, R23