Population concentration in major urban areas is easing in many countries, driven by soaring housing prices and the rise of remote work. In contrast, Japan and South Korea are witnessing a stronger trend of people moving to metropolitan areas in search of higher wages and better job opportunities. However, the gap in per capita disposable income between metropolitan areas and the national average is narrowing, raising questions about the economic advantages of living in these expensive regions.
The Nihon Keizai Shimbun analyzed the proportion of metropolitan populations in 37 OECD member countries, excluding Australia due to a lack of data, based on the United Nations' 'World Urbanization Prospects 2025.' The UN defines urban areas as regions with a certain population density, with metropolitan areas including the capital city and surrounding regions. In Japan, the metropolitan area is slightly smaller than the 'Tokyo Metropolis and the three prefectures of Kanagawa, Chiba, and Saitama.' The average concentration in these 37 countries peaked at 16.9% in 2021 and has since declined, with the most recent estimates for 2023 showing a decrease from the previous year. Concentration levels have fallen in 24 countries, including Germany and Norway.
In 2023, the population of the Paris metropolitan area increased by only 7,000, a fraction of the growth seen a decade ago. This modest increase was primarily due to natural growth, with more deaths than births. In the Île-de-France region, which closely overlaps with the Paris metropolitan area, an average of about 36,000 more people left than moved in each year from 2017 to 2023. This indicates a trend of population outflow from the Paris metropolitan area.
When people and businesses cluster together, they can share infrastructure, reduce costs, and foster innovation through active exchanges, a phenomenon known as 'agglomeration economies.' However, excessive concentration can lead to traffic congestion, reduced productivity, and increased housing costs that diminish consumer purchasing power.
One of the main factors pushing people out of metropolitan areas is housing prices. According to the OECD, housing prices in metropolitan areas with populations over 1.5 million have risen by approximately 68% over the past decade. In contrast, cities with populations between 250,000 and 1.5 million saw a 50% increase, while those with populations between 100,000 and 250,000 experienced a 37% rise. The larger the city, the steeper the price increase, with housing costs in major cities reaching levels unattainable for the middle class. A report from the French National Institute of Statistics and Economic Studies also noted that high housing costs are a significant factor driving people away from cities.
The COVID-19 pandemic has further reduced the necessity of living in metropolitan areas due to the rise of remote work. In Dublin, Ireland, the number of people moving out exceeded those moving in by 4,780 in 2022, reflecting changes in population movement patterns influenced by remote work.
In Japan, the trend is quite the opposite. The concentration of the metropolitan population, heavily influenced by centralization, was 27% in 2023 and is projected to rise to 27.6% by 2030. In South Korea, the concentration increased from 42.1% in 2010 to 43.3% in 2023. In the same year, the figures for the UK and France were 14.9% and 14.1%, respectively, while Germany stood at 4.2%. South Korea and Japan have notably high concentrations. The South Korean figure is based on the UN's method of defining urban areas by population density, resulting in a lower percentage than the domestic statistic of 50.7% for the Seoul-Incheon-Gyeonggi administrative region. Regardless of the metrics used, the trend is clear: while high housing costs drive people away from metropolitan areas in many countries, in Japan and South Korea, expectations for jobs and income continue to attract residents despite these costs.
Japanese workers' preference for metropolitan areas is largely driven by expectations of higher wages. A survey conducted by the employment information company Persol Career found that 70% of respondents preferred to work in Tokyo and the surrounding prefectures of Kanagawa, Chiba, and Saitama, citing the potential for higher salaries as the primary reason.
However, whether these expectations translate into actual benefits is another matter. Kazuyuki Murakami, a senior researcher at Mitsui Sumitomo Trust Bank, calculated that the per capita disposable income in the Japanese metropolitan area decreased from 1.118 times the national average in 2015 to 1.084 times in 2022. Similarly, South Korea's metropolitan area saw a decline from 1.143 times to 1.117 times during the same period. Despite the continued influx of people, the income advantage over the national average is diminishing.
Efforts to alleviate metropolitan concentration are also underway, such as Indonesia's plan to move its capital from the overcrowded Jakarta to Nusantara and South Korea's relocation of some administrative functions to Sejong City. Yasuhiro Sato, a professor at the University of Tokyo, stated, 'By developing hubs for different industries away from Tokyo, we can mitigate risks if existing industries lose competitiveness. Considering the risks of natural disasters, it is rational to ease metropolitan concentration.'
While many countries are experiencing a trend of moving away from metropolitan areas due to skyrocketing housing prices, such movements are not yet evident in Tokyo and Seoul, where expectations for high wages still outweigh the burden of housing costs.
* This article has been translated by AI.
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