Korea has highest capital population concentration of OECD — BOK says it’s hurting birth rates

Posted on : 2023-11-03 17:05 KST Modified on : 2023-11-03 17:05 KST
Korea’s central bank released a report on Thursday in which it said Korea’s population concentration in the capital area — the highest among OECD states — was negatively affecting birth rates
Rhee Chang-yong, the governor of the Bank of Korea, gives an address on policy tasks for revitalizing regional economies and responding to changing demographics at a regional economics symposium on Nov. 2 held at the central bank’s annex building. (Yonhap)
Rhee Chang-yong, the governor of the Bank of Korea, gives an address on policy tasks for revitalizing regional economies and responding to changing demographics at a regional economics symposium on Nov. 2 held at the central bank’s annex building. (Yonhap)

The Bank of Korea has analyzed that the concentration of young people in the Seoul metropolitan area is a key cause of Korea’s declining birth rate and undermined growth potential.

To alleviate the declining birth rate and boost the plummeting potential growth rate, the BOK’s prescription is to create hub cities outside of the greater Seoul area to attract industry and social overhead capital facilities.

The BOK’s regional economic survey team released a report titled “Regional Population Migration and the Regional Economy” at the Regional Economic Symposium on Thursday.

According to the report, the percentage of the South Korean population living in the greater capital area (50.6%) is the largest among the 26 countries of the Organisation for Economic Co-operation and Development, and the combined percentage of the population living in the second- to fourth-largest cities in the country is in the middle to lower range among its peers.

This means that the South Korean population’s concentration in the capital area is unusual among major industrialized countries.

The BOK attributes this to interregional migration (social migration) rather than natural differences in population growth and decline, such as births and deaths, and analyzes the influx of young adults (15-34 years old) into the greater Seoul area as the biggest factor.

In fact, between 2015 and 2021, 78.5% of the population added to the greater Seoul area through net inflow belonged to the younger cohort.

“The migration of young adults is a natural phenomenon considering the differences in income expectations, culture, and medical services between regions,” said Chung Min-su, the deputy director of the central bank’s regional economic survey team.

The increase in the number of young people moving to the capital area has also had an impact on the declining birth rate, the BOK stated. The declining birth rate is a key factor in the declining trend of South Korea’s economic potential.

“Births in the areas young people have left have plummeted, but the increase in births in the greater Seoul area has not offset this,” the report said, noting that “those living in the more densely populated areas delay having children to survive competition.”

The BOK estimated that the cumulative lack of childbirths from the outflow of young adults from areas outside of Seoul since 2001 came to about 6,000, while the same lack from the rise in population density in the metropolitan areas was 4,800.

The BOK suggested fostering regional hub cities as an alternative and provided specific numbers for the effects. However, it did not name any specific cities as candidates.

“If nothing is done about current trends in interregional population flows, by 2053 the population will have shrunk by about 6 million and the ratio [of those living] in the capital area will soar to 53.1%,” the report estimated. “If hub cities are erected, the ratio in the capital area can be reduced to as much as 45.2% and the population shrinkage can be cut by around half a million for the same period.”

The central bank’s report was released amid proposals by the government and the ruling party to make Seoul into a megacity by incorporating Gimpo into the capital. When asked by reporters whether he opposed the creation of a mega-Seoul, Chung only responded that the research “was conducted independent of the notion of ‘Mega Seoul,’” adding, “I’m not sure I can say whether I’m strictly against it.”

At the same symposium, Seoul National University economic professor Hong Sok-chul, a standing member of the Presidential Committee on Ageing Society and Population Policy, gave a presentation on “the ramifications of population crisis for regional economies and ideas for policy responses.” In his presentation, Hong said, “To respond to the crisis of rural population loss, we need policies to prevent the rural flight of young people and incentivize young people in the greater Seoul area to move out of the capital area.”

“But it’s impossible for all levels of local government to succeed at drawing in businesses and young people, not to mention ineffective,” he argued.

“Fostering hub cities in each region and distributing the economic fruits and benefits of these hubs with local areas would be far more effective,” Chung suggested.

By Park Soon-bin, senior staff writer

Please direct questions or comments to [english@hani.co.kr]

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