A multi-region economic growth model with migration, housing and regional amenity

The purpose of this paper is to examine dynamic interactions among interregional migration, economic development and environmental change on microeconomic foundation. The model describes multi-regional economic growth with heterogeneous households, and capital accumulation under assumptions of profit maximization, utility maximization, and perfect competition. First, we simulate the national economy of a three-regional economy with homogeneous population. It is demonstrated that when the production functions take on the Cobb-Douglas form, the dynamics has a unique equilibrium. Then we carry out comparative statics analysis with regard to regions’ productivity and amenity levels, the propensity to save, and the population. The simulation results show that any change in any region’s amenity or productivity may improve or worsen some regions with regard to some variables. We will also examine the dynamics of a two-region two-group economy.