The Income Effects of Decentralization of Population in Korea: An Econometric Investigation

In Korea, the socio-economic imbalance between the Capital and non-Capital Regions has become a serious issue despite the various decentralization policies instituted since the 1960’s. This study aims at analyzing the effect of decentralization of population in the capital region on income, and revealing the difference in productivity between the Capital and non-capital regions. The analysis begins with an estimate of production functions by region. It then analyzes the changes to employment as population decreases in the Capital region, and the economic effects on regional production through the movement of employment in each region. The results show that, decentralization in the capital region would result in decrease national income in Korea.