The Difference of Interregional Productivity and Allocation of Production Factors

Regional development policy in Japan has focused on equalizing interregional differences. Nowadays, net interregional migration is decreasing in Japan. Since Barro and Sala- i- Martin (1992) it has been discussed whether these phenomena cause to decrease interregional differences or not. Mochida (2004) point out that the movement of production factors has an effect both on marginal productivity and fiscal surplus. Kawasaki (2013) concludes that interregional migration is decreasing not due to convergence but to redistribution through fiscal policy. Miyagawa, Kawasaki and Edamura (2018) find that the accumulation of social infrastructure contributed to productivity improvement through labor reallocation.

In this paper, while expanding the framework of Kawasaki (2013) and use the R-JIP database to measure the productivity disparity between regions. As a result of analysis, it clarified that production factors concentrate in metropolitan areas based on market mechanisms because those areas are more productive relative to rural areas. Given financial constraints, in the future there will be a need for policy that increases the productivity of rural areas, rather than curbing metropolitan development.