Ex Ante Evaluation of Migration Subsidy: Evidence from Japan

This study proposes a simple framework for the ex ante evaluation of migration subsidy. Recently, the Japanese government initiated a migration subsidy program to promote urban-to-rural migration for regional revitalization under the economy with a monopolar concentration in Tokyo. The ex ante evaluation framework proposed in this study formulates the payback period of interregional migration as investment behavior. In the model, households compare the sum of the expected benefits available each year after migration with the lump-sum costs of migration, which are estimated with structural estimation using the interregional migration flow data. The migration subsidy leads to an incentive for interregional migration by reducing the payback period. This study finds that households incur different migration costs at each stage of life, implying that a uniformly determined migration subsidy may have different policy effects. Counterfactual simulations provide scientific insight into the potential impact of the migration subsidy program, helping policymakers determine the optimal amount under the budget constraint.

This is the English version of the Japanese Discussion Paper (19-P-006) with some additional information and changes.