Regional Growth in Japan

This paper studies the role of internal migration in income convergence across regions in Japan. Neoclassical theory predicts that migration should have been an important source of convergence, but regression results suggest otherwise. The paper investigates the possibility that this discrepancy is explained by the effects of migration on population composition, especially on educational attainment. It proposes an empirical approach to quantify this ‘educational composition effect’. It is shown that, although this effect did slow down convergence, its magnitude was too small to account for the discrepancy between theory and empirics.