Learning to Manage Demographic "Shrinkage"

The Financial Times has recently had a string of articles highlighting the demographics of low fertility European countries, as I noted recently with respect to Portugal. Yesterday they turned to Germany, highlighting a northern German town that is trying to attract immigrants in order to keep its schools open.

When the quiet village of Ottenstein, in northern Germany, was faced with its school closing for lack of children, Manfred Weiner, its mayor, hit upon a novel way of attracting young families. Instead of renting out village land to farmers, he is giving it away for free to people willing to move to the picturesque hamlet. Successful applicants will be awarded a building plot on one condition: that they have young children and, preferably, intend to have more. About 30 couples have responded.

This is not quite as novel as the FT might think. Let's go back to Dayton, Ohio, just a couple of years ago, as reported by the NYTimes:

Fighting back from the ravages of industrial decline, this city adopted a novel plan two years ago to revive its economy and its spirits: become a magnet for immigrants.Other struggling cities are trying to restart growth by luring enterprising immigrants, both highly skilled workers and low-wage laborers. In the Midwest, similar initiatives have begun in Chicago, Cleveland, Columbus, Indianapolis, St. Louis and Lansing, Mich., as well as Detroit, as it strives to rise out of bankruptcy.

In many ways, this is all about "managing shrinkage," as the FT article noted:

[A]s a rich country with a highly- educated population, Germany has the opportunity to become an innovator in how to manage an ageing population. “Demographic change need not be a catastrophe. The question is how to react,” says Reiner Klingholz, director of the Institute for Population and Development. “Governments are all used to managing growth. They must now learn how to manage shrinkage. We need a complete rethink in our societies.”

And how is another rich, well-educated country, Japan, coping? At the moment, Tokyo is dealing with a growing number of abandoned homes.

These ghost homes are the most visible sign of human retreat in a country where the population peaked a half-decade ago and is forecast to fall by a third over the next 50 years. The demographic pressure has weighed on the Japanese economy, as a smaller work force struggles to support a growing proportion of the old, and has prompted intense debate over long-term proposals to boost immigration or encourage women to have more children.

I'm betting on the idea that these unoccupied homes will be demolished, and probably at public expense. That's a lesson in shrinkage management. Tearing down an unoccupied home is a lot cheaper than raising children or integrating immigrants.