COVER STORY • 6

H

ow Will Covid-19
Reshape Cities in Japan?

By Keisuke Kondo
The Covid-19 pandemic has brought dramatic changes to ourlifestyles, businesses, communications, and all manner of humanactivity. From the current situation in autumn 2020, there is still a long
way to go to eradicate the virus. Combating this infectious disease is
becoming a new policy challenge across the world. Simultaneously,
governments must continue to tackle conventional policy challenges.
Japan is one of the leading developed countries that have started toexperience population decline. Along with the aging of its populationand low birth rate, the labor shortage is one of the most worrisome
problems for the Japanese economy. The situation is already worse inrural areas that permanently face outflows of younger people.
Although the government has taken various measures to address thelabor shortage (e.g., raising the birthrate, encouraging more womenand elderly people to work, promoting engagement in side jobs alongwith concurrent jobs, introducing advanced technologies such as
artificial intelligence and robotics, and expanding the acceptance of
foreign workers), the Japanese economy has failed to grow as
expected. Finding effective policies is an urgent task for thegovernment, but it is in this situation that the Covid-19 pandemic
occurred.
How does Covid-19 change conventional policy challenges? Do weneed “new normal” policy measures that are radically modified? The
answer is no. Although some new policy schemes may be required tosustain the economy from the sudden economic shocks (e.g., someexperts suggest a universal basic income), the conventional policy
measures that the government has discussed up to now, such as work
style reform, regional revitalization, digital transformation (DX),education in data science for the age of AI and robotics also play animportant and effective role in combating infectious disease. Thus, thegoal of this article is to disentangle the possible policy movements in
2021 along with a recent Cabinet Office survey conducted during the
pandemic (https://www5.cao.go.jp/keizai2/manzoku/index.html).
Especially, I focus on how the Covid-19 pandemic will reshape theurban-rural relationship in Japan.

Were Advantages of Large Cities Lost by Covid-19?
Academic research on urban economics has revealed that workers
and companies benefit from locating in large cities. Workers in larger
cities can earn higher wages than in smaller cities. Employees could
enhance their working capacity effectively by working in large cities
because they have many opportunities to be exposed to cutting-edge
technology and to valuable and unique experiences. Companies also
benefit from larger markets by taking advantage of economies of scale.
Consumers in large cities can enjoy a variety of goods and services
that are not provided in small cities. As such, urban economists haveemphasized the economies of density, agglomeration economies, scale
24 Japan SPOTLIGHT • January / February 2021

Author Keisuke Kondo

economies, face-to-face communication for knowledge creation, andbenefits from geographical proximity in knowledge spillover to explain
why large cities attract more people and companies. These advantages
make large cities grow much larger through the circular causality. On
the other hand, small cities suffer from the population outflow. This
human migration explains the simultaneous progress of themonopolar concentration in Tokyo and depopulation in rural areas.
What is the economic impact of the Covid-19 pandemic on theadvantages of large cities? Combating infectious diseases requires astrong restriction of close face-to-face contact in closed spaces andcrowded places. In fact, the Covid-19 infections are mainly spreadingin large cities, such as in Tokyo’s 23 Wards, Osaka, Yokohama,
Saitama, Chiba, Nagoya, Fukuoka, and Sapporo, where social andeconomic activities are concentrated in limited geographical spaces.
Commuting by public transportation is also one of the biggest risks for
infection of workers as well as students. Therefore, the government
requests that people stay home, work from home, promote online
classes, and avoid face-to-face meetings. Obviously, these measuresfor combating infection impede the advantages of large cities
mentioned above and force the economy into a slowdown.

Can Urban-to-Rural Migration Combat Infectious
Disease?
If the advantages of large cities are lost, should our economic
activities be dispersed from urban to rural areas? In the next decade,urban-to-rural migration may be a coming trend. However, the regional
dispersion of economic activities is not the fundamental solution for
combating infectious diseases. Urban and rural areas are always
connected: the outflow from urban areas simultaneously increases the
inflow into rural areas (unless people emigrate). Although many people
in urban areas consider that rural areas are much safer, the risk ofinfection will increase in rural areas owing to additional population
inflows.
Current urban policy in Japan promotes compact and networked
cities. For example, the Location Normalization Plan managed by the
Ministry of Land, Infrastructure, Transport and Tourism requests
residents to live in the areas designated by each local government.
Businesses and hospitals are also required to concentrate in central
business districts or their neighboring areas. These localized areas areconnected by public transportation. Thus, residential locations andeconomic activities in rural areas do not necessarily ensure lesscrowded places. Offices, schools, hospitals, and social facilities still
have the characteristics of close face-to-face contact, closed spaces,
and crowded places.
We should note that the policy for regional reallocation of residents
simply involves certain risks and does not provide a fundamental
https://www.jef.or.jp/journal/

solution for combating Covid-19. In other words, rural areas take on
the infection risks of urban areas. As residents in urban areas feel agreater burden from the pandemic, urban-to-rural migration partly
mitigates their risk of infection. But what is important in combating an
infectious disease is to prevent close contact and concentration ofpeople in crowded places, regardless of urban or rural area.

Changes During the Covid-19 Pandemic
Combating an infectious disease requires not having close face-toface contact in closed spaces and crowded places. In addition,commuting and traveling should be subject to restrictions so as not to
spread the virus across cities. However, most of our social andeconomic activities rely on face-to-face contact and interregional
mobility. The restrictions on our social and economic activities force
the economy into a slowdown. In addition, essential workers, such as
medical service workers, cashiers, and taxi drivers, are exposed tohigher risks of infection.
Although there are some jobs fully requiring face-to-face contact,other jobs can prevent this. Many social and economic activities havebeen switched to be conducted through the Internet. Effective use of
information and communication technology (ICT) allows us tocontinue our social and economic activities.
The introduction of teleworking and online meetings has accelerated
since the Covid-19 pandemic, and this contributes to mitigating the
spread of the virus. Online classes have also started, reducing the
spread of infection between teachers and students. Online medical
diagnosis has also been accelerated, which prevents infection between
medical service workers and patients. Of course, there is still plenty ofroom for improvement, but our society and economy are advancing
gradually under a “new normal” environment.
What I wish to emphasize here is that the “new normal” is nothing
new in terms of the policy agenda. For example, teleworking is
recommended in the work style reform. Because female workers
mainly take care of their children, long-distance commuting is a big
obstacle for them to continue to work after having children. So
teleworking can be viewed as a helpful way to save time and mitigate
anxieties over child-raising during working hours. Online education is
also one of the policy challenges that the government has tackled. On
this point, Japan is behind compared to other developed countries.
Online medical diagnosis has been already started from April 2018.
Importantly, conventional policy measures that the government has
discussed before the Covid-19 pandemic can simultaneously help
resolve the spread of infections. Therefore, the prospect in 2021 is thatprivate and public sectors will work cooperatively toward an early
realization of the conventional policy goals.

Prospect of Regional Revitalization & Digital
Transformation
The government has accelerated policy efforts for regional
revitalization since the Headquarters for Overcoming Population
Decline and Vitalizing Local Economy was established in September
2014. However, the Greater Tokyo area has attracted even more people
from other regions. Will the trend of monopolar concentration in Tokyochange? Or must this trend change to combat infectious diseases?
Masahisa Fujita and Nobuaki Hamaguchi (“Transforming the three C’s

into Urban Advantages: Population Concentration and Infection Risks”,
The Nikkei, July 8, 2020) propose that promoting regional dispersion
serves to combat an infectious disease. More importantly, they areconcerned that the monopolar concentration in Tokyo will bring abouta uniform culture and society, which could prevent high creative
activity in the future. They propose that decentralization must be
promoted to improve economic and social diversity and combat
infectious diseases.
I agree that regional revitalization will bring about a better society inJapan over the long term. But as mentioned earlier, we should
understand that it is not the role of rural areas to accept the burden of
the spread of infection that occurs in urban areas. Policies should beplanned in order that rural areas can promote economic growth during
the Covid-19 pandemic.
The key movement is DX, which enables people to work efficiently
and effectively along with combating the spread of infections. DX is
one of the new policy challenges that the government discussed
before the pandemic. Because face-to-face contact causes the virus to
spread, the promotion of telework can combat this. It could also
encourage urban-to-rural migration because living in urban areas
becomes less important with teleworking, which can reduce theburden of daily commuting. Encouraging workers who can telework toreside in rural areas could lead to economic promotion there because
of increasing money flows from urban to rural areas.
Using the recent Cabinet Office survey, I tried to assess thepossibility of a coming trend of urban-to-rural migration and theimportance of DX. Chart 1 shows whether workers experienced
telework during the pandemic according to city size. As evidenced byChart 1, workers in larger cities tended to switch face-to-face working
to teleworking. Especially, more than half of workers residing inTokyo’s 23 Wards had telework experience partially or completely.
Chart 2 shows whether workers will continue to telework in the futureaccording to city size. An interesting finding is that 38.4% of workers
residing in Tokyo’s 23 Wards wish to replace all or more than half ofconventional work styles by telework, and this rate in small cities is12.9%. In other words, workers in large cities believe their jobs ortasks can be conducted by telework through ICT and the Internet.
Chart 3 shows by what percent workers have reduced theircommuting time per week during the Covid-19 pandemic. Some
38.2% of workers in Tokyo’s 23 Wards reduced their commuting time
CHART 1

Did you experience “telework”
during the Covid-19 pandemic?
Small Cities
Telework
Experience:
Yes

Large Cities

23.9

39.2

Telework
Experience:
No

76.1

0

20

percent

40

Tokyo’s 23 Wards

60

80

55.2

60.8

0

20

percent

40

60

80

44.8

0

20

percent

40

60

80

Note: The number of observations are 2,640 for small cities, 3,459 for large cities, and 545
for Tokyo’s 23 Wards.

Source: Created by the author using the micro data of Cabinet Office (2020)

Japan SPOTLIGHT • January / February 2021

25

CHART 2

CHART 3How often do you want to teleworkfrom now?
Small Cities

Large Cities

Telework (100%)

4.8

Telework (50% over)

8.1

Telework (50% below)

6.7

10.8

Telework (sometimes)

10.1

10.8

Do not telework

Unknown

20

percent(20%, 50%] 0.4

0.7

0.4

10.3

(5%, 20%] 1.3

1.7

3.1

9.9

[-5%, 5%]

44.3

12.8

0

2.1

3.3

55.6
9.5

40

60

32.1
6.1

20

40

percent

60

Tokyo’s 23 Wards

1.1

29.2

1.8

Large Cities(50%, ∞] 0.4

9.2
16.4

Cannot telework

Small Cities

Tokyo’s 23 Wards

6.3

1.8

By what percent did your commuting time
per week change during the pandemic?

20

40

percent

60

70.7

52.1

35.5

[-20%, -6%)

9.7

9.7

9.8

[-50%, -20%)

8.0

10.9

10.8

[-∞, -50%)

9.5

0

20

percent

23.7

40

60

80

0

20

percent

40

38.2

60

80

0

20

percent

40

60

80

Note: The number of observations are 2,640 for small cities, 3,459 for large cities, and 545
for Tokyo’s 23 Wards.

Note: The numbers of observations are 2,514 for small cities, 3,295 for large cities, and 518
for Tokyo’s 23 Wards.

Source: Created by the author using the micro data of Cabinet Office (2020)

Source: Created by the author using the micro data of Cabinet Office (2020)

by 50% or more, reflecting the fact that most of them worked fromhome. On the other hand, for 70.7% of workers in small cities
commuting time only changed by up to 5%. Promotion of DX enables
workers to live far from the central business districts as they do notneed to commute for a long time every day.
Chart 4 shows how interest in urban-to-rural migration has changed
during the pandemic. The left panel presents the answers of those who
had no telework experience, and the right panel presents the answersof those who did have telework experience. Note that respondents arelimited to people who reside in the Greater Tokyo, Osaka, and Nagoya
areas. A salient finding is that workers with telework experience showa twice higher interest in urban-to-rural migration, suggesting that the
telework experience provides a motive to relocate.
From Charts 1, 2, 3 and 4, it is predictable that the promotion of DX
will give incentives for workers to find more attractive places to live
while working in the same companies. Workers wish to reduce theburden of daily commuting to achieve a better living standard if they
can do their job by teleworking. They would also benefit from lower
house rents in suburban areas if they can continue to earn the samelevel of wages by teleworking.

CHART 4How did your interest in urban-to-rural
migration change during the pandemic?
Very high interest

Telework Experience: No

Telework Experience: Yes

2.9

6.2

High interest

9.5

18.2

Unchanged

82.0

71.0

Low interest

1.8

1.5

Very low interest

3.7

3.1

0

percent

20

40

60

80

0

percent

20

40

60

Note: The numbers of observations are 2,122 and 1,509 for workers with and without
telework experience, respectively.

Source: Created by the author using the micro data of Cabinet Office (2020)

26 Japan SPOTLIGHT • January / February 2021

80

Prospect of GIGA School Concept
In my view, one of the most important policy agendas is how
schools can promote effective education during the Covid-19
pandemic. Children are exposed to higher risks of educational
opportunity gaps during the pandemic. In fact, there were many
children who stopped their studies after the declaration of a state of
emergency. Only some children who can access online learningmaterials could continue to study online at home. Thus, online
education is an urgent task for educational policies. Simultaneously,
schools should improve their ICT infrastructure and learn effective
online teaching methods.
Online education is another of the policies the government
discussed before the pandemic. The Ministry of Education, Culture,
Sports, Science and Technology (MEXT) is promoting the Global andInnovation Gateway for All (GIGA) School Concept, which was spelled
out in December 2019. It is planned that each student will be able touse each technological device connected with a high-speed network.
The Covid-19 outbreak is pushing MEXT toward an early realization of
the GIGA School Concept. It had previously not discussed combating
infectious diseases and had just discussed ICT education and data
science, but as the GIGA School Concept will also help combat the
spread of the virus through online education, MEXT will address theissue with greater urgency.
Using the Cabinet Office survey, I shed light on how online
education was provided by schools during the Covid-19 pandemic.
Chart 5 shows the online class experiences of students during the
pandemic. Panel (a) corresponds to high school students and Panel(b) corresponds to university students. I focused on the regional
differences in online education opportunities. A notable finding is thatthe online class experiences of high school students differed between
large and small cities. There are possible reasons for it. First, Covid-19
infection rates might not have been serious in small cities around May
2020, so there might have been high schools that decided not toswitch face-to-face classes to online classes in small cities. Second,
there might have been high schools that were not able to switch face-

CHART 5

Did you experience online classes during the pandemic?
(a) High School, Technical School(b) Vocational School, Junior College, University

Small Cities
Online Class
Experience:
Yes (Whole)

Large Cities

11.0

Online Class
Experience:
Yes (Part)

18.7

31.7

Online Class
Experience:
No

39.6

Online Class
Experience:
Yes (Part)

41.7

Online Class
Experience:
No

57.2

0

percent

20

40

60

80

0

percent

20

40

60

Large Cities

Small Cities
Online Class
Experience:
Yes (Whole)80

Note: The numbers of observations are 145 for small cities and 187 for large cities
including Tokyo’s 23 Wards, respectively.

69.0

70.2

20.2

23.7

10.9

0

percent

20

6.0

40

60

80

0

percent

20

40

60

80

Note: The numbers of observations are 248 for small cities and 447 for large cities
including Tokyo’s 23 Wards, respectively.

Source: Created by the author using the micro data of Cabinet Office (2020)

to-face classes to online classes in small cities owing to a lack of an
online teaching environment and resources even though the infection
was spreading at that time.
It is important to investigate further why these differences appeared
between large and small cities. Most universities were able to start
online classes regardless of whether they were in large or small cities.
So there is a barrier that must be overcome for online education,
especially for elementary and secondary education in small cities. The
government should investigate what factors delay the start of online
classes in small cities. Otherwise, the regional gaps in online
educational environments will lead to widening the gaps in learning
opportunities, being a bottleneck for further economic growth in small
cities.

Conclusion
I have discussed how the Covid-19 pandemic is changing
conventional policy challenges in Japan. My conclusion is that the
government needs to forge ahead with its conventional policy
measures, such as work style reform, regional revitalization, DX, and
the GIGA School Concept. These can help solve long-term challenges
and simultaneously contribute to mitigating the spread of thepandemic.
But short-term policy measures to tackle temporary economic
shocks from the pandemic are also required. The infection situation ischanging from day to day. Distinguishing between short- and longterm policy measures, the government needs to firmly push ahead intackling conventional challenges. Furthermore, effective use of
teleworking and online education will also reshape the urban-rural
relationship, leading to the formation of multipolar sustainable cities inJapan. Regional revitalization contributes to reducing urban
congestion problems, including the spread of infection andmaintaining the unique traditions, cultures, and ideas of each regionalsociety, as well as the diversity of all society, which plays an importantrole as a basis for the long-term prosperity of the country.

Appendix: Data Description of Cabinet Office (2020)
In this article, I use the anonymized micro data of the “Survey onLife Consciousness and Behavior Changes During the COVID-19

Pandemic” with permission (Cabinet Office, 2020). The survey was
conducted online for those who were 15 years old and above, lived inJapan, and were registered as an online survey monitor. The total
number of respondents was 10,128. The survey was conducted fromMay 25 to June 6 in 2020. The sampling method is designed in termsof the age, gender, and region. For the total number 10,128, equal
numbers of responses were allocated by 12 age groups (15–19,
20–24, 25–29, 30–34, 35–39, 40–44, 45–49, 50–54, 55–59, 60–64,
65–69, and 70 over) and gender (male and female). The regional
allocation of responses was based on the distribution of the residential
population across seven regions (Hokkaido and Tohoku, Tokyo,
Greater Tokyo region excepting Tokyo itself, Chubu, Kinki, Chugoku
and Shikoku, and Kyushu and Okinawa). Out of 10,128, the number ofworkers was 6,865 and the number of students 1,035.
To focus on how differently the Covid-19 pandemic affects our life
between urban and rural areas, I divided the sample in terms of thesize of cities where the respondents reside. The survey asked about
the respondent’s residential prefecture and municipality, so I used the
population and population density as a criterion of the city size fromthe 2015 Population Census (Ministry of Internal Affairs andCommunications). The population was used as the municipal unit, andthe population density calculated as a ratio of the population andhabitable area including the neighboring municipalities within 30
kilometers of the center of the municipality. Based on the distributionof population and population density across 1,741 municipalities, I
defined a large city as a municipality with a population of 75 percentile(63,471 persons) or over and population density of 75 percentile(1,581 persons per square km) or over. Out of 1,741 municipalities,
231 municipalities were selected as a large city. Generally, thesemunicipalities include Tokyo’s 23 Wards, 47 prefectural capitals, andregional core cities. There were 1,510 municipalities selected as asmall city.

Keisuke Kondo is a senior fellow at the Research Institute of Economy, Tradeand Industry. He holds a Ph.D. in economics from Kobe University. His researchinterests span a wide variety of empirical topics on urban and regional
economics, such as agglomeration economy, spatial spillover effects, local
labor markets, and interregional labor migration. His recent research has been
published in academic journals including the Journal of Economic Geography
and Papers in Regional Science.

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