Let me talk today about 🧽 sponge cities. When I discuss fertility decline, I often get the following comment: “As the population falls, housing prices will also fall, which will help with fertility and the system will self-correct.” Perhaps not. As the population falls, we are observing a phenomenon called sponge cities (see the map from Japan: do you know which city is the green spot?). There are even more incentives for the population to concentrate in large cities (e.g., Tokyo or Seoul) for three reasons: 1️⃣ Jobs. As the population shrinks in many regions, jobs disappear with it. Yes, you can telecommute for some jobs, but there are fewer of those than you’d think. A plumber cannot telecommute. 2️⃣ Services. As the population shrinks in many regions, services like grocery stores, hospitals, schools, etc., also disappear. I’ve seen this in many villages in Europe: population falls below a threshold, and the local supermarket closes. This creates a negative spiral that’s hard to break. 3️⃣ Amenities. As the population shrinks, amenities like bars, theaters, and restaurants vanish too. And it turns out people, especially younger cohorts, care more about amenities than about jobs. You might be telecommuting, but you cannot telebar. So it might well be the case that housing prices won’t fall in sponge cities, and that this won’t help fertility. Self-correcting mechanisms often don’t work.