The Problem of Population Loss
Do people perceive population loss as a problem for their local community?
Population loss has severe consequences for local communities. Declining populations often coincide with shrinking economic opportunities, aging workforces, and the erosion of vital local services such as hospitals, public schools, and infrastructure built for larger populations. How to help people in these places is a central question of place-based economics.
But the consequences of population loss can unfold gradually, making them difficult to recognize as they occur. Unlike discrete shocks — such as the COVID pandemic — which generate immediate momentum for action, the effects of population decline can be subtle and diffuse enough to lack the kind of urgency that motivates policy responses.
This raises a question: do affected residents themselves recognize population loss as a problem? Survey data suggests that they do.
The demographic problem is real
Population loss is undoubtedly a widespread issue. While demographic change has profound effects on a local economy and community, it’s unclear whether individuals actually perceive population loss in the first place.
We can test this question using a nationally representative survey of 2,005 respondents conducted by EIG and Echelon in 2022.1 In that survey, individuals were asked: “How much of a problem are each of the following in your local area these days, if at all?” One of the options was “population loss.” Importantly, we know the zip code where each respondent lives, which we then match to county-level economic and demographic data.2
The data show that local perceptions match demographic reality. Eighteen percent of respondents living in counties that lost population between 2010 and 2020 identified population loss as being a major problem for their community, versus 10 percent of those living in growing places. Including those who see it as a minor problem, 54 percent of respondents in declining counties view population loss as an issue, versus 34 percent in growing counties.
The more a county’s population shrank over the decade, the more likely its residents were to report population loss as a problem. In the top 10 percent of the fastest growing counties, 7 percent of respondents report that population loss is a major problem for their communities. In the fastest shrinking counties, that number rises to 23 percent.
Regression analysis demonstrates population loss is a non-linear problem. Among growing places, 1 percentage point slower population growth is associated with a 0.2 percentage point increase in the probability that survey respondents identify population loss as a major problem. In shrinking counties, the effect is 5 times larger.
Nobody’s business
Residents of shrinking communities don’t just recognize population loss in the abstract.
The survey data also shows that individuals identify specific economic symptoms that typically accompany demographic decline.
One of the most important consequences of population loss is lack of dynamism. A growing body of scholarship shows that demographic decline is linked to lower rates of business formation.3 Fewer residents doesn’t only mean fewer entrepreneurs, but also a smaller labor force. Both issues make it less likely that a community will be able to generate startups.
The survey data indicates that residents do perceive this connection between population loss and less dynamism playing out in real life. Respondents were asked how the number of new businesses has changed over the past 10 years, as well as how the availability of restaurants, stores, and entertainment options has evolved. In both cases, individuals living in areas with slower population growth are more likely to report that the number of businesses declined over the period.
What’s more, another survey question illustrates that the lack of new businesses rises to the level of concerning in demographically struggling places. Individuals reported whether a lack of new businesses or investment is a problem in their community, and regression analysis shows this is statistically significant related to population change. A 1 percentage point decrease in population growth is associated with a 0.79 percentage point increase in concern about insufficient investment and a 0.49 percentage point increase in concern about business decline.
In short, individuals in shrinking places do understand they have fewer new businesses and that this is a problem.
Wider problems
Unsurprisingly, the lack of investment in shrinking places is not an isolated problem. Another unavoidable result of demographic decline and lack of investment is that the tax base erodes. This in turn causes other deteriorations in quality of life. Population loss can also lead to local vacancies as some neighborhoods empty out and businesses shutter without replacement.
Our survey results are consistent with all of these issues. Regression analysis shows individuals in shrinking places are more likely to report that vacancy, the availability of good jobs, and poor public service are a problem in their community, and the effect is statistically significant. School quality is directionally worse, though not statistically significant.
Interestingly, people in declining places are very likely to report that both there were not enough workers (77 percent of respondents), and not enough good jobs (73 percent of respondents).
People living in declining places are less likely to support immigration than those living in growing ones.
Encouraging immigration to distressed regions is one of the main policy levers available to address population loss and its associated economic consequences.4 Yet residents of the places most in need of immigration are among those least likely to support it.
Residents of shrinking communities are less likely to view immigration as a net positive for the local or national economy, and are less supportive of temporary seasonal migration and immigration designed to address labor shortages. They are less likely to support high-skilled immigration even if it is framed as supporting entrepreneurship.
Support for immigration remains lower among those living in shrinking counties when controlling for urban versus rural status, political affiliation, gender, and educational attainment, suggesting that other factors play a role.
The contradiction between recognizing population loss as a local problem and being more likely to oppose a viable remedy poses a real challenge for policymakers.5 Well-designed place-based programs are unlikely to succeed without a corresponding effort to build public understanding of immigration’s role in reversing economic decline.
Still, there is reason for optimism. Support for high-skilled immigration remains strong: 61 percent of residents in shrinking communities support it, compared with 71 percent in growing ones. Policymakers should address the sources of opposition in declining areas, but this relatively high amount of baseline support suggests that efforts to expand high-skilled immigration in these regions may face only limited resistance.
See our github with replication code here.
We choose county over zip code for analysis as counties are representative of a broader community, while zip codes better represent a neighborhood.
We at EIG have a proposal for one such approach: https://eig.org/heartland-visas-a-policy-primer/
The survey did not ask about support for cross-state migration. Residents of declining counties may be more welcoming of U.S. born residents.
https://substack.com/@aaronruby/note/p-198323227?r=7jhui4
Despite needing more people, bringing immigrants in would have more of a change effect on the overall culture of a place than immigration to places with larger overall populations, which probably explains some of the fear. People want their town/ village etc to be what they remember it to be but a better version of itself. They don’t want it to be different. If they wanted different, they would have already probably moved themselves. People who live in areas with larger populations are already used to the variety of people of different cultures among them and they feel less personally threatened.