City size distribution and utility of living: Exploring intercity migration in Japanese urban systems

City size has both positive and negative impacts on residents’ living utilities, owing to agglomeration and congestion effects. This study aimed to estimate residential welfare, considering migration, agglomeration, and congestion effects across 221 urban areas in Japan in the 2010s. Our findings showed the following: 1) migration from small cities to large cities worsened congestion in large cities and diminished agglomeration effects in small cities, leading to an overall decrease in residential welfare; 2) the reduction in agglomeration effects in small cities outweighed the negative effect of increased congestion in large cities, leading to a widening disparity in utility between large and small cities and potentially encouraging further migration to large cities; and 3) migration increased the income of landowners in large cities but decreased the utility of residents in both large and small cities. Findings 1) and 2) are novel insights identified through empirical analysis targeting Japanese cities. This is partly attributed to the relatively fewer land use regulations in Japanese cities compared with large cities in Europe and the United States, which have been the subjects of previous empirical studies. On the basis of these findings, the study discusses the legitimacy of policy interventions in peripheral developments from the perspective of improving residential welfare, for example, enhancing the attractiveness of industrial locations through infrastructure investments. These insights offer new perspectives for regional policy analysis.