In April 2023, the Japanese government introduced a new policy offering 1 million yen (US$6770) per child to families who move out of greater Tokyo and relocate to rural areas of Japan, as part of Prime Minister Fumio Kishida’s Garden City Nation Project. The initiative is a response to Japan’s challenges with urbanisation in city centres and declining population and fertility rates as the country attempts to reverse its demographic decline.

This new policy comes on top of existing relocation support incentives, which provides a subsidy of 1 million yen for individuals working in local areas and an additional 2 million yen for starting a new business, totalling to a 3 million yen handout per participant.

Officials hope that the cash payout will encourage 10,000 people to move outside of greater Tokyo by 2027 and relieve demographic pressures on the metropolis of 37 million. But six months into the initiative, population trends show no significant developments.

Since April 2023, a decreasing amount of people are moving out of greater Tokyo. In June 2023, 70,054 people left greater Tokyo, compared to 65,568 people during the same time in 2022. Out of the 47 prefectures, 45 experienced a decline in incoming residents in June 2023. While the Garden City Nation Project may have alleviated the decline in certain prefectures, it raises a crucial question — why implement an ineffective policy in the first place?

The ineffectiveness of the policy may stem from struggles finding employment. To receive the monetary benefits, at least one person in the household must start a new business in the new town, get a job at a small- or medium-sized company or continue their previous job remotely. This poses challenges for many families, given that the employment structure of Japan is based upon in-person labour and concentrates career opportunities in Tokyo.

Subsidising people to move away from the capital is counterintuitive to the overarching goals of the policy. Kishida’s commitment to achieve balanced economic development nationwide functions as a political gesture for rural communities, rather than a pragmatic strategy addressing the genuine needs of the Japanese workforce.

It is difficult for both people in a household to find employment while maintaining a comparable standard of living. The average monthly income in Tokyo in 2022 was 375,500 yen, compared to 247,600 yen in Aomori prefecture — the lowest of all prefectures in Japan. Though the 1 million yen can be used to compensate for reduced incomes, the monetary handout is oftentimes used up quickly, considering relocation costs, finding a new home and enrolling children in schools and educational programs.

Another reason why the policy appears to be ineffective may derive from requirements for families to live in the town for five years, or they have to pay the money back. Though this requirement aims to foster long-term commitment to regional development, this rule acts as a deterrent for families to use the initiative in the first place. The lack of flexibility makes it difficult for families to return to Tokyo if they lose their jobs or need to return for personal emergencies.

Despite challenges, positive trends and developments have occurred, notably in Okinawa. Okinawa has consistently attracted a growing number of new residents each month since the start of the 2023 fiscal year, with the exception of August 2023, which may be influenced by Typhoon Khanun and the school holiday season. From April to September 2023, Okinawa saw a 424 person increase of incoming residents compared to 2022.

Okinawa’s appeal lies in its warm climate, abundance of nature and slower pace of life — a combination that attracts those who are tired of bustling city life. Though other prefectures in Japan offer similar lifestyles, Okinawa stands out as a positive outlier, presenting a unique geographical and cultural allure that other prefectures may find difficult to replicate.

A shift in cultural preferences is taking root within the Japanese population. The Furusato Kaiki Shien Center, a non-profit organisation in Tokyo dedicated to supporting individuals interested in relocating to rural areas, witnessed a surge in engagement in the past few years. In 2021, the centre received 49,514 consultations through emails, phone calls, seminars and one-on-one sessions. This figure notably increased by 29 per cent in 2022, with individuals in their 20s–40s constituting 70 per cent of the consultations.

This growing interest reflects a changing mindset — a growing desire to achieve a better work–life balance, contribute to their local communities and embrace a more organic lifestyle. This shift in public opinion holds promise for the Japanese government’s relocation policies and may provide the extra push for families to take the first step out of Tokyo.

For the relocation policy to unlock its full potential, a more nuanced approach is required. Since economic barriers act as the biggest obstacle for both relocation and family expansion, the Japanese government should provide a monthly allowance of 50,000 yen per child on top of the upfront 1 million yen payout. The 50,000 yen comes from the average monthly costs of raising a child — 45,306 yen per month. Not only would this monthly support cover the monthly expenses associated with childcare, but would also serve as a catalyst for parents to invest more in their children’s human capital.

Embedding tax breaks, providing extensive job placement support and promoting remote work opportunities will be crucial. By alleviating financial strains and reshaping the corporate structure of Tokyo, this would create an environment conducive to rural development. As interest in relocation out of the capital remains high, it is imperative to recalibrate the policy to align with the evolving needs of the Japanese population.

Uno Kakegawa is Research Fellow in the Centre for Japanese Research at the University of British Columbia.