Rural depopulation, labour market accessibility and housing prices

In Norway, as in the other Nordic countries, there has been an increasing tendency to centralization (Nivalainen 2003). The typical situation in Norway is that major cities and their surrounding suburban areas have in the long run captured a large proportion of the total population. According to Statistics Norway (Brunborg 2009) the proportion of people living in the most central municipalities increased steadily from 61 per cent to 67 per cent from 1980 to 2009. There are many possible reasons for this tendency. One obvious reason is the relocation of jobs in favour of urban areas, giving these areas better job opportunities. For example, some peripheral towns in western Norway developed many decades ago due to the presence of low-cost hydroelectricity, which attracted power-intensive industries. The comparative advantage of such locations lost significance as the transportation costs of power fell. This resulted in reduced employment in manufacturing, leading to a process of economic decline and depopulation. In general, the relocation of jobs in favour of urban areas may be due to combinations of Marshall’s three sources of agglomeration economies: knowledge spillovers, non-traded local input and local skilled labour pool (McCann 2013)