Michigan Gov. Gretchen Whitmer established a group in June 2023 to study ways the state government could increase Michigan’s population.[1] Economists have studied the causes of population growth for decades, and this article presents the current research on what makes places grow. It also discusses the specific public policies economists have identified that can help create thriving, growing areas.
There are several reasons to care about population growth. First, population growth may be an indicator of the underlying desirability of a location. In other words, an area with healthy population growth is likely doing something right, or at least not doing enough wrong to discourage people from wanting to live and do business there. People are said to “vote with their feet,” so cities and states that are growing faster relative to others can tell us something about the places people prefer to populate.
Second, positive population growth produces all sorts of positive externalities. More populous areas provide more opportunities for community and friendship, and also can support specialized amenities. For example, denser areas are more likely to support racquetball courts, unique ethnic restaurants, cultural amenities or other niche businesses and opportunities. There’s also a positive feedback loop, whereby the more densely populated an area becomes, the more opportunities there are and the more attractive it is for even more people.
Third, more workers in an area make it more productive and innovative, improving living standards. A lack of workers limits economic output and growth. Currently, falling labor force participation in the U.S. presents a challenge — it can limit production and innovation, reducing potential economic growth. Economists with the Federal Reserve Bank of Kansas City show in a recent paper “that slower population growth and an aging population may put downward pressure on labor force growth for some time.”[2]
In short, a growing population provides some indication of the overall health of a state. Recent population trends in Michigan are worrying. From 2010 to 2020, the state’s population grew by only 0.19%, fifth worst in the nation and nearly three times slower than the national median of 0.55%.[3]
Why do some states grow faster than others? Economic research sheds some light on the subject. This article reviews and summarizes almost 100 publications related to this topic, primarily drawn from peer-reviewed, academic sources and government publications. For academic articles, the focus was on well-cited papers and those published in highly ranked journals. Given the nature of research to build on previous work, more recent papers were prioritized to provide the most accurate picture of the current state of knowledge on topics related to state-level population growth.