A SYSTEM DYNAMICS ANALYSIS OF THE DEVELOPMENT IN NORWEGIAN
RURAL COMMUNITIES
A Preliminary Model with Emphasis on Migration
by
Leif Jarle Asheim, Dag Morris Mydland,
Senior Research Associate, Research Associate,
Norw. Agri. Econ. Res. Inst. Finnmark Regional College
P.O. Box 8024, - Follums vei, N-9500
Oslo, Norway Alta, Norway
ABSTRACT
The purpose of this paper is to explain the expansion and
contraction of the population in Norwegian rural communities.
A preliminary system dynamics simulation model with emphasis
on migration have been developed portraying a population
sector, and sectors for kindergarten, education; housing,
business, resources and regional policy. The results of our
simulations is being compared to actual development’ in eight
communities for the period 1976 to 1988 with respect to the
total number of employed in the private sectors as well:as the
number of unemployed and the number. of migrants.
Historically and in our ‘simulations the communities are
relatively attractive in total up until 1982. During the last
part of the seventies there was relatively low unemployment and
the population increased due to immigration. The local labour
market, however, was not sufficiently large to absorb increases
in the supply of labour in the early eighties. Consequently
unemployment increased, leading first to emigration and reduced
unemployment and thereafter to higher unemployment due to the
smaller local market.
On the basis of the model, we have suggested four strategies
for stabilization of the population in the communities. In a
period of declining population, a strategy that seeks to
compensate for declining local markets by producing for
external markets may reduce the negative effects and lead to
a stabilization of the population.
1. THE PROBLEM
The starting-point for this paper has been the research project
"Development and Opportunities in Norwegian Rural Areas". This
project has been financed by The Agricultural Research Council
of Norway. The purpose of the project was:
SYSTEM DYNAMICS '93 a
“to gain insight into and knowledge about the factors
promoting or restraining development in rural areas,
changes in the population and maintenance of the
cultural, social and other welfare qualities". -
The project has been split into two parts:
~Analysis of the business development and the job creation
processes in Norwegian rural areas.
-System dynamics analysis of the population and the business
development in rural areas.
Here we shall deal with the second part which could be of
interest for government policy makers. We also hope it will be
of interest for researchers within the system dynamics
community working with rural development problems in industrial
countries.
The . data pave been collected from .8-..Norwegian rural
communities”. When selecting these communities considerable
thought was: given to choosing communities outside the area of
day commuting to regional centers, thatthe communities should
belong to the least central ones (group 0 according to CBS-
classification), and. that a relatively large part of the
population should live in areas with low population density
when compared: to county average. Also relatively -large
structural changes in business structure should have taken
place during the eighties, and agriculture or fishing should
have had a traditional strong position: in the communities.
2. THE POPULATION DEVELOPMENT IN-THE-RURAL COMMUNITIES
Figure 1 shows development of average number of people in the
conmunities for the period from-1976 and up until 1989.
Figure 1. The Norwegian rural population development
‘Average for the 8 selected rural communities
Nunber of people on Jan 1
T
“8 278 pwd a8 a0 08 708
Year
22 SYSTEM DYNAMICS '93
From 1976 to’ 1983 the population increased with around 100
persons. However during the following 6 years it was reduced
with around 200 persons i.e. a reduction of 4,9%. In order to
study changes in the population size we will first compare net
migration with net natural population change, that is changes
due to deaths and births. Figure 2 shows that the natural
population change is not much different from zero in the
beginning and that it falls slightly during the Baried
Figure 2. Net natura! population groweh and net migration
Average for the 8 selected rural communities
Change 1n-number of people
708 co coy "eee 2H "908 298
Year
—-Net naturel population growtn
~e_Net migration
The second curve in figure 2 shows that the net migration is
positive up until 1982 and thereafter negative. A small and
unstable improvement can be noted for the latest years. We have
considered the natural population change exogenous, and
concentrated the further work on changes in migration. In
figure 3 the net migration has been decomposed into immigration
and emigration.
Figure 3. Number of Immigrants and emigrants
‘Average for the B selected rural communities
Nurber of migrants per year
a
7978 1078 pons ey 1804 088 cory
i Year :
~aImnigrants Emigrants
SYSTEM DYNAMICS '93 23
The pattern of development seems to be that when immigration
is high emigration is low, and opposite. This suggests that the
communities are experienced as more or. less attractive in
different parts of the period.
3. THE LABOUR MARKET AND THE MOTIVES OF MIGRATION
Out of the different factors motivating migration, the
possibilities for employment and income seems most important.
We have therefore examined the number of potential employees
and number of unemployed in the communities. One of the curves
in figure 4 shows the trajectory of the number of executed
standard man-years in the private businesses in the four three
years periods between 1976 and 1988.
We do not, however, have the number of employees in the
government ‘sector since this was not covered by the project.
For governmental administration available data show a strong
growth in employment up until 1982. These data indicates that
total employment was relatively stable in the first three years
period, and that it increased in the second period 1979-82.
During the third period the employment may have stagnated
while it improved slightly in the last period 1985-88.
Figure 4. Unemployment and private business employment
Average for the 8 selected rural conmunities:
ca 27 388 ose 304 1908 cy
Year
‘The number of executed standard man-years
‘The number of unemployed
— Private business employment
—@- Unemployment,
The other curve in figure 4 shows the development of the number
of unemployed. During the last part of the 70‘s the number of
unemployed was relatively low, while the number of executed
man-years was relatively stable. The number of people, however,
increased due to net immigration. The first part of the 80's
showed an increase in unemployment even though the number of
executed man-years increased. It was still an increase in the
number of people in the communities due to net immigration.
Some of the increase in unemployment may also be due to
increased labour force participation of women.
24 SYSTEM DYNAMICS '93
From.the beginning of the 80‘s the immigration was reduced
while the emigration increased. During 1982 the net migration
became negative and during 1986 the population became smaller
than in 1976. From 1984 to 1987 we can register a reduction in
the number of unemployed, together with a.decrease in the
number. of people. Emigration was rather high during these
years. As emigration is reduced while immigration increases
slightly so that the curves are approaching each other in 1988,
unemployment again is increasing.
The figures considered together. suggest the existence of some
basic reasons for shifts that determine the population
development in the rural communities. Changes in the labour
market. seems to explain the changes in the population. The
possibilities for a job must be considered an important
migration motivating factor. We have also identified and
modeled other migration motivating. factors such as the
availability of housing, kindergarten and education. Together
with job opportunities these. factors determine the ‘total
attractiveness of the rural area.
4. FORCES IN THE RURAL DEVELOPMENT
Figure 5 illustrates how some actual factors in the rural
development are assumed to interact.
SUPPLY OF
RESOURCES.
EUPLOYMENT:
POPULATION
Figure 5. Tilustration of ceatrel feechack-Loops deteraioing
the developaeat of private busisess production
in Norwegian Rural Communities
Feedback-loops may be a tool to understand the forces of rural
SYSTEM DYNAMICS '93 2
development. The figure contains four loops, one positive with
a plus sign in the centre and three negative with a minus sign
in the. centre of the loops.
‘An increase in the population in these communities will lead
to a strengthened local customer base that will open up a
larger local market with possibilities for increased
employment. An increase in employment thus leads to reduced
unemployment and reduced emigration and increased immigration.
Thus a self re-enforcing or positive, feedback-loop.
The increase in production may, however, be so large that the
supply of resources will become a limiting factor for further
production increases. This is illustrated with the negative
feedback-loop in the upper’ left corner in figure 5.
The feedback~loop diagram in figure 5 has been used as a
starting-point for the system.dynamics model, a part of which
is. illustrated in the flow-diagram in figure 6. i
a) atomarrox
Figure 6, Flow-diagram for changes io population
due to unemployment affected migration
The migration in figure 6 is assumed to be determined by the
relative unemployment in the rural community which is expressed
as the actual unemployment relative to the unemployment in
reference periods. Since the unemployment was low and stable
during the first three years, the unemployment in 1976 are
assumed to indicate a reference condition on the labour market,
i.e. relative unemployment equal to 1.
26 SYSTEM DYNAMICS '93.
In periods with unemployment corresponding to the reference
unemployment the actual immigration and emigration will be
equal with the reference immigration and emigration. If the
actual unemployment inthe communities is larger than this
reference, the immigration is reduced, while emigration
increases. i
In many situations linear relations may not give a realistic
picture of the reality. It can be assumed that small changes
in: unemployment have a slight effect on migration and it will
only be affected when changes in unemployment are large. Thus
figure 7 illustrates such a non-linear relationship between
relative unemployment and subsequent effect upon migration:
error oF REIT
‘omovoruor on scoeatio#
0,25 ee
ao 4s as 4,95 2 "2,25
Figure 7. A soa-linear reletion between relative
unemployment aad sigration
The figure indicates that when unemployment increases with 25%
compared with the reference periode, the migration will change
with only 2%. With 75% change in unemployment, however, the
migration will change with around 703°. —
5. RURAL DEVELOPMENT AND MODEL TEST OF STRATEGIES
The simulations indicated that we had a self re-enforcing
development in the first three years period. The unemployment
was relatively low at the end of the 1970‘s. At the same time
there was net immigration into the rural communities a
development that lead to a larger local customer base. This
caused increased production in the local businesses. The
increase lead to a reduced unemployment and the motivation for
immigration increased further. The positive feedback loop in
figure 5 seems to be dominating the development from 1976 and
SYSTEM DYNAMICS '93 27
up until 1982.
The capacity limit for production, however,.was then reached.
At this point the negative feedback-loops were strengthened and
dominated the development (the feedback-loop in the upper left
corner of figure 5). This development lead to reduced business
investments, increased unemployment and the number of people
started to decrease after.1983.
It seems, however, that the positive feedback-loop again takes
over the dominance after 1984, but now with a self re-enforcing
decreasing development in the number of people. From.1984 there
is.a stagnation in production”, increased unemployment . and
increased emigration reduced population and local customer
base.
By increasing the period of analysis with two extra three years
periods, i.e. up until 1995, the simulations show that the
number of people continue to decrease. What efforts could have
been undertaken at the beginning of the eighties to reverse the
emigration? The simulations indicates that the reduced resource
base in the rural communities has limited the production
increment from around 1982. To increase the import of resources
can, however, be unprofitable as long as it is primarily
produced for the base population of the communities. If the
customer base are increased by exporting goods and services it
may, however, become profitable to keep production at a level
preventing stagnation in business activity and increased
unemployment. In figure 5 this is illustrated by the two
feedback-loops on the right side.
The simulations indicate that the high unemployment leads to
the strong emigration from 1983 and throughout the eighties.
We must, in other words, ensure a certain employment level in
order to avoid net emigration. With this starting-point the
model has been used to compare 4 strategies for changing an
unwanted development.
One of the strategies has been called "Small scale business
development strategy" (Kvarv 1992), It consists.of, among other
things, expansion to different external markets..-If the
decrease in local population is compensated with stronger
emphasis on external markets the effect of an insufficient
local customer base could be counteracted. Thus the number of
employed could be stabilized. The simulations indicated that
the total customer base: in our rural communities has to be
increased with around 40% in order to maintain.a production
level sufficiently large to consolidate the employment. With
this level the net emigration is around zero and the population
stabilizes at 1983 level.
The model may also form a basis of studying what motivates
establishment. of new business activities in the rural
communities. A strategy for influencing this has been called
28 SYSTEM DYNAMICS .'93.
a "Job-creation strategy". Also a specification. of the
different sectors of production may give a possibility for
studying the relationship between the sectors and uncover where
the different efforts to increase employment most efficiently
could be put into action. This strategy is called "Business
sector strategy". The fourth strategy is called a "General
strategy for business development". It consists of, among other
things, changes in the level: of taxation, governmental
practical advise and extension concerning the establishment of
new businesses and different infrastructure investments in the
rural area. uM
6. CONCLUDING REMARKS
It is difficult to prove what is the right relationship between
a set of factors, and simulation can only indicate what
feedback-loops that dominates in the different periods. The
simulations only result in a pattern of development for the
modeled factors. Simulations, based upon the hypothesis about
the structural relationships assumed to be central in the
Norwegian rural comunities, have been compared with the pattern
of behaviour of the actual data. This way we have studied the
relationship between structure and behaviour and can indicate
what factors, and the relationship between them, that may
explain the population development in Norwegian rural
communities.
The simulations make it possible to study delays in the system,
The effects of such delays are often difficult to predict, but
they can prove to have an immense important influence upon the
behaviour. For instance when a need for more houses arises,
there has to be a certain delay before decisions are made,
permissions are given and houses are built. It will also take
some time: before potential migrants will perceive the changes
in supply of houses. How attractive it will be to-live ina
rural community is therefore a number that will be changed with
a certain sluggishness compared with the real attractiveness.
The relationship between the attractiveness of the rural area
and migration will,also be affected by commuting into and out
of the communities”.
A certain understanding of this kind of dynamics is a necessary
precondition for studying effects of certain state financed
labour market efforts. The simulation model can also contain
a larger set of inter-related factors than we are able to deal
with mentally in an efficient way. Thus it may be possible to
undertake a coordinated analysis of all factors thought
important for the population development in Norwegian rural
communities.
Implementing employment promoting efforts in rural Norwegian
communities are expensive, and it is not easy to measure the
outcome. Here simulation models may be a tool where strategies
SYSTEM DYNAMICS '93 29
and efforts may be designed and tested. This could be of
interest for training government policy makers. To build and
apply such models imply an alternative to studies based upon
"Action Research" that more..aims to change parts of the
development without first. having tested. the. underlying
theories. :
Simulations may often uncover causes and effects that one were
not aware of in the beginning. Our preliminary model
simulations. indicates that the market and the demand-for the
goods and services produced in the rural communities will
determine the long run population development there.
Recommendations for governmental engagement and strategies and
efforts to change the development, should take this as a
starting-point.
REFERENCES
Mydland, D.. M. (1992): Systemdynamisk analyse av utvikling i
norske bygder. En modellskisse med vekt pa flytting til og fra
norske bygdekommuner. (A system dynamics analysis of the
development in Rural areas of Norway. A preliminary model with
emphasis on migration). Norsk institutt for landbruksgkonomisk
forsking, Finnmark distriktshggskole. Melding B-019-92.
Kvarv, S. (1992): Neringsutvikling og jobbskaping i norske
bygder. Studier i 8 kommuner. (Economic development and new
employment opportunities in rural areas of Norway. Studies in
eight municipalities). Norsk institutt for landbruksgkonomisk
forsking. Melding. A-019-92. i
NOTES: -
1. The following communities were selected: Asnes and Os in Hedmark County, Etnedal and Nord-
Fron in Oppland County, Leksvik and Heylandet in Nord-Trendelag County and Nesna and Steigen
in Nordland County.
2. The curve in figure 7 only indicates the jain tendencies in the relationship between
unemployment and the subsequent effect on migration. The form of the curve is in other words
not a result of model tuning.
3. This stagnation is only indicated in the simulation results and not documented in the
data. In accordance with the development of other factors (e.g. stagnation in executed
standard man years) during the same period such a developments seems likely.
4. Based on a somewhat limited material we have.in this preliminary model assumed that the
commuting is constant during the period of analysis.
30 SYSTEM DYNAMICS '93,
