Does Google remove the PageRank coming from links on pages that no longer exist?

Matt's answer:

CUTTS: Robert Enriquez from Charlotte asks a good question. “Websites lose back links due to other websites going out of business or closing, for example, GeoCities or AOL member pages. Does Google remove the back link juice that once came from these pages?” The short answer is, “Yes.” I mean, if you think about it, if there’s no GeoCities page live on a Web anymore then the odds of person coming from a GeoCities page is zero and PageRank, in some sense, is a model of how a random surfer would go around on the Web following links. So, if the page disappears, you don’t want to just keep flowing PageRank from that page forever. That might open up some spam loopholes as a possibility. But also you don’t want to just have these links be stale and say, “Well, this guy got one link from GeoCities in 1998, so he keeps getting PageRank forever.” Typically, what we do is we crawl the Web, we extract the WebGraph, we run PageRank over that, and then, if websites come in or dropout then that might have change PageRank a little bit temporarily. But, in general, it usually stabilizes at a pretty stable state. And that steady state holds through whether, you know, a few Web pages disappear or a few new Web pages come in for the most part. Whenever you have something big like GeoCities disappear then that might affect a few sites quite a bit if that was their biggest PageRank link. But in general, even taking out a large fraction of the Web, it turns out the other PageRanks don’t tend to change all that much. So, in order to prevent things from becoming stale, we tend to use the current link graph rather than a link graph of all of time. It’s an interesting idea, we could explore it more down the road. But the short answer is, “I wouldn’t count on a link from GeoCities counting for PageRank that much in the future.”

by Matt Cutts - Google's Head of Search Quality Team

Original video: