Castilla y León faces acute demographic challenges, characterised by sustained natural population decline and high levels of youth outmigration. These trends are driving the overall population decline and are contributing to population ageing. As a result, the region is experiencing growing labour shortages and increasing mismatches between the skills of the workforce and the needs of employers. These trends also reduce fiscal capacity and undermine the long-term viability of public service delivery. Depopulation and ageing are projected to continue in the coming decades, posing risks to the region’s economic resilience and investment capacity. Addressing these challenges requires a comprehensive and forward-looking policy response to promote the long-term economic sustainability of the region. including measures to retain and attract talent, improved use of multi-level governance tools for regional attractiveness and better alignment of education and training systems with evolving labour market demands.
Preparing for Demographic Change in Castilla y León, Spain
Abstract
By 2050, two-thirds of EU regions, including Castilla y León, are expected to have smaller populations than in 2019, with nearly 90% experiencing a higher median age. Low fertility rates, outmigration, and an ageing population threaten to reduce the workforce, lower tax revenues and increase per capita costs of providing infrastructure and essential services, creating a “scissors effect” where revenues shrink as expenditures rise (OECD, 2022[1]). In Castilla y León, these dynamics are particularly acute, with the outflow of young talent and a growing elderly population straining healthcare systems, intensifying labour shortages and hindering economic growth. Addressing these challenges requires targeted policies to address and adapt to the demographic reality (Box 2.1), by creating opportunities to retain talent, adjusting spatial planning to meet territorial needs, fostering efficient operation across all levels of government or guaranteeing access to services to ensure a sustainable and inclusive future for the region (OECD, 2024[2]; European Commission, 2024[3]).
By 2050, two-thirds of EU regions are projected to have less population than in 2019, while nearly 9 of 10 regions are projected to have a higher median age. Population shrinking, ageing and outmigration of youth is negatively impacting many regions and risks leaving these places in a development trap.
Harnessing talent in Europe’s regions
In recognition of this challenge, the European Commission issued the Communication Harnessing Talent in Europe’s Regions in January 2023. This Communication led to the establishment of the Talent Booster Mechanism and the Harnessing Talent Platform, which aim to support regions facing a sharp decline in the working age population, a low and stagnating share of people with tertiary education and a significant departure of young people. These initiatives offer tailor-made, place-based and multi-dimensional solutions to support regions most affected by the demographic transition.
Source: European Commission, Talent Booster Mechanism, https://ec.europa.eu/regional_policy/policy/communities-and-networks/harnessing-talent-platform/talent-booster-mechanism_en (accessed on April 2025).
Smart adaptation of regions to the demographic transition
Pillar 2 of the Talent Booster Mechanism targets regions at risk of falling into a ‘talent development trap’, which are regions that have historically faced a high rate of departure of young people. Ten regions, including Castilla y León, were selected based on an open call to receive support to address their demographic challenges with a targeted study focusing on land use and spatial planning, multi-level governance, subnational government finance and public investment, and public service delivery.
Adapting to demographic change in order to remain attractive
Meeting the challenge of demographic change requires focusing on both adaptation and attractiveness. Adaptation strategies seek to ensure policies, governance structures and public services are aligned with a changing demographic structure. Attractiveness initiatives aim to address quality of life factors to create an attractive environment and opportunities for current and potential residents.
These approaches reinforce one another:
Adapting land use to be more efficient can not only make public services easier and less costly to provide but can also transform neighbourhoods into more attractive and lively environments that better serve current needs and attract residents and visitors.
Adapting multi-level governance structures, public finances and investment in line with population changes can help to limit fiscal pressure from population ageing and facilitate more efficient public services, creating fiscal space for investment in attractiveness.
Adapting public service delivery through digitalisation and mobile solutions, for example, can keep costs in check while also attracting younger populations and remote workers seeking residential mobility.
The necessity of adaptation thus becomes an opportunity to rethink and improve what makes places attractive and sustainable in the long-term.
Source: European Commission, Harnessing talent in Europe’s regions, https://ec.europa.eu/regional_policy/information-sources/publications/communications/2023/harnessing-talent-in-europe-s-regions_en (accessed on April 2025); European Commission (n.d.), Talent Booster Mechanism, https://ec.europa.eu/regional_policy/policy/communities-and-networks/harnessing-talent-platform/talent-booster-mechanism_en (accessed on April 2025); European Commission, Harnessing Talent Platform, https://ec.europa.eu/regional_policy/policy/communities-and-networks/harnessing-talent-platform_en (accessed on April 2025).
The report is structured into five chapters, each addressing key dimensions relevant to demographic change. Chapter 1 presents the assessment and main recommendations of the report. Chapter 2 sets the stage by reviewing Castilla y León’s socio-economic context, including the main labour market trends, institutional arrangements, and overarching policy framework. Chapter 3 delves into land use, exploring spatial planning, zoning and sustainable urban development strategies. Chapter 4 examines multi-level governance (MLG), subnational government (SNG) finance and investment, focusing on the fiscal and administrative mechanisms. Finally, Chapter 5 assesses the delivery of key public services, highlighting the efficiency, equity and effectiveness. Together, these chapters provide a comprehensive analysis of the challenges and opportunities to help Castilla y León adapt to the demographic challenge.
Understanding the socio-economic landscape of Castilla y León is crucial for identifying the region’s opportunities and challenges. This section provides a comprehensive overview of Castilla y León’s geography, economic structure and current and future demographic trends, offering essential context for policymakers to identify patterns that shape regional growth and inform strategic policy action, on which the next chapters will elaborate further.
Castilla y León is a vast and sparsely populated region
Castilla y León is one of the 17 Spanish Comunidades Autónomas, equivalent to OECD large (TL2) regions. It is a landlocked region in the north-eastern part of Spain, neighbouring Portugal and the regions of Madrid, Castilla-La Mancha, Extremadura, Galicia, Asturias, Cantabria, the Basque Country, Aragón and La Rioja. Castilla y León is surrounded by mountains (the Cantabrian Mountains to the north, the Sistema Central to the south and the Sistema Ibérico to the east) and comprises the northern part of the Inner Plateau (in Spanish, Meseta Central), a large, elevated plateau in central Spain. The region is subdivided into nine small (TL3) regions (or Provincias), two with a city of more than 250 000 (Palencia and Valladolid), five with a city of 50 000 to 250 000 inhabitants (Ávila, Burgos, León, Salamanca and Zamora) and two remote (Segovia and Soria) (Fadic et al., 2019[4]).
In 2023, Castilla y León had a population of approximately 2.4 million, representing 5% of Spain’s total population and making it the sixth most populous region in the country.1 However, as the largest TL2 region in Spain and the third largest in the EU2, spreading over 94 224 km², Castilla y León has one of the lowest population densities in Europe, with just 25 inhabitants per km². Across provinces, the population distribution is uneven. Valladolid hosts one in five inhabitants in the region (22%), followed by León (19%), Burgos (15%) and Salamanca (14%). The provinces of Zamora, Ávila, Palencia and Segovia each account for 7% of the regional population, while Soria represents the smallest share (4%).
Castilla y León has 2 248 municipalities, the largest being Valladolid, the de facto region’s capital city with close to 300 000 inhabitants in 2022. However, in Castilla y León nearly half of the municipalities (48% of them or 1 083) have less than 500 inhabitants and one-third of them have less than 100 inhabitants, limiting the economies of scale in the public service provision at the local level (Figure 2.2).
Population (persons) by municipality, 2023
Source: OECD calculations based on population data from the Junta de Castilla y León, https://conocecastillayleon.jcyl.es/web/en/geography-population/population.html (accessed 24 October 2024).
Structural challenges hold back Castilla y León’s economic potential
In 2022, Castilla y León’s GDP per capita stood at 96% of the national average, positioning the region below six other Spanish regions and in the lower half of the 403 OECD TL2 regions.3
The regional economy is relatively specialised in lower value-added activities
The relatively lower income levels can be partly attributed to the region’s industry structure (Table 2.1). Castilla y León exhibits a relatively lower employment share in high-value-added sectors that typically generate higher income levels, such as professional services, industry and ICT-related activities. Specifically, the share of total employment in these sectors is 2.5 percentage points below the national average and 7.3 percentage points below the EU average. Conversely, employment is more concentrated in lower value-added sectors, such as agriculture, where the regional employment share exceeds the national average by 3 percentage points. Agriculture plays an even more central role in the economy of the most rural provinces of the region (Box 2.2).
Share of employment by economic activity (in %), 2021
Source: OECD Regional Economy Database
The agriculture sector plays an important role in Castilla y León’s economy. Agriculture accounted for over 10% of employment in Zamora, Segovia, Ávila and Soria in 2021. Even in the capital province of Valladolid, the employment share in agriculture remained at 3.7%, above the national average (3.6%). The region benefits from a long-standing tradition of high-quality production and has developed a competitive advantage in premium local products and sustainable farming practices in both domestic and international markets, especially in beef and wine production (Consejo Económico y Social de Castilla y León, 2023[5]).
Beyond agriculture, the synergy with the tourism industry strengthens the rural economies by supporting job creation in related sectors, from hospitality to agri-food services. Castilla y León’s landscapes and historical heritage further enhance its touristic appeal, making tourism a growing driver of economic activity in the region. Two prominent examples are the several wine routes available in the region and El Capricho steakhouse in Jiménez de Jamúz (León), founded by local farmer José Gordon. Renowned for the exceptional quality of the meat sourced from the owner’s farm, El Capricho has gained international recognition, ranking second in the world and first in Europe in the World’s 101 Best Steak Restaurants list. Its reputation attracts visitors from around the world.
The regional government of Castilla y León recognises the strategic importance of agriculture and has implemented policies to support its long-term sustainability. These include initiatives to foster entrepreneurship, facilitate inter-generational renewal, and ensure access to essential resources. However, the sector faces increasing challenges linked to water availability, a critical resource for agricultural production. Climate change is expected to exacerbate water scarcity in the coming decades, requiring strengthened water management strategies to enhance efficiency and resilience. Addressing these challenges will be essential to safeguarding the competitiveness and sustainability of agriculture in the region.
In this context, significant investment efforts have been undertaken by the Ministry of Agriculture, Fisheries and Food (MAPA), in collaboration with the regional government, to advance the modernisation of irrigation systems in Castilla y León. These initiatives promote a more efficient use of water and energy resources in production systems that are fundamental for consolidating the regional agri-food sector and supporting the socio-economic development of rural areas.
Source: OECD Regional Economy Database, Turismo Castilla y León (2024), www.turismocastillayleon.com/cm/facm/141164/192082-Folleto_RutasVino_JCYL_FEB_24_ES-EN_compressed.pdf (accessed 8 February 2025).
Castilla y León faces severe mismatches in its labour market
While Castilla y León’s overall labour market performance is above the national average, with a larger share of employed among its working-age population and a lower long-term unemployment rate (Figure 2.3), the region also suffers from severe skill mismatches.
Share of the working-age population employed (in %), 2023 (left); long-term unemployment rate (in %), 2023 (right)
Source: OECD Regional Economy Database.
The region faces greater difficulties filling vacancies than other regions in Spain, with 1.5 times more vacancies per unemployed than the national average in 2022 or in other words a 1.5 times larger overall labour market tightness. This contrasts with Extremadura, a region facing similar demographic challenges, where labour market tightness is only 0.6 times that of the Spanish average.4
The labour market tightness is most pronounced among technicians and associate professionals, where it is twice as large as in the average occupation, as well as for professionals and plant and machine operators (Figure 2.4). Although the number of vocational education and training (VET) graduates has increased in recent years, the share of young people (25-34) with a VET qualification in Castilla y León stood at 24.6% in 2023, above the national average (23.4%) but well below the OECD (283) TL2 regional average of 39%, limiting the supply of technicians. The region ranks in the bottom 20% of OECD regions in terms of VET graduates, lagging behind regional averages in neighbouring countries such as France (38%), Portugal (41%), and Italy (51%).5
Labour market tightness relative to the regional average for the 3 tightest occupations, 2022
Note: Relative labour market tightness by occupation is calculated at the regional level as the number of vacancies over employment for a given occupation and region, divided by the regional labour market tightness average.
Source: OECD elaboration based on Lightcast and EU-LFS.
In Castilla y León, consistent with broader national trends, university education has traditionally been viewed as the primary pathway for skill acquisition. However, a significant proportion of graduates from the region’s four universities face limited local employment opportunities, leading to high levels of over-education and contributing to the region’s depopulation as those unable to find jobs leave. In 2022, over-education affected 43% of employed young people aged 16-29 in Castilla y León and was most pronounced among those aged 30-34, where it reached 51% (Consejo de la Juventud de España, 2022[6]). Over-education not only limits the employment prospects for highly qualified individuals but also exacerbates the job-finding difficulties of those with lower levels of education, further contributing to the region’s depopulation and undermining the region’s economic and demographic stability. To address the skill mismatch, Castilla y León has in place policies aimed at strengthening technical talent development and improving the alignment between secondary and tertiary education with labour market needs. These efforts seek to facilitate reskilling and upskilling opportunities to enhance workforce adaptability and reduce labour market tightness by promoting VET (Box 2.3).
As part of its National Recovery and Resilience Plan (NRRP), Spain is reinforcing and modernising active labour market policies, a particularly important initiative in the context of demographic shifts.
Key measures under the NRRP include targeted support for older workers, aiming to incentivise voluntary extensions of working life and the upskilling and reskilling of both the employed and unemployed, with a special emphasis on digital skills. Overall, the Spanish public expenditure on training per unemployed worker only amounted to 0.16% of GDP per capita compared to an average of 0.44% in OECD countries in 2019. There is, therefore, scope for increasing public spending on adult learning in the country. If carefully designed, individual learning accounts can help to assign individuals training rights and reinforce individual choice by tying these rights to the individual rather than to the job (OECD, 2024[7]).
Additionally, within the NRRP, Spain is building a stronger collaboration between firms and the education system to better align the workforce skills with labour market needs. Vocational education has been prioritised in partnership with businesses to address shortages in technical and technological occupations. Additionally, SMEs, particularly in rural areas, are actively engaged in these efforts, alongside educators and other relevant stakeholders (Consejo Económico y Social de Castilla y León, 2023[5]). In this direction, the Organic Law on Vocational Education will involve companies in the process of accrediting skills acquired through professional experience (OECD, 2024[7]). The NRRP also facilitates the use of administrative labour market data by researchers to improve labour market analysis and inform policy decisions.
At the regional level, Castilla y León has introduced the Programa Mixto de Formación Profesional Dual en Empresas, a dual vocational education and training (VET) programme designed to enhance the employability of workers while supporting businesses to meet their skill demands. The programme provides financial incentives to firms with operations in Castilla y León to formalise training contracts that facilitate professional practice. It also funds complementary vocational training initiatives that equip employees with both job-specific skills and transversal competencies required by employers.
Related initiatives from other Spanish regions could further guide policy action in Castilla y León. The Basque University+Business Strategy integrates business training, as well as joint education and knowledge-transfer projects, into university programmes. Regular evaluations of the relevance of study programmes could also help ensure that curricula evolve in line with changing labour market needs. For example, the Catalan quality assurance agency (AQU Catalunya) provides regular information on the relevance of educational programmes for the labour market, taking into account the labour market outcomes of graduates and the views of employers on the skills of recent graduates (OECD, 2024[7]).
Source: Plan de Recuperación, Transformación y Resiliencia. Componente 23. Nuevas políticas públicas para un mercado de trabajo dinámico, resiliente e inclusivo. Septiembre de 2023, https://planderecuperacion.gob.es/sites/default/files/2023-10/0310203_adenda_plan_de_recuperacion_componente23.pdf (accessed 10 February 2025)
Castilla y León is investing in enhancing regional competitiveness and growth
Targeted policy support aimed at enhancing the innovation capacity of local firms can foster productivity and economic growth and help retain talent in Castilla y León. In this direction, the 2027 Castilla y León’s entrepreneurship and innovation strategy (Estrategia de Emprendimiento e Innovación de Castilla y León 2027 in Spanish)6 focuses on creating new ideas and widening technology adoption across firms. Initiatives such as the Tractor Companies Programme can create learning opportunities among local firms and strengthen the spillovers to the local economy. Prioritising firm exchange within sectors recognised by their strategic importance, like the agro-industry, the development of innovative healthcare solutions or the silver economy, can contribute positively to the region’s productivity and economic growth. In these sectors, several actors are leading innovation in the region.7 For example, the AIR Institute is advancing innovation in the health and environment sectors with smart technologies like AI-powered crutches that monitor patient rehabilitation. ITCL is pushing the frontier in the healthcare and energy management sectors with computing systems that enable real-time monitoring in, for example, Intensive Care Units (ICUs) without relying on cloud-based services and that optimise energy usage with solar energy alternatives. CIDAUT leads projects that recycle high-performance composite materials from the aerospace industry. In the agri-food industry, CETECE collaborates with firms to develop healthier products, such as sugar-free cocoa biscuits and iodine-rich wakame cookies.8
The region is seeking to foster economic growth and create employment opportunities locally by attracting foreign direct investment (FDI), recognising FDI’s contribution to regional productivity and innovation. Despite progress in recent years, FDI accounted for only 0.3% of the total FDI in Spain9 in 2023, down from 1.4% in 2022, and was concentrated in services (49.2%), followed by industry (40.4%) and agriculture, forestry and fishing (10.4%). Under Castilla y León’s V Business Internationalisation Plan 2022-25, the regional government is implementing active policies to attract high value-added projects, particularly in the industrial, technological and service sectors. Castilla y León has created a robust framework for investor support, such as the Invest in Castilla y León initiative, supporting foreign-owned firms through the process, or the Multinationals Programme, created to build long-lasting ties with foreign-owned companies. These efforts are supported by substantial public investment in infrastructure and local skills development (Box 2.3). In addition, the region exploits its proximity to important ports and logistics hubs, the existence of a comprehensive free-of-charge motorways and dual carriageways network, and a rail network of high-speed lines connecting the region with Madrid in just 20 minutes (see Chapter 5).
Castilla y León has been depopulating and ageing fast
From 1990-2023, Castilla y León has lost 7% of its population. The decline in population has been constant, except for the early 2000s, when favourable economic conditions attracted an influx of population to the region and other parts of Spain (Figure 2.5). In contrast, the average OECD region experienced an increase of 27% in population over the same period. Castilla y León’s population decline ranks among the 10% strongest across 297 OECD TL2 regions.
Population change (persons) by year, 1990-2022
Source: OECD Regional Demography database (accessed 15 October 2024).
Across municipalities, the population decline has been widespread with over 86% of municipalities (1 938 out of 2 248) having seen a decline in population from 2003-22. Even the largest cities, including most provincial capitals, have depopulated (Figure 2.6).
Population (persons) in 2003 (x-axis) and 2022 (y-axis)
Note: Municipalities above the 45-degree line (in black) are growing in population, while municipalities below are decreasing.
Source: OECD municipal database.
The population decline in the region is primarily driven by two factors that are not compensated by the net arrival of international migrants. First, the region faces an increasingly negative natural population change, with deaths consistently outnumbering births. Second, persistent negative inter-regional mobility, with more residents relocating from Castilla y León to other parts of Spain than moving in, further contributes to the loss in population (Figure 2.7). The net inter-regional mobility is mostly driven by the young (15-29 years old), which account for 55% of the total net inter-regional mobility over the period. Castilla y León is the Spanish region with the largest inter-regional mobility among the young, particularly among university graduates, given the mismatch between their education level and the labour market needs (González Leonardo and López-Gay, 2019[8]). Net international migration in the region has been positive in recent years shaped by geographic proximity and linguistic ties and reflecting a steady recovery since 2016, aligned with the broader economic rebound after the debt crisis. In 2023, the immigrant population in the region was diverse in terms of origin, with 35% coming from Europe, 27% from South America, 19% from Africa and 8% from Central America and the Caribbean (Consejo Económico y Social de Castilla y León, 2023[9]). It is thanks to the positive net international migration that despite negative net inter-regional mobility among young people, Castilla y León experienced a positive net migration of individuals aged 15‑39 in 2022. The region experienced a 1.8% greater immigration than outmigration of young people, compared to 3.2% nationally and 1.3% in the EU27 average.10
Decomposition of population change (persons) by year, 2008-20
Note: The correction refers to a statistical adjustment to align the different data sources.
Source: OECD Regional Demography database (accessed 15 October 2024).
In addition, the population of Castilla y León has also aged more rapidly than Spanish and OECD averages. The number of inhabitants aged 65 and above in the region has increased, while the number of children and those of working age has decreased. As a result, the old-age dependency ratio of Castilla y León, defined as the number of individuals aged 65 and above for every 100 working-age inhabitants (15-64 years old) was the second highest among Spanish regions in 2023 (43), with the Spanish average at 31. In the OECD, across 327 TL2 regions, the average old-age dependency ratio stood at 28 and Castilla y León ranked among the top 5% of regions with the highest old-age dependency ratios.11
In the region, one-third of people over 65 lived in municipalities with less than 2 000 inhabitants and 19% lived in municipalities with less than 500 inhabitants in 2015 (Junta de Castilla y León, 2025[10]). However, ageing is not exclusively a rural phenomenon. Across provinces, those considered remote (Soria and Segovia) had lower old-age dependency ratios (38) than provinces with a large city (Palencia and Valladolid, with 41) and than the other five provinces with a small to medium-sized city (46). The lower old-age dependency ratios are partly explained as in Soria and Segovia, agriculture accounted for over 10% of total employment in 2021, well above the regional average of 6.6%, and the sector has attracted a significant share of immigrant workers, who tend to be younger.12
Population projections suggest the region will continue depopulating and ageing
By 2050, Castilla y León is projected to lose another 450 000 inhabitants, representing an 18% decline in its 2019 population. All provinces are projected to be affected by depopulation. While the mildest population decline is projected in Soria and Valladolid, the least and most populous provinces, respectively; Zamora is projected to see the sharpest one, with a decrease of 30% in its population (Figure 2.8).
Percentage change in population (%), 2019-50
Source: OECD calculations based on Eurostat population projections (https://doi.org/10.2908/PROJ_19RP3).
The demographic projections for Castilla y León point to significant population ageing. The population pyramid in 2050 is projected to have a much larger top than in 2023, showcasing a substantial increase in the population aged 65 and over, particularly those above 75. In 2050, the population pyramid base is projected to be smaller than in 2023, driven by a further contraction in size of the younger age population groups in the region (Figure 2.9).
Population and projected population, by age group and sex, 2023 and 2050
Source: OECD calculations based on Eurostat population projections (https://doi.org/10.2908/PROJ_19RP3).
Declines in the working-age population and increases in the population aged 65 and above are projected for all provinces (Figure 2.10), which will result in sharp increases in the old-age dependency ratio. In 2050, the projected old-age dependency ratio will range from 76 in Segovia to 104 in Zamora (Annex 1.A). This means Zamora will have more inhabitants above 64 than of working age (15-64 years old). Although Zamora is the province in Castilla y León projected to see the smallest increase in the population of 65 and above (by 8% compared to 51% in Valladolid), the province is projected to experience the sharpest declines in working-age population up to 2050 (with a decline of -44% in the 15-39 years-old population and a decline of -49% in the 40-64 years-old population) driving the rise in the old-dependency ratio.
Projected population change from 2019 (in %), by age group and province, 2020-2100
Source: OECD calculations based on Eurostat population projections (https://doi.org/10.2908/PROJ_19RP3).
These population trends will have consequences in the region’s labour market. In the coming decades, the difficulties in filling job vacancies in Castilla y León are projected to worsen, threatening the region’s economic outlook. The already high labour market tightness is projected to increase 31% faster than the national average by 2050. Castilla y León is projected to experience the tightest labour market across the other regions in the project (Figure 2.11), with only Extremadura projected to experience similar difficulties filling job vacancies over the same period.
Projected labour market tightness relative to national average given evolution of working-age population, 2022-2100 (2022=100)
Note: Projected labour market tightness, relative to national averages and normalised to 2022 (2022=100) for all the regions in the project for which data are available Castilla y León (ES), Extremadura (ES), Norte (PT), Nord-Vest (RO), Campania (IT), Central Slovakia (SK), Centre Val de Loire (FR) and Thessaly (EL). Labour market tightness is computed as the number of vacancies in 2022 divided by the projected working-age population in a year. National labour market tightness is the total number of vacancies in 2022 divided by the total projected working age population in a year for all regions in that country except for the region of interest. For each region and country, tightness is then indexed to the year 2022, which is set to 100. Finally, the regional projected change in labour market tightness is indexed to the national projected change in labour market tightness, which is set to 100.
Source: OECD elaboration based on Lightcast and population projections from Eurostat and the EU-LFS.
Spain underwent an extensive decentralisation process following the adoption of the 1978 Constitution, which resulted in the establishment of a quasi-federal system (Gobierno de España, 1978[11]). As a result of these reforms, Spain has transitioned over the past 40 years from being one of the most centralised countries in Europe to ranking among the ten most decentralised countries in the OECD (OECD/UCLG, 2022[12]).
The multi-level governance framework in Spain and in Castilla y León is complex
Spain has a three-tier system of subnational government, as established in Article 137 of the Spanish Constitution (Gobierno de Espana, 2013[13]). The system consists of 17 Autonomous Communities (ACs), 2 Autonomous Cities (Ceuta and Melilla), 59 provinces, and 8 131 municipalities (Figure 2.12). Each AC has substantial legislative and executive powers in areas such as health, education, and infrastructure.
Castilla y León, Spain’s largest Autonomous Community by area, comprises 9 provinces, 2 248 municipalities, and 6 175 singular local entities (Entidades Locales Menores), a form of sub-municipal administration. Inter-municipal co-operation is well developed in the region: over 90% of municipalities in seven out of its nine provinces participate in Mancomunidades, which are public bodies enabling joint provision of services across municipalities. As of 2024, Castilla y León had 235 Mancomunidades (Junta de Castilla y León, 2024[14]).
The multi-level governance system in Spain
Source: OECD elaboration based on (OECD/UCLG, 2022[12])
Regional governments are administered by the Gobierno autonómico, which typically comprises a regional parliament (Parlamento autonómico), an executive council (Consejo de Gobierno), and a president (Presidente autonómico). The regional parliament is elected every four years through direct universal suffrage and is responsible for enacting regional legislation within the competencies granted by the Statutes of Autonomy. The president, elected by the parliament, leads the executive and represents the Autonomous Community in its relations with the central government and other institutions.
Provinces serve a key role in co-ordinating municipal affairs and providing supra-municipal services. Provinces also provide legal, technical, and financial support to smaller municipalities and facilitate co‑ordination across levels of government. The governing body at the provincial level is the Diputación Provincial, a deliberative institution composed of councillors indirectly elected from municipal representatives within the province. These councillors, following local elections, elect a president who leads the provincial government.
Municipalities represent the local governance tier. Their governing body, the Ayuntamiento (local council), is composed of members elected every four years through direct universal suffrage. The council is headed by a mayor, elected by and from among the councillors, who leads the municipal executive. Municipal responsibilities include waste management, local infrastructure, urban planning, and cultural services.
Asymmetric allocation of responsibilities underpins Castilla y León’s decentralised governance structure
Autonomous Communities were created between 1979 and 1983 through a two-phase process. Seven “fast-track” regions received a broad range of powers immediately, while ten “slow-track” communities, including Castilla y León, gradually acquired similar responsibilities. Castilla y León gained autonomous status in 1983 with the approval of its Statute of Autonomy and expanded its powers during the 1990s and 2000s. By 2007, following a third reform of the Statute, the region had achieved the highest level of self-government permitted under Spain’s constitutional framework (Junta de Castilla y León, n.d.[15]).
Spain’s model of asymmetric decentralisation also extends to local governance. Article 140 and 141 of the Spanish Constitution guarantee the full legal personality and autonomy of municipalities and provinces, but their actual competencies depend on regional statutes and national legislation (Gobierno de España, 1978[11]). The Organic Law 7/1985 defines the core responsibilities of local authorities based on the principle of subsidiarity, ensuring that public services are managed by the level of government closest to citizens (The Congress of Local and Regional Authorities, 2021[16]). While all municipalities must provide basic services such as local infrastructure, policing, and waste management, those with more than 20 000 inhabitants take on broader responsibilities in areas such as social welfare, civil protection, and environmental management (OECD/UCLG, 2022[12]). However, the degree of devolution to municipalities varies significantly across Autonomous Communities and is shaped by regional statutes and administrative capacity. This variation is particularly relevant in the context of demographic decline, where small municipalities often face challenges in delivering services and rely on inter-municipal co-operation or provincial support (see Chapter 4).
Spain combines high subnational spending responsibilities with more limited fiscal autonomy
Spain ranks among the most decentralised countries in the OECD in several dimensions of subnational finance. In 2022, Spanish subnational governments accounted for 51.7% of total public expenditure, surpassing both the EU average (34.4%) and the OECD federal average (49.8%). Spain also shows particularly high decentralisation in the compensation of employees, with subnational governments managing 80.3% of this expenditure category – well above the EU (53.8%) and OECD federal (76.4%) averages. For public investment, Spain’s subnational share (65.1%) remains above the EU average (53.0%) but slightly below the OECD federal average (67.2%). In contrast, tax revenue decentralisation is more limited: only 35.7% of tax revenue is collected at the subnational level, compared to 41.6% in federal OECD countries. The same trend is observed in subnational debt, where Spain's share (25.8%) is slightly above the OECD federal average (24.5%) but well below the top-performing countries (52.0%). These figures highlight a pattern of high expenditure and service delivery decentralisation in Spain, with more modest fiscal autonomy in terms of revenue-raising and borrowing capacity.
Subnational shares of expenditure, compensation of employees, investment, tax revenue, and debt in Spain compared to EU and OECD federal country averages (2022)
Source: OECD Subnational Government Structure and Finance Database (2024).
Vertical co-ordination frameworks are evolving to support national and regional action on demographic challenges
Given the cross-cutting nature of demographic challenges, Spain has introduced a series of vertical co-ordination platforms to improve coherence across levels of government. Vertical co-ordination between Spain’s central government and the Autonomous Communities (ACs) is led by the Conference of Presidents (Conferencia de Presidentes), established in 2004 and chaired by the President of the Spanish Government. This forum brings together the presidents of the 17 ACs, the two autonomous cities, and the central government. Initially convened infrequently, meetings have become significantly more regular since the COVID-19 pandemic (OECD/UCLG, 2022[12]).
To strengthen policy action on demographic challenges, Spain established a dedicated General Commission for the Demographic Challenge in January 2020. This entity leads a multi-level governance model with a cross-sectoral approach (Figure 2.14).
National instruments such as the Territorial Innovation Centres Network (Red CIT) and the Territorial Cohesion and Transformation Fund (FCT) complement regional efforts by supporting innovation and financing projects to address demographic challenges (Box 2.4).
Territorial Innovation Centres Network (Red CIT)
Territorial Innovation Centres (CITs) are collaborative spaces designed to develop and share initiatives that contribute to the social, economic, and functional revitalisation of rural areas. They serve as platforms to promote the creation and development of activities in these territories, and to foster new forms of co-operation among local actors. CITs are a key instrument for promoting territorial balance through economic development, talent retention, and socio-economic innovation in rural regions. These centres work together as part of the Network of Territorial Innovation Centres (Red CIT).
The co-ordination and management of this network is led by the CIT MITECO-CIUDEN node, located in Cubillos del Sil, in the province of León (Castilla y León). This node operates under the Ministry for the Ecological Transition and the Demographic Challenge. Its mission is to activate, co-ordinate, and promote innovative projects, while encouraging synergies among the various territorial centres. It also facilitates the exchange of best practices and successful experiences, promoting collective solutions for innovation and transformation that support sustainable economic development across the territory.
Additionally, in Castilla y León, the provinces of León and Soria have signed administrative agreements with the Ministry to finance and develop Territorial Innovation Centres. Meanwhile, the provinces of Burgos and Palencia have signed in 2025 a protocol to join the network.
Territorial Cohesion and Transformation Fund (FCT)
Within the framework of the Sectoral Conference on the Demographic Challenge – a multilateral co-operation body where the Ministry for the Ecological Transition and the Demographic Challenge meets with the departments of the Autonomous Communities (ACs) to discuss policies and initiatives – the Ministry allocates and transfers the Territorial Cohesion and Transformation Fund to the Autonomous Communities.
The Territorial Cohesion and Transformation Fund (FCT) is designed to support ACs in developing projects that address the demographic challenge, in line with their respective competencies.
Since 2021, a total of EUR 35 667 489 has been transferred to Castilla y León as a result of agreements reached within the Sectoral Conference. This positions the region as the top recipient of funds distributed by the Ministry.
At the level of the Autonomous Communities, the Sectoral Conference on the Demographic Challenge was established in 2020 to enhance co-operation between Spain's central government and the ACs on demographic change. At the local level, the National Commission for Local Administration (Comisión Nacional de Administración Local, CNAL), created in 1985, provides a formal co-ordination platform between the central government and local authorities. Within CNAL, a Working Group on the Demographic Challenge addresses demographic concerns affecting municipalities.
In Castilla y León, co-ordination between the regional government and the provinces takes place through the Commission for Co-operation between the Regional Administration and the Provincial Councils (Comisión de Cooperación entre la Administración de la Comunidad y las Diputaciones Provinciales). This body facilitates intergovernmental collaboration on policy implementation and service delivery across the region’s nine provinces. Additionally, in 2022, Castilla y León established the Council for Demographic Dynamisation (Box 2.5)
Castilla y León’s Council for Demographic Dynamisation (Consejo de Dinamización Demográfica de Castilla y León), established in 2022, is a consultative body that brings together representatives from the regional government, provincial councils, local authorities, academia, and civil society.
The Council plays an advisory and co-ordinating role in:
Supporting the design and implementation of demographic policies;
Promoting territorial cohesion and improving quality of life in rural and depopulating areas;
Facilitating multi-stakeholder dialogue on the demographic challenge.
The Council supports the regional objectives set out in the Strategy for Demographic and Territorial Sustainability, particularly on strengthening co-ordination and stakeholder engagement.
Subnational governments in Spain hold key responsibilities for managing demographic change
In Spain, many responsibilities are shared between the national and subnational levels of government. However, In the early 2000s, two major areas related to demographic change, education in 2000 and healthcare in 2002, were transferred from the central government to the Autonomous Communities. Castilla y León, like other regions, has extensive responsibilities in areas critical to demographic change, including healthcare, education, and social services. The region also plays an essential role in addressing demographic change through policies related to transport, economic development, agriculture and forestry, water management, regional planning, and housing (Table 2.2).
Source: OECD elaboration based on (Gobierno de España, 1978[11]) (Junta de Castilla y León, n.d.[15]) (OECD/UCLG, 2022[12])
While legal responsibilities are clearly defined, the degree of decentralisation in practice varies across regions and municipalities. In Castilla y León, many local governments play an active role in addressing population decline and supporting rural development. Local initiatives often focus on improving connectivity, upgrading public infrastructure, and supporting economic revitalisation in remote areas (OECD, 2024[21]).
Policy responses to demographic challenges are evolving from fragmented actions to co-ordinated strategies, but implementation and alignment remain key
The policy framework for addressing demographic change in Spain and Castilla y León involves multiple layers of government and a combination of cross-cutting and sectoral strategies (Table 2.3). At the national level, Spain adopted the National Strategy to Address the Demographic Challenge (Estrategia Nacional frente al Reto Demográfico) in 2019. Co-ordinated by the Ministry for the Ecological Transition and the Demographic Challenge, the strategy takes a broad and integrated approach to address rural depopulation, ageing, and the uneven spatial distribution of the population.
At the regional level, Castilla y León’s Agenda for the Population (2010–20) was one of Spain’s earliest dedicated frameworks, shifting the focus from solely addressing depopulation to improving population dynamics more broadly (Ministerio de politico territorial y memoria democrática, n.d.[22]). However, the agenda fell short of its objectives, particularly in reversing population loss and improving territorial balance. Building on these lessons, the region developed together with four regional universities a new Strategy for Demographic and Territorial Sustainability, which places greater emphasis on rural revitalisation, territorial cohesion, support for ageing populations, and the adaptation of public services (Junta de Castilla y León., n.d.[23]). While the revised strategy presents a coherent vision, its success will hinge on the development of a detailed implementation roadmap, including concrete measures, financing, and institutional co-ordination (see Chapter 4 for a detailed discussion).
Source: OECD elaboration based on strategic policy documents.
Additionally, Castilla y León’s Talent Strategy 2031 and its Regional Talent Integral Action Plan (2024‑27) seek to position talent as a lever for demographic renewal and economic competitiveness (Junta de Castilla y León, n.d.[24]). This framework adopts a more integrated governance model involving collaboration with private-sector actors, business clusters, academic institutions, and civil society. The Talent Action Plan (Junta de Castilla y León, n.d.[25]) provides a short-term operational roadmap, with oversight from the Regional Ministry of Economy and Finance and implementation by multiple ministries. While this initiative signals a shift toward a more integrated and strategic approach to workforce retention, its effectiveness will depend on investment levels, policy co-ordination, and sustained engagement with private-sector actors.
Sectoral policies covering transport, healthcare, housing, migration, employment, youth, and tourism also contribute to addressing demographic challenges. Many of these are designed and implemented by regional and local governments. However, these initiatives often operate in isolation, with limited alignment to regional demographic objectives or overarching strategic frameworks (see Chapter 4).
Projected old-age dependency ratio, by province, 2020-2100
Source: OECD calculations based on Eurostat population projections (https://doi.org/10.2908/PROJ_19RP3).
References
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[13] Gobierno de Espana (2013), “Ley 27/2013, de 27 de diciembre, de racionalización y sostenibilidad de la Administración Local [Law 27/2013, of December 27, on rationalization and sustainability of local administration]”, Boletin Oficial del Estado [Official Gazette of the State], https://www.boe.es/buscar/doc.php?id=BOE-A-2013-13756 (accessed on 5 November 2024).
[11] Gobierno de España (1978), “Spanish Constitution {Constitución Española]”, Boletín Oficial del Estado (BOE), https://www.senado.es/web/conocersenado/normas/constitucion/detalleconstitucioncompleta/index.html?lang=en (accessed on 5 November 2024).
[8] González Leonardo, M. and A. López-Gay (2019), “Emigración y fuga de talento en Castilla y León”, Boletín de la Asociación de Geógrafos Españoles 80, https://doi.org/10.21138/bage.2612.
[10] Junta de Castilla y León (2025), Atención en red para los cuidados de larga duración en el medio rural de Castilla y León: A gusto en casa y Viviendas en red, https://serviciossociales.jcyl.es/web/es/gusto-casa.html (accessed on 15 April 2025).
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[24] Junta de Castilla y León (n.d.), Estrategia Talento 2031, https://empresas.jcyl.es/web/es/talento/estrategia-talento-2031/estrategia.html (accessed on 17 February 2025).
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[1] OECD (2022), Shrinking Smartly in Estonia: Preparing Regions for Demographic Change, OECD Rural Studies, OECD Publishing, Paris, https://doi.org/10.1787/77cfe25e-en.
[12] OECD/UCLG (2022), Spain Country Profile.
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← 1. The population information was extracted from the OECD Population Regional Database. The information is presented for the last available year (2023).
← 3. The GDP per capita data was extracted from the OECD Economy Regional Database. It is computed as USD per person, PPP converted, constant prices (2015) and presented for the last available year (2021).
← 4. OECD elaboration based on Lightcast and EU-LFS.
← 5. Data from the OECD Regional Education Database, including only "upper secondary and post-secondary non-tertiary all programmes" as VET education.
← 6. https://empresas.jcyl.es/web/es/creacion-empresas/estrategia-emprendimiento-innovacion-castilla.html (accessed 10 April 2025).
← 7. These sectors have been included as part of the Research and Innovation Strategy for Smart Specialisation (RIS3) of Castilla y León: https://cienciaytecnologia.jcyl.es/web/es/estrategia-especializacion/estrategia-inteligente-2021-2027.html (accessed 10 April 2025).
← 8. The firm’s websites contain more information of their products: https://air-institute.com, www.cetece.net, www.cidaut.es and https://itcl.es/. Other innovative firms in the region include CARTIF, Cesefor, CTME – Fundación Centro Tecnológico de Miranda de Ebro, ICAMCyL Foundation or itagra.ct.
← 9. DataInvex Estadísticas de Inversión Extranjera en España, “Desglose inversión extranjera bruta no ETVE por Comunidades Autónomas” https://comercio.gob.es/es-es/notasprensa/2024/paginas/240320_inversionesexteriores.aspx (accessed 10 April 2025). Official FDI statistics include greenfield, brownfield, retained earnings and debt instruments, including bonds.
← 10. Eurostat data demo_r_d2jan and demo_r_magec. The net migration rate is computed as the difference between (i) the population at the end of the year and (ii) the sum of the population at the beginning of the year and the natural change, divided by the population at the beginning of the year.
← 11. OECD Regional Society Database.
← 12. OECD Regional Society Database.