Close to one fifth of OECD countries (7 out of 38) have lost population since 2001, and a further 7 are expected to do so by 2060. The largest decreases so far have occurred in Eastern and Southern European countries, with Latvia and Lithuania each losing around 20% of their populations between 2001 and 2022. At the same time, most OECD countries have experienced a rapid ageing of their populations. Across OECD countries, Japan has the highest share of old-age population (29%), followed by Italy, Portugal, Finland, and Greece, each with around 23-24%. This trend is expected to persist in the coming decades. By 2060, close to 44% of the population in Korea will be older than 65 years old, followed by Japan (38%), Lithuania and Greece (35%). In this context, policy makers need to manage the consequences of demographic change including in particular its impact on labour markets, service and infrastructure provision, housing, and fiscal sustainability. There is a strong geographic dimension to demographic patterns: while some OECD countries are not expected to see their populations fall over the coming decades for example, many regions in these countries are expected to, particularly remote regions far from cities. Indeed, this is already happening in many regions.
The OECD Regional Development Policy Committee (RDPC) focuses on helping regions and cities address these demographic changes. As part of the workstream “Preparing Regions for Demographic Change”, the project “Shrinking Smartly and Sustainably”, launched in 2023 and financed by the European Commission, focuses on regions experiencing substantial and sustained population decline and ageing. The project re-examines adaptations needed to manage population decline whilst optimising quality of life, service delivery, economic stability, and social cohesion in a way that is also consistent with environmental objectives. The analytical pillar of the project focuses on conducting a demographic diagnosis, analysing demographic trends, including projections, and proposing a new classification of shrinking regions. In parallel, the project’s thematic pillars focus on key policy areas: 1) land use, housing, the environment, and spatial planning; 2) multi-level governance, subnational finance, public service delivery, and infrastructure; and 3) the challenges and opportunities of shrinking small towns and cities.
This report has benefited from inputs of the project’s consultation group and from three peer-to-peer knowledge exchange events: “Adapting governance, finance, services and infrastructure smartly in shrinking regions” (15 December 2023), “Shrinking small and medium-sized cities” (14 June 2024), and “Spatial planning, infrastructure and housing policies to help depopulating regions shrink smartly and sustainably” (12 November 2024). The report develops a policy framework and policy recommendations to address demographic change (Chapter 1). It then provides key statistics on demographic change in OECD countries at different geographical scales while exploring different approaches to define “shrinking” places (Chapter 2). It also addresses spatial planning and housing policy issues as well as the use of service accessibility for infrastructure planning (Chapter 3). Finally, the report looks at multi-level governance institutional frameworks needed to ensure service and infrastructure provision in depopulating places and at the impact of demographic change on subnational finances (Chapter 4).
This report will be complemented by other deliverables, including a paper on demographic diagnosis, a compendium of good practices to address demographic change, a set of guidelines for the multi-level governance of demographic change, and three country case studies – 1) land use planning, built-up growth, and housing, in Korea; 2) multi-level governance and finance – with a focus on service delivery and infrastructure – in Finland; 3) and shrinking small cities and towns, in Portugal.