OCDE - OECD guidelines on the multi-level governance of demographic change

2025 D4SME Survey OECD SME and Entrepreneurship PapersOECD Regional Development Papers OECD guidelines on the multi-level governance of demographic change2025 D4SME Survey OECD SME and Entrepreneurship Papers OECD Regional Development Papers OECD guidelines on the multi-level governance of demographic changeOECD Regional Development Papers

OECD guidelines on the multi-level governance of demographic change

As populations age, shrink or shift across territories, governments face a growing need to adapt how they plan, invest and deliver services. The OECD guidelines on the multi-level governance of demographic change provide practical guidance for national and subnational authorities to anticipate and manage these transformations. Drawing on international practices, the seven guidelines outline key actions to help governments align policies and investments with evolving population realities, particularly demographic shrinking and ageing. Each guideline is structured around a clear rationale, practical recommendations, expected benefits, common pitfalls to avoid and international examples of good practices. They cover how to integrate demographic projections into strategic planning, tailor sectoral policies to local needs, strengthen coordination across levels of government, build community participation, attract and retain skilled public staff, adapt fiscal frameworks, and adjust services and infrastructure provision. The guidelines aim to help countries and regions remain resilient, inclusive and fiscally sustainable in the face of demographic change, serving as a valuable resource for policymakers and practitioners working on regional development, public finance and service delivery.

PUBE2  OECD GUIDELINES ON THE MULTI-LEVEL GOVERNANCE OF DEMOGRAPHIC CHANGE © OECD 2025

ABOUT THE OECD The OECD is a multi -disciplinary inter-governmental organisation with member countries which engages in its work an increasing number of non -members from all regions of the world. The Organisation’s core mission today is to help governments work together towards a stronger, cleaner, fairer global e conomy.

ABOUT THE OECD The OECD is a multi -disciplinary inter-governmental organisation with member countries which engages in its work an increasing number of non -members from all regions of the world. The Organisation’s core mission today is to help governments work together towards a stronger, cleaner, fairer global e conomy. Through its network of specialised committees and working groups, the OECD provides a setting where governments compare policy experiences, seek answers to common problems, identify good practice, and co-ordinate domestic and international policies. More information available: www.oecd.org. ABOUT OECD REGIONAL DEVELOPMENT PAPERS Papers from the Centre for Entrepreneurship, SMEs, Regions and Cities of the OECD cover a full range of topics including regional statistics and analysis, urban governance and economics, rural governance and economics, and multi-level governance. Depending on the programme of work, the papers can cover specific topics such as regional innovation and networks, sustainable development, the determinants of regional growth or fiscal consolidation at the subnational level. OECD Regional Development Papers are published on http://www.oecd.org/cfe/regional-policy. This work is published under the responsibility of the Secretary -General of the OECD. The opinions expressed and arguments employed herein do not n ecessarily reflect the official views of the Member countries of the OECD. This paper was authorised for publication by Lamia Kamal-Chaoui, Director, Centre for Entrepreneurship, SMEs, Regions and Cities, OECD. This document, as well as any statistical data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. This document was produced with the financi al assistance of the European Union. The views expressed herein can in no way be taken to reflect the official opinion of the European Union.

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© OECD (2025)

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herein can in no way be taken to reflect the official opinion of the European Union.

Cover image: Sandwish/ Getty Images Plus

© OECD (2025)

Attribution 4.0 International (CC BY 4.0) This work is made available under the Creative Commons Attribution 4.0 International licence. By using this work, you accept to be bound by the terms of this licence (https://creativecommons.org/licenses/by/4.0/). Attribution – you must cite the work. Translations – you must cite the original work, identify changes to the original and add the following text: In the event of any discrepancy between the o riginal work and the translation, only the text of original work should be considered valid. Adaptations – you must cite the original work and add the following text: This is an adaptation of an original work by the OECD. The opinions expressed and arguments employed in this adaptation should not be reported as representing the official views of the OECD or of its Member countries. Third-party material – the licence does not apply to third -party material in the work. If using such material, you are responsible for obtaining permission from the third party and for any claims of infringement. You must not use the OECD logo, visual identity or cover image without express permission or suggest the OECD endorses your use of the work. Any dispute arising under t his licence shall be settled by arbitration in accordance with the Permanent Court of Arbitration (PCA) Arbitration Rules 2012. The seat of arbitration shall be Paris (France). The number of arbitrators shall be one. 3

OECD GUIDELINES ON THE MULTI-LEVEL GOVERNANCE OF DEMOGRAPHIC CHANGE © OECD 2025

Acknowledgements The paper was prepared by the OECD Centre for Entrepreneurship, SMEs, Regions and Cities (CFE), led by Lamia Kamal-Chaoui. It was produced as part of the Programme of Work of the Regional Development Policy Committee (RDPC). The paper was prepared in the framework of the OECD p roject ‘Shrinking

The paper was prepared by the OECD Centre for Entrepreneurship, SMEs, Regions and Cities (CFE), led by Lamia Kamal-Chaoui. It was produced as part of the Programme of Work of the Regional Development Policy Committee (RDPC). The paper was prepared in the framework of the OECD p roject ‘Shrinking Smartly and Sustainably’ and implemented in the context of the OECD’s programme on Preparing Regions for Demographic Change. It was made possible thanks to the financial contributions of the European Commission’s Directorate-General for Regional and Urban Policy (DG REGIO). This paper was co-ordinated by Miquel Vidal Bover and Marc Bournisien de Valmont, under the supervision of Enrique Garcilazo, Deputy Head of the Regional Development and Multi -level Governance Division , CFE, and Isabelle Chatry, Head of the Decentralisation, Subnational Finance and Infrastructure Unit, CFE. It builds on key findings from the project’s main report Shrinking Smartly and Sustainably: Strategies for Action (notably Chapter 4), the Compendium of internationa l practices, as well as the case study report Shrinking Smartly and Sustainably in Finland . The overall project co-ordination of this project , Shrinking Smartly and Sustainably , was led by Marc Bournisien de Valmont, under the supervision of Dorothée Allain-Dupré, Head of the Regional Development and Multi-level Governance Division (RDG). The OECD is grateful to the OECD delegates and international experts who contributed their insights during the peer-to-peer knowledge exchange workshop held in December 2023, and during discussions of the OECD Expert Group on Multi-level Governance and Public Investment in April 2024. The guidelines also benefited from the valuable input of analysts in the Decentralisation, Subnational Finance and Infrastructure Unit, including Antti Moisio, Courtenay Wheeler, Charlotte Lafitte and Yugo Kimura. The OECD also thanks Martijn Brons, Jorge Durán Laguna and Carlo Gianelle (European Commission, DG REGIO) for their support and input provided throughout the preparation of the guidelines.

Infrastructure Unit, including Antti Moisio, Courtenay Wheeler, Charlotte Lafitte and Yugo Kimura. The OECD also thanks Martijn Brons, Jorge Durán Laguna and Carlo Gianelle (European Commission, DG REGIO) for their support and input provided throughout the preparation of the guidelines. Special thanks are given to Jack Waters and Shayne Maclachlan (CFE/COM) who provided guidance on preparing the publication, and Roxana Glavanov and Jiin Lee (CFE/RDG) for support with project communications.4  OECD GUIDELINES ON THE MULTI-LEVEL GOVERNANCE OF DEMOGRAPHIC CHANGE © OECD 2025

Table of contents Acknowledgements 3 Executive summary 5 Guideline 1: Integrate demographic projections and foresight tools into strategic planning 6 Guideline 2: Territorialise sectoral policies to promote integrated, place-based responses to demographic change 8 Guideline 3: Coordinate across levels of government and functional areas to adapt services and investments to demographic change 10 Guideline 4: Strengthen participatory governance to spur community vitality 12 Guideline 5: Attract, retain and develop public sector capacity in shrinking areas 14 Guideline 6: Ensure fiscal frameworks are responsive to demographic change 16 Guideline 7: Adjust service delivery and infrastructure to evolving demographic needs 18 5

OECD GUIDELINES ON THE MULTI-LEVEL GOVERNANCE OF DEMOGRAPHIC CHANGE © OECD 2025

Executive summary Demographic change is reshaping the economic, social and territorial fabric of OECD countries. Population ageing, decline and internal shifts are placing growing pressure on public services, infrastructure and local governance and finances, especially in shrinking, ageing or low -density regions. These changes demand proactive, place-sensitive responses across all levels of government. Yet, many existing frameworks were designed for stability or growth, not for adaptation. The OECD Guidelines on the Multi-level Governance of Demographic Change offer practical direction for

proactive, place-sensitive responses across all levels of government. Yet, many existing frameworks were designed for stability or growth, not for adaptation. The OECD Guidelines on the Multi-level Governance of Demographic Change offer practical direction for national and subn ational authorities to prepare for, respond to, and benefit from evolving demographic realities. Drawing on international experience and extensive consultation, the Guidelines aim to foster anticipatory, co-ordinated and inclusive policy approaches. The seven Guidelines call on governments to:

1. Integrate demographic projections and foresight tools into strategic planning to ensure policies and investments are future-proof.

2. Territorialise sectoral policies to promote integrated, place -based responses to demog raphic change within and across regions.

3. Coordinate across levels of government and functional areas to adapt services and investments efficiently, especially in small or shrinking municipalities.

4. Strengthen participatory governance to revitalise communities and enhance trust.

5. Attract, retain and develop public sector capacity in shrinking areas to maintain essential services and institutional resilience.

6. Ensure fiscal frameworks are responsive to demographic change.

7. Adjust infrastructure and service delivery systems to reflect evolving demographic needs.

By implementing these Guidelines, governments can better manage the complex implications of demographic change, ensuring that shrinking and ageing regions are not left behind, but supported through strategic adaptation, innovation and solidarity. The Guidelines promote a vision of demographic resilience that goes beyond mitigating demographic decline to enabling regions of all types to guarantee the wellbeing of their residents.6  OECD GUIDELINES ON THE MULTI-LEVEL GOVERNANCE OF DEMOGRAPHIC CHANGE © OECD 2025

Guideline 1: Integrate demographic projections and foresight tools into strategic planning Rationale Demographic change is a long-term transformation that profoundly impact governance , subnational finance and public services. However, many national and subnational governments do not systematically integrate demographic projections into their strategic planning processes. Even when projections are used, they are not always based on up-to-date or comprehensive data (OECD, 2023[1]). As a result, policies may

finance and public services. However, many national and subnational governments do not systematically integrate demographic projections into their strategic planning processes. Even when projections are used, they are not always based on up-to-date or comprehensive data (OECD, 2023[1]). As a result, policies may become misaligned with territorial realities , leading to inefficient resource allocation and stranded public investments. Governments at all levels should embed demographic projections, based on robust forecasting models, into their strategies to ensure that policies, infrastructure and public services align with future population needs. To anticipate the consequences of demographic change, governments are increasingly turning to strategic foresight tools to manage demographic uncertainty. By exploring multiple future scenarios and stresstesting plans, foresight enables governments to move from reactive to anticipatory policymaking. This is particularly relevant for regions where p ast trends may no longer be reliable indicators of the future , such as those experiencing volatile migration patterns or rapid ageing . Moreover, foresight also supports more coherent planning across levels of government, by helping actors align their assum ptions and time horizons when preparing for future demographic realities (OECD, 2023[2]). Recommendations • Develop and integrate robust, independently validated demographic projections at the municipal and regional levels into national and subnational strategic planning processes. These projections should be comprehensive, regularly updated, and account for trends such as commuting patterns, return migration, and spatial redistribution. • Create planning units or review processes that connect population projections with infrastructure investment, service delivery models and land -use planning to e nsure demographic evidence is translated into operational decisions. • Institutionalise strategic foresight as a participatory, cross -sectoral component of planning frameworks at all levels of government, allowing to anticipate the consequences of changes in population size, structure and distribution. Foresight exercises should help develop a demographysensitive long-term vision in areas such as infrastructure, housing, healthcare and education, while engaging local stakeholders in shaping future-oriented, resilient strategies. Benefits Integrating demographic projections and anticipating the consequences of demographic change in strategic planning processes across all sectors can:

sensitive long-term vision in areas such as infrastructure, housing, healthcare and education, while engaging local stakeholders in shaping future-oriented, resilient strategies. Benefits Integrating demographic projections and anticipating the consequences of demographic change in strategic planning processes across all sectors can: • Help national and subnational government prioritise policies and investments in line with expected demographic realities. • Reduce fiscal risks and enhance overall fiscal sustainability by integrating demographic projections into budgeting processes and aligning expenditure with long-term needs. • Support the development of forward -looking regional strategies, improving territorial resilience by aligning infrastructure, service delivery and spatial planning with expected demographic changes. • Foster anticipatory policymaking across levels of government by harmonising assumptions, timelines and data use through the application of strategic foresight tools. 7

OECD GUIDELINES ON THE MULTI-LEVEL GOVERNANCE OF DEMOGRAPHIC CHANGE © OECD 2025

Pitfalls to avoid Policymakers should avoid: • Planning based on outdated assumptions , whether expecting growth in areas facing de cline or underestimating growth in rapidly changing areas. • Using demographic projections that are incomplete, outdated or not independently validated data, especially when informing long-term investment decisions. • Overlooking the role of foresight, such as scenario analysis and stress -testing, in planning under uncertainty, especially in regions with volatile or complex demographic patterns. • Failing to translate demographic insights i nto concrete actions, resulting in strategies that acknowledge change but do not adjust service provision, infrastructure plans or investment priorities accordingly. Examples of good practices • Spain’s “España 2050 ” strategy exemplifies the integration of d emographic projections and foresight tools into national strategic planning. Developed by the National Office of Foresight and Strategy, this comprehensive initiative identifies demographic change as one of ten megatrends shaping the nation's future. By em bedding population projections into different sectoral policies related to infrastructure, urban planning and the labo ur market, the strategy ensures that public investments and services are aligned with anticipated demographic realities. This forward -looking

Strategy, this comprehensive initiative identifies demographic change as one of ten megatrends shaping the nation's future. By em bedding population projections into different sectoral policies related to infrastructure, urban planning and the labo ur market, the strategy ensures that public investments and services are aligned with anticipated demographic realities. This forward -looking approach not only enhances policy coherence but also promotes resilience by preparing for various demographic scenarios. The strategy's development involved extensive collaboration with experts and stakeholders, reflecting a commitment to participatory and evidence-based policymaking.8  OECD GUIDELINES ON THE MULTI-LEVEL GOVERNANCE OF DEMOGRAPHIC CHANGE © OECD 2025

Guideline 2: Territorialise sectoral policies to promote integrated, place-based responses to demographic change Rationale Demographic change affects regions differently – not only between territories, but also within them. While some areas experience population decline and ageing, others, even within the same region, may still face growth pressures. Responding effectively requires policies that are not only cross-sectoral but also tailored to the specific territorial realities of each place. However, many sectoral policies – especially in education, healthcare and labour – remain place-blind, designed around national standards and uniform assumptions that overlook local demographic, geographic and socioeconomic differences. This can lead to mismatches between service provision and local needs, such as building new schools in areas where student populations are declining or overlooking underserved growing neighbourhoods in otherwise shrinking regions. These demographic challenges must be addressed holistically. Governments need to move beyond siloed policymaking and apply territorial lenses to traditionally sectoral domains. Adopting a whole-of-government approach, underpinned by strong c ross-sectoral coordination, at both national and subnational levels, is essential to align education, health, transport, housing and labour market policies with demographic realities. This territorial integration can ensure that strategies reflect not only the scale of change, but also its uneven spatial distribution, supporting more balanced and effective public investment and service delivery. Recommendations • Embed territorial differentiation into sectoral policies by using demographic, geographic, and sociorealities. This territorial integration can ensure that strategies reflect not only the scale of change, but also its uneven spatial distribution, supporting more balanced and effective public investment and service delivery. Recommendations • Embed territorial differentiation into sectoral policies by using demographic, geographic, and socioeconomic data to adapt n ational standards and service models , particularly in education, healthcare, transport and labour, to local needs and capacities. • Establish cross -sectoral coordination platforms such as inter -ministerial fora or joint planning taskforces to align policies across key sectors – such as education, healthcare, transport and labour – ensuring that demographic trends are reflected in decision -making and resource allocation. • Support regional and local governments with tools and guidance to identify intra-regional disparities and implement differentiated responses, including flexible funding schemes, modular service models, and multi-actor coordination platforms. Benefits Territorialising sectoral policies to promote integrated, place-based responses to demographic change can: • Ensure that public services match local demographic realities by adapting sectoral policies to reflect population trends and spatial disparities. • Enable differentiated strategies within regions, recognising that not all parts of a shrinking region are in decline, and allowing policymakers to support both consolidation and growth where needed. • Prevent inefficiencies and misallocation of resources, such as investing in new infrastructure or staffing in areas with shrinking demand while neglecting growing sub-regions. • Strengthen inter-ministerial and multi-level coordination, leading to better prioritisation, sequencing and implementation of demographic adaptation strategies. 9

OECD GUIDELINES ON THE MULTI-LEVEL GOVERNANCE OF DEMOGRAPHIC CHANGE © OECD 2025

Pitfalls to avoid Policymakers should avoid: • Applying uniform national standards without flexibility, which can lead to over - or under-provision of services depending on local demographic dynamics. • Designing sectoral policies in silos, failing to embed demographic analysis and without coordination across ministries or with subnational governments, resulting in fragmented or contradictory actions. • Overlooking intra-regional differences, such as growing urban peripheries or ageing rural villages,

of services depending on local demographic dynamics. • Designing sectoral policies in silos, failing to embed demographic analysis and without coordination across ministries or with subnational governments, resulting in fragmented or contradictory actions. • Overlooking intra-regional differences, such as growing urban peripheries or ageing rural villages, which require differentiated strategies even within the same administrative area. • Ignoring the implementation gap, where territorial differentiation is acknowledged in theory but not translated into investment criteria, budget planning or actual service delivery. Examples of good practices • Castilla-La Mancha (Spain) adopted a cross-sectoral and holistic Depopulation Law in 2021 that demonstrates how demographic priorities can be territorialised and integrated across sectoral policies. The law introduced a zoning system that identifies 26 depopulated areas based on granular demographic and geographic indicators, enabling targeted tax breaks, mobility rights and specific public service reforms. It also mandated that all regional grants, linked to different sectors, incorporate demographic incentives, while rural proofing is now mandatory for new legislation and budgets. Backed by a EUR 3.3 billion ten-year strategy, the initiative exemplifies how demographic priorities can be integrated across policy domains and places.10  OECD GUIDELINES ON THE MULTI-LEVEL GOVERNANCE OF DEMOGRAPHIC CHANGE © OECD 2025

Guideline 3: Coordinate across levels of government and functional areas to adapt services and investments to demographic change Rationale Demographic shrinkage creates pressures on public service delivery, infrastructure planning and local governance capacity , particularly in very small or rapidly ageing municipalities. Addressing these challenges requires strong coordination mechanisms, both vertically (between national, regional, and local governments) and horizontally (among regions and municipalities and across functional areas). Without such coordination, policies risk fragmentation, inefficiencies and uneven outcomes across regions. In shrinking areas, especially where population loss is combined with spatial dispersion, horizontal coordination and function al area-based governance become essential tools. Mechanisms such as intermunicipal partnerships, joint service agreements and special-purpose entities can help municipalities pool

such coordination, policies risk fragmentation, inefficiencies and uneven outcomes across regions. In shrinking areas, especially where population loss is combined with spatial dispersion, horizontal coordination and function al area-based governance become essential tools. Mechanisms such as intermunicipal partnerships, joint service agreements and special-purpose entities can help municipalities pool resources, sustain critical services and adapt infrastructure planning to w here people actually live, work and travel. They are particularly relevant in decentralised countries and for sectors such as public transport, healthcare, education and waste management, where planning at the municipal scale alone may no longer be viable. Vertical coordination also plays a critical role in aligning demographic strategies across levels of government. Inter-governmental forums and joint planning platforms can help clarify responsibilities, avoid duplication and ensure that financial and policy incentives, such as grants, tax breaks or service subsidies, are consistent and strategically targeted. Without coordination, overlapping or competing incentives may emerge, increasing inter-municipal competition and reducing long-term policy impact. By matching policies to the appropriate territorial scales, governments can deliver more coherent and cost -effective responses to demographic change. Recommendations • Establish inter-governmental coordination platforms focused on demographic adaptat ion to align strategies and investment decisions between national, regional and local governments, preventing policy fragmentation and coordinating responses to population decline and ageing. • Support inter -municipal cooperation in shrinking and low -density areas, especially for costintensive services such as transport, healthcare and education , through shared service agreements and joint investment projects across functional areas and through the provision of targeted incentives for joint service provision and infrastructure use. • Embed vertical and horizontal coordination mechanisms into long -term fiscal and infrastructure planning with a special focus on regions undergoing significant population changes and ensuring that coordination is sustained, tailored to the appropriate territorial scale and responsive to the evolving population dynamics. Benefits Strengthening vertical and horizontal coordination mechanisms , particularly at the functional area level , can: • Fostering collaboration across government lev els and sectors, thereby reducing duplication and inconsistent responses to demographic change.

evolving population dynamics. Benefits Strengthening vertical and horizontal coordination mechanisms , particularly at the functional area level , can: • Fostering collaboration across government lev els and sectors, thereby reducing duplication and inconsistent responses to demographic change. • Enabling municipalities to pool resources, share services and align infrastructure planning with population distribution and mobility patterns , especially in sm all or shrinking municipalities and urban areas where per capita service costs are higher. 11

OECD GUIDELINES ON THE MULTI-LEVEL GOVERNANCE OF DEMOGRAPHIC CHANGE © OECD 2025

• Support equitable access to essential public services by planning and delivering them at scales that match real-life usage and territorial needs. • Reduce counterproductive competition among municipalities by coordinating the use of financial incentives, avoiding overlapping tax breaks or subsidies with limited long-term impact.

Pitfalls to avoid Policymakers should avoid: • Establishing coordination mechanisms, such as inter-governmental fora or planning platforms, with unclear mandates or overlapping responsibilities. • Designing functional areas that do not reflect actual patterns of mobility and service use, leading to mismatched planning and underused infrastructure. • Failing to differentiate between territorial contexts, applying a one -size-fits-all approach to coordination that overlooks the specific needs of very small or shrinking municipalities. • Allowing uncoordinated or duplicative financial incentives, such as com peting tax breaks or subsidies, which can increase inter-municipal competition and undermine long-term policy goals. • Treating coordination as a temporary or ad hoc effort, rather than embedding it into long -term strategic and budget planning frameworks. Examples of good practices • The Service and Spatial Planning Basic Units (UBOSTs) in Castilla-y-León (Spain) offer a functional approach to territorial governance by grouping municipalities into urban or rural units for coordinated service delivery. This model enables inter-municipal cooperation across administrative boundaries, improving service accessibility an d efficiency in low -density areas. Flexible governance arrangements allow fo