TOKYO, June 29 – A Japanese compact city policy designed to sustain urban services amid population decline has been linked to rising welfare burdens in smaller municipalities, according to new research.
The study, led by Associate Professor Haruka Kato of Osaka Metropolitan University, examined the Location Optimization Plan (LOP), a national strategy adopted by municipalities since 2016. Using quasi-experimental data from 1,595 small and medium-sized cities between 2008 and 2022, the research analyzed impacts on population trends, migration, and Long-Term Care Insurance (LTCI) certifications.
The study found that adoption of the Location Optimization Plan was linked to sharper population declines across small and medium-sized cities. At the same time, no significant changes were detected in patterns of inter-municipal migration.
Welfare impacts were most evident in municipalities with fewer than 50,000 residents, where the consolidation of government and educational facilities was associated with higher counts of care-support certifications. In contrast, medium-sized cities showed no statistically significant differences in Long-Term Care Insurance outcomes across facility types.
“Compact city strategies are designed to sustain urban services over the long term, but our results show that the transition itself can come at a cost,” Kato said.
“In the smallest cities, consolidating key community facilities was linked to rising burdens in care services. Rather than applying a one-size-fits-all prescription, these cities may need to adopt smart-decline principles that put residents’ immediate well-being first.”
The findings suggest welfare consequences of compact city strategies are context- and design-dependent, with facility type playing a central role. Small municipalities may need to adopt smart decline approaches, prioritizing well-being and sustainable service provision, while medium-sized cities appear less affected in the short term.
The study was published in the journal Sustainable Cities and Society.
