School closure versus a co-working hub in a depopulating valley
A mountain valley of 4,200 residents across 11 villages has lost 12% of its population since 2001. The median age is 49 and 28% of residents are over 65; second homes make up 31% of the housing stock. The only secondary school has 180 pupils and capacity for 300; enrolment is projected to fall to 140 by 2032. National rules require a closure review below 160 pupils and a minimum class size of 15. Fibre broadband reaches only the main village, and 40% of workers already commute 45 minutes or more to the regional city. Proposal A would close the school and bus pupils 26 km to town, 45 minutes each way, saving €1.4m per year. Proposal B would keep the school, convert a wing into a co-working and vocational training hub for care and agriculture, and extend fibre to three villages at a capital cost of €2.3m. The regional authority wants a recommendation within six months.
1. Compare Proposal A and Proposal B using demographic and equity criteria. Which groups bear the largest burden under each?
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Proposal A creates a recurrent saving of €1.4m, but the burden falls on the 140–180 pupils who would spend up to 90 minutes a day travelling, and on families who cannot provide alternative transport. Because 31% of housing is second homes, the school's closure would be felt mainly by permanent residents, not absentee owners; that is an equity issue. A may also accelerate family out-migration, further reducing the tax base and making the saving self-defeating. Proposal B costs €2.3m capital, roughly €230,000 per year over ten years, less than the €1.4m annual saving, so it is not automatically the cheaper option. Its benefits are option value and anchoring: a school, co-working hub and training site may retain households and support care and farm businesses. But the co-working hub may serve incoming remote workers more than existing residents, and 40% already commute, so the demographic effect is uncertain. B's equity gain is strongest if fibre reaches the three villages and training is tied to local employers.
2. Recommend one proposal, with a condition. Explain what would make closure preferable.
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Recommend B, conditional on three tests: fibre reaches at least three villages within three years; the co-working hub reaches 30% occupancy within two years; and the school's projected enrolment stays above 120 by 2030. The reason is irreversibility: closing a school is easy, reopening one is not, and the school is one of the few daily institutions that keeps permanent residents in the valley. The €2.3m capital is modest relative to the annual €1.4m saving, but B should not be a blank cheque. Closure becomes preferable if enrolment falls below 120, if the town school can guarantee a journey under 30 minutes, or if the school's maintenance backlog exceeds €4m. In that case, the saving could fund transport and adult training instead. The decision should be reviewed at a fixed date, not treated as permanent.
3. What data would you require to test whether keeping the school slows depopulation? Explain the identification problem.
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Required data: household-level records of families with children (age, tenure, migration intentions), school enrolment by village, housing transactions, and labour-market participation in the co-working hub. A before-after comparison of the valley is not enough because regional trends affect all valleys. The identification problem is selection: villages that keep schools may differ in unobserved ways from those that close them, and reverse causality is possible-declining areas close schools, and school closure may further decline. A credible test would compare the valley with matched control valleys that faced a similar closure review but chose differently, using difference-in-differences. Even then, spillovers and small numbers limit inference. The authority should state that the evidence will be suggestive, not definitive, and set a decision rule.