Small and medium-sized cities (SMCs) are essential for balanced national development, yet many are now facing prolonged population loss, aging and weakened labor markets. Japan has addressed this challenge for more than half a century through the Depopulated-Area-Designation (DAD) policy, a national framework that identifies municipalities facing population loss and supports them through infrastructure, fiscal, industrial and social measures. However, it has not been determined whether such a designation can stabilize shrinking communities over time.