Methods for small area population forecasts: state-of-the-art and research needs

Small area population forecasts are widely used by government and business for a variety of planning, research and policy purposes, and often influence major investment decisions. Yet the toolbox of small area population forecasting methods and techniques is modest relative to that for national and large subnational regional forecasting. In this paper we assess the current state of small area population forecasting, and suggest areas for further research. The paper provides a review of the literature on small area population forecasting methods published over the period 2001-2020. The key themes covered by the review are: extrapolative and comparative methods, simplified cohort-component methods, model averaging and combining, incorporating socio-economic variables and spatial relationships, ‘downscaling’ and disaggregation approaches, linking population with housing, estimating and projecting small area component input data, microsimulation, machine learning, and forecast uncertainty. Several avenues for further research are then suggested, including more work on model averaging and combining, developing new forecasting methods for situations which current models cannot handle, quantifying uncertainty, exploring methodologies such as machine learning and spatial statistics, creating user-friendly tools for practitioners, and understanding more about how forecasts are used.