This article about the demolition of a school in Osaka had an interesting explanation:
At its peak in 1958, the school had 1,270 enrolled students.
But 30 years down the track, the so-called “donut phenomenon” had taken hold.
Osaka’s downtown population headed for the suburbs leaving a gaping hole in the city center-and a serious shortage of school-age kids. By 1989, Aijitsu Elementary School had just 47 students and it was forced to integrate the following year with nearby Kaihei Elementary School.
Mmm, donut phenomenon.