Like hundreds of other small towns in Japan, Ogawa village in Nagano prefecture has seen shops close and schools shrink over the years despite efforts to attract new residents. The streets are mostly deserted and many homes sit vacant.

Those are the natural consequences of Japan's demographic decline. But one company, Ogawa No Sho, has turned to the community's healthy seniors in a bid to keep the local economy alive, hiring them to make and sell "oyaki," a traditional dumpling considered the region's soul food.

Nearly half of the company's 81 employees are over 60 years old. The oldest, 91-year-old Chikayoshi Gonda, has been working at the company since it was founded almost three decades ago. He comes in three days a week, flipping dumplings in a large iron pan while chatting with customers at "Oyaki-mura," or the "Oyaki village" restaurant where employees serve freshly baked dumplings and soba noodles to tourists.

The dumpling business appears to be thriving. The company ships around 5 million dumplings annually across Japan and operates a couple of wholly owned retail outlets.

"The rest of Japan seems to be undergoing some hard economic times, but I think we've been relatively steady--in fact, business may actually be looking up," he said during a cigarette break on a recent afternoon.

Yoshimitsu Nakazawa, 76, making dumplings at Ogawa No Sho. Illustration: Jarrard Cole for The Wall Street Journal

Of Japan's 1,719 municipalities, 797 are suffering from depopulation. Looking more closely, the government counts around 65,000 smaller hamlets and communities facing the impact of the rural exodus. Dozens disappear every year after the last remaining residents die or relocate, leaving behind untended houses and farmland.

While Japan's high life expectancy has somewhat mitigated the impact of a low birthrate on the total population, depopulation is expected to accelerate in the coming decades. Rural, graying villages like Ogawa, which have already seen many of its residents migrate to larger cities like Tokyo, are feeling the pain more acutely.

A 2014 report by the Japan Policy Council think tank forecast that by 2040, around half of Japan's towns and villages will see the number of female residents of child-bearing age drop by at least 50% if current trends continue. It described them as "facing extinction."

Such alarming predictions have led local governments and businesses to devise ways to revitalize communities, including offers of discount housing and special subsidies for urban residents willing to resettle in the countryside.

Companies like Ogawa No Sho are introducing new age-free business models to steer the growing number of healthy elderly from retirement into work, making them more productive members of society. Ogawa No Sho used to have a retirement age of 78, but employees can now stay as long as they like. "Making dumplings only involves using your hands, so it's easier on the body than farming," said 85-year-old Fujiko Matsumoto, a colleague of Mr. Gonda's.

But Mr. Gonda said they've still been unable to reverse the outflow of residents. About 50 houses sit on the remote hillside where the restaurant is located, but only half of them are inhabited, he said. The population of the village has fallen from about 10,000 in its heyday to around 2,800.

"We tell outside folks that they can have these abandoned homes for free, but no one seems interested," he said.