Aging Population and City Spending

Abstract

This paper examines the relationship between aging and spending change for cities in Oregon. There is evidence that high growth in the share of the 65 years and older population has a significant depressing effect on overall spending change. The overall negative effect on spending somewhat supports the “Gray Peril” hypothesis. Also, rates of change in police spending are predicted to be high where the proportion of the elderly population is high. Police protection is a service that is of great, but not exclusive, importance to older residents. Police protection also is a basic public service and it may be that the elderly are more willing to support core services that historically have been government provided.

Turnout, political strength, and cost efficiency in Spanish municipalities of the autonomous region of Galicia: Evidence from an alternative stochastic frontier approach

“…In addition to the impact of the government's political strength on these two aspects, which has already been discussed, there are other socioeconomic, political, and financial variables that should be in this group. The impact of the demographic structure on public expenditure has been studied in the contexts of interest‐group theory and the common‐pool problem. There are significant relationships between spending on basic police services and the age of the population (Simonsen, ), and between diverse public goods and ethnic fragmentation (Alesina, Baqir, & Easterly, ). Guillamón, Bastida, and Benito () also analysed how unemployment affects the structure of the supply of public goods.…”

Demographic Change and Its Public Sector Consequences

“…Their data cover the period 1952–1984, during which time the older population was relatively small; moreover, the Medicaid program did not even exist until 1965. Simonsen (1994), who modeled the change in spending among 113 cities in Oregon over a more recent five‐year period (1984–1989), found that increases in both the 65‐and‐older and the under‐18 population shares were negatively and significantly related to spending growth. Mullins and Rosentraub (1992), in contrast, found a positive relationship between the presence of retirement‐age people and overall county‐level spending levels.…”

“…To the extent that population movements respond to forces that can be influenced by governmental action—for example, by taxation and public expenditures—estimates of the effects on public expenditures of population size or composition, or changes in population size or composition (e.g., Dye and MacManus 1990; Simonsen 1994), may suffer from severe reverse‐causality (or, more generally, “endogeneity”) bias. This problem may be particularly true when public expenditure outcomes are disaggregated into specific categories such as schooling, public safety, or health services, each of which may have a distinctive influence on the flow of people to and from each location.…”