Template-Type: ReDIF-Paper 1.0
Title: Implications of Low Fertility and Declining Populations for the Operations of US State and Local Governments
Author-Name: Jeffrey Clemens
Abstract: Declining fertility and population loss pose significant challenges for
  state and local governments responsible for providing a range of
  services to citizens, including education, health care, and
  infrastructure. Indeed, many areas are already experiencing outright
  population decline, with roughly half of U.S. counties losing population
  between 2010 and 2020. This paper examines how shrinking and aging
  populations affect the operations and fiscal sustainability of state and
  local governments. Preliminary evidence presented in this paper suggests
  that scaling down educational services is considerably more difficult
  than scaling up. The estimated per-enrollee cost increases associated
  with a 10 percent enrollment decline are four times larger than the cost
  decreases associated with a 10 percent enrollment increase. Regions with
  contracting populations will face additional challenges as a smaller
  working-age population bears the burden of funding pensions and retiree
  health plans for larger aging cohorts. While lower fertility can create
  a short run fiscal dividend as local governments serve fewer children,
  that dividend will only be realized if state and local public officials
  make efficient retrenchment a priority.
Creation-Date: 2026-04-01
Keywords: Public finance, demographics, state and local finance
File-URL: https://www.economicstrategygroup.org/wp-content/uploads/2026/06/Clemens_2026.pdf
File-Format: Application/PDF
Handle: RePEc:cxx:wpaper:clemens_2026