Fiscal impacts of local population growth: A conceptual and empirical analysis

This paper examines the legitimacy of concerns of local residents about the adverse fiscal impacts of population growth. The conceptual discussion shows that economic theory provides no clear prediction of the impact of population growth on per capita spending. Based on a national data set of large countries, simple d descriptive analysis indicates that greater population growth is associated with higher per capita current spending and interest outlays. More detailed analysis both of 1978-1985 changes and of 1985 levels of current spending indicates that higher growth-related per capita spending primarily reflects the combined effects of greater density and increased local spending shares. In sum, established residents in fast- growing areas may experience declines in service quality as well as rising local tax burdens. © 1994.

Duke Scholars

Author Helen F. Ladd Sanford School of Public Policy