Ageing Municipalities, Gerontocracy and Fiscal Competition

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Ageing Municipalities, Gerontocracy and Fiscal Competition

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Anna Montén ()
Marcel Thum ()

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Marcel P. Thum

Abstract

We develop a simple model of fiscal competition among ageing municipalities. When ageing advances, gerontocracies and social planners gradually substitute publicly provided goods aimed at the mobile young population for publicly provided goods for the elderly. This substitution process does not only depend on the ageing itself but also on crowding effects and on the regional distribution of the elderly population. We show that fiscal competition prevents the exploitation of the young. When the share of the elderly is sufficiently large, the utility of the young is even higher in gerontocracies than in welfare maximizing societies. Due to fiscal competition, the gerontocracies will provide even more of the publicly provided good for the young than the social planner.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 2469.

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Date of creation: 2008
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Handle: RePEc:ces:ceswps:_2469

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Find related papers by JEL classification:
H40 - Public Economics - - Publicly Provided Goods - - - General
H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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