Ageing and Fiscal Challenges across Levels of Government
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Populations in OECD and emerging economies are ageing rapidly, which will have significant macroeconomic impacts, including on public expenditures and tax revenues. The rules and practices that govern fiscal relations among different levels of government, such as their responsibilities for taxation, spending and debt management, have a bearing on economic efficiency and ultimately growth. The consequences of population ageing at subnational government levels are especially intense. Many local governments are vulnerable to the ageing of their populations from a fiscal perspective. The economic and fiscal challenges of an ageing population go beyond intergovernmental boundaries, and they require complex intergovernmental policy responses. This volume brings together cross-country studies of fiscal policy, demographics and spatial productivity, as well as country studies of Brazil, Canada, China and Germany.
Executive summary
All OECD economies are undergoing population ageing – an increase in the share of older persons in the population – reflecting a combination of increasing longevity and declining fertility rates. The process and pace are, however, far from uniform, with ageing much more advanced in some countries than in others. Moreover, the implications on public spending, revenues and debts vary not only across countries, but also within countries, across levels of government, with many local and regional governments facing particularly heavy spending burdens as their revenue bases decline. Such burdens are especially intense in the context of the COVID-19 pandemic that puts extreme pressure on shared health systems, public safety, social care and many other locally delivered public services.
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