Demographic change is leading to considerable reductions in spending at the state level in Germany. Public revenue is expected to fall in the coming years due to the fact that the fiscal equalisation scheme of the states is based on population size. In addition budget readjustments will be necessary in order to care for the needs of individual age cohorts. This project will examine the demographic sensitivity of public spending at the level of individual tasks, here specifically for Mecklenburg–Western Pomerania.
On the one hand, age structure matrices for public expenditures (and revenue) will be estimated in order to determine the extent to which the changes in the population structure influence the demand for public services. Corresponding adaptations of the public goods provision are possible indeed without this having a negative effect on quality. On the other hand, the study examines how much personnel in the individual administrative provinces will be necessary in future in order to fulfil these tasks. The project’s concentration on personnel spending is because this budget component is not only the most important but at the same time also the least flexible part of public expenditures.
The preliminary results show that it is very much possible to economise in a majority of task areas of Mecklenburg–Western Pomerania. Presumably this is also valid for other federal states.
Joachim Ragnitz and Helmut Seitz (2010): Auswirkungen des demographischen Wandels auf die Ausgabenstruktur künftiger Haushalte, ifo Dresden Studie 52, Munich/Dresden.
Ragnitz, Joachim (2009): „Personalüberhänge im öffentlichen Dienst – das Beispiel Mecklenburg-Vorpommern“, in: ifo Dresden berichtet 06/2009, p. 13-22. (Download, PDF, 165 KB).
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