Demographic Change and Its Public Sector Consequences

It is widely believed that projected changes in the age structure of the U.S. population will create serious fiscal pressures at the federal level. Irrespective of any reforms undertaken at the federal level, these demographic trends also will have a direct impact on the way state and local governments operate. A review of recent population projections to 2020 reveals a great deal of heterogeneity in demographic trends at lower levels of government. Population aging will accompany overall population growth in some localities, and shrinkage in others. It also will coincide with a broad range of changes in the proportion of children under 18. The authors consider several responses to these demographic developments in the realm of public management: First, they consider major fiscal implications, which may prompt a range of managerial responses pertaining to the scope and mix of public services and the design of public programs. Second, they discuss the effects of demographic change on the composition of the state and local government workforce. Finally, the authors revisit the alleged “exogeneity” of demographic forces and suggest new and fruitful areas for future research.