Date of Award

5-2019

Degree Type

Report

Degree Name

Master of Science (MS)

Department

Applied Economics

First Advisor

Man-Keun Kim

Second Advisor

Ryan Bosworth

Third Advisor

Ruby Ward

Abstract

The share of the population that is 65 or older keeps on rising over the years in the U.S. According to the 2017 US population projection, the rate of growth of older population is much faster than other age groups. The growing aging population will affect the economy in many ways, especially in fiscal balance of regional governments. The main goal of the study is to examine the fiscal implication of increasing old-age population in U.S states. The old-age dependency ratio is used to measure aging population, which derived by diving the population 65 years and over by the 18 to 64 years population and multiplying by 100. The old-age dependency ratio increases government spending on primary education, public welfare (Medicaid), health and hospital, and highways and roads. The old-age dependency ratio increases property tax and corporate income tax while it has negative effects on individual income tax, other tax (taxes on motor vehicle licenses), charges (tolls on highway, tuition paid to state universities etc.), and all other revenue. All told, a one percent point increases in the old-age dependency ratio would decrease state fiscal balance by $104/person.

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