Emigration and fiscal gap in population-exporting region

Area of Science:

• Economics
• Public Finance
• Regional Science

Background:

• Emigration poses fiscal challenges for population-exporting regions.
• Limited research exists on the fiscal implications of population outflow for local governments.

Purpose of the Study:

• To analyze the long-term impact of emigration on the fiscal gap.
• To investigate the relationship between population outflow and fiscal revenue and expenditure dynamics.

Main Methods:

• Construction of a general equilibrium model for emigration and fiscal gap.
• Empirical verification using a two-step system Generalized Method of Moments (GMM) model.
• Case study focusing on Northeast China's long-term population migration.

Main Results:

• Emigration causes immediate economic losses, widening the fiscal gap.
• Population outflow expands fiscal revenue gaps through tax rate and base effects.
• While short-term fiscal expenditure gaps widen, local governments adapt in the long run.
• Increased emigration severity directly correlates with a larger fiscal gap.
• Efforts to attract populations may exacerbate fiscal gaps if emigration trends are irreversible.

Conclusions:

• Emigration significantly contributes to widening fiscal gaps in population-exporting regions.
• Understanding these dynamics is crucial for regions facing fiscal unsustainability.
• Policy interventions should consider the long-term fiscal consequences of population outflow.