Population Aging, Elderly Migration and Education Spending: Intergenerational Conflict Revisited

Abstract

Elderly have been increasingly targeted as a group to enhance economic development and the tax base in communities. A major factor in their rise in importance is the rapid increase in the number of retired elderly through aging of the U.S. population. While recent literature on elderly migration tends to focus on how elderly migration patterns are influenced by state fiscal variables, the reverse effect from elderly population on fiscal variables is very plausible as shown to be the case for estate, inheritance, and gift taxes by Conway and Rork (2006). In this paper, we reexamine the intergenerational conflict in education financing raised by Poterba (1997) using U.S. state and county level data that allows to analyze how preferences for education might vary across different elderly age groups, which has not been explored before. Moreover, this paper uses a variety of advanced econometric techniques to estimate the impact of elderly population and elderly migration on education spending. Our state and county regression results broadly support the presence of intergenerational conflict in education financing. We also find dramatic age heterogeneity in preferences for education spending among elderly migrants.