Real estate taxation and other fiscal policies as regulators of growth in ageing regions

Abstract

Because of ageing, the availability of human resources is decreasing and only an increase in taxes can assure new public facilities for residents with declining functional capacities. Urban shrinkage is a remarkable phenomenon which cannot be convincingly explained by existing theories of urban growth, but it is strongly linked with the market in human resources in production economics. Within the human resource market, commuting or migration costs are compensated, thus influencing wage rates and/or land rent, capitalized on the value of residential properties. Therefore, those institutions that are planning the location and intensity of activities in the nodes of a supply chain should consider the influence of the required level of all kind of taxation, also the real estate, as well as the net wages, which depends on the spatial dispersion of the workers’ dwellings. Therefore, owners and managers of a supply chain also have to consider the fiscal policy in the region and the central location where they intend to invest in production or distribution unit. So, the intensity of the flow of items (in-process inventories) and intensity of the inflow of human resources interact in the area in which the activity cell is located and, together with tax policy and subventions, if such exist, influence the net expected profit of the business. Therefore, the paper presents an approach to the integration of the gravity model of spatially dispersed human resources with the supply systems described by extended MRP Theory, explicitly focused on the fiscal policy of the local authorities of a city and its functional region. The numerical examples show how the demographic projections which we calculated for 2019-2070, giving the ratio between active population and population 65+ in Slovenian regions influence the availability of human resources in the region, influencing the managerial decision of where to look for a workforce, and how these policies influence growth or decline of urban areas and their functional regions in the case of Slovenia.