It is four times harder for a government to shrink its services for fewer people than it is to grow them for more people.
April 2, 2026
Original Paper
Implications of Low Fertility and Declining Populations for the Operations of US State and Local Governments
SSRN · 6506383
The Takeaway
Per-student costs in schools spike dramatically when enrollment drops because fixed costs and institutional inertia are extremely difficult to cut. This creates an 'efficiency trap' where shrinking a district by 10% is four times more expensive than the relative savings gained by growing it by 10%.
From the abstract
Declining fertility and population loss pose significant challenges for state and federal local governments responsible for providing a range of services to citizens, including education, health care, and infrastructure. Indeed, many areas are already experiencing outright population decline, with roughly half of U.S. counties losing population between 2010 and 2020. This paper examines how shrinking and aging populations affect the operations and fiscal sustainability of state and local governm