The Influence of Socio-Demographic Factors on Financial Sustainability of Public Services: A Comparative Analysis in Regional Governments and Local Governments

Abstract

In recent years, financial sustainability (FS) of public policies has become a key concept in all governmental levels due to the need for ensuring public services delivery for future generations. Prior research has been focused on the financial sustainability in local governments (LGs) although its findings suggested the need to analyze this magnitude in other levels of government because political decisions could be different in each type of public entity. So, FS has also become very relevant in the Regional Government (RGs) context because their public policies affect not only at the regional level but also the local one. Therefore, from a comparative approach, this paper seeks to identify socio-demographic factors which could influence on the financial sustainability, in the Spanish context for both LGs vs. RGS in order to establish public policies to make sustainable public goods and services. Findings demonstrate that differences in influential factors between these two levels of public administration exist: factors such as population size and foreign population could have an effect on the financial sustainability of both governmental levels while the unemployment rate, dependent population, and population density affect differently on LGs and RGs.

The Demographic and Economic Determinants of Financial Sustainability: An Analysis of Italian Local Governments

“…Regarding the level of immigration, in model 3, the negative coefficient indicates an increase in social spending without contributing to it, influencing financial sustainability negatively. However, it has to be noted that, differently from other countries [30,48], demographic variables were not statistically significant.…”

“…The analysis revealed that in the Italian context the demographic variables did not influence the level of financial sustainability, unlike in other European countries [30,48]. Therefore, according to these results, the policymakers do not need to consider demographic factors in the management of financial sustainability.…”

“…Therefore, this paper aimed to investigate the influence of demographic as well as economic factors on the financial sustainability of Italian local governments from the perspective of the public choice theory. Previous studies have explored some countries, in particular Spain [14][15][16]30,32,33,48]. A regression model was carried out to test several independent variables such as population density, population under 15 years, population over 65 years, level of immigration, current revenue on capital revenue, current expenditure on capital expenditure, financial autonomy, current equilibrium, and level of indebtedness and investments.…”

“…Furthermore, the population requires different services such as health, education, employment, social affairs, which increase the expenses [46,47]. Several scholars [30,32,33,48] have investigated the influence of these variables in the Spanish context. This study contributes to the academic debate by focusing on the Italian context.…”

Testing the Reliability of Financial Sustainability. The Case of Spanish Local Governments

“…For López-Subirés et al [6], the financial sustainability is a key dimension in the management of governmental organizations in many parts of the world, the monitoring of financial risk being one of the most important challenges to promote the transparency of local administration. Therefore, LG's managers and/or governments aim to find a fair and reliable model based on indicators to be able to measure the financial condition in order to achieve an alert system tool.…”