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 governments. Preliminary evidence presented in this paper suggests that scaling down educational services is considerably more difficult than scaling up. The estimated per-enrollee cost increases associated with a 10 percent enrollment decline are four times larger than the cost decreases associated with a 10 percent enrollment increase. Regions with contracting populations will face additional challenges as a smaller working-age population bears the burden of funding pensions and retiree health plans for larger aging cohorts. While lower fertility can create a short run fiscal dividend as local governments serve fewer children, that dividend will only be realized if state and local public officials make efficient retrenchment a priority.

From Jeffrey Clemens, via the excellent Kevin Lewis.  As I think JFV mentioned lately, we have not done enough thinking about what a society with low TFR really is going to look like after a while.