Academic journal article Journal of the Community Development Society

The Economic and Fiscal Impacts of the Elderly on a Small Rural Region

Academic journal article Journal of the Community Development Society

The Economic and Fiscal Impacts of the Elderly on a Small Rural Region

Article excerpt


Recruiting retirees is a popular economic development strategy for rural communities. Previous research finds positive economic and fiscal impacts in communities, but it tends to assume that the elderly are homogeneous and to concentrate on planned retirement communities. At the same time, concerns are expressed that older and low-income retirees will be a burden for local government. Using a quasi-experimental design, the economic and fiscal impacts of various groups of retirees classified by age and income on a rural region in Wisconsin are simulated. All groups have positive economic benefits for the region. The impacts of the different groups of elderly vary by their income and the size of their households. Contrary to the expectations of some, all groups of retirees provide positive net fiscal impacts for local governments.

Keywords: economic and fiscal impacts, models, elderly migration, retirement



Recruiting retirees as a rural development strategy has been extensively documented in this Journal. Although initially controversial, this strategy has been largely vindicated by applied research showing that in-migrating retirees have significant positive economic impacts on the rural communities to which they migrate. Over the past 20 years, retirement counties as identified by the USDA-ERS (1) have experienced above average population and income growth (Cook & Hady, 1993; Deller, 1995; Walzer & Deller, 1996). Because the number of retirees is expected to increase as the baby boom generation ages, attracting retirees seems an even more promising strategy for the future. As a result, both states and individual communities have initiated programs to attract retirees (Fagan & Longino, 1993; Reeder, Hopper, & Thompson, 1995).

While previous research shows in-migrating retirees benefit rural communities, the literature has focused primarily on the impacts of younger, newly retired, affluent individuals who move permanently to planned-retirement communities. However, concentrating research efforts on this segment of the population neglects the fact that retirees differ substantially among themselves. Stallmann and Jones (1995) point out that retirees are not only heterogeneous but also attracted to different types of communities. The ramification of this diversity is that the economic and fiscal impacts may differ by both the type of retiree and the type of community (Stallmann & Siegel, 1995). To date, this topic has been largely ignored in the literature.

Another shortcoming of previous research is the concern that the positive economic and fiscal impacts of in-migrating retirees hide longer-run increased health care and costs of human services, a phenomenon that Longino (1988) has dubbed the "gray peril." Longino points out that while the issue is often raised, "Nowhere is the direct impact of such migration on government expenditures estimated. Nor are there studies that compare the aggregate or per capita impact of younger and older migrant households on different types of government expenditures ..." (p. 453).


In this paper, we use an economic and fiscal impact model to investigate the differential impacts of heterogeneous retiree populations. Specifically, we examine how different "types"--characterized by age and income--of retirees uniquely affect local employment, income, and government expenditures and revenues. Our objective is to expand the knowledge-base concerning how impacts can vary according to the retiree characteristics. This information should be useful to communities as they try to assess the range of potential impacts of retiree recruitment.

Our first contribution is the explicit recognition of heterogeneity among retirees and providing comparisons among groups of retirees. As noted above, previous research treats retirees as homogeneous or focuses on a particular group of retirees without a comparison. …

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