Single-person household and local government expenditure: evidence from South Korea

Abstract The global rise in single-person households represents a significant demographic shift with profound implications for government policy, where the household serves as a primary unit of analysis. This study examines the implications of this trend on local government expenditure, focusing specifically on Korea, a nation grappling with unprecedented challenges such as low birth rates, an aging population, and a surge in single-person households. From a public financial perspective, we analyze the causal relationship between the increase in single-person households and local government spending through instrumental variable estimation. Our findings indicate that the expansion of single-person households leads to increased local government expenditure, with variations across age groups, urban-rural divides, and expenditure categories. Based on these findings, we discuss policy implications, emphasizing the need for tailored responses to address the evolving dynamics of household structures and their impact on public finances.