Buffering structural decline with place-based fiscal transfers in South Korea

Population decline and rapid aging are placing growing pressure on local governance, yet evidence remains limited on whether targeted fiscal transfers are associated with slower deterioration in shrinking regions. South Korea's 2021 Depopulation Area program provides a nationwide setting to examine this question. Using a district-level panel covering 2012–2024, this study estimates event-study and dose–response models linking local outcomes to designation timing and per-capita fund intensity. Because designation and funding intensity reflect targeted allocation, the estimates are interpreted as diagnostic evidence on relative post-designation trajectories rather than causal treatment effects. Population growth and youth net migration show no statistically detectable association with observed funding intensity over the short post-funding period, consistent with demographic inertia. The most stable pattern concerns housing vacancy: higher funding intensity is associated with lower vacancy rates within districts, a result that persists across exposure-timing, treated-only, baseline-vulnerability, and pre-allocation vacancy-change diagnostics. Associations for housing-stock aging and fiscal self-reliance are more specification-sensitive. Heterogeneity analyses suggest stronger vacancy-related adjustment in structurally vulnerable districts, although these subgroup patterns warrant cautious interpretation. Taken together, the results are consistent with selective functional buffering under structural demographic decline, most clearly in vacancy outcomes, while providing no evidence of short-run population reversal.