Analysis of the Impact of Changes in Population Age Structure on Educational Fiscal Expenditure: Research Based on Provincial Panel Data from 1990 to 2023

Abstract

Against the backdrop of a deepening aging population, the allocation of public finances between pensions and education has become increasingly prominent. Using panel data from 31 Chinese provinces between 1990 and 2023, this study employs a two-way fixed effects model and a mediation effect model to examine how population aging affects local government education expenditure, its mechanisms, and spatiotemporal heterogeneity. The results indicate that population aging significantly suppresses education spending: a one-percentage-point increase in the old-age dependency ratio leads to an average reduction of about 453,000 yuan in provincial education expenditure. This effect is mainly driven by the fiscal crowding-out of social security spending, which accounts for up to 49% of the mediation effect. Regional heterogeneity is notable, with western China being a “high-risk area,” while the eastern region mitigates the adverse impact through higher urbanization and stronger fiscal capacity. Temporal analysis shows that the negative effect intensified significantly after the 2010s, aligning with rising pension insurance pressures. Policy recommendations are proposed to help address aging challenges and ensure sustainable educational investment.