Einwohnerveredelung im Länderfinanzausgleich: Defizite und ein Alternativvorschlag

The relation between per capita public expenditures und population density is implemented in specific population weights, which are used in the German financial equalization schemes. The population weights simulate above-average financial requirements of regions leading to higher transfers. The literature controversially discusses the specific weighting of population. For this reason this paper proposes a significant improvement of the present practice to determine municipal financial requirements on German states level with a higher accuracy. The German financial equalization scheme for the German states balances the tax revenues for the German states as well as the local municipals. So the paper analyzes municipal characteristics und combines these to a specific population weighting. The previous practice of population weighting cannot reflect the situation of German states like Bavaria, where are regions with high population densities as well as rural areas. Furthermore, the population weights should be continually adjusted to the structures of urban development. The paper analyzes the changing financial requirements of German states for a short period of two years only. Moreover the introduced model leads to an elimination of disadvantages for fusions between ‘Stadtstaaten’ and ‘Flächenländern’ by the differentiated observance of local municipal requirements.