Care Gaps under Unequal Fiscal Capacity: Territorial Inequalities in Municipal Spending on Older People

Population ageing is increasing pressure on local welfare systems, but the capacity of municipalities to finance and provide services for older people differs substantially across territories. This paper studies municipal expenditure on older people in Italy, focusing on the large territorial disparities observed across municipalities and regions. Using municipality-level data for 2019, before the disruption caused by the COVID-19 pandemic, the paper investigates how cross-sectional differences in per capita expenditure are associated with indicators of local needs, fiscal resources and local policy orientation. We develop a parsimonious analytical framework linking municipal expenditure to potential financial needs, local policy orientation, and fiscal resources and co-financing. Under an explicit normalization, the framework allows us to construct model-based indicators of potential financial needs and their implied coverage by predicted municipal expenditure. The results document a marked territorial divide in spending on older people and suggests that municipal expenditure covers only a limited share of estimated needs and that unequal fiscal resources contribute substantially to territorial disparities. The findings highlight the importance of local fiscal capacity and intergovernmental financing arrangements in shaping access to local services for older people across territories.