Demand Side Factors of Local Public Services in Estonia

The goal of this paper is to quantitatively assess the relationships between the service structure and size and age structure of the population, as well as the income levels and employment structure of Estonian municipalities. The article consists of three parts. The first part deals with the relationships between the demand for local public services and the main parameters that characterize the population of a municipality based on existing theoretical and empirical studies. The second part outlines the relationship between the models of optimal public service delivery areas and population structure and income levels. In the third part an empirical analysis is carried out to assess the relationship between the structure of Estonian municipal expenditures (by service type) and population size and age structure, as well as work related income (salary) level and employment structure.