Journal of Political Institutions and Political Economy > Vol 2 > Issue 2

Service Solvency and Quality of Life After Municipal Bankruptcy

Carolyn Abott, Department of Government and Politics, St. John's University, USA, , Akheil Singla, School of Public Affairs, Arizona State University, USA,
Suggested Citation
Carolyn Abott and Akheil Singla (2021), "Service Solvency and Quality of Life After Municipal Bankruptcy", Journal of Political Institutions and Political Economy: Vol. 2: No. 2, pp 249-280.

Publication Date: 10 Jun 2021
© 2021 C. Abott and A. Singla
Public economics,  Government,  Political economy,  Public administration,  Public policy,  Urban politics
Municipal bankruptcypublic financeservice solvencypublic safetyausterity


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In this article:
The Provision of Public Goods and Local Responses to Fiscal Stress 
The Possible Effects of Chapter 9 Bankruptcy on the Provision of Public Goods 
Data and Methods 
Empirical Framework 


Despite playing a critical role in the delivery of public goods to residents, American local governments face many resource-related challenges, including hard budget constraints, state restrictions on revenue generation, and declining economic bases. These situations can sometimes result in a perpetual cycle of fiscal stress, thereby harming residents via the impaired delivery of public goods. This research examines how an understudied and often maligned intervention — Chapter 9 of the federal bankruptcy code, or municipal bankruptcy — might affect residents via local government service delivery. After employing propensity score matching to generate a set of control governments that are fiscally similar prior to intervention, we assess the effects of filing for Chapter 9 on the delivery of public goods. We find that bankrupt governments make deeper cuts to expenditures across a variety of service areas relative to the counterfactual. We also show that these cuts are concentrated in the area of public safety and policing but that these cuts come with an apparent improvement to service quality via increases to crime clearance rates and no negative effects on crime rates. This suggests that Chapter 9 may provide local governments the space to reorganize their fiscal profiles in ways that are politically-untenable during normal times but potentially yield improved public goods at a lower cost for residents.



Journal of Political Institutions and Political Economy, Volume 2, Issue 2 Special Issue - Local Political Economy
See the other articles that are part of this special issue.