Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
We analyze the political determinants of municipal bankruptcy law. Our model predicts municipal-bankruptcy-law adoption should drive lower municipalities’ borrowing costs and higher municipal-bond-financed private investment. Ex-ante, weaker labor unions, stronger bondholders’ interests, and more effective courts should drive a higher likelihood of municipal bankruptcy law adoption. In our model, financial reform destroys union rents and fosters investment opportunities. These predictions are broadly consistent with extant evidence.