The Social and Fiscal Consequences of Urban Decline: Evidence from Large American Cities, 1980–2010

Abstract

We examine the fiscal consequences of sustained population loss in American cities. We find the starkest difference between growing and declining cities in their levels of social and economic distress: Declining cities have higher rates of poverty and crime. Our evidence also suggests that shrinking cities have less fiscal capacity than growing cities, although this relationship is complicated by an apparent nonlinearity: Shrinking and rapidly growing cities both have less fiscal capacity than high-demand cities that grow slowly. Lastly, both high distress and low fiscal capacity appear to predict further population loss. Together, our evidence suggests that population loss may both increase social problems and decrease the resources available to solve them, and that declining cities may enter vicious cycles that perpetuate further decline.