The financial sustainability of public services as an instrument to combat depopulation in small and medium-sized municipalities

Abstract

Previous research identified influencing factors in sustainability of public services but exclusively in large local governments, despite the fact that depopulation is currently a serious problem that affects rural areas of many European countries. However, despite that >80 % of European municipalities have fewer than 5000 inhabitants, more work is needed on the factors influencing the financial sustainability of small local governments, that are being greatly affected by the loss of population. This study identifies influencing factors in the financial sustainability of local governments of different population sizes. We analyse the behaviour of 3625 Spanish municipalities during 2009–2017. Our findings are useful for public managers interested in promoting the financial sustainability of small municipalities as an instrument to fight against depopulation and prevent effects of economics crisis in small and medium municipalities.