How closures of local newspapers increase local government borrowing costs

Notre Dame finance professor Paul Gao and two colleagues from the University of Illinois at Chicago are presenting their research on the impact of newspaper closures on government costs at the Brookings Institution’s 2018 Municipal Finance Conference this week. He and colleagues Chang Lee and Dermot Murphy of the University of Illinois at Chicago co-wrote “Financing Dies in Darkness? The Impact of Newspaper Closures on Public Finance.” Read the blog post Brookings published on their research. 

The authors speculate that closing local newspapers increase government borrowing costs because (1) less information is publicly available, and (2) local officials are no longer monitored as closely, reducing the quality of governance. The authors show that newspaper closures are associated with deterioration in many government efficiency metrics, including government wage rates, government employees per capita, and tax dollars per capita.