The current economic crisis is increasingly affecting the public sector, requiring stricter control of deficits, and local administrations are not exempt from these requirements. Therefore, it is essential to consider management forms that may produce cost savings in the provision of public services. In this article we propose an evaluation of municipal waste collection and disposal services to determine whether single/joint or public/private municipal service provision, together with other factors including quality, political aspects, and the socio‐economic environment, most contribute to reducing costs. The results obtained for the period 2002–08 show that joint management (inter‐municipal cooperation) and public management (in relation to single and private management systems, respectively) have a greater effect on reducing the costs of this service. Thus, small and medium‐sized local authorities can identify formulas for reducing costs and thus be in a better position to overcome the economic crisis.

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Various studies have analyzed the relationship between fiscal stress and contracting out, but have failed to achieve conclusive results. In this article, we take a broad view of fiscal stress, addressed in terms of financial condition and studied over a lengthy period (2000-2010). The relationship between fiscal stress and contracting out is studied using a dynamic model, based on survival analysis, a methodology that enables us to take into account the effect of time on this relationship. As this study period includes the years of the Great Recession (2008-2010), we also highlight the impact of this event on the fiscal stress-contracting out relation. The results obtained suggest that taking into account the passage of time and conducting a long-term assessment of financial condition enable a more precise understanding of this relation. We also find that the Great Recession reduced the probability of local governments' contracting out public services.

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