  We study how Chapter 11 bankruptcies affect local legal labor markets. We
document that bankruptcy shocks increase county legal employment and
corroborate this finding by exploiting a stipulation of the law known as Forum
Shopping during the Court Competition Era (1991-1996). We quantify losses to
local communities from firms forum shopping away from their local area as
follows. First, we calculate the unrealized potential employment gains implied
by our reduced-form results. Second, we structurally estimate a model of legal
labor markets and quantify welfare losses. We uncover meaningful costs to local
communities from lax bankruptcy venue laws.
