Political Preferences and Public Sector Outsourcing

Mikael Elinder and Henrik Jordahl

No 6632, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Given the intensive and ideologically charged debate over the use of private contractors for publicly funded services, it is somewhat surprising that many social scientists have preferred to explain government outsourcing by the pursuit of economic efficiency. Starting out from different theories, we investigate political explanations of government outsourcing using a Swedish data set in which outsourcing varies between municipalities and over time, as well as between services. Our identification strategy focuses on two services with similar contracting problems and local market conditions: preschools and primary schools. We study a period in which Swedish municipalities had full discretion in the provision of preschools, while their influence on the private provision of primary education was limited by a national voucher system. The comparison of preschools with primary schools in a difference-in-differences model suggests that the political color of the ruling majority influences outsourcing, which is consistent with the Citizen Candidate model of representative democracy.

Keywords: contracting out; public provision; ideology; outsourcing; child care; education (search for similar items in EconPapers)
JEL-codes: D23 H11 H40 L33 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2012-06
New Economics Papers: this item is included in nep-pol
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Published - published in: European Journal of Political Economy, 2013, 30, 43-57

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Related works:
Journal Article: Political preferences and public sector outsourcing (2013)
Working Paper: Political Preferences and Public Sector Outsourcing (2011)
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