2013

Political Preferences and Public Sector Outsourcing

Reprint No. 2013:24

Author(s): Mikael Elinder and Henrik JordahlYear: 2013 Title: European Journal of Political Economy Volume (No.): 30 (June) Pages: 43–57
Online article (restrictions may apply)
Preliminary version


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.


Reference:
Elinder, Mikael and Henrik Jordahl (2013), "Political Preferences and Public Sector Outsourcing". European Journal of Political Economy 30(June), 43–57.

Henrik Jordahl

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henrik.jordahl@ifn.se

Mikael Elinder

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Ph: +46 18 471 1565
Mob: +46 70 769 0976
mikael.elinder@ifn.se

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