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Fiscal Balance Impacts of Government Outsourcing: Political Ideology as a Moderating Factor

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  • HOYONG JUNG

    (Seoul National University)

Abstract

Government outsourcing has emerged as a significant strategy for managing government organizations in the delivery of public goods and services, attracting considerable attention in the fields of public administration and policy studies. This study investigates the relationship between government out-sourcing and fiscal balance while examining the moderating role of left- and right-wing political ide-ologies. Employing panel analysis of data from 31 OECD countries over the period of 2009–2019, the findings indicate that government outsourcing negatively affects fiscal balance, resulting in an increase in the primary balance deficit. However, the impact varies based on political ideology. Specifically, conservative ideology is associated with enhanced fiscal soundness through outsourcing, while pro-gressive ideology is found to worsen fiscal balance. To infer the underlying mechanisms driving these outcomes, the study reveals that outsourcing, in conjunction with conservative ideology, is linked to reduced government expenditure and public employment. Conversely, progressive ideology is associ-ated with increased government expenditure and public employment.

Suggested Citation

  • Hoyong Jung, 2025. "Fiscal Balance Impacts of Government Outsourcing: Political Ideology as a Moderating Factor," Hacienda Pública Española / Review of Public Economics, IEF, vol. 253(2), pages 3-26, June.
  • Handle: RePEc:hpe:journl:y:2025:v:253:i:2:p:3-26
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    More about this item

    Keywords

    Outsourcing; Fiscal balance; Political ideology.;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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