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Public-sector outsourcing

Author

Listed:
  • Panu Poutvaara

    (University of Munich, Ifo Institute, and IZA, Germany)

Abstract

Outsourcing public provision of services tends to lower labor intensity and increase its efficiency. Costs are usually lower, but quality problems can affect services like health care and residential youth care. Consumer choice has stimulated innovation in education, but the picture is ambiguous for health care. Natural monopolies are unsuitable for outsourcing. Network services (public transportation) may be outsourced through public tenders. While some jobs may be lost in the short run, the long-term effects are generally positive for a wide variety of activities.

Suggested Citation

  • Panu Poutvaara, 2014. "Public-sector outsourcing," IZA World of Labor, Institute for the Study of Labor (IZA), pages 1-65, May.
  • Handle: RePEc:iza:izawol:journl:y:2014:n:65
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    References listed on IDEAS

    as
    1. Anders Böhlmark & Mikael Lindahl, 2015. "Independent Schools and Long-run Educational Outcomes: Evidence from Sweden's Large-scale Voucher Reform," Economica, London School of Economics and Political Science, vol. 82(327), pages 508-551, July.
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    3. Panu Poutvaara & Andreas Wagener, 2008. "Why is the public sector more labor-intensive? A distortionary tax argument," Journal of Economics, Springer, vol. 94(2), pages 105-124, July.
    4. Amaral, Miguel & Saussier, Stéphane & Yvrande-Billon, Anne, 2009. "Auction procedures and competition in public services: The case of urban public transport in France and London," Utilities Policy, Elsevier, vol. 17(2), pages 166-175, June.
    5. Andersson, Fredrik & Jordahl, Henrik, 2011. "Outsourcing Public Services: Ownership, Competition, Quality and Contracting," Working Paper Series 874, Research Institute of Industrial Economics.
    6. Elinder, Mikael & Jordahl, Henrik, 2013. "Political preferences and public sector outsourcing," European Journal of Political Economy, Elsevier, vol. 30(C), pages 43-57.
    7. repec:hrv:faseco:30727607 is not listed on IDEAS
    8. Felipe Barrera-Osorio & Mauricio Olivera & Carlos Ospino, 2009. "Does Society Win or Lose as a Result of Privatization? The Case of Water Sector Privatization in Colombia," Economica, London School of Economics and Political Science, vol. 76(304), pages 649-674, October.
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Niklas Potrafke, 2018. "Does public sector outsourcing decrease public employment? Empirical evidence from OECD countries," ifo Working Paper Series 267, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.

    More about this item

    Keywords

    public procurement; vouchers; outsourcing; health care; education; concession contracts;

    JEL classification:

    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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