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Applying voucher markets in rural local municipalities: fiscal capacity and competition in the Korean elderly program


  • Jae Bok Lee


Vouchers increase the level of social services offered at local levels. This results in new management for local governments and enhancing competition in remote areas becomes a challenge. This study explores whether constraints on the fiscal capacity of local governments relates to the promotion of provider-driven competition, which is different between urban and rural municipalities. As the elderly voucher program was established in 2007 in Korea, the analysis presents empirical evidence from a transitional perspective. The results show that low fiscal capacity of local governments promotes competition and there is no difference in the impact between rural and urban municipalities. The finding implies that uneven fiscal capacity may not exacerbate a deterioration of the provision to secure competition.

Suggested Citation

  • Jae Bok Lee, 2017. "Applying voucher markets in rural local municipalities: fiscal capacity and competition in the Korean elderly program," International Review of Public Administration, Taylor & Francis Journals, vol. 22(1), pages 32-44, January.
  • Handle: RePEc:taf:rrpaxx:v:22:y:2017:i:1:p:32-44
    DOI: 10.1080/12294659.2017.1292042

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    References listed on IDEAS

    1. King, Elizabeth M & Orazem, Peter F & Wohlgemuth, Darin, 1999. "Central Mandates and Local Incentives: The Colombia Education Voucher Program," World Bank Economic Review, World Bank Group, vol. 13(3), pages 467-491, September.
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    3. José Luis Zafra-Gómez & Manuel Antonio & Pérez Muñiz, 2010. "Overcoming Cost-Inefficiencies within Small Municipalities: Improve Financial Condition or Reduce the Quality of Public Services?," Environment and Planning C, , vol. 28(4), pages 609-629, August.
    4. Balaguer-Coll, Maria Teresa & Prior, Diego & Tortosa-Ausina, Emili, 2007. "On the determinants of local government performance: A two-stage nonparametric approach," European Economic Review, Elsevier, vol. 51(2), pages 425-451, February.
    5. Lars-Erik Borge & Torberg Falch & Per Tovmo, 2008. "Public sector efficiency: the roles of political and budgetary institutions, fiscal capacity, and democratic participation," Public Choice, Springer, vol. 136(3), pages 475-495, September.
    6. Daniel Pop & Roxana Radu, 2013. "Challenges to Local Authorities under EU Structural Funds: Evidence from Mixed Quasi-markets for Public Service Provision in Romania," Journal of Common Market Studies, Wiley Blackwell, vol. 51(6), pages 1108-1123, November.
    7. Le Grand, Julian, 1991. "Quasi-markets and Social Policy," Economic Journal, Royal Economic Society, vol. 101(408), pages 1256-1267, September.
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