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Political Preferences and Public Sector Outsourcing

There are several theoretical accounts of public sector outsourcing. We note that leading theories give different predictions of the influence of political variables and test the predictions on 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 provision of primary education was limited by a national voucher system. The comparison of preschools and primary schools in a difference-in-differences model suggests that the political color of the ruling majority matters for outsourcing, which is consistent with the citizen candidate model of representative democracy.

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Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 877.

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Length: 23 pages
Date of creation: 04 Jul 2011
Date of revision:
Publication status: Published as Elinder, Mikael and Henrik Jordahl, 'Political Preferences and Public Sector Outsourcing' in European Journal of Political Economy, 2013, pages 43-57.
Handle: RePEc:hhs:iuiwop:0877
Contact details of provider: Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Phone: +46 8 665 4500
Fax: +46 8 665 4599
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