Public Procurement and Non-contractible Quality: Evidence from Elderly Care
Many quality dimensions are hard to contract upon and are at risk of degradation when the service is procured rather than produced in-house. On the other hand, procurement may foster performance-improving innovation. We assemble a large data set on elderly care services in Sweden for the 1990-2009 period, including survival rates, our measure of non-contractible quality, and indicators of subjectively perceived quality of service. We estimate the effects of municipalities’ decision to procure rather than produce in-house on non-contractible quality using a difference-in-difference approach and controlling for a number of other potential determinants. The results indicate that procurement significantly increases non-contractible quality as measured by survival rate, reduces the cost per resident but does not affect subjectively perceived quality.
|Date of creation:||06 Sep 2012|
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