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Privatization and Quality: Evidence from Elderly Care in Sweden
Södertörns Högskola.
IFAU, Uppsala University.
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Economics. (Nationalekonomi)
Stockholm School of Economics SITE.
2014 (English)Report (Other academic)
Abstract [en]

Non-contractible quality dimensions are at risk of degradation when the provision of public services is privatized. However, privatization may increase quality by fostering performance-improving innovation, particularly if combined with increased competition. We assemble a large data set on elderly care services in Sweden between 1990 and 2009 and estimate how opening to private provision affected mortality rates--an important and not easily contractible quality dimension--using a difference-in-difference-in-difference approach. The results indicate that privatization and the associated increase in competition significantly improved non-contractible quality as measured by mortality rates. It also reduced the cost per resident, although left total cost unaffected.

Place, publisher, year, edition, pages
London, England: Centre for Economic Policy Research , 2014. no 9939
, CEPR Discussion Paper Series, ISSN 0265-8003 ; DP9939
Keyword [en]
competition; incomplete contracts; limited enforcement; mortality; nursing homes; outsourcing; performance measurement; privatization; procurement; public services; quality
National Category
Research subject
URN: urn:nbn:se:umu:diva-99852OAI: diva2:788333
Swedish Research Council
Available from: 2015-02-13 Created: 2015-02-13 Last updated: 2015-03-12Bibliographically approved

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