Henrik Christoffersen (), Anders Milhøj () and Thomas Westergaard-Kabelmann ()
Henrik Christoffersen: Cepos, Center for Politiske Studier, Postal: Landgreven 3, 1301 København. Danmark
Anders Milhøj: Københavns Universitet, Økonomisk Institut, Postal: Øster Farimagsgade 5, 1353 København
Thomas Westergaard-Kabelmann: Rambøll Management, Postal: Hannemanns Allé 53, 2300 København S, Danmark
Abstract: A handfull micro studies from Denmark alone have documented important cost savings or potential for cost savings by using outsourcing in the production of municipal services. At the macro level the Danish Economic Council has presented a model (in 2004) explaining the level of expenditure in the municipalities by the degree of outsourcing. The model found only limited effects on expenditure from outsourcing. In this article we investigate the results from that macro model using an expanded set of data covering two extra years. Our investigation shows that the model does not recognize that the municipalities are not focused on budget minimization but on service provision, so that savings in one field is used to expand expenditures in other fields. Consequently, we propose an alternative approach to estimate the total economic effect from expanding the use of outsourcing in the Danish municipalities.
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