Scandinavian Working Papers in Economics
Umeå Economic Studies,
Umeå University, Department of Economics
No 846: Public Procurement and Non-contractible Quality: Evidence from Elderly Care
Mats A. Bergman (), Sofia Lundberg () and Giancarlo Spagnolo ()
Additional contact information
Mats A. Bergman: Södertörns högskola Institutionen för samhällsvetenskaper, Postal: S 141 89 Huddinge, Sweden
Sofia Lundberg: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden
Giancarlo Spagnolo: Stockholm School of Economics, Postal: P.O. Box 6501, SE-113 83 Stockholm, Sweden
Abstract: 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.
Keywords: incomplete contracts; privatization; procurement; quality; elderly care; mortality; outsourcing; nursing home; performance measurement
51 pages, September 6, 2012
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