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Contracting Out Local Services: A Tale of Technical and Social Services
Author(s) -
Petersen Ole Helby,
Houlberg Kurt,
Christensen Lasse Ring
Publication year - 2015
Publication title -
public administration review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.721
H-Index - 139
eISSN - 1540-6210
pISSN - 0033-3352
DOI - 10.1111/puar.12367
Subject(s) - ideology , social welfare , business , social security , danish , database transaction , service (business) , battlefield , transaction cost , interdependence , economics , politics , finance , marketing , market economy , political science , law , ancient history , linguistics , philosophy , computer science , history , programming language
Governments face a fundamental choice between in‐house production and contracting out for the delivery of services to citizens. This article examines the importance of ideology, fiscal pressure, and size for contracting out in technical and social services. The analysis builds on a panel data set covering municipal spending on services in all 98 Danish municipalities. The authors find that contracting out is shaped by ideology in social services but not in technical services, which indicates that social services are the contemporary ideological battlefield of privatization. The analysis further reveals that economically prosperous municipalities are more likely to contract out social services, whereas contracting out of technical services is not influenced by economic affluence. Finally, larger municipalities contract out more in technical services but less in social services, demonstrating that the size effect is contingent on the transaction cost characteristics of the service.