Choice and Competition in the Welfare State: Home Care as the Ideal Quasi-market

Mats A. Bergman, Henrik Jordahl and Sofia Lundberg
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Mats A. Bergman: Södertörn University
Sofia Lundberg: Umeå University

No 1213, Working Paper Series from Research Institute of Industrial Economics

Abstract: We study a reform by which a standardized model of choice and competition was introduced in tax-financed home care in a majority of Swedish municipalities. The market for home care is of particular interest since it is close to the ideal quasi-market. For identification, we exploit the different timing of reform implementation across municipalities. We find that the introduction of free choice and free entry in home care increased perceived quality by about one quarter of a standard deviation without affecting costs. Since satisfaction is unrelated to the private market share, the underlying mechanism seems to be new choice opportunities rather than competition or an advantage of private providers.

Keywords: Choice; Competition; Privatization; Elderly care; New public management (search for similar items in EconPapers)
JEL-codes: H42 H75 I11 L33 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2018-05-03
New Economics Papers: this item is included in nep-com, nep-eur and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:1213

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