Employment, privatization, and managerial choice: Does contracting out reduce public sector employment?

Sergio Fernandez, Craig R. Smith and Jeffrey B. Wenger
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Sergio Fernandez: Indiana University, Postal: Indiana University
Craig R. Smith: University of Georgia School of Public & International Affairs, Postal: University of Georgia School of Public & International Affairs
Jeffrey B. Wenger: University of Georgia School of Public & International Affairs, Postal: University of Georgia School of Public & International Affairs

Journal of Policy Analysis and Management, 2007, vol. 26, issue 1, 57-77

Abstract: We examine the effects of governments' use of alternative service provision on public employment using panel data from a nationally representative sample of local governments. We model the effects of alternative service provision on the size of the public workforce and hypothesize that alternative provision jointly impacts both full- and part-time employment. We find evidence of an inter-relationship between these employment types. Our results from seemingly unrelated and 3SLS regressions indicate that full-time employment in the public sector declines when additional services are provided by for-profit providers, while part-time employment increases. The net employment effect in the public sector is negative when government services are moved to the for-profit sector. These combined effects result in a compositional shift toward more part-time public sector employment. © 2006 by the Association for Public Policy Analysis and Management

Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:wly:jpamgt:v:26:y:2007:i:1:p:57-77

DOI: 10.1002/pam.20227

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