Privatization and Quality: Evidence from Elderly Care in Sweden

Giancarlo Spagnolo, Per Johansson, Mats Bergman and Sofia Lundberg ()

No 9939, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Non-contractible quality dimensions are at risk of degradation when the provision of public services is privatized. However, privatization may increase quality by fostering performance-improving innovation, particularly if combined with increased competition. We assemble a large data set on elderly care services in Sweden between 1990 and 2009 and estimate how opening to private provision affected mortality rates ? an important and not easily contractible quality dimension ? using a difference-in-difference-in-difference approach. The results indicate that privatization and the associated increase in competition significantly improved non-contractible quality as measured by mortality rates. It also reduced the cost per resident, although left total cost unaffected.

Keywords: Competition; Incomplete contracts; Limited enforcement; Mortality; Nursing homes; Outsourcing; Performance measurement; Privatization; Procurement; Public services (search for similar items in EconPapers)
JEL-codes: H57 I18 L33 (search for similar items in EconPapers)
Date: 2014-04
New Economics Papers: this item is included in nep-age, nep-eur and nep-hea
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Privatization and quality: Evidence from elderly care in Sweden (2016)
Working Paper: Privatization and Quality: Evidence from Elderly Care in Sweden (2012)
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