Did New Public Management Matter? An Empirical Analysis of The Outsourcing and Decentralization Effects on Public Sector Size

Jose M. Alonso, Judith Clifton () and Daniel Díaz-Fuentes

MPRA Paper from University Library of Munich, Germany

Abstract: This paper evaluates whether reforms associated with the New Public Management (NPM) doctrine led to a reduction in public sector expenditure and employees. Savings and downsizing the public sector were a major justification when the international movement of public sector reforms began in the 1980s. Since then, NPM has been the subject of extensive academic debate as to its successes and failures. However, empirical assessments of whether NPM reached its stated objectives are relatively scarce, mainly due to the difficulty of quantifying the impact of such reforms. This paper is an attempt to do this, especially looking at outsourcing and decentralization. We test a number of hypotheses related to the outsourcing and decentralization effects on public sector expenditure and employees through an econometric analysis using a panel data model for eighteen European Countries over the period 1980 to 2010. The results suggest a positive correlation between the degree of outsourcing in the provision of public services and government spending in the short term. On the other hand we find that decentralization tends to decrease the size of general government, particularly in the long-run.

Keywords: New Public Management; outsourcing; decentralization; public sector size (search for similar items in EconPapers)
JEL-codes: H10 H63 H77 L33 (search for similar items in EconPapers)
Date: 2011-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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