Privatization and Quality: Evidence from Elderly Care in Sweden

52 Pages Posted: 2 Jun 2014

See all articles by Mats Bergman

Mats Bergman

Södertörn University, Stockholm

Per Johansson

IFAU - Institute for Labour Market Policy Evaluation; Uppsala University - Department of Economics; IZA Institute of Labor Economics

Sofia Lundberg

University of Umea - Department of Economics

Giancarlo Spagnolo

Stockholm School of Economics (SITE); Centre for Economic Policy Research (CEPR); University of Rome 'Tor Vergata'; EIEF

Date Written: April 2014

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, quality

JEL Classification: H57, I18, L33

Suggested Citation

Bergman, Mats A. and Johansson, Per and Lundberg, Sofia and Spagnolo, Giancarlo, Privatization and Quality: Evidence from Elderly Care in Sweden (April 2014). CEPR Discussion Paper No. DP9939, Available at SSRN: https://ssrn.com/abstract=2444962

Mats A. Bergman (Contact Author)

Södertörn University, Stockholm ( email )

Alfred Nobels allé 7, Flemingsberg
Stockholm, Stockholm 14189
Sweden

Per Johansson

IFAU - Institute for Labour Market Policy Evaluation ( email )

Box 513
751 20 Uppsala
Sweden
+ 46 18 471 70 86 (Phone)
+ 46 18 471 70 71 (Fax)

Uppsala University - Department of Economics ( email )

Uppsala, 751 20
Sweden

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Sofia Lundberg

University of Umea - Department of Economics ( email )

Umeå University
Umea, SE - 90187
Sweden

Giancarlo Spagnolo

Stockholm School of Economics (SITE) ( email )

P.O. Box 6501
Stockholm
Sweden

HOME PAGE: http://https://sites.google.com/site/giancarlospagnoloshomepage/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

University of Rome 'Tor Vergata' ( email )

Faculty of Economics - DEI
Via Columbia 2
Rome, RM 00133
Italy

EIEF ( email )

Via Due Macelli, 73
Rome, 00187
Italy

HOME PAGE: http://WWW.EIEF.IT

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