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

21 Pages Posted: 29 Jul 2020

See all articles by Mats Bergman

Mats Bergman

Södertörn University, Stockholm

Henrik Jordahl

Örebro University - School of Business; Research Institute of Industrial Economics (IFN); CESifo; IZA

Sofia Lundberg

University of Umea - Department of Economics

Date Written: May 3, 2018

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

JEL Classification: H42, H75, I11, L33

Suggested Citation

Bergman, Mats A. and Jordahl, Henrik and Lundberg, Sofia, Choice and Competition in the Welfare State: Home Care as the Ideal Quasi-market (May 3, 2018). IFN Working Paper No. 1213, Available at SSRN: https://ssrn.com/abstract=3641954 or http://dx.doi.org/10.2139/ssrn.3641954

Mats A. Bergman

Södertörn University, Stockholm ( email )

Alfred Nobels allé 7, Flemingsberg
Stockholm, Stockholm 14189
Sweden

Henrik Jordahl (Contact Author)

Örebro University - School of Business ( email )

SE-70182 Orebro, Örebro SE-701 82
Sweden

HOME PAGE: http://https://www.oru.se/personal/henrik_jordahl

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

HOME PAGE: http://www.ifn.se/hj

CESifo ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

IZA ( email )

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

Sofia Lundberg

University of Umea - Department of Economics ( email )

Umeå University
Umea, SE - 90187
Sweden

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