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Privatization and quality: Evidence from elderly care in Sweden

Author

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  • Bergman, Mats A.
  • Johansson, Per
  • Lundberg, Sofia
  • Spagnolo, Giancarlo

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.

Suggested Citation

  • Bergman, Mats A. & Johansson, Per & Lundberg, Sofia & Spagnolo, Giancarlo, 2016. "Privatization and quality: Evidence from elderly care in Sweden," Journal of Health Economics, Elsevier, vol. 49(C), pages 109-119.
    • Handle: RePEc:eee:jhecon:v:49:y:2016:i:c:p:109-119
    DOI: 10.1016/j.jhealeco.2016.06.010
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    More about this item

    Keywords

    Competition; Incomplete contracts; Mortality; Outsourcing; Public procurement;
    All these keywords.

    JEL classification:

    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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