Does Public Sector Outsourcing Decrease Public Employment? Empirical Evidence from OECD Countries

Munich Reprints in Economics from University of Munich, Department of Economics

Abstract: I examine the extent to which public sector outsourcing relates to public employment in Organisation for Economic Co-operation and Development countries. I use new panel data on public sector outsourcing. The sample includes 26 countries over the period 2009-2015. Contrary to common expectations, the results do not suggest that public sector outsourcing expenditure was negatively related to public employment in the full sample. The relation between public sector outsourcing and public employment, however, does vary across countries. If anything, the growth in public sector outsourcing in period t - 1 was positively correlated with the growth in public employment in period t. When public sector outsourcing gives rise to regrouping public employees but not reducing public employment, outsourcing may even increase inefficiencies in the public sector.

Date: 2019
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Published in Cesifo Economic Studies 4 65(2019): pp. 464-484

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Journal Article: Does Public Sector Outsourcing Decrease Public Employment? Empirical Evidence from OECD Countries (2019)
Working Paper: Does Public Sector Outsourcing Decrease Public Employment? Empirical Evidence from OECD Countries (2018)
Working Paper: Does public sector outsourcing decrease public employment? Empirical evidence from OECD countries (2018)
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