Discussion paper

DP9939 Privatization and Quality: Evidence from Elderly Care in Sweden

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.

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Citation

Spagnolo, G (2014), “DP9939 Privatization and Quality: Evidence from Elderly Care in Sweden”, CEPR Press Discussion Paper No. 9939. https://new.cepr.org/publications/dp9939