Make or Buy for Public Services: Culture Matters for Efficiency Considerations

Details

Serval ID
serval:BIB_243DBDE5A67B
Type
Article: article from journal or magazin.
Collection
Publications
Institution
Title
Make or Buy for Public Services: Culture Matters for Efficiency Considerations
Journal
Quarterly Review of Economics and Finance
Author(s)
Athias Laure, Wicht Pascal
Publication state
In Press
Peer-reviewed
Oui
Language
english
Abstract
What determines the share of public employment in countries of similar levels of economic development, at a given size of the State? A standard answer from the public choice literature points to non-benevolent states, emphasizing the importance of constraints on their power. This paper challenges this view by investigating the role of culture and examining whether the relative cost-efficiency of public versus private provision varies across cultures. We build a representative database for contracting choices of municipalities in Switzerland and exploit the discontinuity at the Swiss language border at identical actual set of policies and institutions to analyze the causal effect of culture on the choice of how public services are provided. We find that French-speaking border municipalities are 60% less likely to contract with the private sector than their adjacent German-speaking counterparts. Technical dimensions are much smaller by comparison and their effects do not vary with culture, ruling out cultural bias in municipality choices. We further document that public provision, compared to private provision, increases cost-efficiency within French-speaking Swiss municipalities. These results resonate with the literature emphasizing that public bureaucracies are mission-oriented organizations whose organizational efficiency is enhanced through mission matching, but they also unveil that this mission matching is culturally determined.
Funding(s)
Swiss National Science Foundation / Projects / 100014-130459
Create date
31/03/2024 16:06
Last modification date
04/07/2024 7:02
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