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Cultural Biases in Public Service Delivery : Evidence from a Regression Discontinuity Approach
Chaire EPPP, IAE Panthéon-Sorbonne
Number of pages
Chaire Economie des Partenariats Public-Privé, Institut d'Administration des Entreprises
What determines the share of public employment, at a given size of the State, in countries of similar levels of economic development? While the theoretical and empirical literature on this issue has mostly considered technical dimensions (efficiency and political considerations), this paper emphasizes the role of culture and quantifies it. 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 e↵ect of culture on the choice of how public services are provided. We find that French-speaking border municipalities are 50% less likely to contract with the private sector than their German-speaking adjacent municipalities. Technical dimensions are much smaller by comparison. This result points out that culture is a source of a potential bias that distorts the optimal choice for public service delivery. Systematic differences in the level of confidence in public administration and private companies potentially explain this discrepancy in private sector participation in public services provision.
Public service delivery, contracting out, make-or-buy decision, culture, regression discontinuity design
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