Understanding the Dynamic Effect of Contracting Out on the Delivery of Local Public Services

© 2015 Regional Studies Association. Máñez J., Pérez-López G., Prior D. and Zafra-Gómez J. L. Understanding the dynamic effect of contracting out on the delivery of local public services, Regional Studies. Contracting out is a mechanism through which the delivery of public services can be made more efficient. However, the process has yielded conflicting results. This paper presents a dynamic, mixed approach, incorporating an intertemporal frontier and a matching technique, to measure the short- and long-term effects of the implementation of contracting out on the efficiency of local public service delivery. The study demonstrates the existence of temporary inefficiency arising from the change in service management when contracting out takes place, followed by an increase in efficiency among municipalities that contract out, with respect to comparable municipalities that do not do so.