Privatization and quality: Evidence from elderly care in Sweden.

J Health Econ

Stockholm School of Economics (SITE), EIEF, Centre for Economic Policy Research (CEPR), University of Rome 'Tor Vergata', Italy.

Published: September 2016

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.

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http://dx.doi.org/10.1016/j.jhealeco.2016.06.010DOI Listing

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