Cultural Biases in Public Service Delivery: Evidence from a Regression Discontinuity Approach

Athias, Laure and Wicht, Pascal (2014): Cultural Biases in Public Service Delivery: Evidence from a Regression Discontinuity Approach.

Abstract

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 effect 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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Public service delivery, Contracting out, Make-or-buy decision, Culture, Regression discontinuity design
• Subjects: D - Microeconomics > D2 - Production and Organizations > D23 - Organizational Behavior ; Transaction Costs ; Property Rights; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D73 - Bureaucracy ; Administrative Processes in Public Organizations ; Corruption; H - Public Economics > H1 - Structure and Scope of Government > H11 - Structure, Scope, and Performance of Government; H - Public Economics > H4 - Publicly Provided Goods; L - Industrial Organization > L3 - Nonprofit Organizations and Public Enterprise > L33 - Comparison of Public and Private Enterprises and Nonprofit Institutions ; Privatization ; Contracting Out; Z - Other Special Topics > Z1 - Cultural Economics ; Economic Sociology ; Economic Anthropology

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