Employment, privatization, and managerial choice: Does contracting out reduce public sector employment?

Sergio Fernandez, Craig R. Smith, Jeffrey B. Wenger

Research output: Contribution to journalReview articlepeer-review

27 Scopus citations


We examine the effects of governments' use of alternative service provision on public employment using panel data from a nationally representative sample of local governments. We model the effects of alternative service provision on the size of the public workforce and hypothesize that alternative provision jointly impacts both full- and part-time employment. We find evidence of an inter-relationship between these employment types. Our results from seemingly unrelated and 3SLS regressions indicate that full-time employment in the public sector declines when additional services are provided by for-profit providers, while part-time employment increases. The net employment effect in the public sector is negative when government services are moved to the for-profit sector. These combined effects result in a compositional shift toward more part-time public sector employment.

Original languageEnglish (US)
Pages (from-to)57-77
Number of pages21
JournalJournal of Policy Analysis and Management
Issue number1
StatePublished - Dec 2007
Externally publishedYes

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Sociology and Political Science
  • Public Administration


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