Empirical Analysis of Contracting Out Local Government Services (From Privatizing the United States Justice System: Police, Adjudication, and Corrections Services From the Private Sector, P 82-106, 1992, Gary W Bowman, Simon Hakim, et al., eds. - See NCJ-137785)

• NCJ Number: 137790
• Author(s): D T Martin; R M Stein
• Date Published: 1992
• Length: 15 pages
• Sale Source: McFarland & Company, Inc.
• Publication Type: Survey
• Language: English
• Country: United States of America

Annotation

The contracting out of local governmental services is discussed from a theoretical perspective and then examined empirically, using data from a 1982-83 representative sample of cities with 10,000 or more population, to discover its effect on decisions of chief administrative officers (CAO's) with respect to public safety employment and expenditures.

Abstract

Much literature suggests that CAO's behave analogously to private-sector entrepreneurs, with the same incentive to restrict competition, and extract monopoly profits. Although public-sector entrepreneurs do not receive any direct monetary rewards from achieving efficiency, their salaries and benefits may reflect the size of the budget managed. Testing of a model of the relationships between contracting, employment, and expenditures revealed that contracting has a significant and negative effect on employment levels by function but no appreciable effect on spending for the same functions. Thus, contracting appears to reduce the number of police employees but to have little or no effect on the budgets of police agencies and other public safety agencies. Presumably, the public safety administrator uses the gains from contracting to increase the average salary of the remaining employees, thus compensating for the employment reduction's negative effect on the CAO and agency leader. Figure, tables, appended methodological information, notes, and 67 references