I develop a model of public sector contracting based on the multitask framework by Holmström and Milgrom (1991). In this model, an agent can put effort into increasing the quality of a service or reducing costs. Being residual claimants, private owners have stronger incentives to cut costs than...

There are several theoretical accounts of public sector outsourcing. We note that leading theories give different predictions of the influence of political variables and test the predictions on a Swedish data set in which outsourcing varies between municipalities and over time as well as between...

A wide range of services provided by the public sector are credence goods, i.e., services for which the producer has private information whether a certain treatment is needed or not. This paper studies how ownership affects the incentives for producers to reveal such information to public...

In Sweden, a trust-based system of school performance evaluation meets a market-oriented school system with liberal entry conditions for voucher-funded private providers. National standardized tests are graded at the local school and what ultimately matters to students are teacher-set grades....

The Swedish school system suffers from profound problems with teacher recruitment and retention, knowledge decline, and grade inflation. Absenteeism is high, and psychiatric disorders have risen sharply among Swedish pupils in the last ten years. In this pioneering analysis of the consequences...

Can competition and the existence of profit-seeking actors in the school market improve educational quality? To see cost-efficient, long-term improvements, we identify the school system's capacity for knowledge-enhancing innovation as crucial and explore this question by examining Swedish...

Many countries have implemented quasi-markets to enhance entrepreneurship and innovation in welfare service provision. However, the benefits have generally been limited; this can also be observed in Sweden, a country which stands out for its extensive use of quasi-markets. Based on the Swedish...

Economic theory predicts that outsourcing public services to private firms will reduce costs, but the effect on quality is ambiguous. We explore quality differences between publicly and privately owned ambulances in a setting where patients are as good as randomly assigned to ambulances with...

This paper provides a comprehensive study on how attending a Swedish independent upper secondary school, instead of a public school, affects students' academic and short-term post-secondary outcomes. We apply two estimation methods to data on upper secondary applicants: 1. A value-added model...

This essay argues that the most crucial institution of any school system is its view of knowledge - from which virtually all other aspects of a school are derived: the content of its curricula, its pedagogical practices, and the incentives that motivate its members. To make this case, we outline...