Date of Award
2016
Document Type
Dissertation
Degree Name
Ph.D. in Economics
Department
Economics
First Advisor
Thomas Garrett
Second Advisor
Lane Gauthier
Third Advisor
William Chappell
Relational Format
dissertation/thesis
Abstract
Private participation in the provision of public services is often promoted as a means to reducing production costs in the public sector. In this study, I test this result using a twelve-year panel dataset of 343 public school districts in Minnesota. The voting behavior of residents in the state’s House elections and school districts’ prior experience with contractors are used as instruments to control for the endogenous decision to outsource. The first stage results from fixed-effects two stage least squares (2SLS) regression show that the two instruments, population density and the number of school days increase the likelihood of outsourcing while wages have a negative effect. The second stage results, from the fixed-effects 2SLS regression show that the use of private contractors increases total transportation costs by 21 percent, a much greater effect than when the endogenous decision to outsource is ignored. However, as a share of total expenditure, outsourcing increases the ratio by about 2 percent; thus showing evidence of the cost burden that outsourcing imposes on school finances. The much smaller effect here however, may explain why school districts continue to use contractors despite the overwhelming empirical evidence against outsourcing.
Recommended Citation
Puozaa, Conrad Yelsong, "Outsourcing And The Pupil Transportation Industry In Minnesota: An Economic Evaluation" (2016). Electronic Theses and Dissertations. 482.
https://egrove.olemiss.edu/etd/482