Outsourcing And The Pupil Transportation Industry In Minnesota: An Economic Evaluation

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.

Name thesis:degree_name

Ph.D. in Economics

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Economics

Year dc:date.available

2016

Author dc:creator

• Puozaa, Conrad Yelsong

Contributors dc:contributor

• Thomas Garrett
• Lane Gauthier
• William Chappell

• 2Sls
• Contract-Out
• Education
• Instrumental Variables
• Outsource
• Transportation Costs
• Economics

Repository record dc:identifier

https://egrove.olemiss.edu/etd/482

OAI identifier oai:identifier

oai:egrove.olemiss.edu:etd-1481