Privatization of Public Social Services: A Background Paper
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Privatization of Public Social Services
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Children and Youth
DEMETRA SMITH NIGHTINGALE, NANCY M. PINDUS
This paper was prepared at the Urban Institute for U.S.
Department of Labor, Office of the Assistant Secretary for Policy, under DOL Contract No. J-9-M-5-0048, #15. Opinions expressed are those of the authors and do not necessarily represent the positions of DOL, the Urban Institute or its sponsors.
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The views expressed are those of the author and do not necessarily reflect those of the Urban Institute, its board, its sponsors, or other authors in the series
Document date: October 15, 1997
Released online: October 15, 1997
Families and Parenting
The purposes of the paper are to provide a general overview of the extent of privatization of public services in the areas of social services, welfare, and employment; rationales for privatizing service delivery, and evidence of effectiveness or problems. Examples are included to highlight specific types of privatization and actual operational experience. The paper is not intended to be a comprehensive treatment of the overall subject of privatization, but rather a brief review of issues and experiences specifically related to the delivery of employment and training, welfare, and social
The key points that are drawn from a review of the literature are:
Health and Healthcare
Measurement / Mgmt
Poverty, Assets and
Race, Ethnicity, Gender
Retirement and Older
Health Policy Center
Income & Benefits
Justice Policy Center
& Communities Policy
There is no single definition of privatization. Privatization covers a broad range of methods and models, including contracting out for services, voucher programs, and even the sale of public assets to the private sector. But for the purposes of this paper, privatization refers to the provision of publicly-funded services and activities by non-governmental entities.
Privatization is not a new concept. The current rationales for privatization and their implementation strategies differ very little from earlier privatization initiatives (even as early as the 1930s). Perhaps the biggest single change in the current privatization environment in the area of social and human services is the possibility of private companies being contracted with to administer entire public-funded systems (e.g., all of welfare, all of child support, all of workforce development). The real issue is not so much public vs. private--it is monopoly vs. competition. A key issue in the current trend towards what is commonly referred to as "privatization" is the introduction of competition (e.g., public-public competition, public-private competition, competition between public-private ventures, publicnonprofit competition) to increase efficiency, reduce costs, and improve quality and customer satisfaction. Privatization is not inherently good or bad--the performance or effectiveness depends on implementation. The little empirical analysis comparing the effectiveness of public versus private service delivery shows no clear evidence that private service delivery is inherently more effective or...
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