Association for Public Policy Analysis & Management

In recent decades, the issue of municipal public services and their provision has received much attention due to increasing demand for these services and the severe budgetary constraints often faced. In response to these pressures, new forms of service provision have arisen, as alternatives to the traditional choice between public and private provision, creating a complex range of possibilities for local governments.

Nevertheless, Hefetz and Warner (2007) and Warner (2008) have highlighted the existence of a shift in practice in countries such as the USA, the UK and New Zealand – each of which is characterised by a strong market orientation – toward ‘contracting back’ or ‘insourcing’, i.e., the reinternalisation and control of the management of public services. To complement the latter studies, further research is needed to examine and comprehend the particular characteristics of this process in countries where the continental traditional is prevalent, and where the outsourcing of public services has been carried out more selectively (Rhodes et al., 2012).

Therefore, the main aim of this paper is to analyse the process by which public services are contracted back in, and the drivers of this process, in the Spanish context. For this purpose, we conduct an analysis of the changes observed in the provision of public services (Water, Urban waste, Culture, Social Promotion, Transportation, Urban access) during the period 2002-2014, from diverse forms of joint (Agency, intermunicipal cooperation, private production with cooperation) with private or individual contracting out toward a remunicipalisation of the service for all Spanish small and medium sized municipalities with more than 1,000 inhabitants, a total of 3,245 municipalities. Among the factors influencing the decision to implement this ‘reverse contracting’, we consider the financial (different elements of financial condition) and political characteristics, of each municipality, the service cost prior to the decision to contract it back in, the technical quality of the service and previous experiences of neighbouring authorities (spillover effect) among others. Further, if any event of recent years has had a truly international impact, that event is the global financial crisis, or Great Recession (GR), for this reason, we consider it necessary to determine how GR has affected the remunicipalisation (dummy variable 2008-2014 period) of local authority services, as the Great Recession-remunicipalisation relation may well have changed in recent years due to the impact of this crisis. A survival analysis will be applied to a sample of Spanish municipalities. Our data allow us to include observations of the dependent variable over an extended period, and thus time-varying covariates are incorporated in our estimations. A survival (or duration) analysis takes into account that the probability of the municipality deciding to remunicipalise its services may vary over time. Thus, we determined the factors that influence the timing of the municipality’s decision to remunicipalise these services. The survival models implemented in this study are of the discrete time proportional hazard type, in which duration (time) is treated as a discrete variable, because the data are available only annually.