All You Need is LOV? Quasi-market Governance and Coordination Costs in Swedish Municipal Social Care

Sammanfattning

This paper examines the coordination costs of extending quasi-market governanceacross multiple public service domains simultaneously, drawing on temporal andregional variation in the voluntary adoption of Sweden’s Act on System of Choice(LOV) across 290 municipalities from 2009 onwards. A difference-in-differencesdesign is applied across three domains: elderly home care, disability services, andsocial welfare. In elderly home care alone, LOV adoption produces no detectabledeterioration in care quality or coverage. The main finding is that extending choicegovernance into social welfare — which shares assessment infrastructure and budgetaryprocesses with elderly care — is associated with a significant fall in elderly homecare coverage (−1.4 percentage points, 20 per cent of the pre-adoption mean) andmunicipal nursing coverage (−1.4 to −5.3 percentage points, 12 to 47 per cent of thepre-adoption mean). Public expenditure and staffing are uniformly null, consistentwith non-contractible quality deterioration under incomplete contracts rather thanfiscal or labour channels. Administrative overload, not competition, shapes outcomes.