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Abstract

The generalisation of outsourcing the provision of public goods and services raises the question of whether this is a cost-efficient measure. There is no consensus about the expected impact of an increase in the outsourcing level on public expenditure from the theoretical literature, and there is little empirical evidence. Thus, we exploit a panel of seventeen Spanish regions from 2002 to 2018 in order to estimate the relationship between the level of outsourcing and public spending. Our estimates suggest that for these regional governments an increase in outsourcing has entailed a rise in public spending