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This article presents the results of a systematic review of international studies on economic and quality effects of contracting out published in the period from 2000 to 2014. We conducted a comprehensive search of the literature and identified 49 relevant studies. There are three main findings of the systematic review: (1) cost savings documented in international contracting out literature have been decreasing over time; (2) cost savings have been much greater in technical services than in social services; and (3) economic effects have been twice as large in Anglo-Saxon countries compared with other countries. With regard to measuring the effect of contracting out on service quality, which is a vital component of any service delivery arrangement, very few studies assess this issue in a comprehensive manner. There is also a significant lack of studies that include measures of transaction costs, thereby making it difficult to evaluate the impact of contracting out on overall costeffectiveness of public service delivery. We conclude that generalization of effects from contracting out should be made with caution and are likely to depend, among other things, on the transaction costs characteristics of the service, the market situation and the institutional/regulatory setting.

The past decades have witnessed an upsurge in governments' use of contracting out as a means of reforming and privatizing public service delivery. This development has to a large extent been driven by efficiency and cost-effectiveness concerns, but may also result in important changes in the working conditions and work environment for the personnel in public organizations. In this article, we present the findings from a systematic review of studies documenting the consequences of contracting out for employees. The review is based on 26 empirical studies published between 2000 and 2012. We find both positive and negative effects for employees documented in the literature, although with a predominance of negative effects, including reductions in the workforce and other changes in the workforce composition such as the replacement of experienced employees with younger workers, poorer working conditions, lower salaries, fewer benefits and reduced job satisfaction. We conclude that poorer conditions for the public service personnel are well documented as a short term consequence of contracting out, while more studies covering a longer time-span are needed in order to assess whether the predominantly negative effects are transitory or will persist over time.

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