Public Provision vs Outsourcing of Cultural Services: Evidence from Italian Cities

Cultural policy often implies the transfer of public resources to private cultural institutions. In this contribution we focus on the determinants of a government’s choice between cultural transfers and in-house cultural production. We argue that in the cultural field transfers may be seen as a proxy for the value of outsourced services, and we make reference to the empirical literature on outsourcing of local public services. We consider Italian cities’ cultural policies in the1998-2008 period, a time when overall cultural expenditure shrank while cultural transfers increased. Using dynamic panel data analysis and controlling for specific characteristics of each city, we find that outsourcing of cultural services is negatively affected by cultural assets specificity and is more likely to occur in cities subject to fiscal stress. The results also highlight that the timing of elections affects the transfer of public resources to private cultural institutions.