Cost Savings? Maybe, But at What Price? An Investigation into How Fears of Redistribution Drive Local Privatization and Impact Minority Representation

Abstract

Local service privatization accounts for billions of dollars in annual spending and touches millions of Americans’ lives. But despite this magnitude, the factors motivating a local government’s decision to privatize are poorly understood. Drawing from previous work on privatization, redistributive policy preference, and the theory of representative bureaucracy, it is hypothesized that the presence of racial and ethnic minorities in a population is an important but heretofore unstudied contributor to this decision. Two Ordinary Least Squares regressions are conducted using nationally representative data. The weak findings in the first model and the inability to reject the null hypotheses in the second model suggest that race and ethnicity are unrelated to privatization. Additionally, both models’ failure to find a single statistically significant control variable calls previous findings into question. All of this indicates that the motivators of privatization are either yet to be discovered or extremely specific to each case.