Did New Public Management Matter? An empirical analysis of the outsourcing and decentralization effects on public sector size

Did New Public Management (NPM) actually lead to a smaller public sector? NPM has been the subject of extensive academic debate as to its successes and failures. However, empirical assessments of whether NPM reached its stated objectives are relatively scarce, mainly due to the difficulty of quantifying the impact of such reforms. This article attempts to do this, focusing in particular on outsourcing and decentralization. Our findings suggest that government outsourcing did not reduce public sector size, though decentralization policies resulted in a smaller public sector, particularly with regard to government expenditure.