Abstract
Social impact bonds (SIBs), also known as Pay for Success, are an innovation in Payment by Results contracting. Investors finance programs and are repaid based on the “SIB effect,” which includes changes in outcomes attributable to financing. We generate a quantitative estimate of this part of the SIB effect for two active labor market programs in the Netherlands and Switzerland. Comparing program impacts within providers using SIB and non-SIB contracts suggests financing has positive impacts on public benefit receipt, employment, and income. Qualitative research suggests this is because SIB contracts increased pressure for all involved parties, leading to the institutionalization of selection and greater resources for SIB-financed services. Contracts with high pressure, like SIBs, may compromise both performance requirements and the potential to measure performance. We examine the implications of these findings in relation to agency and stewardship theories and highlight the significance of SIBs as multilateral as opposed to bilateral contracts.
| Original language | English |
|---|---|
| Pages (from-to) | 930-946 |
| Number of pages | 17 |
| Journal | Public Administration Review |
| Volume | 83 |
| Issue number | 4 |
| DOIs | |
| Publication status | Published - 1 Jul 2023 |
Bibliographical note
Publisher Copyright:© 2023 The Authors. Public Administration Review published by Wiley Periodicals LLC on behalf of American Society for Public Administration.
Funding
We would like to thank the Swiss Network for International Studies for funding our project. The project has also benefited from working with the Swiss Federal Statistics Office, Statistics Netherlands, and the International Labour Organization's Department of Social Finance. This paper has been long in the making, and we are indebted to more people than we can mention here by name. We received valuable feedback on our early ideas and drafts of the paper from colleagues at BFH in Bern and KBS in London, as well as colleagues affiliated with the GO Lab in Oxford. Finally, we thank the anonymous reviewers and the editor at PAR for very thoughtful and constructive feedback. Open access funding provided by Berner Fachhochschule. We would like to thank the Swiss Network for International Studies for funding our project. The project has also benefited from working with the Swiss Federal Statistics Office, Statistics Netherlands, and the International Labour Organization's Department of Social Finance. This paper has been long in the making, and we are indebted to more people than we can mention here by name. We received valuable feedback on our early ideas and drafts of the paper from colleagues at BFH in Bern and KBS in London, as well as colleagues affiliated with the GO Lab in Oxford. Finally, we thank the anonymous reviewers and the editor at PAR for very thoughtful and constructive feedback. Open access funding provided by Berner Fachhochschule. 1
| Funders | Funder number |
|---|---|
| Swiss Network for International Studies |