Improving Local Government Performance Through the Use of Contract Workers: A Case From South Korea

• Published date: 01 March 2025
• DOI: http://doi.org/10.1177/0734371X241291610
• Author: Naon Min,Jongseong Lee
• Date: 01 March 2025
• Subject Matter: Articles

https://doi.org/10.1177/0734371X241291610

Review of Public Personnel Administration

2025, Vol. 45(1) 172 –200

© The Author(s) 2024

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DOI: 10.1177/0734371X241291610

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Article

Improving Local Government

Performance Through the

Use of Contract Workers:

A Case From South Korea

Naon Min1 and Jongseong Lee2

Abstract

Policymakers in many countries have employed market approaches to supplement

traditional civil service systems, and using contract employees is a form of this labor

resourcing strategy. Although business studies have suggested that contract-based

employment may enhance organizational performance, few studies have explored

this relationship in the field of public administration. This study examines whether the

use of contract employees is associated with organizational performance in the public

sector. Based on the New Public Management (NPM) literature, this study develops

hypotheses and tests them using two-way fixed effects models with 18 months of

longitudinal data (2018–2019) from 2,912 neighborhood offices in South Korea. The

results reveal that local governments with a greater number of contract employees

are more likely to outperform doorstep health service delivery. The implications for

the management of contract workers in the public sector are discussed.

Keywords

contract employment, home-visit healthcare program, two-way fixed effects model,

local government performance, local government HRM

Introduction

Policymakers and public managers have often emphasized bringing private expertise

into the public sector to improve the effectiveness of public service delivery (Su &

Bozeman, 2009). This trend has been encouraged by the New Public Management

(NPM), which stimulates governments to be more efficient and responsive, engaging

1Sookmyung Women’s University, Seoul, Korea

2Soongsil University, Seoul, Korea

Corresponding Author:

Jongseong Lee, Soongsil University, Sangdo-ro 369, Dongjak-gu, Seoul 06978, Korea.

Email: castle@ssu.ac.kr

1291610ROPXXX10.1177/0734371X241291610Review of Public Personnel AdministrationMin and Lee

research-article2024

Min and Lee 173

with various market approaches for the production and delivery of public services

(O’Toole & Meier, 2004). Particularly in labor resourcing in civil service systems, this

movement has often been characterized by staffing public agencies with temporary

workers recruited through contract-based employment.

Although many business studies have demonstrated the relationship between firms’

use of flexible workforce practices and corporate performance (e.g., Battisti & Vallanti,

2013; Berkery et al., 2017; Michie & Sheehan-Quinn, 2001; Roca-Puig et al., 2012;

Valverde et al., 2000), empirical studies on the influence of the new labor strategy on

public sector outcomes are lacking. Existing studies on public contract workers have

been primarily descriptive, reporting demographic statistics (Mastracci & Thompson,

2009), types of jobs or positions (P. Zhang, 2017), experiences of value differences (de

Graaf & van der Wal, 2008), and career consequences of contract employees (Bozeman

& Ponomariov, 2009). Others explored individual work outcomes, focusing on con-

tract employees’ attitudes and behaviors, such as job satisfaction, job involvement,

perceived job security, turnover intention, job stress, and burnout (Boardman et al.,

2010; Choi, 2017; Feeney, 2008; Flecker & Hermann, 2011; G. E. Hansen, 2023; N.

Hansen et al., 2009; G. R. Lee et al., 2019; Petersen et al., 2022; Vrangbæk et al., 2015;

Zuberi, 2011). However, limiting the research focus to either descriptions or individ-

ual consequences created a lack of knowledge regarding the organization-level out-

comes of contract employment. As decisions on adopting market strategies in the

public sector have often been made without careful consideration (Avery, 2000), this

study provides essential information on the impact of such decisions, which should be

considered before changing the civil service system.

This study investigates the influence of the use of contract workers on organiza-

tional outcomes in the public sector. In pursuit of this inquiry, we synthesize insights

from diverse discussions in research on New Public Management (NPM), and investi-

gate whether using contract employees in local governments influenced their perfor-

mance in providing home-visit healthcare services. Local governments have become

highly dependent on contracts and contract workers to deliver healthcare services.

Recent statistics indicate that approximately one-third of contingent workers in the

public sector are employed in healthcare or education services (U.S. Bureau of Labor

Statistics, 2018). In particular, home-visit programs are increasingly recognized as an

important part of the healthcare system (Minkovitz et al., 2016), where agencies often

contract workers to deliver home visitation services. Previous studies highlight the

effectiveness of home visits in terms of improving care management, identifying

needs, and reducing hospital use and overall health conditions (Boling & Leff, 2014;

Fraze et al., 2019; Minkovitz et al., 2016; Ruiz et al., 2017; Stijnen et al., 2014; Sweet

& Appelbaum, 2004); however, few have examined contract workers delivering home-

visit services (E. Kim et al., 2020).

This study focuses on contract workers in local governments in South Korea (here-

after Korea). In 2017, the Korean government initiated a nationwide home-visit

healthcare program to overcome geographical barriers and enhance community resi-

dents’ healthcare access. Health professionals were enlisted on a contractual basis as

part of this initiative, providing home-visit health services to communities. The