A marketization process in dispute: An analysis of serviced housing for the elderly in Finland, 2000–14

Marketization can be viewed as a potential response to the economic challenges of the public sector. The present study is focused on the development of marketization in serviced housing for the elderly in municipalities within Finland. Marketization is approached by asking the question: What kind of municipality‐level factors are associated with marketization and its development? The data consist of 290 municipalities and cover the years 2000–14. According to the study, the size of the municipality, the political distribution of the municipality council, and the economic situation of the municipality are found to be associated with marketization. More preciesly, the municipality size was found to be a kind of prism, which creates two different realities when it is linked with political distribution and transfers. In the case of big municipalities, the big share of Green‐Left council members on municipality councils has been associated with a low level of marketization. However, in the case of small‐ and medium‐sized municipalities, the low level of marketization has been associated with the government statutory transfers between the state and municipalities, which has helped smaller municipalities to avoid fiscal stress. In a policy context, the present study suggests that the marketization process can be slowed down by supporting the economically weakest municipalities to avoid fiscal stress. On the other hand, the marketization process can be supported by creating bigger municipalities which are then attractive enough to create an effective market mechanism.