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.
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