Efficiency of Public Expenditure in Education and Health

This paper measures the efficiency of public spending in the education and health sectors using Stochastic Frontier Analysis (SFA) and Data Envelopment Analysis (DEA).

Highlights:

• We estimate efficiency of public expenditure in education and health across EU Member States.
• We apply both Stochastic Frontier Analysis (SFA) and Data Envelopment Analysis (DEA). 
• We observe that countries operate near their efficiency frontiers for quantitative outcomes (tertiary education attainment rates and life expectancy at 65) 
• Significant gaps exist for qualitative targets (PISA scores and years of healthy life expectancy at 65).
• DEA analysis suggests the presence of decreasing returns to scale in both domains. 
• Malmquist index calculation points to technological shifts of the frontier to have a role in explaining changes in efficiency over time.

Information and identifiers

Discussion Paper 217. December 2024. Brussels. PDF. 52pp. Tab. Graph. Bibliogr. Free.

KC-01-24-008-EN-N (online)
ISBN 978-92-68-23515-7 (online)  
ISSN 2443-8022 (online)
doi: 10.2765/2628664) 

JEL classification: H40, H51, H52, I11, I21.

Disclaimer

European Economy Discussion Papers are written by the staff of the European Commission’s Directorate-General for Economic and Financial Affairs, or by experts working in association with them, to inform discussion on economic policy and to stimulate debate. The views expressed in this document are solely those of the author(s) and do not necessarily represent the official views of the European Commission.