Assessing Education and Health Efficiency in OECD Countries Using Alternative Input Measures

Abstract

Efficiency of education and health provision in a sample of OECD countries is assessed by means of two alternative non-parametric methodologies: FDH and DEA. The efficiency frontier is estimated using both measures of expenditure and quantity inputs, as a country may well be efficient from a technical point of view but appear as inefficient if the inputs it uses are expensive. Only a small number of countries are efficient irrespective of sector or method: Finland, Japan, Korea and Sweden. Detected inefficiencies may be quite high in other countries, and, as these are two areas where public expenditure is predominant, these findings have strong policy implications.

Keywords: expenditure and education, expenditure and health, spending efficiency, production possibility frontier, FDH, DEA

JEL Classification: I18, I21, I28, H51, H52, C14