The Efficiency of Public Spending on Education: an empirical comparison of EU countries

Abstract

Recent policy suggestions from the European Community underlined the importance of “efficiency” and “equity” in the provision of education while, at the same time, the European countries are required to provide their educational services by minimizing the amount of public money devoted to them. In this paper, an empirical study compares the spending efficiency on education in 20 European countries during the period 2006-2009. OECD-Pisa test scores are used as output, while the “expenditure per student” has been used as the input. The efficiency scores are calculated via a bootstrap Data Envelopment Analysis (DEA) procedure. In a second stage, the efficiency scores are regressed against a set of context variables, which represent the different socio - economic settings (e.g., GDP per capita, unemployment rate, etc.) as well as some important “structural” characteristics of the educational systems. Teachers’ salaries and internet usage (as a proxy for technological “literacy”) play a positive role in affecting educational performance, while GDPpc is negatively related to efficiency. Lastly, Malmquist indexes are calculated to measure the change in efficiency in the period 2006-2009; the results showed that the average efficiency remained basically stable in the period.

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