Incentive Effects on Efficiency in Education Systems’ Performance

Giuseppe Coco and Raffaele Lagravinese

No 270, Working Papers from ECINEQ, Society for the Study of Economic Inequality

Abstract: In the face of past ambiguous results on growth effects of education when measured through school attainment, some papers suggest that some countries may be unable to use productively their schooling output because of the scope of cronyism. We dig deeper and demonstrate that, in a stylized model, cronyism in the labour market, e.g. the ability to exert influence to gain high wage positions without merit, may impact heavily on the relationship between schooling inputs and cognitive skills, due to incentive effects. We then use a two-stage DEA approach to identify factors affecting inefficiency in education performance of OECD countries when the output is proxied by PISA scores. Along with other well known factors, a measure of corruption, our chosen proxy for cronyism, explains a substantial fraction of the inefficiency. This result suggests that, as in our model, in the presence of cronyism, incentives to cognitive skills acquisition are dampened. Analogously to developing countries but for different reasons, the best way to improve the education system performance in OECD countries may well be to fight corruption and increase transparency in labour access.

Keywords: education; corruption; technical efficiency; DEA. (search for similar items in EconPapers)
JEL-codes: C14 C61 D73 I21 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2012-10
New Economics Papers: this item is included in nep-edu, nep-eff, nep-hrm, nep-lab and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:inq:inqwps:ecineq2012-270

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