Economists’ Musings on Human Capital Investment: How Efficient is Public Spending on Education in EU Member States?

Erik Canton, Anna Thum-Thysen and Peter Voigt

No 81, European Economy - Discussion Papers from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission

Abstract: In this paper we perform stochastic frontier analyses to assess the quality of public spending on education in Europe. To measure the corresponding efficiency, three dimensions are taken into account: (1) quantity (tertiary educational attainment), (2) quality (PISA scores in the area of science), and (3) inclusiveness (proxied by the inverse of young people not in employment, training or education (NEET rates)). All EU Member States are covered over the period 2002 – 2015. Based on pooled and fixed effects regressions, the EU Member States' efficiency scores are assessed both with a view at an EU-wide frontier to allow for cross-country comparisons as well as concerning country-specific frontiers to identify individual trends and possibly remaining deficiencies. The results reveal that some Member States manage to achieve high efficiency in all observed output dimensions 'quantity', 'quality' and 'inclusion', such as e.g. the Netherlands and the United Kingdom - which implies that there is not necessarily a trade-off between the individual output dimensions. Evidence suggests, moreover, that most Member States made remarkable progress over time in terms of efficient use of public resources in reaching large numbers of highly educated young adults. With a view at quality and inclusiveness of public spending on education, however, in many Member States seems to remain still room (and need) for further improvements.

JEL-codes: H52 I2 I21 I26 I28 O15 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2018-06
New Economics Papers: this item is included in nep-edu and nep-eur
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:euf:dispap:081

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