Productivity and performance in the public sector

Mathieu Lefebvre, Sergio Perelman and Pierre Pestieau

Working Papers of BETA from Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg

Abstract: In times of budgetary difficulties it is not surprising to see public sector performance questioned. What is surprising is that what is meant by performance, and how it is measured, does not seem to matter to either the critics or the advocates of the public sector. The purpose of this paper is to suggest a definition, and a way to measure the performance of the public sector or rather of its main components. Our approach is explicitly rooted in the principles of welfare and production economics. We will proceed in two stages. First of all we present what we call the "performance approach" to the public sector. This concept rests on the principal-agent relation that links a principal, i.e., the public authority, and an agent, i.e., the person in charge of the public sector unit, and on the definition of performance as the extent to which the agent fulfils the objectives assigned to him by the principal. The performance is then measured by using the notion of productive efficiency and the "best practice" frontier technique. We then move to the issue of measuring the performance of some canonical components of the public sector (railways transportation, waste collection, secondary education and health care). We survey some typical studies of efficiency and emphasize the important idea of disentangling conceptual and data problems. This raises the important question that given the available data, does it make sense to assess and measure the performance of such public sector activities? In the second stage we try to assess the performance of the overall public sector. We argue that for such a level of aggregation one should restrict the performance analysis to the outcomes and not relate it to the resources involved. As an illustration we then turn to an evaluation of the performance of the European welfare states using the DEA approach.

Keywords: performance measure; best practice frontier; social protection. (search for similar items in EconPapers)
JEL-codes: C14 D24 H50 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-eff, nep-hme, nep-hrm and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ulp:sbbeta:2015-15

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