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Economies of scale in public education: an econometric analysis

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  • K. Chakraborty
  • B. Biswas
  • WC. Lewis
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    Abstract

    This article investigates the sources of scale economies in the production of public education. The relationship between the average cost of producing educational output and school characteristics including school and district size is estimated using a neoclassical cost function. The empirical analysis used panel data from Utah school districts and estimates the function using the covariance and error component models after making necessary corrections for heteroskedasticity and autocorrelation. The uncorrected fixed effects model generates a significant negative coefficient on district size in both the cost and expenditure functions; the coefficient on number of students has the hypothesized sign but is not significant in either equation. After making various corrections for autocorrelation and heteroskedasticity, the coefficients have the correct signs and are significant in all equations. Thus, it is concluded that scale economies arise from both sources but that the evidence is stronger for district size. Copyright 2000 Western Economic Association International.

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    Bibliographic Info

    Article provided by Western Economic Association International in its journal Contemporary Economic Policy.

    Volume (Year): 18 (2000)
    Issue (Month): 2 (04)
    Pages: 238-247

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    Handle: RePEc:bla:coecpo:v:18:y:2000:i:2:p:238-247

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    Cited by:
    1. Brennan, Shae & Haelermans, Carla & Ruggiero, John, 2014. "Nonparametric estimation of education productivity incorporating nondiscretionary inputs with an application to Dutch schools," European Journal of Operational Research, Elsevier, vol. 234(3), pages 809-818.
    2. Haelermans, Carla & Ruggiero, John, 2013. "Estimating technical and allocative efficiency in the public sector: A nonparametric analysis of Dutch schools," European Journal of Operational Research, Elsevier, vol. 227(1), pages 174-181.
    3. Ambrose Leung & J. Stephen Ferris, 2002. "School Size and Youth Violence," Carleton Economic Papers 02-10, Carleton University, Department of Economics, revised Feb 2008.
    4. Mehari Mekonnen Akalu, 2002. "Measuring and Ranking Value Drivers," Tinbergen Institute Discussion Papers 02-043/2, Tinbergen Institute.
    5. Brunner, Eric J. & Squires, Tim, 2013. "The bargaining power of teachers’ unions and the allocation of school resources," Journal of Urban Economics, Elsevier, vol. 76(C), pages 15-27.
    6. Heinesen, Eskil, 2005. "School district size and student educational attainment: evidence from Denmark," Economics of Education Review, Elsevier, vol. 24(6), pages 677-689, December.
    7. Haelermans, Carla & De Witte, Kristof, 2012. "The role of innovations in secondary school performance – Evidence from a conditional efficiency model," European Journal of Operational Research, Elsevier, vol. 223(2), pages 541-549.
    8. Driscoll, Donna & Halcoussis, Dennis & Svorny, Shirley, 2003. "School district size and student performance," Economics of Education Review, Elsevier, vol. 22(2), pages 193-201, April.
    9. Colegrave, Andrew D. & Giles, Margaret J., 2008. "School cost functions: A meta-regression analysis," Economics of Education Review, Elsevier, vol. 27(6), pages 688-696, December.

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