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Technical Efficiency of the Brazilian Municipalities: Correcting Nonparametric Frontier Measurements for Outliers

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  • Maria Sousa

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  • Borko Stošić
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    Abstract

    In this paper we estimate the DEA technical efficiency for 4796 Brazilian municipalities, by applying a recently proposed “Jackstrap” method, which combines Bootstrap and Jackknife resampling techniques, to reduce the effect of outliers and possible errors in the data set. We perform calculations to identify and eliminate high leverage municipalities, using different variants of Data Envelopment Analysis (DEA), as well as Free Disposal Hull (FDH). Corroborating previous results, efficiency results for the Brazilian municipalities show a clear relationship between the size of the municipality and its efficiency scores. Indeed, under both DEA variants, smaller cities tend to be less efficient than larger ones hence indicating that the quality of the frontier adjustment improves significantly as the size of the municipality increases. We present arguments that may explain to some extent these findings, such as economies of scale and the excess spending due to revenue from royalties. However, such effects require further, more careful examination. Copyright Springer Science+Business Media, Inc. 2005

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    File URL: http://hdl.handle.net/10.1007/s11123-005-4702-4
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    Bibliographic Info

    Article provided by Springer in its journal Journal of Productivity Analysis.

    Volume (Year): 24 (2005)
    Issue (Month): 2 (October)
    Pages: 157-181

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    Handle: RePEc:kap:jproda:v:24:y:2005:i:2:p:157-181

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    Web page: http://www.springerlink.com/link.asp?id=100296

    Related research

    Keywords: data envelopment analysis; outlier detection; leverage;

    References

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    1. Laurens CHERCHYE & Timo KUOSMANEN & Thierry POST, 2000. "New Tools for Dealing with Errors-in-Variables in DEA," Center for Economic Studies - Discussion papers ces0006, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
    2. Andrew Worthington & Brian Dollery, 2000. "Efficiency Measurement in the Local Public Sector: Econometric and Mathematical Programming Frontier Techniques," School of Economics and Finance Discussion Papers and Working Papers Series 078, School of Economics and Finance, Queensland University of Technology.
    3. Vanden Eeckaut, Ph. & Tulkens, H. & Jamar, M-A., 1991. "A Study of Cost-Efficiency and Returns to Scale for 235 Municipalities in Belgium," CORE Discussion Papers 1991058, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    Cited by:
    1. Laura Carosi & Giovanna D’Inverno & Letizia Ravagli, 2014. "Global public spending efficiency in Tuscan municipalities," Discussion Papers 2014/175, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    2. Isabel Raposo & Tatiane Menezes, 2011. "Public School Efficiency Using Data Envelopment Analysis: An Empirical Application For Brazil," ERSA conference papers ersa11p1594, European Regional Science Association.
    3. Victor Maia Senna Delgado, 2008. "Estudo Sobre Um Ranking Municipal De Eficiencia Escolar Em Minas Gerais," Anais do XIII Seminário sobre a Economia Mineira [Proceedings of the 13th Seminar on the Economy of Minas Gerais], in: Anais do XIII Seminário sobre a Economia Mineira [Proceedings of the 13th Seminar on the Economy of Minas Gerais] Cedeplar, Universidade Federal de Minas Gerais.
    4. da Cruz, Nuno Ferreira & Marques, Rui Cunha, 2014. "Revisiting the determinants of local government performance," Omega, Elsevier, vol. 44(C), pages 91-103.
    5. Victor Maia Senna Delgado & Ana Flávia Machado, 2007. "Eficiência Das Escolas Públicas Estaduais De Minas Gerais: Considerações Acerca Da Qualidade Do Ensino," Anais do XXXV Encontro Nacional de Economia [Proceedings of the 35th Brazilian Economics Meeting] 091, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
    6. Geys, Benny & Heinemann, Friedrich & Kalb, Alexander, 2007. "Local Governments in the Wake of Demographic Change: Efficiency and Economies of Scale in German Municipalities," ZEW Discussion Papers 07-036, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    7. Anna Montén & Christian Thater, 2011. "Determinants of Efficiency in Child-Care Provision," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 67(4), pages 378-403, December.
    8. Fernando Antonio Slaibe Postali, 2014. "Oil windfalls and tax inefficiency: evidence from Brazil," Working Papers, Department of Economics 2014_02, University of São Paulo (FEA-USP).
    9. Dana PANCUROVA & Stefan LYOCSA, 2013. "Determinants of Commercial Banks’ Efficiency: Evidence from 11 CEE Countries," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 63(2), pages 152-179, May.
    10. Emili Tortosa Ausina & Diego Prior & María Teresa Balaguer-Coll, 2006. "Decentralization And Effiency In Spanish Local Goverment," Working Papers. Serie EC 2006-02, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).

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