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Imposing monotonicity on outputs in parametric distance function estimations

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  • Sergio Perelman
  • Daniel Santin

Abstract

The technology set involved in the estimation of a multi-output production frontier theoretically implies monotonicity on outputs. This is because an efficient firm cannot reduce the vector of outputs holding the vector of inputs fixed while it still belongs to the frontier. In empirical studies dealing with the estimation of parametric distance functions, this hypothesis is often violated by observations with far from average characteristics. To overcome this limitation, we propose a new approach for allowing the easy imposition of monotonicity on outputs in this context. This methodology is tested in the educational sector using Spanish student level data from the Programme for International Student Assessment (PISA) database. The results indicate that a nonnegligible 8.33% of the production units break the monotonicity assumption. Furthermore, although there is no statistically significant difference in efficiency distribution by school ownership, our methodology helps to detect a slight worse mathematical performance for students attending public schools.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/00036846.2010.493141
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 43 (2011)
Issue (Month): 30 ()
Pages: 4651-4661

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Handle: RePEc:taf:applec:v:43:y:2011:i:30:p:4651-4661

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Cited by:
  1. José Manuel Cordero Ferrera & Eva Crespo Cebada & Francisco Pedraja & Rosa Simancas Rodríguez, 2011. "El rendimiento educativo y sus determinantes según PISA: Una revisión de la literatura en España," Investigaciones de Economía de la Educación volume 6, in: Antonio Caparrós Ruiz (ed.), Investigaciones de Economía de la Educación 6, edition 1, volume 6, chapter 2, pages 40-56 Asociación de Economía de la Educación.

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