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Efficiency of Finnish Upper Secondary Schools: An Application of Stochastic Frontier Analysis with Panel Data

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Tanja Kirjavainen

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Abstract

In this study the efficiency of Finnish upper secondary schools is evaluated with stochastic frontier analysis. Different stochastic frontier models for panel data are used to estimate education production functions. The results in matriculation examination are explained with comprehensive school grade point average, parents? socioeconomic background, resources, length of studies and decentralization of test taking on matriculation examination. Controls for schools with specialized curriculum are also included. The heterogeneity across schools is allowed by estimating both true random and true fixed effects models. The results show that the effect of teaching resources on examination results is even negative when the heterogeneity across schools is taken into account. Length of studies and decentralization of test taking affected negatively on student achievement. The inefficiency and the rankings of schools based on inefficiency score varied quite considerably depending on the type of stochastic frontier model. The lowest estimates for inefficiency were obtained with true random and true fixed effects models that separate time constant random or fixed effects from inefficiency.

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Paper provided by Government Institute for Economic Research Finland (VATT) in its series Discussion Papers with number 428.

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Date of creation: 08 Nov 2007
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Handle: RePEc:fer:dpaper:428

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Keywords: Efficiency; stochastic frontier analysis; secondary schools;

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  1. Mizala, Alejandra & Romaguera, Pilar & Farren, Dario, 2002. "The Technical Efficiency of Schools in Chile," Applied Economics, Taylor and Francis Journals, vol. 34(12), pages 1533-52, August. [Downloadable!] (restricted)
  2. Joshua D. Angrist & Victor Lavy, 1999. "Using Maimonides' Rule To Estimate The Effect Of Class Size On Scholastic Achievement," The Quarterly Journal of Economics, MIT Press, vol. 114(2), pages 533-575, May. [Downloadable!] (restricted)
  3. Cooper, Samuel T. & Cohn, Elchanan, 1997. "Estimation of a frontier production function for the South Carolina educational process," Economics of Education Review, Elsevier, vol. 16(3), pages 313-327, June. [Downloadable!] (restricted)
  4. Andrew C. Worthington, 2001. "An Empirical Survey of Frontier Efficiency Measurement Techniques in Education," Education Economics, Taylor and Francis Journals, vol. 9(3), pages 245-268, December. [Downloadable!] (restricted)
  5. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-32.
  6. Eric A. Hanushek, 2003. "The Failure of Input-Based Schooling Policies," Economic Journal, Royal Economic Society, vol. 113(485), pages F64-F98, February. [Downloadable!] (restricted)
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  7. Kumbhakar, Subal C., 1990. "Production frontiers, panel data, and time-varying technical inefficiency," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 201-211. [Downloadable!] (restricted)
  8. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-44, June. [Downloadable!] (restricted)
  9. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July. [Downloadable!] (restricted)
  10. Barrow, Michael M., 1991. "Measuring local education authority performance: A frontier approach," Economics of Education Review, Elsevier, vol. 10(1), pages 19-27, March. [Downloadable!] (restricted)
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  12. Akerhielm, Karen, 1995. "Does class size matter?," Economics of Education Review, Elsevier, vol. 14(3), pages 229-241, September. [Downloadable!] (restricted)
  13. Caroline M. Hoxby, 1998. "The Effects of Class Size and Composition on Student Achievement: New Evidence from Natural Population Variation," NBER Working Papers 6869, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  14. Alan B. Krueger, 2003. "Economic Considerations and Class Size," Economic Journal, Royal Economic Society, vol. 113(485), pages F34-F63, February. [Downloadable!] (restricted)
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  15. Deller, Steven C. & Rudnicki, Edward, 1993. "Production efficiency in elementary education: The case of Maine public schools," Economics of Education Review, Elsevier, vol. 12(1), pages 45-57, March. [Downloadable!] (restricted)
  16. Pitt, Mark M. & Lee, Lung-Fei, 1981. "The measurement and sources of technical inefficiency in the Indonesian weaving industry," Journal of Development Economics, Elsevier, vol. 9(1), pages 43-64, August. [Downloadable!] (restricted)
  17. Geraint Johnes & Jill Johnes, 2005. "Higher education institutions' costs and efficiency: taking the decomposition a further step," Working Papers 003052, Lancaster University Management School, Economics Department. [Downloadable!]
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  18. Cornwell, Christopher & Schmidt, Peter & Sickles, Robin C., 1990. "Production frontiers with cross-sectional and time-series variation in efficiency levels," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 185-200. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Ossi Korkeamäki & Tomi Kyyrä, 2008. "A Distributional Analysis of Displacement Costs in an Economic Depression and Recovery," Discussion Papers 465, Government Institute for Economic Research Finland (VATT). [Downloadable!]
  2. Ville Mälkönen, 2008. "Optimal Public Procurement Contracts Under a Soft Budget Constraint," Discussion Papers 464, Government Institute for Economic Research Finland (VATT). [Downloadable!]
  3. Elina Berghäll, 2008. "Revealing Agglomeration Economies with Stochastic Frontier Modelling in the Finnish ICT Industry," Discussion Papers 435, Government Institute for Economic Research Finland (VATT). [Downloadable!]
  4. Tarmo Räty & Micke Bondas, 2008. "A Publication Activity Model for Finnish Universities," Discussion Papers 448, Government Institute for Economic Research Finland (VATT). [Downloadable!]
  5. Tomi Kyyrä, 2008. "Partial Unemployment Insurance Benefits and the Transition Rate to Regular Work," Discussion Papers 440, Government Institute for Economic Research Finland (VATT). [Downloadable!]
  6. Tuukka Saarimaa, 2008. "Imputed Rental Income, Taxation and Income Distribution in Finland," Discussion Papers 446, Government Institute for Economic Research Finland (VATT). [Downloadable!]
  7. Marja Riihelä & Risto Sullström & Ilpo Suoniemi, 2008. "Tax Progressivity and Recent Evolution of the Finnish Income Inequality," Discussion Papers 460, Government Institute for Economic Research Finland (VATT). [Downloadable!]
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