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The determinants of economic efficiency in English and Welsh universities

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  • Philip Stevens

Abstract

With imperfect markets for the services of the higher education sector, it is important to assess the effectiveness of institutions. Previous studies have analysed the costs of universities but only one, to our knowledge, their efficiency. In this paper, we examine the costs and efficiency of institutions of higher education as suppliers of teaching and research using the method of stochastic frontier analysis. This paper is unique in that it investigates the impact of staff and student characteristics on efficiency. We find that there is inefficiency in higher education. This result is robust to the inclusion of a qualitative measure of output into the cost function. There is also evidence of convergence in the inefficiency of institutions, implying that the less efficient institutions are Ôcatching up' with those nearer to the cost frontier. Our analysis suggests that the anticipation of the introduction of tuition fees may have led to a shake-up in the less efficient universities. However, the results suggest that this effect was short-lived and offset by the more efficient universities relaxing somewhat.

Suggested Citation

  • Philip Stevens, 2001. "The determinants of economic efficiency in English and Welsh universities," National Institute of Economic and Social Research (NIESR) Discussion Papers 185, National Institute of Economic and Social Research.
    • Handle: RePEc:nsr:niesrd:185
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    Cited by:

    1. Turgay Türker & Murat Etöz & Yasemin Altun Türker, 2016. "Determination of Effective Critical Factors in Successful Efficiency Measurement of University Departments by Using Fuzzy DEMATEL Method," Alphanumeric Journal, Bahadir Fatih Yildirim, vol. 4(1), pages 57-72, June.
    2. T Agasisti & G Johnes, 2009. "Cost Structure, Efficiency and Heterogeneity in US Higher Education: An Empirical Analysis," Working Papers 599308, Lancaster University Management School, Economics Department.
    3. Johnes, Geraint & Johnes, Jill, 2009. "Higher education institutions' costs and efficiency: Taking the decomposition a further step," Economics of Education Review, Elsevier, vol. 28(1), pages 107-113, February.
    4. Erkoc, Taptuk Emre, 2013. "Estimating Economic Efficiencies of Public Sector Organisations with Stochastic Frontier Analysis: Evidence from Turkish Higher Education," MPRA Paper 54101, University Library of Munich, Germany.
    5. Eline Sneyers & Kristof De Witte, 2017. "The interaction between dropout, graduation rates and quality ratings in universities," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(4), pages 416-430, April.
    6. Johnes, Jill, 2006. "Measuring teaching efficiency in higher education: An application of data envelopment analysis to economics graduates from UK Universities 1993," European Journal of Operational Research, Elsevier, vol. 174(1), pages 443-456, October.
    7. Melville McMillan & Wing Chan, 2006. "University Efficiency: A Comparison and Consolidation of Results from Stochastic and Non-stochastic Methods," Education Economics, Taylor & Francis Journals, vol. 14(1), pages 1-30.
    8. Geraint Johnes & Manuel Salas-Velasco, 2007. "The Determinants Of Costs And Efficiencies Where Producers Are Heterogeneous: The Case Of Spanish Universities," Economics Bulletin, AccessEcon, vol. 4(15), pages 1-9.

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