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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

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

Suggested Citation

  • Maria Sousa & Borko Stošić, 2005. "Technical Efficiency of the Brazilian Municipalities: Correcting Nonparametric Frontier Measurements for Outliers," Journal of Productivity Analysis, Springer, vol. 24(2), pages 157-181, October.
  • Handle: RePEc:kap:jproda:v:24:y:2005:i:2:p:157-181
    DOI: 10.1007/s11123-005-4702-4
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    References listed on IDEAS

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    1. Laurens Cherchye & Timo Kuosmanen & Thierry Post, 2000. "New Tools for Dealing with Errors-in-Variables in DEA," Public Economics Working Paper Series ces0006, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics.
    2. 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).
    3. 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.
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    Cited by:

    1. Ligia Alba Melo-Becerra & Lucas Wilfried Hahn-De-Castro & Dalma Sofía Ariza-Hernández & Cristian Oswaldo Carmona-Sanchez, 2016. "El desempeño municipal en el sector educativo: un análisis a partir de una función multiproducto," DOCUMENTOS DE TRABAJO SOBRE ECONOMÍA REGIONAL Y URBANA 015017, BANCO DE LA REPÚBLICA - ECONOMÍA REGIONAL.
    2. Isabel Narbón-Perpiñá & Mª Teresa Balaguer-Coll & Emili Tortosa-Ausina, 2017. "Evaluating local government performance in times of crisis," Working Papers 2017/05, Economics Department, Universitat Jaume I, Castellón (Spain).
    3. 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].
    4. Emrouznejad, Ali & De Witte, Kristof, 2010. "COOPER-framework: A unified process for non-parametric projects," European Journal of Operational Research, Elsevier, vol. 207(3), pages 1573-1586, December.
    5. Ligia Alba Melo-Becerra & Lucas Wilfried Hahn-De-Castro & Dalma Sofía Ariza-Hernández & Cristian Oswaldo Carmona-Sanchez, 2016. "Efficiency of Public Education in a Multiproduct Context: The Case of Colombian Municipalities," Borradores de Economia 979, Banco de la Republica de Colombia.
    6. 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.
    7. 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.
    8. 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.
    9. 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).
    10. Simona Bigerna & Paolo Polinori, 2013. "Quality of Life in Major Italian Cities: Do Local Governments Cost Efficiency Contribute to Improve Urban Life Style? An Introductory Analysis," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2013(3), pages 121-144.
    11. repec:eee:soceps:v:61:y:2018:i:c:p:102-113 is not listed on IDEAS
    12. Cordero, José Manuel & Pedraja-Chaparro, Francisco & Pisaflores, Elsa C. & Polo, Cristina, 2016. "Efficiency assessment of Portuguese municipalities using a conditional nonparametric approach," MPRA Paper 70674, University Library of Munich, Germany.
    13. repec:kap:jproda:v:48:y:2017:i:1:d:10.1007_s11123-017-0500-z is not listed on IDEAS
    14. Isabel Narbón-Perpiñá & Kristof De Witte, 2016. "Local governments’ efficiency: A systematic literature review – Part I," Working Papers 2016/20, Economics Department, Universitat Jaume I, Castellón (Spain).
    15. Monchuk, Daniel C. & Chen, Zhuo & Bonaparte, Yosef, 2010. "Explaining production inefficiency in China's agriculture using data envelopment analysis and semi-parametric bootstrapping," China Economic Review, Elsevier, vol. 21(2), pages 346-354, June.
    16. Francesco Aiello & Graziella Bonanno & Luigi Capristo, 2017. "Explaining Differences In Efficiency: The Case Of Local Government Literature," Working Papers 201704, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
    17. 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.
    18. Torben Dall Schmidt, 2008. "The cost of regional equity in Denmark: Goal attainment or incentive distortions," Papers in Regional Science, Wiley Blackwell, vol. 87(4), pages 567-587, November.
    19. Dino Rizzi & Michele Zanette, 2015. "A Procedure for the Ex-Ante Assessment of Compulsory Municipal Amalgamation Programs," Working Papers 2015:22, Department of Economics, University of Venice "Ca' Foscari".
    20. repec:eee:proeco:v:193:y:2017:i:c:p:465-478 is not listed on IDEAS
    21. repec:bla:asiaec:v:31:y:2017:i:3:p:253-273 is not listed on IDEAS
    22. 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.
    23. 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.
    24. 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).
    25. da Cruz, Nuno Ferreira & Marques, Rui Cunha, 2014. "Revisiting the determinants of local government performance," Omega, Elsevier, vol. 44(C), pages 91-103.

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