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Economists’ Musings on Human Capital Investment: How Efficient is Public Spending on Education in EU Member States?

Author

Listed:
  • Erik Canton
  • Anna Thum-Thysen
  • Peter Voigt

Abstract

In this paper we perform stochastic frontier analyses to assess the quality of public spending on education in Europe. To measure the corresponding efficiency, three dimensions are taken into account: (1) quantity (tertiary educational attainment), (2) quality (PISA scores in the area of science), and (3) inclusiveness (proxied by the inverse of young people not in employment, training or education (NEET rates)). All EU Member States are covered over the period 2002 – 2015. Based on pooled and fixed effects regressions, the EU Member States' efficiency scores are assessed both with a view at an EU-wide frontier to allow for cross-country comparisons as well as concerning country-specific frontiers to identify individual trends and possibly remaining deficiencies. The results reveal that some Member States manage to achieve high efficiency in all observed output dimensions 'quantity', 'quality' and 'inclusion', such as e.g. the Netherlands and the United Kingdom - which implies that there is not necessarily a trade-off between the individual output dimensions. Evidence suggests, moreover, that most Member States made remarkable progress over time in terms of efficient use of public resources in reaching large numbers of highly educated young adults. With a view at quality and inclusiveness of public spending on education, however, in many Member States seems to remain still room (and need) for further improvements.

Suggested Citation

  • Erik Canton & Anna Thum-Thysen & Peter Voigt, 2018. "Economists’ Musings on Human Capital Investment: How Efficient is Public Spending on Education in EU Member States?," European Economy - Discussion Papers 2015 - 081, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
  • Handle: RePEc:euf:dispap:081
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    File URL: https://ec.europa.eu/info/sites/info/files/economy-finance/dp081_human_capital.pdf
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    Cited by:

    1. Gralka, Sabine, 2018. "Stochastic frontier analysis in higher education: A systematic review," CEPIE Working Papers 05/18, Technische Universität Dresden, Center of Public and International Economics (CEPIE).

    More about this item

    JEL classification:

    • I2 - Health, Education, and Welfare - - Education
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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