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Inefficiency in Childcare Production.Evidence from Italian Microdata

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  • Luigi Brighi

    ()

  • Paolo Silvestri

    ()

Abstract

The purpose of the paper is to study inefficiency in the production technology of the childcare service and to carry out a comparative analysis of public and private day-care centres. An empirical analysis on cross-section micro-data from a region of northern Italy has been conducted by using an input-distance function with a translog specification. Estimates of the multi-output production technology and input-oriented technical inefficiency are obtained in a stochastic frontier model with a half-normally distributed one-sided error. Heteroscedasticity has been modelled to investigate the determinants of inefficiency and estimate their marginal effects. We find that production exhibits increasing returns with an estimated elasticity of scale of 1.21. Separability between inputs and outputs is rejected at a 5% level of significance. The average estimate of technical inefficiency is 10% and public centres are more inefficient than private centres by 4.1 percentage points. The proportion of part-time children and the presence of mixed-age classrooms are significant determinants of inefficiency which equally affect both public and private centres.

Suggested Citation

  • Luigi Brighi & Paolo Silvestri, 2016. "Inefficiency in Childcare Production.Evidence from Italian Microdata," Center for the Analysis of Public Policies (CAPP) 0135, Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi".
    • Handle: RePEc:mod:cappmo:0135
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    References listed on IDEAS

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    1. Bjurek, Hans & Kjulin, Urban & Gustafsson, Bjorn, 1992. " Efficiency, Productivity and Determinants of Inefficiency at Public Day Care Centers in Sweden," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(0), pages 173-187, Supplemen.
    2. Caudill, Steven B. & Ford, Jon M., 1993. "Biases in frontier estimation due to heteroscedasticity," Economics Letters, Elsevier, vol. 41(1), pages 17-20.
    3. Irene Powell & James Cosgrove, 1992. "Quality and Cost in Early Childhood Education," Journal of Human Resources, University of Wisconsin Press, vol. 27(3), pages 472-484.
    4. Kumbhakar,Subal C. & Wang,Hung-Jen & Horncastle,Alan P., 2015. "A Practitioner's Guide to Stochastic Frontier Analysis Using Stata," Cambridge Books, Cambridge University Press, number 9781107029514.
    5. Kodde, David A & Palm, Franz C, 1986. "Wald Criteria for Jointly Testing Equality and Inequality Restriction s," Econometrica, Econometric Society, vol. 54(5), pages 1243-1248, September.
    6. Tim Coelli & Sergio Perelman, 2000. "Technical efficiency of European railways: a distance function approach," Applied Economics, Taylor & Francis Journals, vol. 32(15), pages 1967-1976.
    7. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
    8. Olson, Jerome A. & Schmidt, Peter & Waldman, Donald M., 1980. "A Monte Carlo study of estimators of stochastic frontier production functions," Journal of Econometrics, Elsevier, vol. 13(1), pages 67-82, May.
    9. 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 325-332.
    10. 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.
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    More about this item

    Keywords

    Childcare; Day-Care Center; Technical Inefficiency; Stochastic Frontier; Analysis; Input-Distance Function;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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