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The determinants of economic efficiency in English and Welsh universities


  • Philip Stevens



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.

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  • 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:157

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    References listed on IDEAS

    1. Neil Manning, 1994. "Are Higher Long‐Term Unemployment Rates Associated With Lower Earnings?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 56(4), pages 383-397, November.
    2. Manning, Neil, 1994. "Are Higher Long-Term Unemployment Rates Associated with Lower Earnings?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 56(4), pages 383-397, November.
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    Cited by:

    1. Malinka Koparanova, 2007. "Structural Changes in the Manufacturing Industry of Transition Economies," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 3-42.
    2. repec:spo:wpecon:info:hdl:2441/3381 is not listed on IDEAS
    3. 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.

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