Economic Efficiency of Public Secondary Education Expenditure: How Different are Developed and Developing Countries?

Abstract

This study measures the efficiency of public secondary education expenditure in 37 developing and developed countries using a two-step semi-parametric DEA (Data Envelopment Analysis) methodology. We first implement two cross-country frontier models for the 2012-2015 period: one using a physical input (i.e., teacher-pupil ratio) and one using monetary inputs (i.e., government and private expenditure per secondary student as a percentage of GDP). These results are corrected by the effects of GDP per capita and adult educational attainment as non-discretionary inputs. We obtain five important results: 1) developed and developing countries are similar in terms of the education production process due to the peers used in the non-parametric estimation of relative efficiency; 2) developing countries could increase their enrolment rates and PISA scores by approximately 22% and 21%, respectively, by maintaining the same teacher-pupil ratios and public-private spending levels; 3) Australia, Belgium, Finland, and Japan are efficient countries in the two frontier models; 4) robust empirical evidence indicates that both income and parental educational attainment negatively affect efficiency in both models; and 5) the physical frontier model significantly favours developing countries, bringing them closer to the efficiency frontier; however, it negatively affects developed countries.