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The efficiency of educational production: A comparison of the Nordic countries with other OECD countries

Highlights

Efficiency of secondary education is investigated using data envelopment analysis.

The Nordic countries are benchmarked with other rich OECD countries.

Finland is fully efficient (or nearly so) in most models.

Savings potentials of Norway, Denmark, and Sweden are large in many models.

Using expected earnings as output quality proxy, all Nordic countries are efficient.

Abstract

Focusing
in particular on upper secondary education, this paper examines whether
the relatively high level of expenditure on education in the Nordic
countries is matched by high output from the educational sector, both in
terms of student enrolment and indicators of output quality in the form
of graduation/completion rates and expected earnings after completed
education. We use data envelopment analysis (DEA) to compare (benchmark)
the Nordic countries with a relevant group of rich OECD countries and
calculate input efficiency scores for each country. We estimate a wide
range of specifications in order to analyse different aspects of
efficiency. In purely quantitative models (where inputs and outputs are
expenditure and number of students at different levels of the
educational system) and in models where graduation or completion rates
are included as indicators of output quality, Finland is the most
efficient Nordic country (often fully efficient), whereas Sweden and
especially Norway and Denmark are clearly inefficient. However, using
PISA test scores as indicators of student input quality in upper
secondary education reduces the inefficiencies of these three countries.
Also, when expected earnings after completed education are used as an
indicator of output quality, all Nordic countries are estimated to be
fully efficient (or nearly so).

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