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Economics Research Institute Study Paper




Utah State University Department of Economics

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Despite the long-standing debate surrounding the performance of the U.S. public education system, there is an absence of comprehensive empirical evidence on this issue across different states. Initial dialogues on educational performance prescribed overall increases in expenditures for securing productivity gains. However, more recent themes emphasize the importance of productive efficiency as a key factor in securing performance increases.

This paper measures technical efficiency and total factor productivity in educational production units that utilize a multi output production technology. The technical efficiency scores are explicitly conditioned on socioeconomic and environmental influences. Particular attention is paid to the specification of varying returns to scale and input disposabilities in a piecewise linear technology. An empirical application to Utah school districts reveals that filtering out scale, congestion, and socioeconomic components from technical efficiency measures, provides superior pure technical efficiency estimates. Similarly, disentangling scale, congestion, and technological innovation components in the total factor productivity measure of Utah schools, observed over the period 1993-95, provides more precise estimates of dynamic productivity.

We find evidence of high levels of pure technical efficiencies across Utah school districts but weak evidence of technological innovations. The implication is that Utah schools are overall technically efficient, and policies seeking broader and better educational outcomes need to be focused on correcting for inefficient scales and research expenditures that would shift out the technical frontier. Thus, the widespread "efficiency or expenditure" debates, as alternative sources of educational productivity increases, may not be well posed. This study demonstrates empirically that efficiency and expenditure alignments are not mutually exclusive.