Efficiency and productivity by Manuel Salas-Velasco
Socio-Economic Planning Sciences, 2024
This article proposes nonparametric and parametric methods for conducting meaningful evaluations ... more This article proposes nonparametric and parametric methods for conducting meaningful evaluations of academic programs. In particular, it proposes the use of data envelopment analysis (DEA) along with regression analysis for the evaluation of Spanish public universities' undergraduate curricula. Unlike the radial DEA models, which assume an equiproportional expansion of all outputs to achieve efficiency, the current study also relies on the use of non-radial DEA models for assessing the efficiency of Spanish public universities. A non-radial DEA measure (the so-called Russell measure) allows for unlike proportional augmentations in each positive output. In this study, non-radial DEA measures allow us to identify different levels of inefficiency for each output considered (social sciences and non-social sciences degrees). Specifically, the results show that the inefficiency in the production of scientific and technical degrees is greater than that in the production of humanities and social sciences degrees, although there are differences among institutions. Bachelor's degree production time is also estimated, and a duration analysis explains the time to degree. A worrying result is the "excessive" time it takes for a university to produce four-year undergraduate degree programs. The mean graduation time is 5.7 years. The Cox proportional hazards regression shows that a shorter time to graduation is associated with higher teaching quality as well as a higher faculty-to-student ratio. Parametric survival analysis using a lognormal distribution with gamma frailty also verifies these latter results.
Operational Research, 2024
Conventional data envelopment analysis (DEA) models assume that all decisionmaking units (DMUs) a... more Conventional data envelopment analysis (DEA) models assume that all decisionmaking units (DMUs) are homogenous. While higher education institutions (HEIs) of very different sizes challenge the homogeneity of DMUs, DEA studies have paid relatively little attention to university size when assessing the performance of HEIs. This article proposes novel, effective methods for evaluating university performance and identifying useful benchmarks for improving the operations of inefficient performers. Specifically, DEA and cluster analysis (CA) are applied for the evaluation of the performance of traditional Spanish public universities. DEA is utilized to examine the relative performance of these universities in terms of undergraduate teaching output. CA is applied to find similar-in-scale universities prior to the DEA to facilitate peer-groupings. The advantage of this method is that when DMUs are clustered based on their size, one can obtain homogenous groups of units with comparable operating environments. Furthermore, using the meta-frontier framework, this research finds significant evidence that there is an efficiency advantage for medium-and large-sized universities over small ones in providing undergraduate teaching. A bootstrapped, non-parametric meta-frontier approach also verifies this latter result. Some of the factors that contribute to the differences in the relative efficiencies are identified as well.
Higher Education, 2019
The information on academic performance rates—what percentage of the enrolled credits a student c... more The information on academic performance rates—what percentage of the enrolled credits a student can pass in one academic year—showed traditionally a relatively low students' academic performance at Spanish public universities. However, over the period 2008–2014, the academic productivity of undergraduate students at public higher education institutions improved considerably. In this period, Spanish universities experienced changes related to the structuring of the educational curriculum—the homogenization of undergraduate university degrees—and the policy of tuition fees. In relation to the latter, the entry into force of the Royal Decree-Law 14/2012 (the so-called Decreto Wert) allowed universities a considerable increase in tuition fees. Using data for Spanish public universities for the academic years 2008/2009 and 2013/2014, this paper studied to what extent this educational law contributed to the improvement of the academic performance of undergraduate students. Using a stochastic frontier analysis for panel data, this paper showed that the increase in undergraduate tuition fees (first enrolment) acted as a catalyst in reducing the inefficiencies of the Spanish public university system.
International Journal of Educational Management, 2020
Purpose-The purpose of this paper is to measure the efficiency performance of public sector-funde... more Purpose-The purpose of this paper is to measure the efficiency performance of public sector-funded schools in Spain. Design/methodology/approach-Using school-level data from Program for International Student Assessment 2012, cross-sectional models were estimated using stochastic frontier analysis (SFA). Technical efficiencies of public sector-funded schools (public schools and centros concertados), and their determinants were estimated using a one-step maximum likelihood procedure. SFA models include both a stochastic error term and a term that can be characterized as inefficiency; the non-negative technical inefficiency effects are assumed to be a function of school characteristics. Findings-The results show that greater school autonomy and school responsibility for resource allocation are associated with efficiency improvement. Subsidized private schools (called centros concertados) were more efficient than public schools. The former are free of bureaucratic constraints that encumber public schools, and they are able to control many more decisions at the school level (e.g. they select their own teachers). Originality/value-This paper shows the value of school autonomy for educational performance. The author defines school autonomy as the operational empowerment of the principals and teachers. Therefore, the government could grant greater autonomy to public schools (school-based management), since school autonomy is a driver of efficiency. Further, teachers' morale is also an environmental driver of efficiency. Schools tend to be more efficient when teachers work with enthusiasm or value academic achievement. And this is more likely to occur in private schools, even though teachers are hired (they are not civil servants) and have a lower salary than public school teachers. The lack of motivation of many teachers in public schools may be in the absence of incentivesthere is no possibility of promotion and everyone is guaranteed a wage increase every three years-and in the bureaucratization of the public school system.
Educational Research for Policy and Practice, 2020
It is important for policymakers and managers of higher education institutions knowing how well t... more It is important for policymakers and managers of higher education institutions knowing how well their universities are operating. This article aimed to show that data envelopment analysis (DEA) can be an excellent benchmarking instrument in higher education. First, by using several inputs and outputs at the institutional level, DEA can identify technically efficient institutions that may work as a benchmark in the sector becoming a reliable tool for ranking universities. Second, a bootstrapped-truncated regression allows us to understand the factors affecting technical efficiency of the institutions under evaluation. The case of Spanish public universities is taken as an example to verify the usefulness of the proposed methods. Our empirical strategy was based on a two-stage procedure to evaluate their internal efficiency in the provision of teaching and research. In the first stage, we estimated a technical efficiency score for each university. The average efficiency among Spanish universities was about 92%. In the second stage, we regressed the efficiency scores against a set of covariates to investigate their association with the level of university (in)efficiency. We found that universities with a higher percentage of grantees tend to be less inefficient, and a higher percentage of academics with tenure enhances the productive efficiency of the Spanish higher education sector. Finally, we computed Spearman's rank correlations between DEA efficiency scores and the classification of Spanish institutions in university rankings such as the SCImago and Shanghai rankings. The results revealed that the ranking positions given by DEA scores to Spanish universities matched their positions in recognized rankings.
Scientometrics, 2020
The identification of environmental factors that explain differences in efficiency is essential f... more The identification of environmental factors that explain differences in efficiency is essential for improving the results of public universities. A two-stage, semi-parametric approach with the single and double bootstrap procedure (Algorithm #1 and Algorithm #2) proposed by Simar and Wilson (J Econom 136(1):31-64, 2007) was used in this article for making valid inferences about the impact of environmental factors on university efficiency. A data envelopment analysis (DEA) efficiency estimator was used in the first stage to estimate technical efficiency scores for Spanish public universities. It is common to explore the determinants of (in)efficiency in a second stage. To provide valid inference, Simar and Wilson (2007) suggested a parametric bootstrap of the truncated regression (Algorithm #1). Alternatively, they recommended a bootstrap procedure to obtain bias-corrected technical efficiency scores used in the second-stage truncated regression; valid inference can be obtained by using a second bootstrap procedure applied to the truncated regression (Algorithm #2). Under both algorithms, three environmental factors were statistically significant predictors of efficiency. Our results confirmed that universities with a higher percentage of academics with tenure, outgoing Erasmus students, and state grantees tend to be less inefficient. Keywords Data envelopment analysis • Bootstrapped-truncated regression • Simar and Wilson • Efficiency measurement • Spanish public universities JEL Classification D22 • I23 • C50 The author highly appreciates the valuable comments of the referee on previous versions of this article. These comments helped me to improve the manuscript significantly.
Manchester School , 2020
This paper evaluated the performance of Spanish secondary schools whose 15-year-old students were... more This paper evaluated the performance of Spanish secondary schools whose 15-year-old students were assessed in mathematical competencies by the OECD (PISA program) in 2003 and 2012. The technique employed was the stochastic frontier analysis for panel data using a sample of schools which participated simultaneously in both waves. First, the parametric measurement of time-varying technical inefficiency was done in this paper using three standard models. Second, we used the four random component stochastic frontier model proposed by Kumbhakar, Lien, and Hardaker [2014. Journal of Productivity Analysis, 41(2), 321–337] that distinguishes between residual or transient technical inefficiency and persistent technical inefficiency, separated from heterogeneity. Persistent (time invariant) inefficiency was a larger problem than residual (time varying) inefficiency when evaluating the educational performance of Spanish secondary schools over time. Finally, we introduced the recent model recommended by Badunenko and Kumbhakar [2017. European Journal of Operational Research, 260(2), 789–803] to accommodate heteroscedasticity associated with both heterogeneity and the noise terms, incorporating at the same time determinants of both persistent and time-varying inefficiency. School inefficiency was presumably not caused by something unexpected within each year such as greater difficulty in hiring teachers, but rather by persistent factors such as classroom management—schools with better disciplinary climate tend to be less inefficient in educational production. In addition, we identified the motivation of the students of each school (interest in and enjoyment of mathematics) as the effect of heterogeneity on learning outcomes.
Journal of Economic Studies, 2018
Purpose
Recent studies have linked differences in aggregate productivity to misallocation of reso... more Purpose
Recent studies have linked differences in aggregate productivity to misallocation of resources across firms. In contrast, the purpose of this paper is to study the macroeconomic performance of OECD economies from a production efficiency point of view and estimated the determinants of (in)efficiency with particular emphasis on misallocation of labor.
Design/methodology/approach
Following the pioneering work of Battese and Coelli, the authors proposed a parametric methodology to construct a world frontier that serves as a benchmark to compare the relative position of each country. The non-negative technical inefficiency effects are assumed to be a function of explanatory variables. By doing this, determinants of technical inefficiency are explicitly introduced in the model.
Findings
The results revealed that OECD countries to operate efficiently should expand their aggregate output by 22.6 percent without consuming more resources. A novel finding is that higher skill mismatch is associated with higher production inefficiency. Conversely, more flexible labor markets, and better management and human resource practices, lowered the inefficiency in production. The paper also analyzed the underlying factors driving skill misallocation in the job market. In this regard, a well-functioning education and training system and greater flexibility in the determination of wages are associated with lower levels of mismatch between the skills of individuals and those required by the jobs.
Practical implications
The measurement of the productive efficiency of an economy (or country) is crucial to governments. It is important to know how far a given economy can be expected to increase its output by simply increasing its efficiency, without absorbing further resources. In other words, it is relevant to know if a country could produce more with the same resources and, therefore, could increase per capita income and welfare. In this type of analysis what also matters is to identify what factors or variables explain that greater or lesser ability of a country to convert its resources into aggregate production.
Originality/value
Much research on efficiency measurement has focused on the firm or industry level, mainly to study the efficiency of financial institutions. Efficiency studies using aggregated data across countries are rare in the literature of efficiency. This paper aimed to contribute to filling that shortage evaluating the macroeconomic performance of a sample of OECD countries from the production efficiency point of view.
Economic Analysis and Policy, 2018
Increasing efficiency and productivity should be at the core of the policy agendas of all governm... more Increasing efficiency and productivity should be at the core of the policy agendas of all governments. Knowing whether or not OECD economies optimize their resources in production is, therefore, an important policy issue. The purpose of this paper was to make crosscountry comparisons of production efficiency, and its determinants, using mainly a parametric approach. Our proposed model was a stochastic frontier version of Battese and Coelli's (1995) which includes both a stochastic error term and a term that can be characterized as inefficiency. The non-negative technical inefficiency effects are assumed to be a function of explanatory variables. The empirical analysis of macroeconomic performance done in this paper confirmed that OECD countries with a greater sophistication of their production processes and a higher capacity for innovation tend to be less inefficient. Alternative non-parametric methods for evaluating the impact of process/contextual variables on efficiency also corroborated that business sophistication and innovation contribute to efficiency improvements across OECD countries.
International Journal of Water Resources Development , 2010
Expansionist policies in irrigation in Andalusia have led to an intensive use of water, which has... more Expansionist policies in irrigation in Andalusia have led to an intensive use of water, which has depleted rivers and aquifers and led to high added costs in terms of hidden subsidies for irrigation farming. Water scarcity has become an increasing social and economic worry for those responsible for regulating water policies and has created problems among users, especially when it is an important factor for production purposes. This empirical study analyses the differences that exist in terms of economic efficiency in the 156 irrigation areas of Andalusia. To achieve rational management of irrigation water it is essential to consider economic efficiency and carry out comparative studies to identify the causes that contribute to differences in terms of efficiency. This paper describes the conclusions of a study into economic rationality in the use of such a scarce resource as water.
Economics Bulletin, 2007
A multi-product cost function is evaluated for the universities of Spain, using a random paramete... more A multi-product cost function is evaluated for the universities of Spain, using a random parameters stochastic frontier model. This allows estimates of systematic cost differences to be obtained alongside estimates of universities' efficiency. In addition, we evaluate average incremental costs of key university output, and provide measures of economies of scale and scope.
Labor market for graduates by Manuel Salas-Velasco
Sustainability, 2023
This paper presents a microeconomic analysis of the occupational choices that individuals make af... more This paper presents a microeconomic analysis of the occupational choices that individuals make after graduating from higher education. Specifically, a binomial logit model of the self-employment decision, which can be seen as a special case of a model of utility maximization, is estimated for a large, nationally representative sample of Spanish bachelor’s degree holders. The estimation of the logit model allows one to analyze the influence of the university degree and individual sociodemographic characteristics on the probability of becoming self-employed five years after graduation. Results show that graduates in Odontology, Physiotherapy, Architecture, Law, Fine Arts, Pharmacy, and Psychology are the most likely to become self-employed. Surprisingly, financially literate individuals (economics and finance-related undergraduate degree holders) are less likely to start their own businesses. The paper also shows that women are less likely to be self-employed than men, but those graduates whose mothers obtained a university degree have an increased likelihood of being self-employed. The paper highlights the need for career guidance for undergraduates contemplating a career in self-employment.
Systems, 2023
This study looks at how well bachelor’s degree holders in Spain match into jobs five years after ... more This study looks at how well bachelor’s degree holders in Spain match into jobs five years after graduation. Based on workers’ self-assessment, education–job mismatch is defined as the discrepancy between the formal qualifications that individuals earned at Spanish universities and those that are required by jobs. By estimating a multinomial logit model, this research identifies fields of study that are associated with increased likelihood of a particular educational mismatch status. Results indicate that university graduates from highly specialized bachelor’s degree programs are more likely to work in a graduate job that is related to their field of education. In particular, graduates with degrees that entail specific human capital, such as health sciences degrees and hard science and engineering degrees, are more likely to be well-matched in their current jobs. In contrast, the results show a higher likelihood of over-qualification (recent graduates who are in non-graduate jobs) for social and legal sciences degrees and arts and humanities degrees. Gender appears to play no role in the matching process; however, the subject-specific knowledge that graduates have gained from their time in higher education is important. As a novelty, this study also identifies, for a sub-sample of workers, the process through which a good match is achieved—that is, how individuals self-select to accept jobs in which they can achieve a good match. The regression results are based on micro data from a nationally representative random sample of the first cohort of undergraduates after the Bologna curriculum reform.
Sustainability, 2023
This paper presents a microeconomic analysis of the occupational choices that individuals make af... more This paper presents a microeconomic analysis of the occupational choices that individuals make after graduating from higher education. Specifically, a binomial logit model of the self-employment decision, which can be seen as a special case of a model of utility maximization, is estimated for a large, nationally representative sample of Spanish bachelor’s degree holders. The estimation of the logit model allows one to analyze the influence of the university degree and individual sociodemographic characteristics on the probability of becoming self-employed five years after graduation. Results show that graduates in Odontology, Physiotherapy, Architecture, Law, Fine Arts, Pharmacy, and Psychology are the most likely to become self-employed. Surprisingly, financially literate individuals (economics and finance-related undergraduate degree holders) are less likely to start their own businesses. The paper also shows that women are less likely to be self-employed than men, but those graduates whose mothers obtained a university degree have an increased likelihood of being self-employed. The paper highlights the need for career guidance for undergraduates contemplating a career in self-employment.
Journal for Labour Market Research, 2021
This paper contributes to the scarce literature on the topic of horizontal education-job mismatch... more This paper contributes to the scarce literature on the topic of horizontal education-job mismatch in the labor market for graduates of universities. Field-of-study mismatch or horizontal mismatch occurs when university graduates, trained in a particular field, work in another field at their formal qualification level. The data used in the analysis come from the first nationally representative survey of labor insertion of recent university graduates in Spain. By estimating a multinomial logistic regression, we are able to identify the match status 4 years after graduation based on self-assessments. We find a higher likelihood of horizontal mismatch among graduates of Chemistry, Mathematics, Physics, Pharmacy, and Languages and Literature. Only graduates in Medicine increase the probability of being adequately matched in their jobs. It may be hypothesized that horizontal mismatch is more likely among those graduates in degree fields that provide more general skills and less likely among those from degree fields providing more occupation-specific skills. Other degrees such as Business Studies, and Management and Economics Studies increase the probability of being vertically mismatched (over-educated). Vertical mismatch preserves at least some of the specific human capital gained through formal educational qualifications. However, some workers with degrees in Labor Relations and Social Work are in non-graduate positions and study areas unrelated to their studies. The paper also shows that graduates in the fields of health sciences and engineering/architecture increase the probability of achieving an education-job match after external job mobility.
Economic Working Papers …, 2007
Resumen: Este trabajo examina los determinantes de la duración del primer desempleo de una cohort... more Resumen: Este trabajo examina los determinantes de la duración del primer desempleo de una cohorte de jóvenes graduados: los que obtuvieron su titulación en el curso 2001/2002 en las carreras del área económica de la Universidad de Sevilla. Tras estimar un logit ...
En este artículo se presenta y revisa una de las metodologías más utilizadas en la práctica para ... more En este artículo se presenta y revisa una de las metodologías más utilizadas en la práctica para estimar los rendimientos privados de las inversiones en educación: el «método algebraico» (o «método elaborado»), centrándose el análisis en las inversiones en educación universitaria. Con datos de corte transversal procedentes de una encuesta dirigida a graduados registrados en Colegios Profesionales, y a partir de los «perfiles edad-ingresos» según ciclos universitarios, se obtiene una tasa interna de rentabilidad (TIR) del 22,5 por ciento para la inversión en una carrera de ciclo largo en un ambiente de certeza.
Hacienda Pública Española, Feb 1, 2004
A pesar de su amplio uso en los trabajos aplicados sobre rendimientos de la educación, este artíc... more A pesar de su amplio uso en los trabajos aplicados sobre rendimientos de la educación, este artículo demuestra que la «función minceriana estándar» no arroja una medida exacta del valor económico de la Educación Superior si ésta es una variable endógena. El problema de la endogeneidad de la educación se ha corregido a través de la técnica de variables instrumentales. Nosotros obtenemos una rentabilidad del 13,6 por 100 para los estudios universitarios; alternativamente, observamos que los licenciados ganan un 57 por 100 más que los diplomados. No obstante, y tras usar el método bietápico de Heckman, no se detecta sesgo de selección muestral.
Estadística Española, 2007
Following the traditional Mincerian earnings function, this paper studies the wage determinants a... more Following the traditional Mincerian earnings function, this paper studies the wage determinants among medical doctors and nurses. It measures the private rate of return on university education proving that considering schooling to be an exogenous variable gives a downward bias to the estimation of the rate of return. The problem concerning the endogeneity of schooling has been corrected in this article by means of the instrumental variables technique. With a sample of Spanish graduates in Health Sciences, the estimated return is by 11,1 per cent.
Tesis doctoral / Doctoral dissertation University of Granada, Spain, 2000
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Efficiency and productivity by Manuel Salas-Velasco
Recent studies have linked differences in aggregate productivity to misallocation of resources across firms. In contrast, the purpose of this paper is to study the macroeconomic performance of OECD economies from a production efficiency point of view and estimated the determinants of (in)efficiency with particular emphasis on misallocation of labor.
Design/methodology/approach
Following the pioneering work of Battese and Coelli, the authors proposed a parametric methodology to construct a world frontier that serves as a benchmark to compare the relative position of each country. The non-negative technical inefficiency effects are assumed to be a function of explanatory variables. By doing this, determinants of technical inefficiency are explicitly introduced in the model.
Findings
The results revealed that OECD countries to operate efficiently should expand their aggregate output by 22.6 percent without consuming more resources. A novel finding is that higher skill mismatch is associated with higher production inefficiency. Conversely, more flexible labor markets, and better management and human resource practices, lowered the inefficiency in production. The paper also analyzed the underlying factors driving skill misallocation in the job market. In this regard, a well-functioning education and training system and greater flexibility in the determination of wages are associated with lower levels of mismatch between the skills of individuals and those required by the jobs.
Practical implications
The measurement of the productive efficiency of an economy (or country) is crucial to governments. It is important to know how far a given economy can be expected to increase its output by simply increasing its efficiency, without absorbing further resources. In other words, it is relevant to know if a country could produce more with the same resources and, therefore, could increase per capita income and welfare. In this type of analysis what also matters is to identify what factors or variables explain that greater or lesser ability of a country to convert its resources into aggregate production.
Originality/value
Much research on efficiency measurement has focused on the firm or industry level, mainly to study the efficiency of financial institutions. Efficiency studies using aggregated data across countries are rare in the literature of efficiency. This paper aimed to contribute to filling that shortage evaluating the macroeconomic performance of a sample of OECD countries from the production efficiency point of view.
Labor market for graduates by Manuel Salas-Velasco
Recent studies have linked differences in aggregate productivity to misallocation of resources across firms. In contrast, the purpose of this paper is to study the macroeconomic performance of OECD economies from a production efficiency point of view and estimated the determinants of (in)efficiency with particular emphasis on misallocation of labor.
Design/methodology/approach
Following the pioneering work of Battese and Coelli, the authors proposed a parametric methodology to construct a world frontier that serves as a benchmark to compare the relative position of each country. The non-negative technical inefficiency effects are assumed to be a function of explanatory variables. By doing this, determinants of technical inefficiency are explicitly introduced in the model.
Findings
The results revealed that OECD countries to operate efficiently should expand their aggregate output by 22.6 percent without consuming more resources. A novel finding is that higher skill mismatch is associated with higher production inefficiency. Conversely, more flexible labor markets, and better management and human resource practices, lowered the inefficiency in production. The paper also analyzed the underlying factors driving skill misallocation in the job market. In this regard, a well-functioning education and training system and greater flexibility in the determination of wages are associated with lower levels of mismatch between the skills of individuals and those required by the jobs.
Practical implications
The measurement of the productive efficiency of an economy (or country) is crucial to governments. It is important to know how far a given economy can be expected to increase its output by simply increasing its efficiency, without absorbing further resources. In other words, it is relevant to know if a country could produce more with the same resources and, therefore, could increase per capita income and welfare. In this type of analysis what also matters is to identify what factors or variables explain that greater or lesser ability of a country to convert its resources into aggregate production.
Originality/value
Much research on efficiency measurement has focused on the firm or industry level, mainly to study the efficiency of financial institutions. Efficiency studies using aggregated data across countries are rare in the literature of efficiency. This paper aimed to contribute to filling that shortage evaluating the macroeconomic performance of a sample of OECD countries from the production efficiency point of view.