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Economies of scale in public education: an econometric analysis

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  • K. Chakraborty
  • B. Biswas
  • WC. Lewis

Abstract

This article investigates the sources of scale economies in the production of public education. The relationship between the average cost of producing educational output and school characteristics including school and district size is estimated using a neoclassical cost function. The empirical analysis used panel data from Utah school districts and estimates the function using the covariance and error component models after making necessary corrections for heteroskedasticity and autocorrelation. The uncorrected fixed effects model generates a significant negative coefficient on district size in both the cost and expenditure functions; the coefficient on number of students has the hypothesized sign but is not significant in either equation. After making various corrections for autocorrelation and heteroskedasticity, the coefficients have the correct signs and are significant in all equations. Thus, it is concluded that scale economies arise from both sources but that the evidence is stronger for district size.

Suggested Citation

  • K. Chakraborty & B. Biswas & WC. Lewis, 2000. "Economies of scale in public education: an econometric analysis," Contemporary Economic Policy, Western Economic Association International, vol. 18(2), pages 238-247, April.
    • Handle: RePEc:bla:coecpo:v:18:y:2000:i:2:p:238-247
    DOI: 10.1111/j.1465-7287.2000.tb00021.x
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    References listed on IDEAS

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    Cited by:

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    3. Driscoll, Donna & Halcoussis, Dennis & Svorny, Shirley, 2003. "School district size and student performance," Economics of Education Review, Elsevier, vol. 22(2), pages 193-201, April.
    4. Haelermans, Carla & Ruggiero, John, 2013. "Estimating technical and allocative efficiency in the public sector: A nonparametric analysis of Dutch schools," European Journal of Operational Research, Elsevier, vol. 227(1), pages 174-181.
    5. Heinesen, Eskil, 2005. "School district size and student educational attainment: evidence from Denmark," Economics of Education Review, Elsevier, vol. 24(6), pages 677-689, December.
    6. Brennan, Shae & Haelermans, Carla & Ruggiero, John, 2014. "Nonparametric estimation of education productivity incorporating nondiscretionary inputs with an application to Dutch schools," European Journal of Operational Research, Elsevier, vol. 234(3), pages 809-818.
    7. Mehari Mekonnen Akalu, 2002. "Measuring and Ranking Value Drivers," Tinbergen Institute Discussion Papers 02-043/2, Tinbergen Institute.
    8. Rhys Andrews, 2012. "Local Government Size and Efficiency in Labour Intensive Public Services: Evidence from Local Educational Authorities in England," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1214, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    9. Tao, Hung-Lin & Yuan, Ming-Ching, 2005. "Optimal scale of a public elementary school with commuting costs--a case study of Taipei county," Economics of Education Review, Elsevier, vol. 24(4), pages 407-416, August.
    10. Rhys Andrews, 2013. "Local government size and efficiency in labor-intensive public services: evidence from local educational authorities in England," Chapters, in: Santiago Lago-Peñas & Jorge Martinez-Vazquez (ed.), The Challenge of Local Government Size, chapter 7, pages 171-188, Edward Elgar Publishing.
    11. Brunner, Eric J. & Squires, Tim, 2013. "The bargaining power of teachers’ unions and the allocation of school resources," Journal of Urban Economics, Elsevier, vol. 76(C), pages 15-27.
    12. Lu, Ming & Zhang, Xi, 2019. "Towards an intelligent country: China’s higher education expansion and rural children’s senior high school participation," Economic Systems, Elsevier, vol. 43(2), pages 1-1.
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