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Economists’ Musings on Human Capital Investment: How Efficient is Public Spending on Education in EU Member States?

Author

Listed:
  • Erik Canton
  • Anna Thum-Thysen
  • Peter Voigt

Abstract

In this paper we perform stochastic frontier analyses to assess the quality of public spending on education in Europe. To measure the corresponding efficiency, three dimensions are taken into account: (1) quantity (tertiary educational attainment), (2) quality (PISA scores in the area of science), and (3) inclusiveness (proxied by the inverse of young people not in employment, training or education (NEET rates)). All EU Member States are covered over the period 2002 – 2015. Based on pooled and fixed effects regressions, the EU Member States' efficiency scores are assessed both with a view at an EU-wide frontier to allow for cross-country comparisons as well as concerning country-specific frontiers to identify individual trends and possibly remaining deficiencies. The results reveal that some Member States manage to achieve high efficiency in all observed output dimensions 'quantity', 'quality' and 'inclusion', such as e.g. the Netherlands and the United Kingdom - which implies that there is not necessarily a trade-off between the individual output dimensions. Evidence suggests, moreover, that most Member States made remarkable progress over time in terms of efficient use of public resources in reaching large numbers of highly educated young adults. With a view at quality and inclusiveness of public spending on education, however, in many Member States seems to remain still room (and need) for further improvements.

Suggested Citation

  • Erik Canton & Anna Thum-Thysen & Peter Voigt, 2018. "Economists’ Musings on Human Capital Investment: How Efficient is Public Spending on Education in EU Member States?," European Economy - Discussion Papers 081, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    • Handle: RePEc:euf:dispap:081
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    Citations

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    Cited by:

    1. Stylianos Sakkas, 2018. "The macroeconomic implications of the European Social Fund: An impact assessment exercise using the RHOMOLO model," JRC Working Papers on Territorial Modelling and Analysis 2018-01, Joint Research Centre.
    2. Wolfram F. Richter & Kerstin Schneider, 2021. "Education: Optimal choice and efficient policy," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(2), pages 840-863, May.
    3. Cinzia Alcidi & Francesco Corti & Daniel Gros, 2022. "A Golden Rule for Social Investments: How to Do It," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 57(1), pages 26-32, January.
    4. Alessandra Cepparulo & Gilles Mourre, 2020. "How and How Much? The Growth-Friendliness of Public Spending through the Lens," European Economy - Discussion Papers 132, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    5. Anna Thum-Thysen & Rossella Cravetto & Jan Varchola, 2021. "Investing in People’s Competences A Cornerstone for Growth and Wellbeing in the EU," European Economy - Discussion Papers 139, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    6. Carmen Valentina RADULESCU & Florina BRAN & Cristina ALPOPI & Petrica Sorin ANGHELU?A, 2018. "Aspects Of Early Leaving Education And Training Systems From The Perspective Of Tertiary Education," Proceedings of Administration and Public Management International Conference, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 14(1), pages 35-46, October.
    7. Gralka, Sabine, 2018. "Stochastic frontier analysis in higher education: A systematic review," CEPIE Working Papers 05/18, Technische Universität Dresden, Center of Public and International Economics (CEPIE).
    8. Pierre LESUISSE, 2024. "Education, public expenditure and economic growth under the prism of performance," Working Papers of BETA 2024-10, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    9. Corti, Francesco & Alcidi, Cinzia & Gros, Daniel & Liscai, Alessandro & Shamsfakhr, Farzaneh, 2022. "A qualified treatment for green and social investments within a revised EU fiscal framework," CEPS Papers 36574, Centre for European Policy Studies.
    10. Peter Voigt & Anna Thum-Thysen & Wouter Simons, 2020. "The Economic Benefits of Improving Efficiency in Public Spending on Education in the European Union," European Economy - Economic Briefs 056, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    11. Chiara Burlina & Alessandro Crociata & Iacopo Odoardi, 2021. "Can culture save young Italians? The role of cultural capital on Italian NEETs behaviour," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 38(3), pages 943-969, October.
    12. Crucitti, Francesca & Lazarou, Nicholas-Joseph & Monfort, Philippe & Salotti, Simone, 2023. "Where does the EU cohesion policy produce its benefits? A model analysis of the international spillovers generated by the policy," Economic Systems, Elsevier, vol. 47(3).
    13. Pierre Lesuisse, 2022. "Education, public expenditure and economic growth under the prism of performance," Working Papers hal-03685311, HAL.

    More about this item

    JEL classification:

    • I2 - Health, Education, and Welfare - - Education
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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