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How costly are the public sector ineffiencies? An integrated theoretical framework for its welfare assessment

Author

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  • Jorge Onrubia-Fernández
  • A. Jesús Sánchez-Fuentes

Abstract

This paper provides a theoretical framework which integrates the conventional methodology for measuring the productive efficiency and the monetary assessment of social welfare changes associated with public sector performance. Two equivalent measures of social welfare changes generated by an improvement (or worsening) in productive efficiency are deduced using duality theory. The first one is obtained from the cost function, while the second one arises directly from the production function. Moreover, the paper induces the application of the theoretical framework proposed to empirical analysis.

Suggested Citation

  • Jorge Onrubia-Fernández & A. Jesús Sánchez-Fuentes, 2014. "How costly are the public sector ineffiencies? An integrated theoretical framework for its welfare assessment," Working Papers. Collection A: Public economics, governance and decentralization 1407, Universidade de Vigo, GEN - Governance and Economics research Network.
    • Handle: RePEc:gov:wpaper:1407
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    File URL: http://infogen.webs.uvigo.es/WP/WP1407.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Public sector efficiency; technical efficiency; allocative efficiency; social welfare changes.;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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