Economies of scale in public primary and junior high school education in Japan -an empirical analysis focusing on expense categories-

This study examines economies of scale in public primary and junior high school education focusing on expense categories applying fixed effect analysis to the prefecture-level panel data from the period of FY1980 to FY2016. The estimation results show that there are economies of scale over total ordinary expenditure, personnel expenditure, administrative expenditure, sub activity expenditure (only in primary school) and insurance expenditure. The cost elasticity of the number of students found to be larger in administrative and insurance expenditures than in personnel expenditure. These results remain to be the same even after controlling for the effect of class size on the cost, which implies that in time of declining birthrates, maintaining or expanding class size could achieve financial efficiency. Moreover, after the amendment of the Act on Standards for Class Formation and Fixed Number of School Personnel of Public Compulsory Education Schools in FY2001, since each local government became to be more responsible to decide class size, the magnitude of economies of scale tends to becoming larger.