The Relative Efficiencies of Higher Education in OECD Countries

Studies of productivity of systems of Higher Education (HE) on the national level are of interest for two main reasons: education is an important factor for productivity growth for the macro-economy, and the efficiency of spending public resources on HE is of key interest in the context of accountability specifically relative efficiency compared with other developed countries. The objective of this study is to evaluate the relative efficiency of HE in OECD countries from the public viewpoint; how well OECD countries utilize their public resources to achieve their outputs relative to each other. For this study, two inputs are chosen reflecting the public investment in HE. Six outputs are chosen reflecting the main outcomes of HE in terms of: accessibility of tertiary education, employment level, earnings level relative to secondary education, net financial returns from HE, internal rate of return, and research articles level. The data is taken, mostly, from the OECD report on education in 2019. Out of 37 OECD countries 29 are considered in this study. Due to missing data 8 countries are not included. The stress on efficiency from the public viewpoint is a strength of this study in relation to previous OECD efficiency studies. The original Data Envelopment Analyses (DEA) basic models are, which provide dichotomy of the countries into two groups: efficient and inefficient. Moreover, several efficiency rank-scaling methods based on DEA, and several multivariate statistic methods are utilized here. The use of a variety of efficiency rank-scaling methods, while choosing the robust one, is another strength of this research. The results indicate that the robust method is cross efficiency, as it is significantly correlated with each of the other efficiency methods, and it has the highest average correlation with other efficient methods. From the 29 studied OECD countries, the USA is found to be the most efficient in HE. However, when we use only the first input versus the six above outputs, Italy became the most efficient country. The USA is ranked third in this case, while Italy is ranked fourth in the original case.