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Recent studies have linked differences in aggregate productivity to misallocation of resources across firms. In contrast, the purpose of this paper is to study the macroeconomic performance of OECD economies from a production efficiency point of view and estimated the determinants of (in)efficiency with particular emphasis on misallocation of labor.

Following the pioneering work of Battese and Coelli, the authors proposed a parametric methodology to construct a world frontier that serves as a benchmark to compare the relative position of each country. The non-negative technical inefficiency effects are assumed to be a function of explanatory variables. By doing this, determinants of technical inefficiency are explicitly introduced in the model.

The results revealed that OECD countries to operate efficiently should expand their aggregate output by 22.6 percent without consuming more resources. A novel finding is that higher skill mismatch is associated with higher production inefficiency. Conversely, more flexible labor markets, and better management and human resource practices, lowered the inefficiency in production. The paper also analyzed the underlying factors driving skill misallocation in the job market. In this regard, a well-functioning education and training system and greater flexibility in the determination of wages are associated with lower levels of mismatch between the skills of individuals and those required by the jobs.

The measurement of the productive efficiency of an economy (or country) is crucial to governments. It is important to know how far a given economy can be expected to increase its output by simply increasing its efficiency, without absorbing further resources. In other words, it is relevant to know if a country could produce more with the same resources and, therefore, could increase per capita income and welfare. In this type of analysis what also matters is to identify what factors or variables explain that greater or lesser ability of a country to convert its resources into aggregate production.

Much research on efficiency measurement has focused on the firm or industry level, mainly to study the efficiency of financial institutions. Efficiency studies using aggregated data across countries are rare in the literature of efficiency. This paper aimed to contribute to filling that shortage evaluating the macroeconomic performance of a sample of OECD countries from the production efficiency point of view.

The purpose of this paper was to measure the efficiency of resource utilization across OECD countries aiming to verify that higher levels of competitiveness enhance the production capacity – the maximum possible output of an economy in a given period with the available resources.

The author used a two-stage procedure to first estimate the cross-sectional efficiency scores of 18 OECD economies by data envelopment analysis, and then to assess the impact of contextual variables on efficiency running regressions in the second-stage analysis. In particular, in the second stage, the author examined the effects of competitiveness on the production efficiency of the countries, while controlling for other independent variables.

The results confirmed that the higher the level of competitiveness, innovation and sophistication factors predominantly, the higher the level of productive efficiency of the countries analyzed.

The paper is novel because it opens the black box of the aggregate process of production of the conversion of resources into a national product. From the social point of view, it is relevant to know if a country could produce more output with the same resources, such as labor and capital and, therefore, could increase per capita income and social welfare.

The purpose of this paper is to measure the efficiency performance of public sector-funded schools in Spain.

Using school-level data from Program for International Student Assessment 2012, cross-sectional models were estimated using stochastic frontier analysis (SFA). Technical efficiencies of public sector-funded schools (public schools and centros concertados), and their determinants were estimated using a one-step maximum likelihood procedure. SFA models include both a stochastic error term and a term that can be characterized as inefficiency; the non-negative technical inefficiency effects are assumed to be a function of school characteristics.

The results show that greater school autonomy and school responsibility for resource allocation are associated with efficiency improvement. Subsidized private schools (called centros concertados) were more efficient than public schools. The former are free of bureaucratic constraints that encumber public schools, and they are able to control many more decisions at the school level (e.g. they select their own teachers).

This paper shows the value of school autonomy for educational performance. The author defines school autonomy as the operational empowerment of the principals and teachers. Therefore, the government could grant greater autonomy to public schools (school-based management), since school autonomy is a driver of efficiency. Further, teachers’ morale is also an environmental driver of efficiency. Schools tend to be more efficient when teachers work with enthusiasm or value academic achievement. And this is more likely to occur in private schools, even though teachers are hired (they are not civil servants) and have a lower salary than public school teachers. The lack of motivation of many teachers in public schools may be in the absence of incentives – there is no possibility of promotion and everyone is guaranteed a wage increase every three years –and in the bureaucratization of the public school system.