An evaluation and explanation of (in)efficiency in higher education institutions in Europe and the U.S. with the application of two-stage semi-parametric DEA

Abstract

In this study the technical efficiency of number of public European and American HEIs is assessed over a decade. Efficiency scores are determined using nonparametric DEA with different input-output sets and considering different frontiers: global frontier (all HEIs pooled together), regional frontier (Europe and the U.S. having their own frontiers) and country-specific ones. The external factors affecting the degree of HEI inefficiency are also investigated, e.g. institutional settings (size and department composition), location and funding structure. Specifically, the results indicate a positive association between both regional GDP per capita and number of departments and an institution’s efficiency (for both the European and U.S. samples). On average, older European HEIs are more efficient, but this is not confirmed for American ones. Finally, government funding seems to have a negative effect on the efficiency of universities in Europe, which again is not confirmed for the U.S. However, some country heterogeneity at the European level is found through intensive sensitivity analysis.