Appraising the Cost Efficiency of Higher Technological and Vocational Education Institutions in Taiwan Using the Metafrontier Cost-Function Model

Abstract

This paper aims at appraising the cost efficiency and technology of institutions of higher technological and vocational education. Differing from conventional literature, it considers the potential influence of inherent discrepancies in output quality and characteristics of school systems for institutes of technology (ITs) and universities of technology (UTs). Moreover, to meet the purpose, this study conducted a seemingly unrelated regression—metafrontier cost-function model framework, which is extended from the classical metafrontier production function model and tailor-made for the theme. The econometric analysis utilizes a set of micro-level panel data that spans 6 years inclusive of 60 ITs and 29 UTs in Taiwan. The empirical results clearly reveal that the UTs own a superior cost-exploiting and -controlling capability for the operation of educational institutions to ITs’, given the quality dimension. Further, the estimated results of public and private schools for the UTs indeed do not vary by a wide margin, but this is not the case for the ITs. The statistical figures imply that the UTs are significantly more efficient than the ITs.