Decomposing Regional Efficiency

Schaffer , Axel;Simar, Léopold;Rauland , Jan
(2011) Journal of Regional Science — Vol. 51, n° 5, p. 931-947 (2011)

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Applying an outlier robust extension of the data envelopment analysis (DEA) followed by a geoadditive regression analysis, this study identifies and decomposes the efficiency of 439 German regions in using infrastructure and human capital. The findings show that the regions’ efficiency is driven by a spatial and a nonspatial, arguably structural factor. As a consequence, concrete regional funding schemes, shaped by best practice results, might not be appropriate for all regions. Instead, a more differentiated funding scheme that accounts for both spatial and structural factors seems more promising.
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Schaffer, A., Simar, L., & Rauland, J. (2011). Decomposing Regional Efficiency. Journal of Regional Science, 51(5), 931-947. https://doi.org/10.1111/j.1467-9787.2011.00731.x (Original work published 2011)