Internal Efficiency of Educational Systems

Abstract

The paper examines both the major factors determining and affecting the efficiency of educational systems and the opportunities for improving them. Starting from an analysis of individual interests of those who are the most concerned with and affected by the education system, connections between efficiency in the education system will be researched. The evidence for efficiency measures is investigated in three important areas of interest: namely input and output factors based on an educational production function approach, organisational structures, and new approaches to financing education, which are directed at more competitive and market-like education.
However, when one considers empirical evidence than it seems that increasing resources has only a small effect on student achievement. But there is some evidence that a reallocation of existing resources towards teaching and learning materials and performance-related teacher salaries will have a positive effect in this respect. The same positive effect on student achievement applies to centralized examination procedures, as well as more school autonomy concerning process and personnel. Autonomous budget responsibility for educational institutions leads to lower student achievement because resources are particularly used to serve the interests of the teachers.
The effects of educational coupons and other more market-oriented financing instruments are highly controversial. Looking at empirical studies, the positive effects on students are weaker than is stated by many proponents. Nonetheless, most studies conclude that there seems to be a positive relationship between competition and coupons and student’s academic performance. However, the strongest impact of new financing models can be expected when it is combined with structural reforms, e.g. centralized exams. The social problems that are reported in connection with such reforms can be avoided by appropriate construction of the coupon systems (differentiating them according to socio-economic and individual factors) in combination with advice and information. Such a comprehensive and well thought out reform would increase the incentives for all those involved to improve the performance of the educational system. When only partial solutions are applied, gains in efficiency will be less if some small steps are not taken.