Efficiency in higher education: An analysis of the "traditional universities" in Chile

Date of Completion

January 2007


Economics, General|Education, Higher




The Chilean Higher education sector has experienced major reforms starting in 1980 during the military government, which led to a wide diversification in the type of institutions as well as rapid growth in the number of establishments. This growth in the number of universities has increased competition and thus the pressure for individual organizations to improve their performance. The universities that existed prior to these reforms were reorganized into 25 higher education institutions, a group that has come to be known as the "traditional universities". This group today includes 16 public and 9 private universities. The data comes from the Council of Presidents of Chilean Universities, the Chilean Education Ministry, the National Commission for Scientific and Technological Research and Superior Council of Education. These traditional universities now co-exist with a new group of private universities that has emerged since the 1980 reforms.^ There is a growing academic literature focusing on the efficiency analysis of higher education institutions. The objective of this dissertation, therefore, is to investigate the efficiency of the Chilean traditional universities using a panel data set covering this group of institutions from 1994 to 2004. The technology was modeled using input stochastic distance functions (ISDF) and stochastic cost frontiers (SCF). Estimates of technical efficiency (TE), cost efficiency (CE) and total factor productivity growth (TFPG) were obtained.^ The main results from both frontier analyses (ISDF and SCF) indicate that the translog is the more appropriate functional form, the inefficiency effects display a half-normal distribution, and TE and CE are both time-variant. The ISDF analysis reveals that the average level of TE for all universities and years is 86.4%, with a range from 82.0% to 90.2%, and TE improves over time. In addition, during the period 1994/2004 TFPG increased at an average annual rate of 0.54%. By contrast, the SCF analysis shows that the average level of CE for all universities and years is 71.2%, with a range from 78.6% (1994) to 63.4% (2004), and during the period 1994/2004 TFPG increased at an average annual rate of 0.72%.^