Journal Article

Costs, efficiency, and economies of scale and scope in the English higher education sector

Geraint Johnes and Jill Johnes

in Oxford Review of Economic Policy

Published on behalf of The Oxford Review of Economic Policy Ltd

Volume 32, issue 4, pages 596-614
Published in print January 2016 | ISSN: 0266-903X
Published online October 2016 | e-ISSN: 1460-2121 | DOI: https://dx.doi.org/10.1093/oxrep/grw023
Costs, efficiency, and economies of scale and scope in the English higher education sector

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An understanding of the production and cost technology of higher education institutions is of considerable policy interest as it motivates the structure of the sector—how large universities should be, and what mix of outputs they should produce. We review the literature and, using data for English institutions in 2013–14, apply appropriate frontier methods to model the structure of costs in this diverse sector. In doing so, we uncover information about the returns to scale and scope within the higher education sector: in particular, the class of institutions comprising larger research-intensive universities and small specialist institutions could benefit from further concentrating postgraduate and research activity. We find that the universities comprising the English higher education sector are largely efficient (measured relative to observed practices) and that there is little scope for gains in technical efficiency from allocating resources on the basis of efficiency scores.

Keywords: costs; efficiency; higher education; I23

Journal Article.  8288 words.  Illustrated.

Subjects: Education and Research Institutions

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