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Labour‐use efficiency in Swedish social insurance offices
Author(s) -
Kumbhakar Subal C.,
Hjalmarsson Lennart
Publication year - 1995
Publication title -
journal of applied econometrics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.878
H-Index - 99
eISSN - 1099-1255
pISSN - 0883-7252
DOI - 10.1002/jae.3950100104
Subject(s) - inefficiency , econometrics , panel data , estimation , economics , residual , frontier , production (economics) , scale (ratio) , microeconomics , mathematics , geography , management , archaeology , cartography , algorithm
This paper considers the estimation of frontier production functions in panel data models. It proposes a multi‐stage method to obtain estimates of (1) the parameters of a flexible input requirement function and (2) technical inefficiency decomposed into time‐invariant (firm‐specific), time‐varying, and the residual components. The proposed method is used to analyse labour‐use efficiency of Swedish local social insurance offices on the basis of a large panel of observations during the time period 1974–84. Empirical results show: (1) substantial variations in labour‐use efficiency among these offices, with the mean efficiencies declining over time; (2) presence of economies of scale, thereby meaning that most of the offices were of suboptimal size.