The effect of additional resources for schools with disadvantaged students: Evidence from a conditional efficiency model

This paper proposes an innovative approach to evaluate the causal impact of a policy change on efficiency. It combines insights from the econometric impact evaluation techniques and from the standard efficiency analysis. Specifically, we account for endogeneity issues by introducing a quasi-experimental setting within a conditional multi-input multi-output efficiency framework and decompose the overall efficiency between ‘group-specific’ efficiency (i.e., reflecting internal managerial inefficiency) and ‘program’ efficiency (i.e., explaining the impact of the policy intervention on performance). This allows us to interpret the efficiency differences in a causal way. We demonstrate the practical usefulness of our methodology through an application to secondary and primary schools in Flanders, Belgium. In particular, exploiting exogenous thresholds, we examine whether additional resources for disadvantaged students impact the efficiency of schools. Our empirical results indicate that additional resources do not causally influence efficiency around the threshold.