Measuring health production performance in the OECD

Abstract

This paper contributes to the estimation of the best practice frontier in health production in the OECD countries at the aggregate level, in the tradition of the concept of health production function originally developed by Grossman. Estimates of technical efficiency for the OECD countries, decomposed into their components of pure technical efficiency and scale efficiency, using a nonparametric method (Data Envelopment Analysis) are presented. In a two-stage approach, differences in efficiency scores are attributed to environmental factors using a stochastic censored regression model.