Inefficiency in childcare production. Evidence from italian microdata

The purpose of the paper is to study inefficiency in the production technology of
the childcare service and to carry out a comparative analysis of public and private
day-care centres. An empirical analysis on cross-section micro-data from a region of
northern Italy has been conducted by using an input-distance function with a translog
specification. Estimates of the multi-output production technology and input-oriented
technical inefficiency are obtained in a stochastic frontier model with a half-normally
distributed one-sided error. Heteroscedasticity has been modelled to investigate the determinants of inefficiency and estimate their marginal effects. We find that production
exhibits increasing returns with an estimated elasticity of scale of 1.21. Separability
between inputs and outputs is rejected at a 5% level of significance. The average
estimate of technical inefficiency is 10% and public centres are more inefficient than
private centres by 4.1 percentage points. The proportion of part-time children and
the presence of mixed-age classrooms are significant determinants of inefficiency which
equally affect both public and private centres.