The effectiveness and efficiency of additional funding for disadvantaged students: An integrated economic perspective

Socio-economic status has been widely recognized as one of the most important drivers affecting educational and labor market outcomes. Governments make huge investments in policies to reduce the impact of disadvantaged backgrounds on educational achievement. Due to budget constraints, these goals need to be pursued efficiently and effectively. Despite being complementary, effectiveness and efficiency have been addressed in rather separate literatures subject to main limitations. In education economics, the effectiveness analysis suffers from low external validity and ignores the role of the education production process, such that the empirical applications often result in contrasting evidence. In efficiency in education, the efficiency analysis overlooks the importance of endogeneity issues, hindering causal interpretation of findings and leading to inaccurate evidence-based policy recommendations. This research project overcomes these two issues combining the tools for impact evaluation with the performance evaluation of the efficiency analysis. From an empirical perspective, we contribute by providing new evidence on the impact of an equal educational opportunity program promoted in Flanders. From a methodological perspective, we combine state-of-the-art econometric techniques and non-parametric frontier methods in an innovative way to provide an integrated economic framework. We address endogeneity issues ignored before and provide causal inference in the efficiency model.