Comparing Groups of Decision-Making Units in Efficiency Based on Semiparametric Regression

Abstract

We consider a stochastic frontier model in which a deviation of output from the production frontier consists of two components, a one-sided technical inefficiency and a two-sided random noise. In such a situation, we develop a semiparametric regression-based test and compare the technical efficiencies of the different decision-making unit groups, assuming that the production frontier function is the same for all the groups. Our test performs better than the previously proposed ones for the same purpose in numerical studies, and also has the theoretical advantage of working under more general assumptions. To illustrate our method, we apply the proposed test to Program for International Student Assessment (PISA) 2015 data and investigate whether an efficiency difference exists between male and female student groups at a specific age in terms of learning time and achievement in mathematics.