The influence of regional contextual factors on public university efficiency in Italy

This study contributes to the ongoing debate on the assessment of university performance, a critical issue in light of increasing global competition in education and the growing demand for accountability as universities rely on taxpayer funding, particularly when public budget constraints are tight. Using a two-stage approach, we examine the evolution of productivity levels of public universities in Italy from 2010 to 2017, following the introduction of university reform in 2010. In the first stage, we apply the nonparametric bootstrap Data Envelopment Analysis (DEA) method to calculate universities' internal technical efficiency scores, considering two outputs (teaching and research) and four inputs (students, academic staff, technical staff, and financial resources). In the second stage, we use linear and fractional response models to assess how the socio-economic characteristics of the regions where universities are located impact their internal efficiency. The first stage results reveal a general increase in relative technical efficiency between 2010 and 2017, accompanied by a notable reduction in efficiency dispersion, largely due to improvements among Southern universities. This suggests that universities have responded effectively to the reforms and the specific incentives they introduced. In the second stage, we find convincing evidence that regional contextual factors such as per capita income, student competencies, and the quality of local institutions significantly influence university efficiency. The paper, by suggesting to decision-makers and practitioners an easy procedure to calculate the universities’ internal efficiency and the impact of contextual factors, offers valuable tools and insights to inform the design of more balanced policy measures to finance the public university system.