Efficiency of the Services Sector: a Parametric Approach

Abstract

The question if countries are achieving their maximum production given resource allocation is at the very centre of contemporary debates. The issue becomes even more relevant when directed to service activities, due to their cardinal role in modern societies. However, hardly any studies perform cross-country efficiency comparison of service sectors at aggregated level. The paper aims at measuring and comparing technical efficiency of (total and market) services across 16 developed economies during the past three decades. The empirical estimations are performed by means of frontier parametric techniques applied to both panel data and cross-sectional data. Benchmark figures, useful for cross-country comparison and policy analysis, are provided for efficiency scores and for their evolution across time.