What is Variable Returns to Scale

This chapter examines the productivity of the public sectors throughout the United States from 1992 through 2022. Because there is heterogeneity across states regarding public services provided, this could impact its productivity and efficiency. The services provided by the public sector have come under increased scrutiny with the ongoing reform process in recent years. In the public sector, unlike the private sector, and the information and incentives provided by these markets, performance information, particularly comparative performance measures, have been used to gauge the productivity of the public service sector. This chapter examines the productivity of the public sector across states using the standard date envelopment analysis (DEA) and efficiency measures given by the Malmquist productivity index. Then, the DEA analysis was followed by panel regression analysis.