Pergamon Ermomics of Ehrarion Review, Vol. 13, No. 4. pp. 289-304, 1994 Copyright @ 1994 Elsevier Science Ltd Printed in Great Britain. All rights reserved 0272-7751194 $9.50 + 0.00 0272-7757(94)EOOOl-L Efficiency Variation Among the Norwegian High Schools: Consequences of Equalization Policy HANS BONESRBNNING and JBRN RAT-M Department of Economics, University of Trondheim. N-7055 Dragvoll, Norway Abstract-The performance of the regulated school system in Norway is investigated by analyzing the relationship between resource use and student achievement in 34 Norwegian high schools. The marginal school effect on student achievement is estimated, and the output of the schools is described by the number of graduates and the school effect. Using this separation between quantity and quality, a reference frontier representing best practice among the schools is established by Data Envelopment Analysis, and the technical efficiencies are measured. The schools have very different student achievements, but the variation is not related to differences in resource use. The school system is oriented towards the equalization of student results, but the schools show systematic differences in the handling of high and low achievers. 1. INTRODUCTION THE NORWEGIAN school system is highly centralized both in terms of educational content and financing. Equal opportunities and standardization of the teaching are key characteristics. The present study addresses the resource use of Norwegian high schools. It is of interest to investigate if the schools under heavy regulation produce the equalization they are supposed to, and if the student perform- ance is linked to the resource use in the schools. The point of departure of this study of the efficiency variation between schools is the education production ‘function approach. The high school is treated as a production unit transforming resources to student achievements. Four important character- istics of the transformation are captured. First, students are like raw materials entering the pro- duction to be processed, and the production is measured by the value added. The variation in the quality of the input and the output is represented by the evaluation of the students made through the examination marks. Second, the school production is measured both by the quantity (the number of graduates) and the quality (the average value added per graduate). Third, the student performance in each school is related to the quantity of teacher input. Fourth, the results of the high and low achievers from the junior high school are investi- gated separately. Different schools may follow different strategies regarding elitism and equalization. The study describes the efficiency variation between the high schools and investigates the determinants of the performance. A reference frontier representing the best practice observed is established. A flexible methodology is chosen that allows for multiple outputs. The frontier is esti- mated non-parametrically (Data Envelopment Analysis, DEA) by enveloping the data. The production output is measured by the value added as recommended by Hanushek and Taylor (1990), and decomposes the value added for different student categories (low achievers and high achievers). 2. THE INSTITUTIONAL BACKGROUND American studies dominate the literature on The research is supported by the Norwegian Research Council for Applied Social Science. [Manuscript received 30 April 1992; revision accepted for publication 2 November 1993.1 289