Mergers in higher education: implications for efficiency
- Jill Johnes, University of Huddersfield
Rising tuition fees and pressures on public funding caused by austerity have increased the need for efficiency in English higher education. Merging has been suggested as a way of increasing efficiency, but little is known of merging effects in higher education.
Using a panel of data on all English universities and containing more than 20 incidences of merger, this paper uses frontier estimation techniques to assess the productive efficiency of higher education institutions in England. In a second stage various econometric techniques are applied to assess the effect of merging on subsequent efficiency.
The findings suggest that merging institutions are significantly more efficient, on average, than non-merging ones. However, once other possible factors of efficiency and the two-way relationship between efficiency and merger (specifically, merger might lead to greater efficiency, but efficiency itself might lead to a higher propensity to merge) are taken into account, it appears that any efficiency gains from merger are short-lived (possible lasting only two years). Various caveats of the analysis are discussed.
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Jill Johnes is Professor of Production Economics at the University of Huddersfield, and has published widely on education economics in journals such as European Journal of Operational Research, Oxford Economic Papers, Economics of Education Review, Higher Education Quarterly, Higher Education and Studies in Higher Education. She is co-author of Performance Indicators in Higher Education (1990) and co-editor of the International Handbook of the Economics of Education (2004), a new edition of which will be published in 2017.