Education and Health in G7 Countries: Achieving Better Outcomes with Less Spending

IMF Working Papers, November 1, 2007

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Authors: Victoria Gunnarsson, Stéphane Carcillo, Marijn Verhoeven
Publication date: November 1, 2007
Type: IMF Working Paper (Working Paper No. 2007/263)
Core objective: Assess efficiency of education and health spending in G7 countries and link cross-country efficiency differences to policy and institutional factors.

Enhancing the efficiency of education and health spending is a key policy challenge in G7 countries.
Inefficiencies in G7 countries mostly reflect lack of cost effectiveness in acquiring real resources, such as teachers and pharmaceuticals.
High wage spending is associated with lower efficiency.
Lowering student-teacher ratios is associated with reduced efficiency in the education sector.
Immunizations and doctors' consultations coincide with higher efficiency in the health sector.
Greater autonomy for schools seems to raise efficiency in secondary education.

Reforms aimed at increasing efficiency need to take into account the nature and causes of inefficiencies (e.g., whether inefficiencies stem from resource acquisition or from service delivery).
Address cost-effectiveness in acquiring real resources (teachers, pharmaceuticals) to improve overall efficiency.
Review wage spending policies, since high wage spending is associated with lower efficiency.
Evaluate the trade-offs of reducing student-teacher ratios, as lower ratios were associated with reduced efficiency in education.
Promote preventive and primary-care activities (immunizations, doctors' consultations) that coincide with higher health-sector efficiency.
Consider increasing school autonomy in secondary education to raise efficiency.