Inefficiency in Childcare Production: Evidence from Italian Microdata

The paper provides an empirical analysis of production technology in the childcare sector and offers a comparative analysis of inefficiency between public and private day-care centres. Estimates of multi-output production technology and technical inefficiency are obtained in a stochastic frontier model by using cross-section micro-data from a region of northern Italy over the period 2007/8. We find that production exhibits increasing returns to scale and that separability between inputs and outputs is rejected. The average estimate of technical inefficiency is about 10% and public centres are more inefficient than private centres by 4.1% points.