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Local or Regional? Cost-Benefit Analysis of a Hypothetical New Structure in Public Primary Education in Hungary

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Local governments are responsible for the provision of primary education in Hungary, this being the largest expenditure item in their budget. The segmented structure of Hungarian local government may be a source of inefficiencies, since one of the most important source of inefficiencies is diseconomies of scale. This paper, using data of two counties - Baranya and Békés - presents a cost-benefit calculation with respect to the operational costs of a hypothetical, newly structured primary education system, where only institutions of “optimal (efficient) size” are operated. Two scenarios are presented. According to the first one all schools of inefficient size would be closed down, while according to the second this could happen only if there is at least one additional social/cultural institution in the settlement in question. The results of the simulation, being rough calculations, may provide guidance on what kind of questions might occur and what the approximate magnitudes of expenditures of a new system might be under specific conditions of reorganisation.

Keywords: economics of scale; primary education; public financing

Document Type: Research Article

Publication date: 2002-07-19

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