The Relationship among Certain Political and Socioeconomic Variables with Economic Efficiency : An Exploratory Article

Abstract

This article is an empirical note that links measures of macroeconomic efficiency constructed through data envelopment analysis (DEA) with measures of inequality, poverty, as well as government debt, welfare spending, taxation and unionization in OECD nations from the last decade. In the course of minimizing the amounts of resources or inputs necessary to generate an optimal amount of GDP, those nations which are the most efficient in resource allocation and input minimization are also hypothesized to be those with higher levels of poverty and inequality yet lower levels of government spending and debt, tax revenues, and unionization, all else held constant. Much has been written about how market efficiency is either compatible or incompatible with these variables, and this article tries to offer more evidence by looking at how DEA measures of economic efficiency either correlate or do not correlate with them.