1. Tine Stanovnik Faculty of Economics and Institute for Economic Research, Ljubljana Equity vs. Efficiency? Regional Seminar: Equity vs. Efficiency Zagreb, April 7th 2011

2. The need for clarity: Equality or Equity? Equality of what? Political rights, economic rights (»rewards«) and social rights (»needs«). The resource costs of these rights. The principle of horizontal equity (principle of non-discrimination).

3. The need for clarity: Technical and productive efficiency (looking at the cost or »supply« side). The transformation curve (Production possibility frontier). Allocative efficiency (looking at the »demand« side, optimizing benefits or a measure of social welfare for the population).

4. Health care and the pension system: technical and productive efficiency Technical and productive efficiency in health care: efficient management of hospitals, use of least-cost procedures (for a given outcome) etc. Technical and productive efficiency in the pension system: design of the system, minimizing negative effects on labour supply and output.

5. Health care and the pension system: allocative efficiency Macro allocative efficiency: equating marginal social benefits of all social interventions and programs. More down-to-earth, »micro« allocative efficiency: how are resources to be allocated within a given field of social expenditures (education, health care, pensions etc) so as to maximize a measure of social welfare?

6. Education: the rewards of tertiary education are high (high private rates of return), as seen in table 1 and table 2.

7. Table 1: Relative equivalized income by education levels of labour-active persons aged between 25 and 64 years BulgariaHungaryRomaniaSlovenia 19922002199320021995200419932002 Primary0.940.610.860.780.820.710.700.76 Vocational1.030.910.940.900.920.870.900.85 Secondary0.970.981.121.101.121.071.111.02 Tertiary1.041.201.371.441.681.811.391.37 All1.00 Note: HU: all persons aged between 25 and 64 years Source: Source: Stanculescu, Stanovnik (eds), 2009. Activity, Incomes and Social Welfare, Ashgate.

8. Table 2: Persons with attained tertiary education level as percentage of working-age population, by income deciles Notes: BG, HU and RO: all persons aged between 25 and 64 years; SI: labour-active persons aged between 25 and 64 years. Source: Stanculescu, Stanovnik (eds), 2009. Activity, Incomes and Social Welfare, Ashgate. Decile 12345678910All Early 1990s BG (1992) 12.911.915.214.715.717.517.018.618.819.116.5 HU (1993) 1.93.72.73.15.46.37.713.721.231.510.7 RO (1995) 1.0 2.03.04.07.010.016.030.08.0 SI (1993) 2.1 3.67.98.97.012.924.931.746.917.7 Early 2000s BG (2002)5.38.211.116.416.718.524.523.529.430.918.8 HU (2002)2.6 4.35.16.810.214.017.127.141.613.6 RO (2004)1.0 3.0 6.07.013.020.044.010.0 SI (2001-03)7.15.82.85.06.99.917.022.837.961.320.8

9. The efficiency of higher education – productive and allocative The fairness (equity) issue.