Abstract The significance and methods of measuring inefficiency of local communities has been gaining prominence in the last decade. The purpose of this paper is to empirically investigate the level of technical inefficiency in the sample of local communities in Bosnia and Herzegovina (BiH) for the year of 2017. We implement parametric stochastic frontier analysis (SFA) to conduct an input-oriented stochastic parametric approach to measuring technical inefficiency of local communities in BiH. The results of our work are complementary to previous research indicating relative technical inefficiency of local communities in BiH. On average, BiH local communities’ total expenditures can be reduced by 46.8 percent without reducing output levels to achieve the result of the local community on the best practice frontier. Since our analysis and selection of variables are driven by data availability, the future research plans to include more variables.

Abstract This paper analyses the inefficiency of social services targeting in the Federation of Bosnia and Herzegovina (FB&H). Using official statistics microdata of the Household Budget Survey 2015, three models of social minimum in FB&H were constructed: extreme and general poverty, and the model with multidimensional poverty aspects. The analysis of features of poor household categories showed that the most vulnerable residents of FB&H are not beneficiaries of permanent financial assistance. The reason for such an inefficient targeting was recognized in the Federal Law on Principles of Social Care, Care for the War-Disabled Civilians and Care for Families with Children that stipulates that only persons and families that (cumulatively): are incapable for work, have insufficient income, and there are no family members who are legally obligated to support them. The results indicated a high inconsistency in the legal criteria for qualification, and also in the amounts of permanent social assistance among cantons. The Proxy Means Test (PMT) Model is offered as one of the possible solutions for the improvement of social services targeting in FB&H. Given the importance of efficiency of targeting in social services, the research results could be useful, for both, vulnerable segments of the society and federal and cantonal ministries of labour and social affairs, in the process of targeting the households qualified for social support programmes.