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• Output decomposition is considered into the estimation of the panel data cost efficiency of waste management service. • Results show that panel data cost efficiency is increased with selective collection. • Municipal direct provision is the least efficient management form for this service. • Panel data cost efficiency is positively related with progressive and coalition governments, a greater financial independence, a greater tourist and industrial activity and a greater proportion of women and of foreign-born residents. In recent years, concerns about the increasing generation of municipal solid waste, together with related health and environmental issues and regulatory changes, have motivated significant alterations in the provision of waste management services, such as the introduction of selective collection (by type of waste). However, these changes may impact on service costs and/or efficiency. The present study was undertaken to analyse the efficiency of the waste management service in Spain, using data from 283 municipalities for the period 2005–2015. The analysis consists of two phases: first, the application of panel data order-m frontiers, that allows to obtain a homogeneous estimation of efficiency based on the input–output relationship at the production process (Surroca et al., 2016), and second, the use of bootstrapped truncated regression, considering different municipal sizes. The results obtained show that cost efficiency is increased with selective collection and by certain political and socio-economic factors of the local governments, concretely with the government by a progressive party, coalition governments, a greater financial independence, a greater tourist and industrial activity and a greater proportion of women and of foreign-born residents in the municipality. We also show that municipal direct provision is the least efficient management form for this service. The main contribution made by this study is to examine the influence of different elements of service output (i.e., selection by type of waste vs. non-selection) on cost efficiency. [ABSTRACT FROM AUTHOR]