The application of production functions to Iranian higher education system

Abstract

This article aims to empirically examine the application of production functions for evaluating remarkable developments in Iranian higher education system during the past three decades, using data from the Statistics Center of Iran and Institute for Research and Planning in Higher Education for the 1988-2014 period. A variety of production function forms have been used to evaluate the main determinants of Iran's higher education performance, and cointegration analyses have been conducted to rectify the problem of spurious regressions and to evaluate long-run and short-run relationships among the variables used. We found that: (1) estimated Iranian higher education production functions conform the polynomial cubic as well as Cobb-Douglas forms; (2) academic staff and number of institutions are the main determinants of higher education outputs in both long-run and short-run explaining more than 98% of the variations in the dependent variable, with the human capital factor playing a dominant role; (3) Iranian higher education system performs at the situation of increasing return to scale exhibiting some degree of inefficiency; and (4) the estimates of Cobb-Douglas forms provide evidence on the existence of substitutability among various academic staff.