A theoretical model for education production and an empirical test of the relative importance of school and nonschool inputs

The importance of public education in rural development has received increasing attention by local and state policy makers as competition for new industry has intensified throughout rural America. Uncertainty about the relationships of public and private inputs to education output, however, presents problems to state and local officials and parents interested in improving the quality and quantity of the public education system.

This research examines the education process in a production function framework to identify the relationships of education inputs to education output. A theoretical model that combines public l and household decision making into an education production process is used as the basis for the empirical model that is developed. The estimated model includes input measures for school, family, volunteer and student inputs to education production and is estimated with cross·sectional data for Virginia counties. The expenditure measure used in the model is specified as a polynomial lag. The model also is specified as a joint-product production process.

The results of the analysis provide evidence of the importance of expenditures in education production and indicate that the impact of changes in expenditures occurs over time. The number of and educational levels of teachers also is associated with education output. Household and student inputs also are associated with education output. Volunteer input measures are not statistically significant in the estimated equations, a reflection of the difficulty of specifying and measuring specific volunteer inputs into the education production process. The empirical results do not support a joint production hypothesis between outputs as measured by achievement test scores and the school continuation rate.