Education Production Function A model

Theory Output= f(inputs) What is output? Test scores? Which scores? Graduation rates? Multiple outputs? Estimation

Theory Output= f(inputs) What are the inputs? Think of (pure or general) theory Capital, labor (human capital), energy, materials Think of literature (you have been reading the literature, right?) student teacher ratio teacher salaries per pupil expenditures socio-demographic characteristics other

Theory Output = f(inputs) What is f(.)? Linear non-linear no interactions interactions

Estimation Multiple outputs separate regressions Seemingly unrelated regressions cross equation restrictions

Estimation - SUR

Estimation - SUR Cross equation constraints F(y, z; x1, x2) PPF MRTSy = MRTSx implication