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This paper follows an earlier article in which we examined the production process of higher education. Two aspects of the original study serve as the basis for this paper and thus warrant brief review.

First, we have argued that educational production does not lend it self to analysis as a production function in the classic sense. A simple production rendering ignores the fact that two of the more important factors, students and faculty, enter the process upon considerable self-selection, especially among the more highly qualified of these inputs. This reasoning led us to model educational production as a three-equation simultaneous system in which the quality of students , faculty, and college output were treated endogenously. The results of that research confirmed the strength of interdependencies existing among the endogenous variables, thus recommending simultaneous estimation as the appropriate methodology for evaluating factors in educational production.

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