A regional econometric model of the demand for faculty in public higher education

The purposes of this study are to introduce the three models for the study of the demand for faculty—the component model, the input-output model, and the econometric model; to review traditional input demand theory; to formulate a faculty demand function based on the constrained cost minimization model; to estimate empirically the elasticity of the demand for faculty based on the cross-sectionally correlated and time-wise autoregressive model; to test the hypothesis that regressions by regions have different parameters; and to compare estimated parameters with previous studies. Annual data by state in the U.S. from 1967 to 1973 and 1975 to 1977 were used to estimate the parameters in the demand function by regions (the South, the North and the West) and for the U.S. as a whole.

Major findings and conclusions of this dissertation are as follows: first, the demand for faculty based on the constrained cost minimization model is supported empirically. Second, the GLS method based on the cross-sectionally correlated and time-wise autoregressive model yields more desirable results than the OLS method. Third, hypothesis testing has proved that the estimation of the faculty demand function by regions is justifiable, and that regions do show differences in the estimated parameters. Fourth, according to t tests, the incorporation of a partial adjustment model into the faculty demand function is sustained empirically. Last, but not least, the explanatory variables chosen for empirical estimation generally have correct signs, and differences in parameters by regions are interpreted.