Production and Efficiency at Ontario Universities: Evidence from Departments of Economics

Abstract

<p>The potential efficiency gains which could be realized at Ontario universities from system reorganization are analyzed with special reference to departments of economics. A model of academic production is specified and estimated, and the results are used to perform various hypothetical experiments pertaining to the system rationalization proposal. It is found that, for departments of economics, an increase in research productivity, holding teaching output constant, would result from either producing output at fewer, larger departments, or by creating a two-tier system. However, the actual gain in productivity, or cost savings, which are predicted to occur, are surprisingly small. In general, the results of the analysis do not lend support to the notion that system rationalization would substantially solve the financial difficulties of the university system.</p>