Higher education in Iran: An investigation of its expansion during 2005–2015 period using a control function approach

This article aims at investigating the significant higher education expansion in the Islamic Republic of Iran during 2005–2015 period through employing the production function of higher education. Avoiding simultaneity and selection problems in the presence of shocks, we have used a novel method from industrial organization discipline introduced by Rovigatti and Mollisi [1] – which is officially offered embeded in a Stata® module – by providing different production function estimators (Olley-Pakes, Levinsohn-Petrin, and Wooldridge) using provincial data on Iran. Our empirical results reveal that physical capital is the most critical determinant of higher education graduates. The results also uncover some important facts about the contribution of academic staff to the process of graduation. Compared to other conventional estimation methods, we also provide evidence on the superiority of this innovative method, which is far beyond its original context.