Publication Date

2026

Document Type

Dissertation/Thesis

First Advisor

Hua, Lei

Degree Name

M.S. (Master of Science)

Legacy Department

Department of Statistics and Actuarial Science

Abstract

Despite massive increases in funding, U.S. higher education degree output has stagnated—a paradox often attributed to external cost pressures like Baumol’s cost disease. This paper tests an alternative hypothesis: that internal resource misallocation, specifically the accumulation of noninstructional liabilities, actively crowds out educational productivity. Using a panel of 26,603 institution-year observations, I estimate the university production function via a fixed-effects Poisson specification, adjusting all financial inputs using the Higher Education Price Index. The results expose a stark asymmetry in productive returns: a 10% increase in instructional spending drives a 1.76% increase in degree production (β = 0.176). In contrast, the accumulation of administrative liabilities yields a negative elasticity (β = −0.009), which escalates into a statistically significant penalty on intensive-margin graduation rates (β = −0.420). Heterogeneity analysis reveals that this inefficiency is structurally located in the public sector, where liability accumulation acts as an active productivity penalty (β = −0.018). Private nonprofit institutions, operating under stricter market discipline, exhibit a strictly zero return to debt-financed amenities (β = −0.001). These findings are robust to state-specific time trends and placebo tests, confirming that the amenities arms race creates an administrative overhang that actively cannibalizes human capital production.

Extent

52 pages

Language

en

Publisher

Northern Illinois University

Rights Statement

In Copyright

Rights Statement 2

NIU theses are protected by copyright. They may be viewed from Huskie Commons for any purpose, but reproduction or distribution in any format is prohibited without the written permission of the authors.

Media Type

Text

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