What matters in education: a decomposition of educational outcomes with multiple measures

Significant variations in educational outcomes across both the spatial and socioeconomic spectra in Australia have been widely debated by policymakers in recent years. This paper examines these variations and decomposes educational outcomes into 3 major input factors: availability of school resources, socioeconomic background, and a latent factor that links to the specificities of the local education system such as efficiencies. The proposed method respects the multi-dimensional nature of educational outcomes by estimating structural parameters of an extended education production function with multiple outcome measures. The results indicate that all factors contribute to the variations. Nevertheless, socioeconomic factors dominate non-school-based measures such as the tertiary education enrolment rate. The study also reveals significant differences in education system efficiencies across areas, suggesting compounding factors are often responsible for poor educational performance.