Working Paper: NBER ID: w30769
Authors: Danielle V. Handel; Eric A. Hanushek
Abstract: The impact of school resources on student outcomes was first raised in the 1960s and has been controversial since then. This issue enters into the decision making on school finance in both legislatures and the courts. The historical research found little consistent or systematic relationship of spending and achievement, but this research frequently suffers from significant concerns about the underlying estimation strategies. More recent work has re-opened the fundamental resource-achievement relationship with more compelling analyses that offer stronger identification of resource impacts. A thorough review of existing studies, however, leads to conclusions similar to those in the historical work: how resources are used is key to the outcomes. At the same time, the research has not been successful at identifying mechanisms underlying successful use of resources or for ascertaining when added school investments are likely to be well-used. Direct investigations of alternative input policies (capital spending, reducing class size, and salary incentives for teachers) do not provide clear support for such specific policy initiatives in the United States.
Keywords: school finance; student outcomes; education policy
JEL Codes: H41; H72; I20; J08
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increased funding (I22) | Improved student outcomes (I24) |
| Effective use of resources (D61) | Improved student outcomes (I24) |
| Funding variations (I22) | Student achievement (I24) |
| Resource utilization mechanisms (Q21) | Effectiveness of additional funding (I24) |
| Heterogeneity in resource effects (D29) | Non-uniformity in outcomes (I24) |
| Capital spending policies (G31) | Student outcomes (I21) |
| Salary incentives for teachers (J33) | Improved student outcomes (I24) |