Working Paper: NBER ID: w9054
Authors: Lisa Barrow; Cecilia Elena Rouse
Abstract: In this paper we use a 'market-based' approach to examine whether increased school expenditures are valued by potential residents and whether the current level of public school provision is inefficient. We do so by employing an instrumental variables strategy to estimate the effect of state education aid on residential property values. We find evidence that, on net, additional state aid is valued by potential residents and that school districts do not appear to overspend on education. We also find that school districts may overspend in areas in which residents are poor or less educated, in large districts, and in districts with higher shares of rental property. One interpretation of these results is that increased competition has the potential to reduce overspending on public schools in some areas.
Keywords: No keywords provided
JEL Codes: I2; H4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| State Education Aid (I22) | School Spending (H52) |
| School Spending (H52) | School Outcomes (I21) |
| School Outcomes (I21) | Property Values (H82) |
| State Education Aid (I22) | Property Values (H82) |
| School Spending (H52) | Perceived School Quality (I21) |
| Perceived School Quality (I21) | Property Values (H82) |