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Does Money Matter in the Long Run? Effects of School Spending on Educational Attainment

  • Joshua Hyman
American Economic Journal: Economic Policy
vol. 9, no. 4, November 2017
(pp. 256-80)
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Abstract

This paper measures the effect of increased primary school spending on students' college enrollment and completion. Using student-level panel administrative data, I exploit variation in the school funding formula imposed by Michigan's 1994 school finance reform, Proposal A. Students exposed to $1,000 (10 percent) more spending were 3 percentage points (7 percent) more likely to enroll in college and 2.3 percentage points (11 percent) more likely to earn a postsecondary degree. The effects were concentrated among districts that were urban and suburban, lower poverty, and higher achieving at baseline. Districts targeted the marginal dollar toward schools serving less-poor populations within the district.

Citation

Hyman, Joshua. 2017. "Does Money Matter in the Long Run? Effects of School Spending on Educational Attainment." American Economic Journal: Economic Policy, 9 (4): 256-80. DOI: 10.1257/pol.20150249

Additional Materials

JEL Classification

  • H75 State and Local Government: Health; Education; Welfare; Public Pensions
  • I21 Analysis of Education
  • I22 Educational Finance; Financial Aid
  • I28 Education: Government Policy
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