School Finance Reforms and Juvenile Crime[Estimating the Deterrent Effect of Incarceration using Sentencing Enhancements]

Several states initiated school finance reforms during the post-1990s, commonly named the “adequacy” era, with the primary purpose of providing adequate funding for low-income school districts. This article uses the space–time variation in court-ordered reforms in this period as shocks to school spending and investigates its effects on juvenile arrest rates and risky behaviors. Using a 2SLS-DDD approach and a wide range of data sets, I find that exposure to reform reduces the juvenile arrest rates, increases the likelihood of high school graduation, increases the time spent on educational activities, and reduces risky behaviors at schools. A 10 rise in real per-pupil spending is associated with 7.4 fewer arrests per 1,000 in the population aged 15–19. This rise is equivalent to a reduction of roughly 90,806 arrests annually. It also implies a minimum of 20 return in school spending due to the avoided costs of deterred crimes.