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The Effect of a Differential Add-On Grant: Title I and Local Education Spending

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  • Martin Feldstein

Abstract

Analyses of intergovernmental aid emphasize the difference between matching grants and block grants. Since a block grant has only an income effect and no price effect, conventional theory predicts that block grants have a very small impact on the local government's expenditure on the favored activity. There is, however, a different type of block grant referred to in this paper as a "differential add-on grant." The purpose of the present paper is to measure the effectiveness of one such add-on grant, the federal government's program to increase local education spending on pupils from low-income families. The evidence implies that this aid is quite effective and therefore suggests that the traditional theory of intergovernmental aid should be extended to recognize this type of grant.

Suggested Citation

  • Martin Feldstein, 1978. "The Effect of a Differential Add-On Grant: Title I and Local Education Spending," Journal of Human Resources, University of Wisconsin Press, vol. 13(4), pages 443-458.
    • Handle: RePEc:uwp:jhriss:v:13:y:1978:i:4:p:443-458
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    Cited by:

    1. Rajashri Chakrabarti & Sarah Sutherland, 2013. "Precarious slopes? The Great Recession, federal stimulus, and New Jersey schools," Economic Policy Review, Federal Reserve Bank of New York, issue Dec, pages 41-65.
    2. Baicker, Katherine & Clemens, Jeffrey & Singhal, Monica, 2012. "The rise of the states: U.S. fiscal decentralization in the postwar period," Journal of Public Economics, Elsevier, vol. 96(11), pages 1079-1091.
    3. Gordon, Nora, 2004. "Do federal grants boost school spending? Evidence from Title I," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1771-1792, August.
    4. Rhee, Se-Koo, 1996. "The impact of intergovernmental grants-in-aid on public school expenditure under the segregated school system," ISU General Staff Papers 1996010108000012396, Iowa State University, Department of Economics.
    5. Rebecca J. Acosta, 2001. "How Do Colleges Respond to Changes in Federal Student Aid?," UCLA Economics Working Papers 808, UCLA Department of Economics.
    6. Michael S. McPherson & Morton Owen Schapiro, 1990. "The Effect of Government Financing on the Behavior of Colleges and Universities," Williams Project on the Economics of Higher Education DP-9, Department of Economics, Williams College.

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