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Pennies from heaven - Using exogenous tax variation to identify effects of school resources on pupil achievement

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Author Info
Hægeland, Torbjørn (Statistics Norway)
Raaum, Oddbjørn (Ragnar Frisch Centre for Economic Research)
Salvanes, Kjell Gunnar (The Norwegian School of Economics and Business Administration)

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Abstract

Despite important policy implications associated with the allocation of education resources, evidence on the effectiveness of school inputs remains inconclusive. In part, this is due to endogenous allocation; families sort themselves non-randomly into school districts and school districts allocate money based in order to compensate (or reinforce) differences in child abilities, which leaves estimates of school input effects likely to be biased. Using variation in education expenditures induced by the location of natural resources in Norway, we examine the effect of school resources on pupil outcomes. We find that higher school expenditures, triggered by higher revenues from local taxes on hydropower plants, have a significantly positive effect on pupil performance at age 16. The IV estimates contrast with the standard cross-sectional estimates that reveal no effects of extra resources.

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File URL: http://www.oekonomi.uio.no/memo/memopdf/memo1807.pdf
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Publisher Info
Paper provided by Oslo University, Department of Economics in its series Memorandum with number 18/2007.

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Length: 43 pages
Date of creation: 01 Sep 2007
Date of revision:
Handle: RePEc:hhs:osloec:2007_018

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Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
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Web page: http://www.oekonomi.uio.no/indexe.html
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Related research
Keywords: Pupil achievement; school resources;

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Find related papers by JEL classification:
I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
I28 - Health, Education, and Welfare - - Education - - - Government Policy
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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    Other versions:
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  24. Borge, Lars-Erik & Rattso, J.Jorn, 2004. "Income distribution and tax structure: Empirical test of the Meltzer-Richard hypothesis," European Economic Review, Elsevier, vol. 48(4), pages 805-826, August. [Downloadable!] (restricted)
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  26. Paul Bingley & Vibeke Myrup Jensen & Ian Walker, 2005. "The Effects of School Class Size on Length of Post-Compulsory Education: Some Cost-Benefit Analysis," IZA Discussion Papers 1605, Institute for the Study of Labor (IZA). [Downloadable!]
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Leuven, Edwin & Oosterbeek, Hessel & Rønning, Marte, 2008. "Quasi-Experimental Estimates of the Effect of Class Size on Achievement in Norway," IZA Discussion Papers 3474, Institute for the Study of Labor (IZA). [Downloadable!]
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