Segregated schools, investment in education, and property values in Maryland school districts: 1924-1955

Many theoretical models have been developed which describe the educational investment process. Each presents causal relationships among variables such as birth rates, enrollments or attendance, property values, and per-pupil expenditures. The validity of the relationships among such variables as set forth in these theoretical models is tested in a vector-autoregressive setting using Maryland grade school data during the segregated schooling era. The period covered is from 1924 to 1955. A vector-autoregressive approach is taken because it makes no a priori assumptions about variable relationships. The causal structure of the vector-autoregressive model alone empirically determines the relationships of the relevant variables. New theoretical models are developed which help to explain the empirical findings;Among the theoretical models developed, one offers a potential solution to the paradox of investment in black school by whites in an era of segregation. This paradox was first addressed by Myrdal (1944) and has subsequently become known as Myrdal's paradox. The model encompasses the relationship between property values and educational investment. The framework for model building begins with the idea that white capitalists would be willing to invest in black education provided they benefitted economically from such investment.