Does Money Matter for Schools?
AbstractThere is considerable disagreement in the academic literature about whether raising school expenditure improves educational outcomes. Yet changing the level of resources is one of the key policy levers open to governments. In the UK, school expenditure has increased by about 40 per cent in real terms since 2000. Thus, providing an answer to the question as to whether such spending has an impact on educational outcomes (and whether it is good use of public money) is of paramount importance. In this paper we address this issue for England using much better data than what has generally been used in such studies. We are also able to test our identification assumption by use of a falsification test. We find that the increase in school expenditure over recent years has had a consistently positive effect on outcomes at the end of primary school. Back-of-envelope calculations suggest that the investment may well be cost-effective. There is also some evidence of heterogeneity in the effect of expenditure, with higher effects for students who come from economically disadvantaged backgrounds.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3769.
Length: 26 pages
Date of creation: Oct 2008
Date of revision:
Publication status: published in: Economics of Education Review, 2010, 29 (6), 1154-1164
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Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Other versions of this item:
- I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
- H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-10-28 (All new papers)
- NEP-EDU-2008-10-28 (Education)
- NEP-EEC-2008-10-28 (European Economics)
- NEP-LAB-2008-10-28 (Labour Economics)
- NEP-URE-2008-10-28 (Urban & Real Estate Economics)
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