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Do School Budgets Matter? The Effect of Budget Referenda on Student Performance

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  • Lee, Kyung-Gon

    ()
    (Korean Labor Institute)

  • Polachek, Solomon

    ()
    (Binghamton University, New York)

Abstract

This paper analyzes how changes in school expenditures affect dropout rates and standardized test scores based on data from 465 school districts in New York during the 2003/04 to the 2008/09 school years. Past traditional regression approaches show inconsistent results of school expenditures because of an endogeneity problem. The regression discontinuity design used in this study isolates exogenous variation in school expenditures per pupil by comparing school districts where budget referenda passed and failed by narrow margins. The results indicate that increases in school expenditures reduce dropout rates but have limited effects on student test scores.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 8056.

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Length: 35 pages
Date of creation: Mar 2014
Date of revision:
Handle: RePEc:iza:izadps:dp8056

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Keywords: educational expenditures; school budget referenda; school dropout rates; student performance;

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  1. Phuong Nguyen-Hoang, 2012. "Fiscal effects of budget referendums: evidence from New York school districts," Public Choice, Springer, Springer, vol. 150(1), pages 77-95, January.
  2. Hahn, Jinyong & Todd, Petra & Van der Klaauw, Wilbert, 2001. "Identification and Estimation of Treatment Effects with a Regression-Discontinuity Design," Econometrica, Econometric Society, Econometric Society, vol. 69(1), pages 201-09, January.
  3. David S. Lee & Thomas Lemieux, 2009. "Regression Discontinuity Designs In Economics," Working Papers, Princeton University, Department of Economics, Industrial Relations Section. 1118, Princeton University, Department of Economics, Industrial Relations Section..
  4. Guido Imbens & Thomas Lemieux, 2007. "Regression Discontinuity Designs: A Guide to Practice," NBER Technical Working Papers, National Bureau of Economic Research, Inc 0337, National Bureau of Economic Research, Inc.
  5. Ludwig, Jens & Miller, Douglas L., 2006. "Does Head Start Improve Children's Life Chances? Evidence from a Regression Discontinuity Design," IZA Discussion Papers, Institute for the Study of Labor (IZA) 2111, Institute for the Study of Labor (IZA).
  6. James J. Heckman & Paul A. LaFontaine, 2008. "The American High School Graduation Rate: Trends And Levels," Working Papers, Geary Institute, University College Dublin 200828, Geary Institute, University College Dublin.
  7. Ou, Dongshu, 2010. "To leave or not to leave? A regression discontinuity analysis of the impact of failing the high school exit exam," Economics of Education Review, Elsevier, Elsevier, vol. 29(2), pages 171-186, April.
  8. Wilbert van der Klaauw, 2002. "Estimating the Effect of Financial Aid Offers on College Enrollment: A Regression-Discontinuity Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 1249-1287, November.
  9. Hanushek, Eric A, 1986. "The Economics of Schooling: Production and Efficiency in Public Schools," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 24(3), pages 1141-77, September.
  10. Thomas Dee, 2012. "School Turnarounds: Evidence from the 2009 Stimulus," NBER Working Papers, National Bureau of Economic Research, Inc 17990, National Bureau of Economic Research, Inc.
  11. McCrary, Justin, 2008. "Manipulation of the running variable in the regression discontinuity design: A density test," Journal of Econometrics, Elsevier, Elsevier, vol. 142(2), pages 698-714, February.
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