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Using Market Valuation to Assess Public School Spending

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Author Info
Lisa Barrow
Cecilia Elena Rouse

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Abstract

In this paper we use a 'market-based' approach to examine whether increased school expenditures are valued by potential residents and whether the current level of public school provision is inefficient. We do so by employing an instrumental variables strategy to estimate the effect of state education aid on residential property values. We find evidence that, on net, additional state aid is valued by potential residents and that school districts do not appear to overspend on education. We also find that school districts may overspend in areas in which residents are poor or less educated, in large districts, and in districts with higher shares of rental property. One interpretation of these results is that increased competition has the potential to reduce overspending on public schools in some areas.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9054.

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Date of creation: Jul 2002
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Handle: RePEc:nbr:nberwo:9054

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I2 - Health, Education, and Welfare - - Education
H4 - Public Economics - - Publicly Provided Goods

References listed on IDEAS
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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. John Abowd & Charles Mulvey, 1979. "Estimating the Union-Non-union Wage Differential: A Statistical Issue," Working Papers 488, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  2. Robert Inman, 2005. "Financing Cities," NBER Working Papers 11203, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Grace Wong, 2004. "Has SARS Infected the Property Market? Evidence from Hong Kong," Working Papers 11, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  4. Daniel Millimet; Vasudha Rangaprasad, 2004. "Strategic Competition Amongst Public Schools," Econometric Society 2004 North American Summer Meetings 197, Econometric Society. [Downloadable!]
    Other versions:
  5. Grace Wong, 2004. "Has SARS Infected the Property Market? Evidence from Hong Kong," Working Papers 867, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  6. Stephanie Riegg Cellini & Fernando Ferreira & Jesse Rothstein, 2008. "The Value of School Facilities: Evidence from a Dynamic Regression Discontinuity Design," NBER Working Papers 14516, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Christian A. L. Hilber & Christopher J. Mayer, 2004. "Why Do Households Without Children Support Local Public Schools?," NBER Working Papers 10804, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Timothy J. Bartik, 2009. "How Policymakers Should Deal with the Delayed Benefits of Early Childhood Programs," Staff Working Papers 09-150, W.E. Upjohn Institute for Employment Research. [Downloadable!] (restricted)
  9. Patrick Bayer & Robert McMillan, 2005. "Choice and Competition in Local Education Markets," NBER Working Papers 11802, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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