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Education inputs, student performance and school finance reform in Michigan

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  • Chaudhary, Latika

Abstract

This paper estimates the impact of the Michigan school finance reform, Proposal A, on education inputs and test scores. Using a difference-in-difference estimation strategy, I find that school districts in Michigan used the increase in educational spending generated through Proposal A to increase teacher salaries and reduce class size to a smaller extent. Then, using the foundation allowance created by Proposal A as an instrument, I estimate the causal effect of increased spending on 4th and 7th grade math scores for two test measures - a scaled score and a percent satisfactory measure - and find positive effects of increased spending on 4th grade test scores. A 60% increase in spending increases the percent satisfactory score by one standard deviation. The positive impact of expenditures on test performance seems largely due to higher teacher salaries.

Suggested Citation

  • Chaudhary, Latika, 2009. "Education inputs, student performance and school finance reform in Michigan," Economics of Education Review, Elsevier, vol. 28(1), pages 90-98, February.
  • Handle: RePEc:eee:ecoedu:v:28:y:2009:i:1:p:90-98
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    References listed on IDEAS

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    1. David Card & Alan B. Krueger, 1996. "School Resources and Student Outcomes: An Overview of the Literature and New Evidence from North and South Carolina," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 31-50, Fall.
    2. Murray, Sheila E & Evans, William N & Schwab, Robert M, 1998. "Education-Finance Reform and the Distribution of Education Resources," American Economic Review, American Economic Association, vol. 88(4), pages 789-812, September.
    3. Courant, Paul N & Gramlich, Edward M & Loeb, Susanna, 1995. "Michigan's Recent School Finance Reforms: A Preliminary Report," American Economic Review, American Economic Association, vol. 85(2), pages 372-377, May.
    4. Caroline M. Hoxby, 2001. "All School Finance Equalizations are Not Created Equal," The Quarterly Journal of Economics, Oxford University Press, vol. 116(4), pages 1189-1231.
    5. Downes, Thomas A., 1992. "Evaluating the Impact of School Finance Reform on the Provision of Public Education: The California Case," National Tax Journal, National Tax Association;National Tax Journal, vol. 45(4), pages 405-419, December.
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    8. Jonathan Guryan, 2001. "Does Money Matter? Regression-Discontinuity Estimates from Education Finance Reform in Massachusetts," NBER Working Papers 8269, National Bureau of Economic Research, Inc.
    9. Paul N. Courant & Susanna Loeb, 1997. "Centralization of school finance in Michigan," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 16(1), pages 114-136.
    10. Downes, Thomas A. & Dye, Richard F. & McGuire, Therese J., 1998. "Do Limits Matter? Evidence on the Effects of Tax Limitations on Student Performance," Journal of Urban Economics, Elsevier, vol. 43(3), pages 401-417, May.
    11. Papke, Leslie E., 2005. "The effects of spending on test pass rates: evidence from Michigan," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 821-839, June.
    12. Eric A. Hanushek, 1996. "Measuring Investment in Education," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 9-30, Fall.
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    Citations

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    Cited by:

    1. Marchand, Joseph & Weber, Jeremy, 2017. "The Local Effects of the Texas Shale Boom on Schools, Students, and Teachers," Working Papers 2017-12, University of Alberta, Department of Economics, revised 26 Jan 2018.
    2. repec:aea:aejpol:v:9:y:2017:i:4:p:256-80 is not listed on IDEAS
    3. Stephen Gibbons & Sandra McNally, 2013. "The Effects of Resources Across School Phases: A Summary of Recent Evidence," CEP Discussion Papers dp1226, Centre for Economic Performance, LSE.
    4. Sims, David P., 2011. "Suing for your supper? Resource allocation, teacher compensation and finance lawsuits," Economics of Education Review, Elsevier, vol. 30(5), pages 1034-1044, October.
    5. Sungoh Kwon, 2017. "Does Public School Spending Raise Intergenerational Mobility?: Evidence from U.S. School Finance Reforms," Working papers 2017-06, University of Connecticut, Department of Economics.
    6. Marchand, Joseph & Weber, Jeremy, 2015. "The Labor Market and School Finance Effects of the Texas Shale Boom on Teacher Quality and Student Achievement," Working Papers 2015-15, University of Alberta, Department of Economics.
    7. Rebeca Regina Regatieri & Marcelo Araújo Castro, 2016. "More Money, More Quality? Impact Of An Unconditional Transfer On Approval Rates, National Exam Results And Ideb," Anais do XLIII Encontro Nacional de Economia [Proceedings of the 43rd Brazilian Economics Meeting] 077, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    8. repec:eee:resene:v:49:y:2017:i:c:p:150-164 is not listed on IDEAS
    9. McHenry, Peter, 2011. "The effect of school inputs on labor market returns that account for selective migration," Economics of Education Review, Elsevier, vol. 30(1), pages 39-54, February.

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