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Inequality in Public School Spending Across Space and Time

Author

Listed:
  • Christopher Biolsi

    (Western Kentucky University)

  • Steven Craig

    (University of Houston)

  • Amrita Dhar

    (University of Mary Washington)

  • Bent Sorensen

    (University of Houston)

Abstract

This paper takes a novel time series perspective on the financing of K-12 schooling. About half of school spending is financed by state government aid to local districts, and because state aid is generally income conditioned, it acts as a mechanism for risk sharing between school districts. We show that temporal inequality, due to state and local business cycles, is prevalent across the income distribution. We estimate a model of local revenue and state aid, and its allocation across districts, and use the parameters to simulate impulse response functions. We find that state aid provides risk sharing for local shocks, although slow speed of adjustment results in temporal inequality. There is little risk sharing for statewide income shocks, and the risk from such shocks to school spending is more severe in low-income districts because of their greater reliance on state aid. (Copyright: Elsevier)

Suggested Citation

  • Christopher Biolsi & Steven Craig & Amrita Dhar & Bent Sorensen, 2022. "Inequality in Public School Spending Across Space and Time," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 46, pages 244-279, October.
    • Handle: RePEc:red:issued:19-49a
    DOI: 10.1016/j.red.2021.09.004
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    Cited by:

    1. Christopher Biolsi & H. Youn Kim, 2021. "Analyzing state government spending: balanced budget rules or forward-looking decisions?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(4), pages 1035-1079, August.

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    More about this item

    Keywords

    Local School Finance; Fiscal Federalism; Education Inequality; Risk Sharing between school districts;
    All these keywords.

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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