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Budget-Maximizing Bureaucracy and the Effects of State Aid on School Expenditures


  • John H. Beck

    (Case Western Reserve University)


This article estimates expenditure equations for Michigan school districts using Kelejian's (1971) procedure for dealing with the endogenous state aid variables. Alternative specifications of the expenditure equation are derived, based on (i) a median voter model and (ii) Niskanen's (1971) budget-maximizing model. Theoretical considerations imply different specifications of the aid variables than have been used in previous empirical work. The estimated effect of grants-in-aid is a larger increase in expenditures than is consistent with model (i) but less than is consistent with model (ii).

Suggested Citation

  • John H. Beck, 1981. "Budget-Maximizing Bureaucracy and the Effects of State Aid on School Expenditures," Public Finance Review, , vol. 9(2), pages 159-182, April.
  • Handle: RePEc:sae:pubfin:v:9:y:1981:i:2:p:159-182

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    Cited by:

    1. Rhee, Se-Koo, 1996. "The impact of intergovernmental grants-in-aid on public school expenditure under the segregated school system," ISU General Staff Papers 1996010108000012396, Iowa State University, Department of Economics.
    2. Robert Logan & J. O'Brien, 1989. "Fiscal illusion, budget maximizers, and dynamic equilibrium," Public Choice, Springer, vol. 63(3), pages 221-235, December.

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