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Does Additional Spending Help Urban Schools? An Evaluation Using Boundary Discontinuities


  • Stephen Gibbons
  • Sandra McNally
  • Martina Viarengo


Improvement of educational attainment in schools in urban, disadvantaged areas is an important priority for policy - particularly in countries like England which have a long tail at the bottom of the educational distribution and where there is much concern about low social mobility. An anomaly in the spatial dimension of school funding policy in England allows us to examine the effect of increasing school expenditure for schools in urban areas. This anomaly arises because an 'area cost adjustment' is made in how central government allocates funds to Local Authorities (school districts) whereas, in reality, teachers are drawn from the same labour market and are paid according to national pay scales. This is one of the features that give rise to neighbouring schools on either side of a Local Authority boundary being allocated very different resources, even if they have very similar characteristics. We find that these funding disparities give rise to sizeable differences in pupil attainment in national tests at the end of primary school. This finding lends adds to the evidence that school resources have an important role to play in improving educational attainment and has direct policy implications for the current 'pupil premium' policy in England.

Suggested Citation

  • Stephen Gibbons & Sandra McNally & Martina Viarengo, 2011. "Does Additional Spending Help Urban Schools? An Evaluation Using Boundary Discontinuities," SERC Discussion Papers 0090, Spatial Economics Research Centre, LSE.
  • Handle: RePEc:cep:sercdp:0090

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    References listed on IDEAS

    1. Steven G. Rivkin & Eric A. Hanushek & John F. Kain, 2005. "Teachers, Schools, and Academic Achievement," Econometrica, Econometric Society, vol. 73(2), pages 417-458, March.
    2. Sandra E. Black, 1999. "Do Better Schools Matter? Parental Valuation of Elementary Education," The Quarterly Journal of Economics, Oxford University Press, vol. 114(2), pages 577-599.
    3. Jo Blanden, 2009. "How Much Can We Learn from International Comparisons of Intergenerational Mobility?," CEE Discussion Papers 0111, Centre for the Economics of Education, LSE.
    4. Gilles Duranton & Laurent Gobillon & Henry G. Overman, 2011. "Assessing the Effects of Local Taxation using Microgeographic Data," Economic Journal, Royal Economic Society, vol. 121(555), pages 1017-1046, September.
    5. Patrick Bayer & Fernando Ferreira & Robert McMillan, 2007. "A Unified Framework for Measuring Preferences for Schools and Neighborhoods," Journal of Political Economy, University of Chicago Press, vol. 115(4), pages 588-638, August.
    6. Holmlund, Helena & McNally, Sandra & Viarengo, Martina, 2010. "Does money matter for schools?," Economics of Education Review, Elsevier, vol. 29(6), pages 1154-1164, December.
    7. Patrick J. Bayer & Robert McMillan, 2010. "Choice and Competition in Education Markets," Working Papers 10-47, Duke University, Department of Economics.
    8. Eric Maurin & Sandra McNally, 2007. "Educational Effects of Widening Access to the Academic Track: A Natural Experiment," CEE Discussion Papers 0085, Centre for the Economics of Education, LSE.
    9. Cushing, Brian J., 1984. "Capitalization of interjurisdictional fiscal differentials: An alternative approach," Journal of Urban Economics, Elsevier, vol. 15(3), pages 317-326, May.
    10. Stephen Machin & Sandra McNally & Costas Meghir, 2010. "Resources and Standards in Urban Schools," Journal of Human Capital, University of Chicago Press, vol. 4(4), pages 365-393.
    11. 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.
    12. Joshua D. Angrist & Victor Lavy, 1999. "Using Maimonides' Rule to Estimate the Effect of Class Size on Scholastic Achievement," The Quarterly Journal of Economics, Oxford University Press, vol. 114(2), pages 533-575.
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    Cited by:

    1. Gibbons, Stephen & Silva, Olmo & Weinhardt, Felix, 2014. "Neighbourhood Turnover and Teenage Attainment," IZA Discussion Papers 8381, Institute for the Study of Labor (IZA).
    2. Stephen Gibbons & Henry G. Overman, 2012. "Mostly Pointless Spatial Econometrics?," Journal of Regional Science, Wiley Blackwell, vol. 52(2), pages 172-191, May.
    3. Ruth Lupton & Polina Obolenskaya, 2013. "Labour's Record on Education: Policy, Spending and Outcomes 1997-2010," CASE - Social Policy in a Cold Climate Working Paper 03, Centre for Analysis of Social Exclusion, LSE.
    4. Gordon L. Clark, 2014. "Roepke Lecture in Economic Geography—Financial Literacy in Context," Economic Geography, Clark University, vol. 90(1), pages 1-23, January.
    5. Gibbons, Steve & Overman, Henry G. & Patacchini, Eleonora, 2015. "Spatial Methods," Handbook of Regional and Urban Economics, Elsevier.
    6. Steve Gibbons & Max Nathan & Henry G. Overman, 2014. "Evaluating Spatial Policies," SERC Policy Papers 012, Spatial Economics Research Centre, LSE.
    7. Eyles, Andrew & Machin, Stephen & McNally, Sandra, 2017. "Unexpected school reform: Academisation of primary schools in England," Journal of Public Economics, Elsevier, vol. 155(C), pages 108-121.
    8. Nicoletti, Cheti & Rabe, Birgitta, 2012. "The effect of school resources on test scores in England," ISER Working Paper Series 2012-13, Institute for Social and Economic Research.
    9. repec:eco:journ1:2017-05-35 is not listed on IDEAS
    10. Monique De Haan, 2012. "The Effect of Additional Funds for Low-Ability Pupils - A Nonparametric Bounds Analysis," CESifo Working Paper Series 3993, CESifo Group Munich.
    11. Machin, Stephen & Wyness, Gill & McNally, Sandra, 2013. "Education in a devolved Scotland: a quantitative analysis," LSE Research Online Documents on Economics 57971, London School of Economics and Political Science, LSE Library.
    12. Stephen Machin & Sandra McNally, 2012. "The Evaluation of English Education Policies," National Institute Economic Review, National Institute of Economic and Social Research, vol. 219(1), pages 15-25, January.
    13. 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.
    14. repec:cep:spccrr:01 is not listed on IDEAS
    15. Lupton, Ruth & Hills, John & Stewart, Kitty & Vizard, Polly, 2013. "Labour’s social policy record: policy, spending and outcomes 1997-2010," LSE Research Online Documents on Economics 51070, London School of Economics and Political Science, LSE Library.
    16. Deborah A. Cobb-Clark & Nikhil Jha, 2016. "Educational Achievement and the Allocation of School Resources," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 49(3), pages 251-271, September.

    More about this item


    Urban schools; education; resources;

    JEL classification:

    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education

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