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Using Market Valuation to Assess the Importance and Efficiency of Public School Spending

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  • Lisa Barrow

    (Federal Reserve Bank of Chicago)

  • Cecilia Elena Rouse

    (Princeton University and NBER)

Abstract

In this paper we take a "market-based" approach to examine whether increased expenditures improve perceived school quality and whether the current level of public school provision is inefficient. We find evidence that, on average, school districts are not wasting taxpayers' education dollars. Rather, if anything, we find that education may be underfunded. As a result, increased competition has the potential to increase school spending levels. We also find evidence that school districts spend less efficiently in areas in which school districts face less competition from other public schools and in areas in which residents are less educated (leading either to less mobility from a lack of resources or to less efficient education production through peer effects).

Suggested Citation

  • Lisa Barrow & Cecilia Elena Rouse, 2000. "Using Market Valuation to Assess the Importance and Efficiency of Public School Spending," Econometric Society World Congress 2000 Contributed Papers 1446, Econometric Society.
  • Handle: RePEc:ecm:wc2000:1446
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    Cited by:

    1. Lisa Barrow & Cecilia Elena Rouse, 2005. "Causality, causality, causality: the view of education inputs and outputs from economics," Working Paper Series WP-05-15, Federal Reserve Bank of Chicago.
    2. Fox, William F. & Gurley, Tami, 2006. "Will consolidation improve sub-national governments ?," Policy Research Working Paper Series 3913, The World Bank.
    3. Byron F. Lutz, 2006. "Taxation with representation: intergovernmental grants in a plebiscite democracy," Finance and Economics Discussion Series 2006-06, Board of Governors of the Federal Reserve System (U.S.).

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    JEL classification:

    • O29 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Other
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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