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Understanding the 20th Century Growth in U.S. School Spending

  • Eric A. Hanushek
  • Steven G. Rivkin

The persistent increase in spending on elementary and secondary schools has gone virtually undocumented and has received insufficient attention. Real expenditure per student increased at 3« percent per year over the entire period of 1890-1990. A decomposition of the spending growth shows that it was propelled by a combination of falling pupil-teacher ratios, increasing real wages to teachers, and rising expenditures outside of the classroom. While the expansion of education for the handicapped has had a disproportionate effect on spending, most of the growth in expenditure during the 1980s came from other sources. Teacher salary increases, which reflect competitive pressures particularly for females, have nevertheless failed to keep up with wages in other occupationsþleading to likely declines in teacher quality over time. Moreover, the magnitude of the wage decline is larger than commonly thought because the relative aging of teachers has masked the sizable declines when teachers are compared to comparably aged people in other occupations.

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File URL: http://www.nber.org/papers/w5547.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5547.

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Date of creation: Apr 1996
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Publication status: published as Journal of Human Resources, 32(1), Winter1997, pp.35-68.
Handle: RePEc:nbr:nberwo:5547
Note: LS
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  1. Hanushek, Eric A & Rivkin, Steven G & Taylor, Lori L, 1996. "Aggregation and the Estimated Effects of School Resources," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 611-27, November.
  2. Hanushek, Eric A. & Pace, Richard R., 1995. "Who chooses to teach (and why)?," Economics of Education Review, Elsevier, vol. 14(2), pages 101-117, June.
  3. Flyer, Fredrick & Rosen, Sherwin, 1997. "The New Economics of Teachers and Education," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages S104-39, January.
  4. Ballou, Dale, 1996. "Do Public Schools Hire the Best Applicants?," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 97-133, February.
  5. Hanushek, Eric A, 1986. "The Economics of Schooling: Production and Efficiency in Public Schools," Journal of Economic Literature, American Economic Association, vol. 24(3), pages 1141-77, September.
  6. Joseph P. Newhouse, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 3-21, Summer.
  7. Card, David & Krueger, Alan B, 1992. "Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 1-40, February.
  8. Dale Ballou & Michael Podgursky, 1995. "Recruiting Smarter Teachers," Journal of Human Resources, University of Wisconsin Press, vol. 30(2), pages 326-338.
  9. Akerhielm, Karen, 1995. "Does class size matter?," Economics of Education Review, Elsevier, vol. 14(3), pages 229-241, September.
  10. Baumol, William J, 1972. "Macroeconomics of Unbalanced Growth: Reply," American Economic Review, American Economic Association, vol. 62(1), pages 150, March.
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