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The Impact of Fiscal Incentives on Student Disability Rates

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  • Julie Berry Cullen

Abstract

Student disability rates have grown by over 50 percent over the past two decades and are continuing to rise. Policy discussion has linked this trend to state funding formulas that reward local school districts for identifying additional students with special needs. However, there is little empirical evidence on the role of these fiscal parameters in explaining student disability rates, or, more generally, on the responsiveness of local program take-up rates to intergovernmental fiscal incentives. In order to estimate the elasticity of student disability rates with respect to the generosity of state reimbursements, I use variation in the state aid generated by serving a disabled student across local school districts in Texas from 1991-92 through 1996-97. The take-up response is identified from sharp changes in the relative treatment of districts of differing wealth that arise from court-mandated changes in the structure of school finance equalization. My central estimates imply that fiscal incentives can explain over 35 percent of the recent growth in student disability rates in Texas. The magnitude of the institutional response varies by district size and enrollment concentration, student race/ethnicity composition, and the level of fiscal constraint.

Suggested Citation

  • Julie Berry Cullen, 1999. "The Impact of Fiscal Incentives on Student Disability Rates," NBER Working Papers 7173, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:7173
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    1. repec:pal:jorsoc:v:68:y:2017:i:4:d:10.1057_jors.2015.93 is not listed on IDEAS
    2. Janet Currie & Mark Stabile, 2007. "Mental Health in Childhood and Human Capital," NBER Chapters,in: The Problems of Disadvantaged Youth: An Economic Perspective, pages 115-148 National Bureau of Economic Research, Inc.
    3. Johansson, Per & Skedinger, Per, 2005. "Are Objective, Official Measures of Disability Reliable?," Working Paper Series 643, Research Institute of Industrial Economics.
    4. Rajashri Chakrabarti, 2013. "Accountability with Voucher Threats, Responses, and the Test-Taking Population: Regression Discontinuity Evidence from Florida," Education Finance and Policy, MIT Press, vol. 8(2), pages 121-167, April.
    5. Glomm, Gerhard & Harris, Douglas & Lo, Te-Fen, 2005. "Charter school location," Economics of Education Review, Elsevier, vol. 24(4), pages 451-457, August.
    6. Dhuey, Elizabeth & Lipscomb, Stephen, 2010. "Disabled or young? Relative age and special education diagnoses in schools," Economics of Education Review, Elsevier, vol. 29(5), pages 857-872, October.
    7. 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.).
    8. Currie, Janet & Stabile, Mark, 2006. "Child mental health and human capital accumulation: The case of ADHD," Journal of Health Economics, Elsevier, vol. 25(6), pages 1094-1118, November.
    9. Cullen, Julie Berry, 2003. "The impact of fiscal incentives on student disability rates," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1557-1589, August.
    10. Clemens, Jeffrey & Cutler, David M., 2014. "Who pays for public employee health costs?," Journal of Health Economics, Elsevier, vol. 38(C), pages 65-76.
    11. Caroline M. Hoxby & Ilyana Kuziemko, 2004. "Robin Hood and His Not-So-Merry Plan: Capitalization and the Self-Destruction of Texas' School Finance Equalization Plan," NBER Working Papers 10722, National Bureau of Economic Research, Inc.
    12. Rajashri Chakrabarti, 2013. "Vouchers, Public School Response, And The Role Of Incentives: Evidence From Florida," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 500-526, January.
    13. Julie Berry Cullen & Randall Reback, 2006. "Tinkering Toward Accolades: School Gaming Under a Performance Accountability System," NBER Working Papers 12286, National Bureau of Economic Research, Inc.
    14. Kathryn Wilson & Kristina Lambright & Timothy M. Smeeding, 2004. "School Finance, Equivalent Educational Expenditure, and Income Distribution: Equal Dollars or Equal Chances for Success?," Center for Policy Research Working Papers 62, Center for Policy Research, Maxwell School, Syracuse University.
    15. Elizabeth Dhuey & Stephen Lipscomb, 2013. "Funding Special Education by Total District Enrollment: Advantages, Disadvantages, and Policy Considerations," Education Finance and Policy, MIT Press, vol. 8(3), pages 316-331, July.
    16. David N. Figlio & Lawrence S. Getzler, 2002. "Accountability , Ability and Disability: Gaming the System," NBER Working Papers 9307, National Bureau of Economic Research, Inc.

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    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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