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Pennies from heaven. Using exogenous tax variation to identify effects of school resources on pupil achievement

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Despite important policy implications associated with the allocation of education resources, evidence on the effectiveness of school inputs remains inconclusive. In part, this is due to endogenous allocation; families sort themselves non-randomly into school districts and school districts allocate money based in order to compensate (or reinforce) differences in child abilities, which leaves estimates of school input effects likely to be biased. Using variation in education expenditures induced by the location of natural resources in Norway, we examine the effect of school resources on pupil outcomes. We find that higher school expenditures, triggered by higher revenues from local taxes on hydropower plants, have a significantly positive effect on pupil performance at age 16. The IV estimates contrast with the standard cross-sectional estimates that reveal no effects of extra resources.

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  • Torbjørn Hægeland & Oddbjørn Raaum & Kjell G. Salvanes, 2007. "Pennies from heaven. Using exogenous tax variation to identify effects of school resources on pupil achievement," Discussion Papers 508, Statistics Norway, Research Department.
  • Handle: RePEc:ssb:dispap:508
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    Cited by:

    1. Havnes, Tarjei & Mogstad, Magne, 2011. "Money for nothing? Universal child care and maternal employment," Journal of Public Economics, Elsevier, vol. 95(11), pages 1455-1465.
    2. Andersen, Jørgen Juel & Fiva, Jon H. & Natvik, Gisle James, 2014. "Voting when the stakes are high," Journal of Public Economics, Elsevier, vol. 110(C), pages 157-166.
    3. Destin, Mesmin, 2013. "Integrating resource-based and person-based approaches to understanding wealth effects on school achievement," Economics of Education Review, Elsevier, vol. 33(C), pages 171-178.
    4. Figlio, D. & Karbownik, K. & Salvanes, K.G., 2016. "Education Research and Administrative Data," Handbook of the Economics of Education, Elsevier.
    5. Marie Hyland & Richard Layte & Seán Lyons & Selina McCoy & Mary Silles, 2015. "Are Classroom Internet Use and Academic Performance Higher after Government Broadband Subsidies to Primary Schools?," The Economic and Social Review, Economic and Social Studies, vol. 46(3), pages 399-428.
    6. Edwin Leuven & Marte Rønning, 2016. "Classroom Grade Composition and Pupil Achievement," Economic Journal, Royal Economic Society, vol. 126(593), pages 1164-1192, June.
    7. De Witte, Kristof & Geys, Benny & Solondz, Catharina, 2014. "Public expenditures, educational outcomes and grade inflation: Theory and evidence from a policy intervention in the Netherlands," Economics of Education Review, Elsevier, vol. 40(C), pages 152-166.
    8. repec:eee:pubeco:v:152:y:2017:i:c:p:47-54 is not listed on IDEAS
    9. Reiling, Rune Borgan, 2016. "Does size matter? Educational attainment and cohort size," Journal of Urban Economics, Elsevier, vol. 94(C), pages 73-89.
    10. Joseph Marchand & Jeremy Weber, 2018. "Local Labor Markets And Natural Resources: A Synthesis Of The Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 32(2), pages 469-490, April.
    11. Marchand, Joseph & Weber, Jeremy, 2017. "The Local Effects of the Texas Shale Boom on Schools, Students, and Teachers," Working Papers 2017-12, University of Alberta, Department of Economics, revised 26 Jan 2018.
    12. Edwin Leuven & Hessel Oosterbeek & Marte Rønning, 2008. "Quasi-experimental Estimates of the Effect of Class Size on Achievement in Norway," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(4), pages 663-693, December.
    13. Masakazu Hojo, 2011. "Education Production Function and Class-Size Effects in Japanese Public Schools," Global COE Hi-Stat Discussion Paper Series gd11-194, Institute of Economic Research, Hitotsubashi University.
    14. 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.
    15. Marcelo Araújo Castro, 2016. "Using A Quasi-Experiment To Identify The Effects Of Education Spending On School Quality," Anais do XLIII Encontro Nacional de Economia [Proceedings of the 43rd Brazilian Economics Meeting] 221, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    16. Silliman, Mikko, 2017. "Targeted Funding, Immigrant Background, and Educational Outcomes: Evidence from Helsinki's “Positive Discrimination†Policy," Working Papers 91, VATT Institute for Economic Research.

    More about this item

    Keywords

    Pupil achievement; school resources;

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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