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Labor versus Capital in the Provision of Public Services: Estimating the Marginal Products of Inputs in the Production of Student Outcomes

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  • Ali Enami

    () (Department of Economics, Tulane University)

Abstract

Does the enormous variation in financial resources available to local schools affect student achievement? There is an intense debate over the inequality of opportunity in public schools due to differences in financial resources, but there is little empirical evidence that sheds light on this issue. The main purpose of this paper is to measure the impact of various types of school expenditures (i.e. operating, minor capital, and major capital expenditures) on the short- and long-term educational achievement of students. This paper also looks at various channels (i.e. class size, attendance, discipline, and teachers' compensation) through which each type of expenditure could affect the performance of students. I use a dynamic regression discontinuity design that relies upon the exogenous variation in public school funding in Ohio that is created by marginally approved or failed local referenda to fund school districts. I find that only one type of expenditure, the approval of additional operating expenditures, has a positive effect in the short-term on the math proficiency of students subject to Ohio high school graduation tests, i.e. about 0.033 standard deviations (0.27 percentage points) for every additional $1,000 extra per pupil operating expenditure. I also find that the subsequent increase in the average expenditure on instructional staff is the only channel that can explain this effect. I do not find any long-term effect for any type of school expenditures.

Suggested Citation

  • Ali Enami, 2017. "Labor versus Capital in the Provision of Public Services: Estimating the Marginal Products of Inputs in the Production of Student Outcomes," Working Papers 1718, Tulane University, Department of Economics, revised Oct 2017.
  • Handle: RePEc:tul:wpaper:1718
    as

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    File URL: http://repec.tulane.edu/RePEc/pdf/tul1718r.pdf
    File Function: Revised Version, October 2017
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    References listed on IDEAS

    as
    1. Stephanie Riegg Cellini & Fernando Ferreira & Jesse Rothstein, 2010. "The Value of School Facility Investments: Evidence from a Dynamic Regression Discontinuity Design," The Quarterly Journal of Economics, Oxford University Press, vol. 125(1), pages 215-261.
    2. David Card & Alan B. Krueger, 1996. "School Resources and Student Outcomes: An Overview of the Literature and New Evidence from North and South Carolina," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 31-50, Fall.
    3. Roland G. Fryer, 2013. "Teacher Incentives and Student Achievement: Evidence from New York City Public Schools," Journal of Labor Economics, University of Chicago Press, vol. 31(2), pages 373-407.
    4. C. Kirabo Jackson & Rucker C. Johnson & Claudia Persico, 2016. "The Effects of School Spending on Educational and Economic Outcomes: Evidence from School Finance Reforms," The Quarterly Journal of Economics, Oxford University Press, vol. 131(1), pages 157-218.
    5. repec:fth:prinin:366 is not listed on IDEAS
    6. repec:bpj:bejeap:v:17:y:2017:i:4:p:26:n:9 is not listed on IDEAS
    7. Brasington, David M. & Haurin, Donald R., 2009. "Parents, peers, or school inputs: Which components of school outcomes are capitalized into house value?," Regional Science and Urban Economics, Elsevier, vol. 39(5), pages 523-529, September.
    8. 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 1141-1177, September.
    9. David Card & Alan Krueger, 1996. "School Resources and Student Outcomes: An Overview of the Literature and New Evidence from North and South Carolina," Working Papers 745, Princeton University, Department of Economics, Industrial Relations Section..
    10. Hong, Kai & Zimmer, Ron, 2016. "Does Investing in School Capital Infrastructure Improve Student Achievement?," Economics of Education Review, Elsevier, vol. 53(C), pages 143-158.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    public school funding; operating expenditure; minor and major capital expenditures; student achievement; school district referendum.;

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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