The Impact of Fiscal Incentives on Student Disability Rates

50 Pages Posted: 23 Mar 2000 Last revised: 7 Feb 2021

See all articles by Julie Berry Cullen

Julie Berry Cullen

University of California, San Diego (UCSD) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: June 1999


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

Berry Cullen, Julianne (Julie), The Impact of Fiscal Incentives on Student Disability Rates (June 1999). NBER Working Paper No. w7173, Available at SSRN:

Julianne (Julie) Berry Cullen (Contact Author)

University of California, San Diego (UCSD) - Department of Economics ( email )

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La Jolla, CA 92093-0508
United States

National Bureau of Economic Research (NBER)

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