Using Market Valuation to Access the Importance and Efficiency of Public School Spending

and Princeton Univ., IRS Working Paper No. 438

FRB Chicago Working Paper No. 2000-04

42 Pages Posted: 25 Oct 2000

See all articles by Lisa Barrow

Lisa Barrow

Federal Reserve Bank of Chicago

Cecilia E. Rouse

Princeton University - Industrial Relations Section; National Bureau of Economic Research (NBER)

Date Written: November 2000

Abstract

In this paper we take a "market-based" approach to examine whether increased school expenditures are valued by potential residents and whether the current level of public school provision is inefficient. We do so by employing an instrumental variables strategy to estimate the effect of state education aid on residential property values. We find evidence that, on average, additional state aid is valued by potential residents and that school districts appear to spend efficiently or, if anything, underspend. We also find that school districts spend less efficiently in areas in which they face little or no competition from other public schools, in large districts, and in areas in which residents are poor or less educated. One interpretation of these results is that increased competition has the potential to increase school efficiency in some areas.

JEL Classification: H4, H7, I2

Suggested Citation

Barrow, Lisa and Rouse, Cecilia E., Using Market Valuation to Access the Importance and Efficiency of Public School Spending (November 2000). and Princeton Univ., IRS Working Paper No. 438; FRB Chicago Working Paper No. 2000-04. Available at SSRN: https://ssrn.com/abstract=230748 or http://dx.doi.org/10.2139/ssrn.230748

Lisa Barrow

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604
United States
312-322-5073 (Phone)
312-322-2357 (Fax)

Cecilia E. Rouse (Contact Author)

Princeton University - Industrial Relations Section ( email )

Princeton, NJ 08544-2098
United States
609-258-4042 (Phone)
609-258-2907 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
72
Abstract Views
900
rank
322,164
PlumX Metrics