Do School Budgets Matter? The Effect of Budget Referenda on Student Performance

35 Pages Posted: 5 Apr 2014

See all articles by Kyung-Gon Lee

Kyung-Gon Lee

Sungshin Women's University

Solomon W. Polachek

State University of New York at Binghamton; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Abstract

This paper analyzes how changes in school expenditures affect dropout rates and standardized test scores based on data from 465 school districts in New York during the 2003/04 to the 2008/09 school years. Past traditional regression approaches show inconsistent results of school expenditures because of an endogeneity problem. The regression discontinuity design used in this study isolates exogenous variation in school expenditures per pupil by comparing school districts where budget referenda passed and failed by narrow margins. The results indicate that increases in school expenditures reduce dropout rates but have limited effects on student test scores.

Keywords: educational expenditures, school budget referenda, school dropout rates, student performance

JEL Classification: I20, I21, I22

Suggested Citation

Lee, Kyung-Gon and Polachek, Solomon W., Do School Budgets Matter? The Effect of Budget Referenda on Student Performance. IZA Discussion Paper No. 8056, Available at SSRN: https://ssrn.com/abstract=2420701

Kyung-Gon Lee (Contact Author)

Sungshin Women's University ( email )

249-1 Dong-Dong 3-Ka Sungbuk-Ku
Seoul 136-742
Korea, Republic of (South Korea)

Solomon W. Polachek

State University of New York at Binghamton ( email )

Binghamton, NY 13902-6000
United States
607-777-2144 (Phone)
607-777-4900 (Fax)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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