Are Court Orders Sticky? Evidence on Distributional Impacts from School Finance Litigation

15 Journal of Empirical Legal Studies 4 (2018).

Yale Law & Economics Research Paper No. 574

85 Pages Posted: 18 Apr 2017 Last revised: 20 Feb 2018

Zachary D. Liscow

Yale University - Law School

Multiple version iconThere are 2 versions of this paper

Date Written: May 14, 2017

Abstract

Whether welfare analysis of legal rule changes should evaluate distributional outcomes as well as efficiency depends crucially on how much their distributional impacts stick. That is, do court mandates ultimately affect the distribution of taxes and spending or do legislatures offset the distributional consequences of those court orders with other changes? Little is known about this question. To offer insight into it, I use an event study methodology to show how state revenues and expenditures respond to court orders to increase funding for schools.

I find that the court orders’ distributional impacts do stick. The education spending is financed by tax increases that do not target the largest beneficiaries of the increased education spending, the poor and those with children. Thus, since the main beneficiaries of the school spending do not pay a disproportionate share of the costs, advocates for school finance reform are effective at transferring resources to poor families. The results suggest that welfare analysis of these legal rules should take into account not only efficiency but also distribution, in a departure from traditional economic analysis of legal rules.

Keywords: school finance, state supreme courts, law and economics, welfare analysis

Suggested Citation

Liscow, Zachary D., Are Court Orders Sticky? Evidence on Distributional Impacts from School Finance Litigation (May 14, 2017). 15 Journal of Empirical Legal Studies 4 (2018).; Yale Law & Economics Research Paper No. 574. Available at SSRN: https://ssrn.com/abstract=2953104 or http://dx.doi.org/10.2139/ssrn.2953104

Zachary D. Liscow (Contact Author)

Yale University - Law School ( email )

127 Wall St.
New Haven, CT 06511
United States

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