Public Bond Issuance and Education Inequality

71 Pages Posted: 6 May 2022

See all articles by Nicole M. Boyson

Nicole M. Boyson

Northeastern University - D’Amore-McKim School of Business

Weiling Liu

Northeastern University

Date Written: May 2, 2022

Abstract

Relative to wealthier school districts, less wealthy districts have difficulty obtaining municipal bond market funding. When a district issues more bonds to finance education infrastructure, it experiences improvements in both test scores and home prices. Yet, for each standard deviation decrease in wealth, a district’s bonds are 47% less likely to be approved via public vote. In addition, less wealthy districts pay higher yields and third-party fees to issue bonds, even after controlling for factors including credit quality. We identify three constraints that explain these higher costs: property tax limits, bond marketability, and urgency of funding.

Keywords: fixed income, municipal bonds, cost of education, market frictions

JEL Classification: G18, G51, G14, H74, H75

Suggested Citation

Boyson, Nicole M. and Liu, Weiling, Public Bond Issuance and Education Inequality (May 2, 2022). Northeastern U. D’Amore-McKim School of Business Research Paper No. 4099121, Available at SSRN: https://ssrn.com/abstract=4099121 or http://dx.doi.org/10.2139/ssrn.4099121

Nicole M. Boyson

Northeastern University - D’Amore-McKim School of Business ( email )

360 Huntington Ave.
Boston, MA 02115
617-373-4775 (Phone)

Weiling Liu (Contact Author)

Northeastern University ( email )

360 Huntington Ave.
Boston, MA 02115
United States
2157898931 (Phone)
02115 (Fax)

HOME PAGE: http://sites.google.com/view/weilingliu/

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