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Education inputs, student performance and school finance reform in Michigan

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  • Chaudhary, Latika

Abstract

This paper estimates the impact of the Michigan school finance reform, Proposal A, on education inputs and test scores. Using a difference-in-difference estimation strategy, I find that school districts in Michigan used the increase in educational spending generated through Proposal A to increase teacher salaries and reduce class size to a smaller extent. Then, using the foundation allowance created by Proposal A as an instrument, I estimate the causal effect of increased spending on 4th and 7th grade math scores for two test measures - a scaled score and a percent satisfactory measure - and find positive effects of increased spending on 4th grade test scores. A 60% increase in spending increases the percent satisfactory score by one standard deviation. The positive impact of expenditures on test performance seems largely due to higher teacher salaries.

Suggested Citation

  • Chaudhary, Latika, 2009. "Education inputs, student performance and school finance reform in Michigan," Economics of Education Review, Elsevier, vol. 28(1), pages 90-98, February.
    • Handle: RePEc:eee:ecoedu:v:28:y:2009:i:1:p:90-98
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    Cited by:

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    2. Rebeca Regina Regatieri & Marcelo Araújo Castro, 2016. "More Money, More Quality? Impact Of An Unconditional Transfer On Approval Rates, National Exam Results And Ideb," Anais do XLIII Encontro Nacional de Economia [Proceedings of the 43rd Brazilian Economics Meeting] 077, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    3. Bo Zhao, 2023. "Estimating the cost function of connecticut public K–12 education: implications for inequity and inadequacy in school spending," Education Economics, Taylor & Francis Journals, vol. 31(4), pages 439-470, July.
    4. Sims, David P., 2011. "Suing for your supper? Resource allocation, teacher compensation and finance lawsuits," Economics of Education Review, Elsevier, vol. 30(5), pages 1034-1044, October.
    5. Cristian Barra & Marinella Boccia, 2022. "What matters in educational performance? Evidence from OECD and non-OECD countries," Quality & Quantity: International Journal of Methodology, Springer, vol. 56(6), pages 4335-4394, December.
    6. Rajashri Chakrabarti & Joydeep Roy, 2017. "Effect of constraints on Tiebout competition: evidence from a school finance reform," Regional Studies, Taylor & Francis Journals, vol. 51(5), pages 765-785, May.
    7. Michael D. Bates & Leslie E. Papke & Jeffrey M. Wooldridge, 2024. "Non linear correlated random effects models with endogeneity and unbalanced panels," Econometric Reviews, Taylor & Francis Journals, vol. 43(9), pages 713-732, October.
    8. Eric Brunner & Joshua Hyman & Andrew Ju, 2020. "School Finance Reforms, Teachers' Unions, and the Allocation of School Resources," The Review of Economics and Statistics, MIT Press, vol. 102(3), pages 473-489, July.
    9. Kreisman, Daniel & Steinberg, Matthew P., 2019. "The effect of increased funding on student achievement: Evidence from Texas's small district adjustment," Journal of Public Economics, Elsevier, vol. 176(C), pages 118-141.
    10. Joshua Hyman, 2017. "Does Money Matter in the Long Run? Effects of School Spending on Educational Attainment," American Economic Journal: Economic Policy, American Economic Association, vol. 9(4), pages 256-280, November.
    11. Sungoh Kwon, 2017. "Does Public School Spending Raise Intergenerational Mobility?: Evidence from U.S. School Finance Reforms," Working papers 2017-06, University of Connecticut, Department of Economics.
    12. Marchand, Joseph & Weber, Jeremy, 2017. "The Local Effects of the Texas Shale Boom on Schools, Students, and Teachers," Working Papers 2017-12, University of Alberta, Department of Economics, revised 31 Jan 2019.
    13. Josh B. McGee, 2023. "Yes, money matters, but the details can make all the difference," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 42(4), pages 1125-1132, September.
    14. Barra, Cristian & Boccia, Marinella, 2019. "“The determinants of students' achievement: a difference between OECD and not OECD countries”," MPRA Paper 92561, University Library of Munich, Germany.
    15. C. Kirabo Jackson & Claudia Persico, 2023. "Point column on school spending: Money matters," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 42(4), pages 1118-1124, September.
    16. Stephen Gibbons & Sandra McNally, 2013. "The Effects of Resources Across School Phases: A Summary of Recent Evidence," CEP Discussion Papers dp1226, Centre for Economic Performance, LSE.
    17. McHenry, Peter, 2011. "The effect of school inputs on labor market returns that account for selective migration," Economics of Education Review, Elsevier, vol. 30(1), pages 39-54, February.
    18. Marchand, Joseph & Weber, Jeremy, 2015. "The Labor Market and School Finance Effects of the Texas Shale Boom on Teacher Quality and Student Achievement," Working Papers 2015-15, University of Alberta, Department of Economics.
    19. James, Alexander, 2017. "Natural resources and education outcomes in the United States," Resource and Energy Economics, Elsevier, vol. 49(C), pages 150-164.
    20. Shuang Yu & Xiaojun Zhao, 2021. "How Do Different Households Respond to Public Education Spending?," Sustainability, MDPI, vol. 13(20), pages 1-24, October.

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