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The Effect of a Differential Add-On Grant: Title I and Local Education Spending

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  • Martin Feldstein

Abstract

Analyses of intergovernmental aid emphasize the difference between matching grants and block grants. Since a block grant has only an income effect and no price effect, conventional theory predicts that block grants have a very small impact on the local government's expenditure on the favored activity. There is, however, a different type of block grant referred to in this paper as a "differential add-on grant." The purpose of the present paper is to measure the effectiveness of one such add-on grant, the federal government's program to increase local education spending on pupils from low-income families. The evidence implies that this aid is quite effective and therefore suggests that the traditional theory of intergovernmental aid should be extended to recognize this type of grant.

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  • Martin Feldstein, 1978. "The Effect of a Differential Add-On Grant: Title I and Local Education Spending," Journal of Human Resources, University of Wisconsin Press, vol. 13(4), pages 443-458.
    • Handle: RePEc:uwp:jhriss:v:13:y:1978:i:4:p:443-458
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    Cited by:

    1. Gordon, Nora, 2004. "Do federal grants boost school spending? Evidence from Title I," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1771-1792, August.
    2. Rajashri Chakrabarti & Sarah Sutherland, 2013. "Precarious slopes? The Great Recession, federal stimulus, and New Jersey schools," Economic Policy Review, Federal Reserve Bank of New York, issue Dec, pages 41-65.
    3. Rhee, Se-Koo, 1996. "The impact of intergovernmental grants-in-aid on public school expenditure under the segregated school system," ISU General Staff Papers 1996010108000012396, Iowa State University, Department of Economics.
    4. Baicker, Katherine & Clemens, Jeffrey & Singhal, Monica, 2012. "The rise of the states: U.S. fiscal decentralization in the postwar period," Journal of Public Economics, Elsevier, vol. 96(11), pages 1079-1091.
    5. Rebecca J. Acosta, 2001. "How Do Colleges Respond to Changes in Federal Student Aid?," UCLA Economics Working Papers 808, UCLA Department of Economics.
    6. Michael S. McPherson & Morton Owen Schapiro, 1990. "The Effect of Government Financing on the Behavior of Colleges and Universities," Williams Project on the Economics of Higher Education DP-9, Department of Economics, Williams College.

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