The effects of school spending on educational and economic outcomes: Evidence from school finance reforms

C. Kirabo Jackson, Rucker C. Johnson, Claudia Persico

Research output: Contribution to journalArticlepeer-review

350 Scopus citations


Since the Coleman Report, many have questioned whether public school spending affects student outcomes. The school finance reforms that began in the early 1970s and accelerated in the 1980s caused dramatic changes to the structure of K-12 education spending in the United States. To study the effect of these school finance reform-induced changes in public school spending on long-run adult outcomes, we link school spending and school finance reform data to detailed, nationally representative data on children born between 1955 and 1985 and followed through 2011. We use the timing of the passage of court-mandated reforms and their associated type of funding formula change as exogenous shifters of school spending, and we compare the adult outcomes of cohorts that were differentially exposed to school finance reforms, depending on place and year of birth. Event study and instrumental variable models reveal that a 10% increase in per pupil spending each year for all 12 years of public school leads to 0.31 more completed years of education, about 7% higher wages, and a 3.2 percentage point reduction in the annual incidence of adult poverty; effects are much more pronounced for children from low-income families. Exogenous spending increases were associated with notable improvements in measured school inputs, including reductions in student-to-teacher ratios, increases in teacher salaries, and longer school years.

Original languageEnglish (US)
Article numberqjv036
Pages (from-to)157-218
Number of pages62
JournalQuarterly Journal of Economics
Issue number1
StatePublished - Feb 1 2016

ASJC Scopus subject areas

  • Economics and Econometrics


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