Abstract
This study exploits spatial anomalies in school funding policy in England to provide new evidence on the impact of resources on student achievement in urban areas. Anomalies arise because the funding allocated to Local Education Authorities (LEA) depends, through a funding formula, on the ‘additional educational needs’ of its population and prices in the district. However, the money each school receives from its LEA is not necessarily related to the school’s own specific local conditions and constraints. This implies that neighbouring schools with similar intakes, operating in the same labour market, facing similar prices, but in different LEAs, can receive very different incomes. We find that these funding disparities give rise to sizeable differences in pupil attainment in national tests at the end of primary school, showing that school resources have an important role to play in improving educational attainment, especially for lower socio-economic groups. The design is geographical boundary discontinuity design which compares neighbouring schools, matched on a proxy for additional educational needs of its students (free school meal entitlement – FSM), in adjacent districts. The key identification requirement is one of conditional ignorability of the level of LEA grant, where conditioning is on geographical location of schools and their proportion of FSM children.
Highlights
Improvement of the educational attainment of poor children is a top priority in many countries
To the extent that the effects of expenditure are heterogenous across school and pupil types, the results we present are specific to schools and students of the type in our boundary sample, rather than the general population, which motivates our specific research focus on disadvantaged students in urban schools
Convincing evidence of an impact from putting more money into state schools has remained elusive, so our analysis is a useful addition to the international academic literature on the economics of schooling
Summary
Any opinions expressed here are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but the institute itself takes no institutional policy positions. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author
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