A new study published by the US National Bureau of Economic Research shows that money still matters in education. It found that school finance reforms in the US that increased expenditure in low income school districts increased high school completion and college entrance among Black students and females as well as increasing annual earnings.
We find that school finance reforms lead to increases in educational attainment and in mean earnings. These results hold when we consider the full state population, but we generally find larger effects for Black than for white students….We also find some evidence that effects are larger for female students. [p. 5]
The study analysed the impact of what are known as “adequacy”-based school finance reforms implemented since 1990. Courts in many US states have ruled that state constitutions require adequacy in school funding. This led to increased expenditure in disadvantaged school districts above the state average to compensate for the increased costs of educating children from disadvantaged backgrounds.
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