School Spending Increases Linked to Better Outcomes for Poor Students

Posted by National Bureau of Economic Research on June 9, 2014

A new paper from the National Bureau of Economic Research finds that in districts that substantially increased education spending as the result of court orders, low-income children were significantly more likely to graduate from high school, earn livable wages, and avoid poverty in adulthood, reports Holly Yettick for Education Week. Between 1971 and 2010, supreme courts in 28 states responded to large gaps between richer and poorer districts by reforming school-finance systems. Although the changes had limited consequences for higher-income children, for low-income students who spent all 12 years of school in districts that increased spending by 20 percent, graduation rates rose 23 percentage points. Estimates are based on an analysis of 15,000 children born between 1955 and 1985, and account for a host of other potential explanations, such as desegregation, War on Poverty programs, and demographic changes. The paper’s analysis also found that low-income children who were exposed to a 20 percent spending increase for their entire school careers attained nearly a full year of additional education after high school, and between the ages of 25 and 45 were 20 percent less likely to fall into poverty during any given year. Their individual wages were 25 percent higher than they would have been without the changes, and their family incomes were 52 percent higher.

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