1Prominent critiques of public schools and teachers ’ unions include Chubb and Moe (19 90), Hanus... more 1Prominent critiques of public schools and teachers ’ unions include Chubb and Moe (19 90), Hanushek et al
Advocates of market-based public school reform maintain that offering parents and students a choi... more Advocates of market-based public school reform maintain that offering parents and students a choice of schools will promote more effective performance by teachers and administrators. Few proposals have been implemented, however, so empirical evidence of this consequence is scant. This paper examines the effect on student achievement of one possible outcome of a more decentralized educational system-smaller schools. The authors find that students in small schools of fewer than 600 pupils scored much higher on math achievement tests than otherwise comparable students in large schools of more than 800 pupils.
Religion, politics, and schools are a volatile mixture in the national debate over various propos... more Religion, politics, and schools are a volatile mixture in the national debate over various proposals for school choice, proposals in which students would no longer be constrained to attend the public-school district in which they live, but could instead use government-supplied ...
v1.5 Barro’s (1990) model of endogenous growth implies that economic growth will initially rise w... more v1.5 Barro’s (1990) model of endogenous growth implies that economic growth will initially rise with an increase in taxes directed toward “productive ” expenditures (e.g., education, highways, and streets), but will subsequently decline. Previous tests of the model, including Barro (1989, 1990) and recently Bleaney et al (2001), focus on whether the linear incremental effect of taxes is positive, negative, or zero, with substantial evidence for all three conclusions. In this study, we test for nonlinearity directly by incorporating nonlinear effects for taxes, and based on U.S. states find that the incremental effect of taxes directed toward productive government expenditures is initially positive, but eventually declines. U.S. states on average appear to under invest in expenditures on productive government activities. 1. Introduction. Do taxes and government expenditures enhance or impede economic growth? This question lies at the heart of public finance and taxation policy, both ...
This paper offers unique rankings of the extent to which fiscal structures of U.S. states contrib... more This paper offers unique rankings of the extent to which fiscal structures of U.S. states contribute to economic growth. The rankings are novel in two key respects: they are well grounded in established growth theory, in which the effect of taxes depends both on the level of taxes and on the composition of expenditures; and they are derived from actual estimates of the link between fiscal structures and economic growth. Estimates for the latter yield a growth hill, in which the incremental effect of taxes spent on productive services and infrastructure initially rises, reaches a peak, and then declines. Rankings derived from these estimates differ sharply from typical rankings based on levels of taxation alone. Two hypothetical policy experiments highlight both the growth-hill effects of tax investments in productive services and infrastructure and the short- and long-term tradeoffs in attempting to fund strong social services.
– We investigate how key school and community characteristics interact with the characteristics o... more – We investigate how key school and community characteristics interact with the characteristics of individual students and families in determining the enrollment patterns in public and private schools. Using unique, nationally-representative, individual-level data, we find evidence that a number of factors plausibly influenced by public policy (e.g., school-district concentration, student-teacher ratios, and local violent crime rates) have powerful effects on the composition of public and private schools.
Are federal Pell grants "appropriated" by universities through increases in tuitionconsistent wit... more Are federal Pell grants "appropriated" by universities through increases in tuitionconsistent with what is known as the Bennett hypothesis? Based on a panel of 71 universities from 1983 to 1996, we find little evidence of the Bennett hypothesis among either public or lower-ranked private universities. For top-ranked private universities, though, increases in Pell grants appear to be more than matched by increases in net tuition. The behavior most consistent with this result is price discrimination that is not purely redistributive from wealthier to needier students. "If anything, increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that Federal loan subsidies would help cushion the increase."
Evidence from a half century of experience by U.S. states identifies nonlinearities in the effect... more Evidence from a half century of experience by U.S. states identifies nonlinearities in the effects of debt and fiscal policy on growth. Effects are Keynesian for low to moderate levels of debt and stimulus but anti Keynesian for sufficiently high levels of debt or stimulus. Results are broadly consistent with those found in the cross-country studies of Adam and Bevan (2005) and Reinhart and Rogoff (2010).
Applying a Barro-style model of endogenous growth to a fifty-year panel of states from 1957 to 20... more Applying a Barro-style model of endogenous growth to a fifty-year panel of states from 1957 to 2007, We examine the extent to which expenditures on public education and infrastructure— together with the taxes necessary to support them— enhance or impede the steady-state growth of state and local economies, as measured by per capita personal income. Our findings suggest that the independent effect of tax expenditures on either public infrastructure or education alone is significantly negative, but the complementary effect of each on the other is positive enough to make their combined effect significantly positive— except at large scales, where we find diseconomies, consistent with the ‘growth hill’ predicted by theory. Policy effects are identified empirically using a recursive structure with very long lags, GMM/instrumental variables, and controls for both fixed and time-varying heterogeneity. Results are robust to a variety of alternative specifications.
We investigate how key school and community characteristics interact with the characteristics of ... more We investigate how key school and community characteristics interact with the characteristics of individual students and families in determining the enrollment patterns in public and private schools. Using unique, nationallyrepresentative, individual-level data, we find evidence that a number of factors plausibly influenced by public policy (e.g., school-district concentration, student-teacher ratios, and local violent crime rates) have powerful effects on the composition of public and private schools. 2001 David N. Figlio and Joe A. Stone. * Thanks to two anonymous referees, Dan Aaronson, Julian Betts, Jan Brueckner, Dennis Epple, Hamp Lankford, Rich Romano, Larry Singell, Jon Sonstelie, and seminar participants at several universities for helpful conversations on this topic. We gratefully acknowledge financial support from the National Science Foundation under grants SBR-9816629 (Figlio) and SBR9810615 (Stone), and the U.S. Department of Education. All errors are ours. David Fig...
We find region-specific complementarity between investments in public infrastructure and educatio... more We find region-specific complementarity between investments in public infrastructure and education, both k-12 and postsecondary. The complementarity helps to explain how regions capture returns to investments in education even when residents are mobile, and is strong enough for the effect of tax-financed expenditures on either public infrastructure or education to be significantly positive when spending on the other is high, even though the independent effect of either one is negative. Effects are identified using a recursive structure, very long lags, GMM-instrumental variables, and multiple controls for heterogeneity. Estimates are robust across identification strategies, estimators, and instruments.
This study links federal Pell grants to college students in the United States to the decades-long... more This study links federal Pell grants to college students in the United States to the decades-long decline in state-local funding for public colleges. The effect is at least as significant as other explanations based on taxes, Medicaid, or K-12 funding. Estimates are obtained from multiple identification strategies, including a crossover, repeated-measures (RM) design—a powerful design particularly well suited to the Pell program. The results offer a compelling example of how federal funding can induce an unintended cascade of effects even when it is given to individuals, not as traditional inter-governmental grants.
Evidence from a half century of experience by states identifies nonlinearities in the effects of ... more Evidence from a half century of experience by states identifies nonlinearities in the effects of debt and fiscal policy on growth. Effects are Keynesian for low to moderate levels of debt and stimulus but anti Keynesian for sufficiently high levels of debt or stimulus. Results are broadly consistent with models by Barro (1999), Judd (1987), and others.
Previous models of the popular vote in U.S. Presidential elections emphasize economic growth and ... more Previous models of the popular vote in U.S. Presidential elections emphasize economic growth and price stability, the role of parties and incumbency, and pre-election expectations for the future. Despite the closeness of the pre-election polls in 2004, formal models instead predict a landslide victory for President Bush. An obvious question is whether this anomaly arises, at least in part, from national security concerns – in particular, the conflict in Iraq. We explore this pre-election anomaly by introducing two opposing electoral forces capturing national security concerns, which for the 2004 election reduces President Bush's predicted vote share. In general, the impact of national security concerns on the vote share of the incumbent (or the incumbent''s party) can be substantial, whether positive, as in the 1944 election during World War II, or negative, as in the 1952 election during the Korean war and the 1968 election during the Vietnam war.
This paper proposes and tests a simple joint explanation for i) increases in marital and nonmarit... more This paper proposes and tests a simple joint explanation for i) increases in marital and nonmarital birth rates in the United States over recent decades, ii) the dramatic rise in the share of nonmarital births, and iii) the pronounced racial differences in the timing of childbearing. The explanation arises from differences across time and race in the attractiveness of marriage and opportunities for investment in human capital. For given preferences, a decline in the marriage rate necessarily causes both the marital and nonmarital birth rates to increase, with no change in the total birth rate. This model exhibits exceptional power in replicating salient features of childbearing behavior. Our results suggest that changes in marital and nonmarital birth rates, as well as in the share of nonmarital births, arose primarily from changes in marriage behavior, not from changes in fertility; and that racial differences in the timing of childbearing reflect early differences in human capital...
This paper offers the first birth-cohort test of the Wilson-Willis model of black-white differenc... more This paper offers the first birth-cohort test of the Wilson-Willis model of black-white differences in nonmarital childbearing. Cohort data are uniquely suited to the model, and unlike prior evidence, support the power of the model’s predictions: For blacks, the nonmarital birth share rises, as predicted, with the ratio of female to male resources, but decreases for whites. Similarly, the nonmarital birth share for blacks decreases with the ratio of eligible men to women for blacks, as predicted, yet increases for whites. The model explains a majority of the racial difference in nonmarital birth shares.
Working papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to s... more Working papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment. The views stated herein are those of the authors and not necessarily those of the Federal Reserve Bank of Cleveland or of the Board of Governors of the Federal Reserve System.
1Prominent critiques of public schools and teachers ’ unions include Chubb and Moe (19 90), Hanus... more 1Prominent critiques of public schools and teachers ’ unions include Chubb and Moe (19 90), Hanushek et al
Advocates of market-based public school reform maintain that offering parents and students a choi... more Advocates of market-based public school reform maintain that offering parents and students a choice of schools will promote more effective performance by teachers and administrators. Few proposals have been implemented, however, so empirical evidence of this consequence is scant. This paper examines the effect on student achievement of one possible outcome of a more decentralized educational system-smaller schools. The authors find that students in small schools of fewer than 600 pupils scored much higher on math achievement tests than otherwise comparable students in large schools of more than 800 pupils.
Religion, politics, and schools are a volatile mixture in the national debate over various propos... more Religion, politics, and schools are a volatile mixture in the national debate over various proposals for school choice, proposals in which students would no longer be constrained to attend the public-school district in which they live, but could instead use government-supplied ...
v1.5 Barro’s (1990) model of endogenous growth implies that economic growth will initially rise w... more v1.5 Barro’s (1990) model of endogenous growth implies that economic growth will initially rise with an increase in taxes directed toward “productive ” expenditures (e.g., education, highways, and streets), but will subsequently decline. Previous tests of the model, including Barro (1989, 1990) and recently Bleaney et al (2001), focus on whether the linear incremental effect of taxes is positive, negative, or zero, with substantial evidence for all three conclusions. In this study, we test for nonlinearity directly by incorporating nonlinear effects for taxes, and based on U.S. states find that the incremental effect of taxes directed toward productive government expenditures is initially positive, but eventually declines. U.S. states on average appear to under invest in expenditures on productive government activities. 1. Introduction. Do taxes and government expenditures enhance or impede economic growth? This question lies at the heart of public finance and taxation policy, both ...
This paper offers unique rankings of the extent to which fiscal structures of U.S. states contrib... more This paper offers unique rankings of the extent to which fiscal structures of U.S. states contribute to economic growth. The rankings are novel in two key respects: they are well grounded in established growth theory, in which the effect of taxes depends both on the level of taxes and on the composition of expenditures; and they are derived from actual estimates of the link between fiscal structures and economic growth. Estimates for the latter yield a growth hill, in which the incremental effect of taxes spent on productive services and infrastructure initially rises, reaches a peak, and then declines. Rankings derived from these estimates differ sharply from typical rankings based on levels of taxation alone. Two hypothetical policy experiments highlight both the growth-hill effects of tax investments in productive services and infrastructure and the short- and long-term tradeoffs in attempting to fund strong social services.
– We investigate how key school and community characteristics interact with the characteristics o... more – We investigate how key school and community characteristics interact with the characteristics of individual students and families in determining the enrollment patterns in public and private schools. Using unique, nationally-representative, individual-level data, we find evidence that a number of factors plausibly influenced by public policy (e.g., school-district concentration, student-teacher ratios, and local violent crime rates) have powerful effects on the composition of public and private schools.
Are federal Pell grants "appropriated" by universities through increases in tuitionconsistent wit... more Are federal Pell grants "appropriated" by universities through increases in tuitionconsistent with what is known as the Bennett hypothesis? Based on a panel of 71 universities from 1983 to 1996, we find little evidence of the Bennett hypothesis among either public or lower-ranked private universities. For top-ranked private universities, though, increases in Pell grants appear to be more than matched by increases in net tuition. The behavior most consistent with this result is price discrimination that is not purely redistributive from wealthier to needier students. "If anything, increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that Federal loan subsidies would help cushion the increase."
Evidence from a half century of experience by U.S. states identifies nonlinearities in the effect... more Evidence from a half century of experience by U.S. states identifies nonlinearities in the effects of debt and fiscal policy on growth. Effects are Keynesian for low to moderate levels of debt and stimulus but anti Keynesian for sufficiently high levels of debt or stimulus. Results are broadly consistent with those found in the cross-country studies of Adam and Bevan (2005) and Reinhart and Rogoff (2010).
Applying a Barro-style model of endogenous growth to a fifty-year panel of states from 1957 to 20... more Applying a Barro-style model of endogenous growth to a fifty-year panel of states from 1957 to 2007, We examine the extent to which expenditures on public education and infrastructure— together with the taxes necessary to support them— enhance or impede the steady-state growth of state and local economies, as measured by per capita personal income. Our findings suggest that the independent effect of tax expenditures on either public infrastructure or education alone is significantly negative, but the complementary effect of each on the other is positive enough to make their combined effect significantly positive— except at large scales, where we find diseconomies, consistent with the ‘growth hill’ predicted by theory. Policy effects are identified empirically using a recursive structure with very long lags, GMM/instrumental variables, and controls for both fixed and time-varying heterogeneity. Results are robust to a variety of alternative specifications.
We investigate how key school and community characteristics interact with the characteristics of ... more We investigate how key school and community characteristics interact with the characteristics of individual students and families in determining the enrollment patterns in public and private schools. Using unique, nationallyrepresentative, individual-level data, we find evidence that a number of factors plausibly influenced by public policy (e.g., school-district concentration, student-teacher ratios, and local violent crime rates) have powerful effects on the composition of public and private schools. 2001 David N. Figlio and Joe A. Stone. * Thanks to two anonymous referees, Dan Aaronson, Julian Betts, Jan Brueckner, Dennis Epple, Hamp Lankford, Rich Romano, Larry Singell, Jon Sonstelie, and seminar participants at several universities for helpful conversations on this topic. We gratefully acknowledge financial support from the National Science Foundation under grants SBR-9816629 (Figlio) and SBR9810615 (Stone), and the U.S. Department of Education. All errors are ours. David Fig...
We find region-specific complementarity between investments in public infrastructure and educatio... more We find region-specific complementarity between investments in public infrastructure and education, both k-12 and postsecondary. The complementarity helps to explain how regions capture returns to investments in education even when residents are mobile, and is strong enough for the effect of tax-financed expenditures on either public infrastructure or education to be significantly positive when spending on the other is high, even though the independent effect of either one is negative. Effects are identified using a recursive structure, very long lags, GMM-instrumental variables, and multiple controls for heterogeneity. Estimates are robust across identification strategies, estimators, and instruments.
This study links federal Pell grants to college students in the United States to the decades-long... more This study links federal Pell grants to college students in the United States to the decades-long decline in state-local funding for public colleges. The effect is at least as significant as other explanations based on taxes, Medicaid, or K-12 funding. Estimates are obtained from multiple identification strategies, including a crossover, repeated-measures (RM) design—a powerful design particularly well suited to the Pell program. The results offer a compelling example of how federal funding can induce an unintended cascade of effects even when it is given to individuals, not as traditional inter-governmental grants.
Evidence from a half century of experience by states identifies nonlinearities in the effects of ... more Evidence from a half century of experience by states identifies nonlinearities in the effects of debt and fiscal policy on growth. Effects are Keynesian for low to moderate levels of debt and stimulus but anti Keynesian for sufficiently high levels of debt or stimulus. Results are broadly consistent with models by Barro (1999), Judd (1987), and others.
Previous models of the popular vote in U.S. Presidential elections emphasize economic growth and ... more Previous models of the popular vote in U.S. Presidential elections emphasize economic growth and price stability, the role of parties and incumbency, and pre-election expectations for the future. Despite the closeness of the pre-election polls in 2004, formal models instead predict a landslide victory for President Bush. An obvious question is whether this anomaly arises, at least in part, from national security concerns – in particular, the conflict in Iraq. We explore this pre-election anomaly by introducing two opposing electoral forces capturing national security concerns, which for the 2004 election reduces President Bush's predicted vote share. In general, the impact of national security concerns on the vote share of the incumbent (or the incumbent''s party) can be substantial, whether positive, as in the 1944 election during World War II, or negative, as in the 1952 election during the Korean war and the 1968 election during the Vietnam war.
This paper proposes and tests a simple joint explanation for i) increases in marital and nonmarit... more This paper proposes and tests a simple joint explanation for i) increases in marital and nonmarital birth rates in the United States over recent decades, ii) the dramatic rise in the share of nonmarital births, and iii) the pronounced racial differences in the timing of childbearing. The explanation arises from differences across time and race in the attractiveness of marriage and opportunities for investment in human capital. For given preferences, a decline in the marriage rate necessarily causes both the marital and nonmarital birth rates to increase, with no change in the total birth rate. This model exhibits exceptional power in replicating salient features of childbearing behavior. Our results suggest that changes in marital and nonmarital birth rates, as well as in the share of nonmarital births, arose primarily from changes in marriage behavior, not from changes in fertility; and that racial differences in the timing of childbearing reflect early differences in human capital...
This paper offers the first birth-cohort test of the Wilson-Willis model of black-white differenc... more This paper offers the first birth-cohort test of the Wilson-Willis model of black-white differences in nonmarital childbearing. Cohort data are uniquely suited to the model, and unlike prior evidence, support the power of the model’s predictions: For blacks, the nonmarital birth share rises, as predicted, with the ratio of female to male resources, but decreases for whites. Similarly, the nonmarital birth share for blacks decreases with the ratio of eligible men to women for blacks, as predicted, yet increases for whites. The model explains a majority of the racial difference in nonmarital birth shares.
Working papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to s... more Working papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment. The views stated herein are those of the authors and not necessarily those of the Federal Reserve Bank of Cleveland or of the Board of Governors of the Federal Reserve System.
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