Inequality in Public School Spending across Space and Time

Sørensen, Bent E, Christopher Biolsi, Steven Craig and Amrita Dhar ()
Authors registered in the RePEc Author Service: Bent E. Sorensen

No 15666, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper takes a novel time series perspective on K-12 school spending. About half of school spending is financed by state government aid to local districts. Because state aid is generally income conditioned, with low-income districts receiving more aid, state aid acts as a mechanism for risk sharing between school districts. We show that temporal inequality, due to state and local business cycles, is prevalent across the income distribution. We estimate a model of local revenue and state aid, and its allocation across districts, and use the parameters to simulate impulse response functions. We find that state aid provides risk sharing for local shocks, although slow speed of adjustment results in temporal inequality. There is little risk sharing for statewide income shocks, and the risk from such shocks to school spending is more severe in low income districts because of their greater reliance on state aid.

JEL-codes: H72 H77 I22 (search for similar items in EconPapers)
Date: 2021-01
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Inequality in Public School Spending Across Space and Time (2022)
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