Education Spending and State Economic Growth: Are All Dollars Created Equal?

John Deskins, Brian Hill and Laura Ullrich
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John Deskins: Creighton University, Omaha, NE, USA, johndeskins@creighton.edu
Laura Ullrich: Winthrop University, Rock Hill, SC, USA

Economic Development Quarterly, 2010, vol. 24, issue 1, 45-59

Abstract: This article contributes to the literature on the effect of state and local education spending on U.S. state economic growth by separately analyzing higher and K-12 education spending and by taking into account the possibility that education spending may generate spillover effects to neighboring states. Results from a series of fixed-effects regressions using a 1992-2002 panel of state-level data indicate that increased spending on higher education generally exhibits a relatively large negative effect on private sector employment or gross state product growth when the increase in education spending is financed through own-source revenue. Results do not identify a statistically significant relationship between K-12 education spending and economic growth. This finding is an important clarification in the literature because an analysis of combined higher and K-12 education spending yields an overall negative effect. Results do not provide consistent evidence of cross-state spillover effects associated with either form of education spending.

Keywords: industrial location; industry; government policy (parks; schools); quality of life; industrial location; industry; public finance; state and local economic development policy; university role in economic development; economic development incentives/tools (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:ecdequ:v:24:y:2010:i:1:p:45-59

DOI: 10.1177/0891242409347370

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