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How Local Economic Conditions Affect School Finances, Teacher Quality, and Student Achievement: Evidence from the Texas Shale Boom

Joseph Marchand () and Jeremy Weber ()

No 2019-7, Working Papers from University of Alberta, Department of Economics

Abstract: Whether improved local economic conditions lead to better student outcomes is theoretically ambiguous and will depend on how schools use additional revenues and how students and teachers respond to rising private sector wages. The Texas boom in shale oil and gas drilling, with its large and localized effects on wages and the tax base, provides a unique opportunity to address this question that spans the areas of education, labor markets, and public finance. An empirical approach using variation in shale geology across school districts shows that the boom reduced test scores and student attendance, despite tripling the local tax base and creating a revenue windfall. Schools spent additional revenue on capital projects and debt service, but not on teachers. As the gap between teacher wages and private sector wages grew, so did teacher turnover and the percentage of inexperienced teachers, which helps explain the decline in student achievement. Changes in student composition did not account for the achievement decline but instead helped to moderate it. The findings illustrate the potential value of using revenue growth to retain teachers in times of rising private sector wages.

Keywords: local labor markets; local school finances; resource booms; student achievement; teacher quality (search for similar items in EconPapers)
JEL-codes: H70 I22 J31 J40 Q33 R23 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2019-05-01
New Economics Papers: this item is included in nep-lma and nep-ure
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Journal Article: How Local Economic Conditions Affect School Finances, Teacher Quality, and Student Achievement: Evidence from the Texas Shale Boom (2020) Downloads
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