Does the United States Spend Enough on Public Schools?

Patrick Bayer, Peter Blair and Kenneth Whaley

No 2024-01, Working Papers from University of South Florida, Department of Economics

Abstract: The United States ranks low among peer countries on the ratio of teacher spending to per capita GDP. Is this (in)efficient? Using a spatial equilibrium model we show that spending on schools is efficient if an increase in school spending funded through local taxes would leave house prices unchanged. By exploiting plausibly exogenous shocks to both school spending and taxes, paired with 25 years of national data on local house prices, we find that an exogenous tax-funded increase in school spending would significantly raise house prices. These findings provide causal evidence that teacher spending in the U.S. is inefficiently low.

JEL-codes: H41 I22 I24 (search for similar items in EconPapers)
Date: 2024-01
New Economics Papers: this item is included in nep-ure
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