School Spending and
Student Achievement: New Evidence from
Longitudinal Data
Jens
Ludwig and Laurie J. Bassi
Abstract
Public school spending has increased dramatically
in the United States during the 20th century; concerns about growing
wage inequality and slow growth in labor productivity have led many
observers to call for even greater increases in such expenditures
in the future. Yet despite the ongoing political and legal attention
devoted to public school funding, the current research literature
is quite unclear as to whether increases in spending will improve
the academic achievement of students. Using student-level data from
the National Educational Longitudinal Study (NELS), this paper provides
some evidence to suggest that the ³state of the art² estimators
used in previous studies may be misspecified, thus offering one
explanation for the puzzling pattern of results found in the literature.
The longitudinal structure of the NELS data is then exploited to
produce new estimates. The findings imply that increases in resources,
particularly for teacher salaries, lead to modest gains in student
achievement. We also consider the economic implications of these
estimates. Our rough benefit-cost calculations suggest that even
interventions that produce modest achievement gains may produce
net benefits to society.
Jens Ludwig, Georgetown
University and Northwestern University/University of Chicago Joint
Center for Poverty Research
Laurie J. Bassi, American Society for Training
and Development
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