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Do School Spending Cuts Matter? Evidence from the Great Recession
American Economic Journal: Economic Policy (2020)
  • C. Kirabo Jackson
  • Cora Wigger, Northwestern University
  • Heyu Xiong, Northwestern University
Abstract
During the Great Recession, national public school per-pupil spending fell by roughly seven percent, and took several years to recover. The impact of such large and sustained education funding cuts is not well understood. To examine this, first, we document that the recessionary drop in spending coincided with the end of decades-long national growth in both test scores and college-going. Next, we show that this stalled educational progress was particularly pronounced in states that experienced larger recessionary budget cuts for plausibly exogenous reasons. To isolate budget cuts that were unrelated to (a) other ill-effects of the recession or (b) endogenous state policies, we use states’ historical reliance on State taxes (which are more sensitive to the business cycle) to fund public schools interacted with the timing of the recession as instruments for reductions in school spending. Cohorts exposed to these spending cuts had lower test scores and lower college-going rates. The test score impacts were larger for children in poor neighborhoods, and spending cuts increased Black-White test score gaps within states.
Keywords
  • school spending,
  • Great Recession,
  • test scores,
  • college-going
Publication Date
2020
Citation Information
C. Kirabo Jackson, Cora Wigger and Heyu Xiong. "Do School Spending Cuts Matter? Evidence from the Great Recession" American Economic Journal: Economic Policy (2020)
Available at: http://works.bepress.com/c_kirabo_jackson/35/