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Pennies from heaven : using exogenous tax variation to identify effects of school resources on pupil achievement

Hægeland, Torbjørn; Raaum, Oddbjørn; Salvanes, Kjell Gunnar
Working paper
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URI
http://hdl.handle.net/11250/163026
Date
2007-07
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  • Discussion papers (SAM) [578]
Abstract
Despite important policy implications associated with the allocation of education resources, evidence on the

effectiveness of school inputs remains inconclusive. In part, this is due to endogenous allocation; families sort

themselves non-randomly into school districts and school districts allocate money based in order to

compensate (or reinforce) differences in child abilities, which leaves estimates of school input effects likely to

be biased. Using variation in education expenditures induced by the location of natural resources in Norway,

we examine the effect of school resources on pupil outcomes. We find that higher school expenditures,

triggered by higher revenues from local taxes on hydropower plants, have a significantly positive effect on

pupil performance at age 16. The IV estimates contrast with the standard cross-sectional estimates that reveal no effects of extra resources.
Publisher
Norwegian School of Economics and Business Administration. Department of Economics
Series
Discussion paper
2007:16

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