Understanding the 20th Century Growth in U.S. School Spending

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The persistent increase in spending on elementary and secondary schools has gone virtually undocumented and has received insufficient attention. Real expenditure per student increased at 3« percent per year over the entire period of 1890-1990. A decomposition of the spending growth shows that it was propelled by a combination of falling pupil-teacher ratios, increasing real wages to teachers, and rising expenditures outside of the classroom. While the expansion of education for the handicapped has had a disproportionate effect on spending, most of the growth in expenditure during the 1980s came from other sources. Teacher salary increases, which reflect competitive pressures particularly for females, have nevertheless failed to keep up with wages in other occupationsþleading to likely declines in teacher quality over time. Moreover, the magnitude of the wage decline is larger than commonly thought because the relative aging of teachers has masked the sizable declines when teachers are compared to comparably aged people in other occupations.

Published: Journal of Human Resources, 32(1), Winter1997, pp.35-68.

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