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Institutional Affiliation: Northwestern University
NBER Working Papers and Publications
|January 2018||Do School Spending Cuts Matter? Evidence from The Great Recession|
with C. Kirabo Jackson, Heyu Xiong: w24203
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 sch...