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Does Money Matter? School Spending and Student Outcomes

Updated: Nov 21, 2021

The current public school funding mechanism means school spending disparity in rich and poor towns and cities. But does this gap in spending explain that in learning outcomes for students in different school districts? In other words, does money matter?


Economist and professor of Northwestern University Kirabo Jackson researched the link between school funding and student outcomes. He concluded that "The recent quasi-experimental literature that relates school spending to student outcomes overwhelmingly support a causal relationship between increased school spending and student outcomes." (1)

In an updated working paper (2), the research quantified the results as follows:

"On average, a $1000 increase in school spending (sustained over four years) increases test scores by 0.0352σ (or 1.4 percentage points), high-school graduation by 1.9 percentage points, and college-going by 2.65 percentage points. In relative terms, this is a 2.3 percent increase in high school graduation and a 6.5 percent increase in college-going."


It should be noted Jackson’s research is based on 31 studies (majority published after 2010) which met the following three inclusion criteria:1)The study relied on quasi-experimental or policy variation in school spending, 2) The study demonstrated that their analysis was based on policies (or policy-induced variation) that had a robust effect on school spending, and 3) The study demonstrated that the variation in school spending examined was unrelated to other determinants of student outcomes, including other policies, student demographics, or underlying trend differences.

  1. https://www.nber.org/system/files/working_papers/w25368/w25368.pdf

  2. https://www.nber.org/system/files/working_papers/w28517/w28517.pdf


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