$1000 Enough to Boost Low-income Student Performance

Low-income students in Australia are four to five years of leaning behind their high-income peers at age 15 and over 80 per cent of low income students attend public schools that are under-funded.

It makes sense that more money being spent on lower income students might just increase their performance, but that idea still seems controversial to policy makers.

Now, a ground-breaking new research paper clearly shows that increasing funding for public schools has positive impacts on student achievement and attainment.

Higher school funding, especially for disadvantaged schools increases student test scores, school completion, tertiary participation and improves equity in education.

Capital funding has similar effects. The study shows that these effects are valid in a variety of circumstances and provide a reliable guide for policy makers.

The research is published in the latest issue of the American Economic Journal: Applied Economics. Its lead author is Professor C. Kirabo Jackson of Northwestern University in Chicago who was recently appointed to President Biden’s Council of Economic Advisors. Jackson is a leading scholar in what has become known as the “new literature” on school funding.

A series of studies over the last ten years has demonstrated that money matters in education because of its positive effects on student achievement and attainment.

Despite these positive findings they have been dismissed by some policy makers because the studies vary in time, policy context, populations and locations. This study attempted to overcome these limitations and give policy makers a more reliable guide about the impacts of school expenditure.

Jackson and his co-author state:

‘We shed light on what range of policy impacts can be expected in a new context, and how marginal effects may differ by spending type, population, geography, and baseline spending levels.’

The study conducted a meta-analysis of 31 studies that have established causal effects between school expenditure and student outcomes to explore the distribution of these effects. It estimates the average impact of a US$1000 increase in per-student school spending sustained over four years and the range of plausible impacts across settings.

The authors found that an increase in spending of US$1000 per-student sustained over four years in an average setting would increases test scores by a small to moderate amount.

They estimated that the impact would be positive 90 per cent of the time in different average settings.

The spending increase would increase high school graduation by two percentage points and tertiary education participation by 2.8 percentage points. There would be positive effects over 97 per cent of the time.

See https://www.aeaweb.org/articles?id=10.1257/app.20220279