Are We Spending Enough on Teachers in the U.S.?
Expenditures on teacher salaries in US public schools exceeds $200 billion annually, yet there is no existing evidence on whether this spending level is efficient. We fill this gap by developing a theoretical test for efficiency based on the causal impact of salary spending and taxes on local house prices. We empirically implement the test on a national sample of school districts from 1990-2015, using a research design that generates quasi-random variation in public school spending and taxes. We find that a tax-funded increase in salary spending would raise house prices, indicating that spending on teacher salaries is inefficiently low.
Non-Technical Summaries
- A 1 percent increase in spending on teacher salaries increases house prices by nearly 2 percent, while increased spending on capital...
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