Abstract:

When it comes to studying the effects of school resource disparities, little attention has been paid to the potential existence of competitive forces among geographically proximate school districts that may result in negative spillover effects on neighbors when a district increases its own education expenditures. This study considers whether student achievement in a given district may be associated with spending not only within the district but also among neighboring districts. Using a nationwide panel dataset of school districts from 2009 to 2015, we model potential spillover effects by looking at how student achievement is associated with neighbors’ spending. We find some evidence that a district’s own outcomes are negatively associated with expenditures in neighboring districts, although our attempts to address potential endogeneity issues suggest that this association may not be causal.