Research Article

Education Spending and State Economic Growth: Are All Dollars Created Equal?

Published: 2010-2

Journal: Economic Development Quarterly

DOI: 10.1177/0891242409347370

Abstract

This article contributes to the literature on the effect of state and local education spending on U.S. state economic growth by separately analyzing higher and K-12 education spending and by taking into account the possibility that education spending may generate spillover effects to neighboring states. Results from a series of fixed-effects regressions using a 1992-2002 panel of state-level data indicate that increased spending on higher education generally exhibits a relatively large negative effect on private sector employment or gross state product growth when the increase in education spending is financed through own-source revenue. Results do not identify a statistically significant relationship between K-12 education spending and economic growth. This finding is an important clarification in the literature because an analysis of combined higher and K-12 education spending yields an overall negative effect. Results do not provide consistent evidence of cross-state spillover effects associated with either form of education spending.

Faculty Members

  • John Deskins - Creighton University, Omaha, NE, USA,
  • Brian Hill - Salisbury University, Salisbury, MD, USA
  • Laura Ullrich - Winthrop University, Rock Hill, SC, USA

Themes

  • State and Local Economic Development Policy
  • Spillover Effects of Education Spending
  • Distinction between Higher Education and K-12 Spending
  • Impact of Education Spending on Economic Growth
  • Public Finance and Its Effects on Employment

Categories

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