Skip to main content
Article thumbnail
Location of Repository

Does money matter for schools?

By Helena Holmlund, Sandra McNally and Martina Viarengo


There is considerable disagreement in the academic literature about whether raising school expenditure improves educational outcomes. Yet changing the level of resources is one of the key policy levers open to governments. In the UK, school expenditure has increased by about 40 per cent in real terms since 2000. Thus, providing an answer to the question as to whether such spending has an impact on educational outcomes (and whether it is good use of public money) is of paramount importance. In this paper we address this issue for England using much better data than what has generally been used in such studies. We are also able to test our identification assumption by use of a falsification test. We find that the increase in school expenditure over recent years has had a consistently positive effect on outcomes at the end of primary school. Back-of-envelope calculations suggest that the investment may well be cost-effective. There is also some evidence of heterogeneity in the effect of expenditure, with higher effects for students who come from economically disadvantaged backgrounds

Topics: HC Economic History and Conditions, LA History of education
Publisher: Centre for the Economics of Education, London School of Economics and Political Science
Year: 2009
OAI identifier:
Provided by: LSE Research Online

Suggested articles


  1. (1997). Assessing the Effects of School Resources on Student Performance: An Update, Educational Evaluation and Policy Analysis doi
  2. (2008). Choice, Competition and Pupil Achievement, doi
  3. (2003). Economic Considerations and Class Size, doi
  4. (2005). Education and Skills/HM Treasury
  5. (2008). Education Production Functions, doi
  6. (1999). Experimental Estimates Of Education Production Functions, doi
  7. (2008). Financing Schools: Evolving Patterns of Autonomy and Control, doi
  8. (2005). Fiona Steele and Rebecca Allen
  9. (2008). Redistribution and Financing Schools in England under Labour: Are Resources Going to Where Needs are Greatest? Education Management Administration and Leadership. doi
  10. (2008). Research on the Impact of School Resources on Attainment at Key Stage 2. Report prepared for Department Children, Schools and Families
  11. (2001). The Effect of Attending a Small Class in the Early Grades on College-Test Taking and Middle School Test Results: Evidence from Project Star, doi
  12. (2003). The failure of input-based schooling policies, doi
  13. (2008). The Literacy Hour. doi
  14. (1999). Using Maimonides‟ rule to estimate the effect of class size on scholastic achievement, doi

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.