School Choice and Student Performance: Are Private Schools Really Better?

Are private schools really better than public schools, or is it simply that better students attend private schools? Although a number of recent studies find that students perform better in private schools (more specifically, Catholic schools), others do not. Typically, however, the instruments used to adjust for nonrandom selection are weak. This study employs uniquely detailed local instruments and jointly models selection into religious and nonreligious private high schools, relative to public high schools—improving instrument power in predicting private sector attendance to roughly three times that of prior studies. Failing to correct adequately for selection leads to a systematic upward bias in the estimated treatment effect for religious schools, but a downward bias for nonreligious private schools. With adequate correction, religious schools are modestly inferior in mathematics and science, while nonreligious schools are substantially superior. However, minority students, particularly in urban areas, benefit from religious schools. Other factors that may make both religious and nonreligious private schools attractive include possibly better retention rates, increased security and discipline, and greater opportunities for a variety of specialized school-day and extracurricular activities.

School Finance Reforms, Tax Limits, and Student Performance: Do Reforms Level Up or Dumb Down?

During the late 1970s and early 1980s, a majority of states substantially changed the ways in which schools were funded, either directly through court- or legislatively mandated school finance reform, or indirectly through tax and expenditure limits. To date, there have been few academic attempts to gauge the effects of these policy changes on actual outcomes of education. This paper is an attempt to fill this gap in the literature. We find compelling evidence that the imposition of tax or expenditure limits on local governments in a state results in a significant reduction in the mean for that state of student performance on standardized tests of mathematics skills. We also find that finance reforms in response to court mandates do not result in significant changes in either the mean level or the distribution of student performance on standardized tests of reading and mathematics. In addition, substantial finance reforms that are not legislative responses to explicit court mandates generally result in increases in mean student performance. Further, in those states that have implemented finance reforms of this type, the test performance of students residing in localities in which local revenues formed smaller shares of total revenue prior to the reforms improve relative to others after the reforms are implemented.

Welfare Reform and Food Stamp Caseload Dynamics

We use state-level panel data for federal fiscal years 1980–1998 to estimate the impacts of welfare reform and the business cycle on food stamp caseloads. The model we employ is a dynamic function of past caseloads, economic factors, AFDC and Food Stamp Program policies, political factors, AFDC caseload levels, and unobserved fixed and trending heterogeneity. Our results suggest that the robust economy has substantially influenced the recent decline in food stamp caseloads, but that the estimated aggregate effect of welfare reform is modest—we attribute around 45 percent of 1994–1998 decline to the macroeconomy and about 5 percent to welfare reform. We do find substantial heterogeneity in the impact of AFDC waiver policies. States with JOBS sanctions policies but not family cap or earnings disregard waivers can expect a larger long-run decline in caseloads than those states with all three policies. In addition, we do find some evidence, albeit weaker, that states with waivers for unemployed able-bodied adults without dependents can expect higher caseload levels than states without the waivers and that the Electronic Benefits Transfer program is leading to food stamp caseload declines. An important finding of this study is that modeling food stamp caseload dynamics has implications for the estimated effects of policy changes and economic factors—when dynamic models are employed, we observe substantially reduced welfare-reform effects but significantly increased effects of the macroeconomy on food stamp caseloads. These results are robust to models that permit the simultaneous determination of AFDC and food stamp caseloads.

Asymmetric Policy Interaction among Subnational Governments: Do States Play Welfare Games?

This paper explores the possibility that states respond asymmetrically to increases versus decreases in their neighboring states’ welfare benefit levels. We present a theoretical model suggesting that states respond more to decreases than to increases in their neighbors’ benefit levels. To test this proposition empirically, we use a panel of annual state-level data from 1983 to 1994 for each of the contiguous United States and the District of Columbia, and we observe changes in state demographic and economic characteristics as well as changes in state welfare benefits. We find substantial empirical evidence that uniformly supports our argument. State responses to neighbor benefit decreases tend to be at least twice as large as their responses to neighbor benefit increases. Our empirical results are robust to modeling neighbor benefits as endogenous. Our results, therefore, have substantial implications for public policy in the wake of the increased decentralization of welfare policy associated with the welfare reforms of 1996.

Accounting for the Decline in AFDC Caseloads: Welfare Reform or Economic Growth?

Nationwide, AFDC caseloads have decreased by about 18 percent since March 1994, while some states, such as Wisconsin, Indiana, and Oregon, have seen declines of 40 percent or more. Two factors are frequently suggested as possible causes: state-level experiments with welfare reform and strong economic growth. In this paper, we use state-level monthly panel data from 1987 to 1996 to assess the importance of each of these factors by estimating a model of AFDC caseloads as a dynamic function of time-dependent state welfare reform variables (welfare waivers) and economic variables such as per capita employment. Our results from the dynamic model suggest that the decline in per capita AFDC caseloads is attributable largely to the economic growth of states and not to waivers from federal welfare policies. In the 26 states experiencing at least a 20 percent decline in per capita AFDC caseloads between 1993 and 1996, we attribute 78 percent of the decline to business-cycle factors and 6 percent to welfare waivers.

Do Multinational enterprises push up wages of domestic firms in the Italian Manufacturing sector?

This paper analyzes the effects of foreign direct investment on wages paid by domestic firms in the Italian manufacturing sector over the period 2002–2007. In particular, the authors investigate the im-pact of multinational enterprises on wages paid by local firms which operate in the same industry, known and horizontal wage spillovers, or have linkages with multinational enterprises in both downstream and upstream industries, known as vertical wage spillovers. By using a large panel dataset, consisting of 551,000 observations, the authors find evidence of wage spillovers only at inter-industry level and, more specifically, for those firms who supply their goods to multinational enterprises, described as backward wage spillovers. Moreover, findings suggest that the wage spillover effect is strongly affected by the technological gap between local and foreign firms: only workers employed in domestic firms with a low-medium technological absorptive capacity seem to benefit from the presence of multinational enterprises in terms of higher wages

Performance Standards and Employee Effort: Evidence from Teacher Absences

The 2001 No Child Left Behind Act (NCLB) increased accountability pressure in U.S. public schools by threatening to impose sanctions on Title 1 schools that failed to make adequate yearly progress (AYP) in consecutive years. Difference-in-difference estimates of the effect of failing AYP in the first year of NCLB on teacher effort in the subsequent year suggest that, on average, teacher absences in North Carolina fell by about 10 percent, and the probability of being absent 15 or more times fell by about 30 percent. Reductions in teacher absences were driven by within-teacher increases in effort and were larger among more effective teachers

Educational effects of early or later secondary school tracking in Germany

This paper examines educational outcomes of pupils selected to secondary school types by different tracking regimes in a German state: Pupils are alternatively streamed after fourth grade or after sixth grade. Regression results indicate that, estimated on the mean, there are no negative effects of later tracking on educational outcomes in the middle of secondary school. Positive effects are observed for pupils with a less favorable family background. Quantile regressions reveal that the estimated effects of later tracking are positive for the lower quantiles but decrease monotonically over the conditional distribution of test scores