Assessing the Effectiveness and Efficiency of Local Education Spending

This thesis examines the economic return and efficiency of local education spending by studying its impact towards measurable school outcomes, namely on student performance and teacher quality, and house prices. To obtain causal estimates, the main analysis uses a regression discontinuity design by comparing close winners and losers of local school bond elections as a source of random, exogenous variation in school expenditures. The results indicate that education spending in Texas is inefficiently low as house prices increase by 6-11% after two years following the authorization of an average bond. Moreover, bond­financed spending have a detrimental effect on teacher quality, whereas the effect on student performance remains positive, yet small.