Affiliation:
1. Ifo Institute and CESifo, Germany
2. University of Lausanne , Switzerland
Abstract
Abstract
This paper shows that austerity spending cuts harmed student performance in standardised national tests. To identify this relationship, we use cross-municipality variation in the timing of eligibility for the Italian Domestic Stability Pact as an exogenous shifter of local public spending. We then compare test scores for students that were from the same municipality, but who were exposed to different levels of austerity cuts based on their birth year. Combining administrative data on public spending and test scores with an instrumental variable model, we show that the test score impact from austerity spending cuts is around 5.1% of a standard deviation in math and 4.6% in reading. These effects are more pronounced for children with limited resources at home. We provide suggestive evidence that school budget cuts account for most of the observed test score impact.
Funder
Swiss National Science Foundation
Publisher
Oxford University Press (OUP)
Subject
Economics and Econometrics
Reference46 articles.
1. Italian internal revenue agency—osservatorio del mercato immobiliare: House price data [dataset];Agenzia delle Entrate,2021
2. Childhood circumstances and adult outcomes: Act II;Almond;Journal of Economic Literature,2018
3. Active and passive waste in government spending: Evidence from a policy experiment;Bandiera;American Economic Review,2009
4. Does management matter in schools?;Bloom;Economic Journal,2015
5. Austerity, welfare cuts and hate crime: Evidence from the UK’s age of austerity;Bray;Journal of Urban Economics,2022