β Scribed by James M. Poterba
No coin nor oath required. For personal study only.
This article examines the relationship between demographic structure and the level of government spending on K-12 education. Panel data for the states of the United States over the period suggests that an increase in the fraction of elderly residents in a jurisdiction is associated with a significant reduction in per-child educational spending. This reduction is particularly large when the elderly residents and the school-age population are from different racial groups. Variation in the size of the school-age population does not result in proportionate changes in education spending, thus, students in states with larger school-age populations receive lower per-student spending than those in states with smaller numbers of potential students. These results provide support for models of generational competition in the allocation of public sector resources. They also suggest that the effect of cohort size on governmentmediated transfers must be considered in analyzing how cohort size affects economic well-being.
Spending on primary and secondary education is the largest expenditure item in state and local government budgets. Although tax-financed public education may provide some benefits to society and the local community at-large, most of the return to such spending accrues to families with children. The costs of public education nevertheless fall on households with and without school-age children. In particular, older households with owner-occupied homes pay local property taxes as well as state sales and income taxes that ultimately finance K-12 education. These generational differences in the net benefits from publicly provided education can lead to tensions in the political process in which education budgets are set. This article explores the empirical significance of these generational tensions, and presents evidence suggesting that, during the postwar period, a state's demographic composition has affected the level of per-child education spending.
Questions of intergenerational burden-sharing and equity in school finance have received less attention to date than intragenerational issues such as in-
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