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Finance

Cory Koedel, Trang Pham.

We study the conditional gender wage gap among faculty at public research universities in the U.S. We begin by using a cross-sectional dataset from 2016 to replicate the long-standing finding in research that conditional on rich controls, female faculty earn less than their male colleagues. Next, we construct a data panel to track the evolution of the wage gap through 2021. We show that the gap is narrowing. It declined by more than 50 percent over the course of our data panel to the point where by 2021, it is no longer detectable at conventional levels of statistical significance.

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Tammy Kolbe, Elizabeth Dhuey, Sara Menlove Doutre.

The formula used to allocate federal funding for state and local special education programs is one of the Individual with Disabilities Act’s most critical components. The formula not only serves as the primary mechanism for dividing available federal dollars among states, it also represents policymakers’ intent to equalize educational opportunities for students with disabilities nationwide. In this study, we evaluate the distribution of IDEA Part B(611) funding in the wake of changes to the formula that were instituted at the law’s 1997 reauthorization. We find that the revised formula generated large and concerning disparities among states in federal special education dollars. We find that, on average, states with proportionally larger populations of children and children living in poverty, children identified for special education, and non-White and Black children receive fewer federal dollars, both per pupil and per student receiving special education. We present policy simulations that illustrate how changes to the existing formula might improve the fairness and efficiency with which federal IDEA Part B funding is allocated to states.

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Dan Goldhaber, Cyrus Grout, Kris Holden, Josh B. McGee.

Over the last two decades, twenty-two states have moved away from traditional defined benefit (DB) pension systems and toward pension plan structures like the defined contribution (DC) plans now prevalent in the private sector. Others are considering such a reform as it is seen as a means of limiting future pension funding risk. It is important to understand the implications of such reforms for end-of-career exit patterns and workforce composition. Empirical evidence on the relationship between pension plan structure and retirement timing is currently limited, primarily because, most state pension reforms are so new that few employees enrolled in those alternative plans have reached retirement age. An exception, and the subject of our analysis, is the teacher retirement system in Washington State, which introduced a hybrid DB-DC plan in 1996 and allowed employees in its traditional DB plan to transfer into the new plan. Our analysis focuses on a years-of-service threshold, the crossing of which grants employees early retirement eligibility and, in many cases, a large upward shift in retirement wealth. The financial implications of crossing this threshold are far greater under the state’s traditional DB plan than under the hybrid plan. We find that employees are responsive to crossing the years-of-service threshold, but we fail to find significant evidence that the propensity to exit the workforce varies according to plan enrollment.

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Maxwell J. Cook, Cory Koedel, Michael Reda.

We estimate the education and earnings returns to enrolling in technical two-year degree programs at community colleges in Missouri. A unique feature of the Missouri context is the presence of a highly-regarded, nationally-ranked technical college: State Technical College of Missouri (State Tech). Compared to enrolling in a non-technical community college program, we find that enrolling in a technical program at State Tech greatly increases students’ likelihoods of graduation and earnings. In contrast, there is no evidence that technical education programs at other Missouri community colleges increase graduation rates, and our estimates of the earnings impacts of these other programs are much smaller than for State Tech. Our findings exemplify the importance of institutional differences in driving the efficacy of technical education and suggest great potential for high-quality programs to improve student outcomes.

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Kenneth A. Shores, Matthew P. Steinberg.

We synthesize and critique federal fiscal policy during the Great Recession and Covid-19 pandemic. First, the amount of aid during both crises was inadequate to meet policy goals. Second, the mechanisms used to distribute funds was disconnected from policy goals and provided different levels of aid to districts with equivalent levels of economic disadvantage. Third, data tools are missing making it difficult to understand whether funds were used to meet policy goals. Details for these results are provided along with policy recommendations.

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Danielle Lowry, Lindsay C. Page, Jennifer Iriti.

Award displacement occurs when one type of financial aid award directly contributes to the change in quantity of another award. We explore whether postsecondary institutions displaced awards in response to the Pittsburgh Promise scholarship by capitalizing on the doubling of the maximum Promise amount in 2012. We use de-identified student-level data on each Promise recipient’s actual cost of attendance, grants, and scholarships, as well as demographic and academic characteristics from school district administrative files to examine whether and how components of students’ financial aid packages and total costs of attendance changed after the Promise award increase. To account for overall trends in pricing and financial aid, we compare Promise recipients to the average first-time, full-time freshman entering the same institutions in the same year as reported by the Integrated Postsecondary Education Data System (IPEDS). With these two data sources, we assess differences in costs and awards between Promise students and their peers, on average, and examine whether and in what ways these differences changed after the increase in Promise funding. We refer to this strategy as a “quasi-difference-in-differences” design. We do not find evidence that institutions are responding to the Promise increase through aid reductions.

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William A. Fischel.

This article reviews the development of my thesis that the California Supreme Court's Serrano decisions, which began in 1971 and sought to disconnect district school spending with local property taxes, led to the fiscal conditions that caused California voters to embrace Proposition 13 in 1978, which radically undermined the local property tax system. I submit that my thesis is most likely true because of Proposition 13’s durability and the absence of alternative explanations that account for its longstanding power over California politics. The article then circles back to John Serrano himself. I want to respectfully suggest that John’s views about the role of public education and my own have more in common than might be suspected. At the very least I want to correct the impression that John supported Proposition 13, which was suggested by the title of my last full article about this topic.

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Virginia S. Lovison, Cecilia H. Mo.

While investing in the teacher workforce is central to improving schools, school resources are notoriously limited, forcing school leaders to make difficult decisions on how to prioritize funds. This paper examines a critical input to resource allocation decisions: teacher preferences. Using an original, online discrete choice survey experiment with a national sample of 1,030 U.S. teachers, we estimate how much teachers value different features of a hypothetical teaching job. The findings show that (a) teachers value access to special education specialists, counselors, and nurses more than a 10% salary increase or 3-student reduction in class size, (b) investments in school counselors and nurses are strikingly cost-effective, as the value teachers alone place on each of these support roles far exceeds the per teacher cost of funding these positions, and (c) teachers who are also parents treat a 10% salary increase and a child care subsidy of similar value as near perfect substitutes. These novel estimates of teachers’ willingness to pay for student-based support professionals challenge the idea that inadequate compensation lies at the root of teacher workforce challenges and illustrate that reforms that exclusively focus on salary as a lever for influencing teacher mobility (e.g. transfer incentives) may be poorly aligned to teachers’ preferences.

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Michel Grosz, Ross T. Milton.

We study a California policy that loosened constraints on some local governments by lowering the share of votes required to pass school capital improvement bond referendums. We show that the policy change yielded larger tax proposals that received less support from voters, yet led to a doubling of approved spending. We show that this effect is concentrated in more racially diverse jurisdictions and that loosening these electoral constraints completely closed the gap in funding between these areas. We develop an agenda-setter model of the interaction between local government officials and voters to illustrate potential mechanisms behind these results.

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Ishtiaque Fazlul, Cory Koedel, Eric Parsons.

We develop a new framework for identifying at-risk students in public schools. Our framework has two fundamental advantages over status quo systems: (1) it is based on a clear definition of what it means for a student to be at risk and (2) it leverages states’ rich administrative data systems to produce more informative risk measures. Our framework is more effective than common alternatives at identifying students who are at risk of low academic performance and we use policy simulations to show that it can be used to target resources toward these students more efficiently. It also offers several other benefits relative to status quo systems. We provide an alternative approach to risk measurement that states can use to inform funding, accountability, and other policies, rather than continuing to rely on broad categories tied to the nebulous concept of “disadvantage.”

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