The War on Poverty’s Human Capital Programs:

K-12 Education

Elizabeth Cascio, DartmouthSarah Reber, UCLA

June 2012

Elementary and Secondary Education Act

• Signed April 11, 1965

• Title I: Federal aid to fund programs for poor, educationally deprived children– Directed to poor school districts– $1 billion in 1965-66 ($7b, 2009$)– Doubled federal aid for

elementary/secondary education

• Per-pupil grants to districts ↑ linearly in child poverty rate

The Title I Program• Restricted block grant from the federal

government to local school districts– Targeted good is educational services for poor

children• Initially, very little regulation of use of funds• Over time, became highly regulated• Most educators now think of Title I as related to

particular educational interventions (pull-out programs), schools and students– Evaluations of program consistent with this

Federal Grants in a Federalist System

• Effects of Title I extended beyond grant-making

• TI receipt initially tied to desegregation– Strengthened the hand of the Courts– Consider desegregation-related benefits part of

the legacy of TI• TI receipt tied to accountability• Experience of TI influenced design of state

programs

Title I Evaluation Studies• Federally mandated evaluations• Compare students participating in “Title I

programs” to some comparison groups• Generally find Title I not so effective• Difficult to handle selection problem• Gives benefits of Title I overall only if– No Crowd-Out: Services received by treated students

are new services– No Spillovers: Non-participating students not affected– Good reason to believe these don’t hold

Economists’ Approach• Worry about all kinds of crowd out• Who can crowd out?

– State governments– Local school districts– Schools

• Where might the money go?– Educational services for ineligible kids/schools– Ineligible educational expenditure (e.g. capital)– Private consumption (lower taxes)

• Funds may be nominally used for intended purposes but still not increase ed services for poor children – Lots of anecdotal evidence of nominal mis-use of funds

Fiscal Federalism Studies• Feldstein (1978)• Gordon (2004)• Cascio, Gordon, and Reber (2012)• Range of estimates, but all find evidence of

economically significant crowd-out.• What is the incidence?• CGR find suggestive evidence of improvements

in ed attainment for Southern whites

Summary of the Literature

• Important to consider crowd-out!• Few credible studies of Title I programs much

less the program as a whole• Desegregation appears to have benefitted

blacks TI like played some role– Many other actors and policies also important

• A lot we don’t know

School Spending and Attainment: A Long View

• How have the relationships among educational spending, educational attainment, poverty and income changed over time?

• Use state-level data from the 1950s to 2000s.– Digest of Education Statistics– Census/ACS

Summary• Spending incredibly unequal across states and

strongly negatively correlated with poverty– No “South” effect South is just poor– Would have needed a much larger program to equalize

• Poverty less predictive and slope less steep over time– Greater role for income

• Ed attainment gaps between high and low poverty states narrowing over time– HS: Strong trend over whole period– College Attendance: Consistent with role for TI

NENM

KY

WYKSIL

NY

AZNHMAWAVTMNME MO

INWIOHDEPA

ORMT

SD

IDNJCA

WV

OK

NVMD

UTCTMI

NDRI IACO

LANC

TXGA

ARAL

FL

SC

VATN

MS

020

040

060

080

0

0 .1 .2 .3 .41960 Child Poverty Rate

slope estimate = $909 ($70), R2 = .78A. Title I Per Pupil, 1969

IDWY

OK

CTKS

AZMD

NV

MNOR

NM

MANY WVME KY

MI

CORI

NJ IAOHPACAVT

WA

WI

NDUT

IN

SD

NHDE

NEMT

IL MO

VA

ALFL

TX TNGA SCLA MSAR

NC

020

040

060

080

0

0 .1 .2 .3 .41960 Child Poverty Rate

slope estimate = $45 ($112), R2 = .003B. Federal Revenue Per Pupil, 1963

NE

NM

KY

WYKS

ILNY

AZ

NHMA

WAVTMNME MO

INWIOH

DE

PAORMT

SD

ID

NJCA

WV

OKNV

MDUT

CTMI

ND

RIIA

CO LA

NC

TX

GAARAL

FL

SCVA

TN

MS

020

040

060

080

0

0 .1 .2 .3 .41960 Child Poverty Rate

slope estimate = $1213 ($177), R2 = .5C. Federal Revenue Per Pupil, 1969

Figure 1. Title I Formula Amounts and Federal Revenue Per Pupilv. 1960 State Child Poverty Rate

Current ExpenditurePer Pupil

Federal RevenuePer Pupil

040

0080

0012

000

1950 1960 1970 1980 1990 2000 2010Year (fall of academic)

Figure 2. Trends in Real Federal Revenueand Current Expenditure Per Pupil (2009 dollars)

CT

CO

ID

VT

WV

WA

IA

MA

NY

WY

MOUTNMIN

MI

ORMN

OK

WI IL

NDOH

DE

CANH

MD

ME

NVMT AZKS

KY

SD

NJ

PA

NE

RI

AL

LAFL

MSSC

TX

GA NCTN

VA

AR

7.58

8.59

0 .1 .2 .3 .41960 Child Poverty Rate

slope estimate = -2.28 (.18), R2 = .69A. 1963

IAAZ

NE

SD

NY

MD

CAWV

NV

MNMTMI

NJ

MA

IN MO

OK

KY

OH

DE

ND

IL

CO

NHKS

ME

OR

WY

ID

CT

PA

WA

RIVT

UT

NM

WIGA

ARFL

VA

NCSCLA

TNTX

MSAL

8.59

9.510

0 .1 .2 .3 .41960 Child Poverty Rate

slope estimate = -1.09 (.28), R2 = .17B. 2006

Figure 3. ln(Current Expenditure Per Pupil), 1963 and 2006,v. 1960 Child Poverty Rate

-2.5

-2-1

.5-1

Gra

dien

t

1950 1960 1970 1980 1990 2000 2010Year (fall of academic)

Figure 4. Trend in the Gradient of ln(Current Expenditure Per Pupil)in the 1960 Child Poverty Rate

-50

510

1520

Gra

dien

t for

Pup

il-Te

ache

r Rati

o

-1.8

-1.6

-1.4

-1.2

-1-.8

Gra

dien

t for

ln(T

each

er S

alary

)

1950 1960 1970 1980 1990 2000 2010Year (fall of academic)

Gradient for ln(Teacher Salary) Gradient for Pupil-Teacher Ratio

Figure 5. Trends in the Gradients of ln(Teacher Salary) and Pupil-Teacher Ratioin the 1960 Child Poverty Rate

.2.4

.6.8

R-sq

uare

d

1950 1960 1970 1980 1990 2000 2010Year (fall of academic)

1960 Child Poverty Current Per-Capita Income Both

Figure 6. Trends in the Predictive Power of the 1960 Child Poverty Rateand Per-Capita Income for ln(Current Expenditure Per Pupil)

.64

.77

.88 .91 .93 .94

.35

.54

.76.83

.87 .88

.25

.33

.49.56 .57

.62

.11.16

.35

.43 .42

.51

No Exposure Full Exposure

0.2

.4.6

.81

1929 1939 1949 1959 1969 19795-year Birth Cohort Starting...

High School Graduation - WhiteHigh School Graduation - NonwhiteCollege Attendance - WhiteCollege Attendance - Nonwhite

Figure 7. Trends in High School Graduation andCollege Attendance Rates by Ages 26-30, by Race

No Exposure Full Exposure

-1-.8

-.6-.4

-.20

.2

1929 1939 1949 1959 1969 19795-year Birth Cohort Starting...

High School Graduation Some College Completed

A. White

No Exposure Full Exposure

-1-.8

-.6-.4

-.20

.21929 1939 1949 1959 1969 1979

5-year Birth Cohort Starting...

High School Graduation Some College Completed

B. Nonwhite

Figure 8. Intercohort Trends in the Gradients of High School Graduationand Some College Completed in the 1960 Child Poverty Rate

WhiteHS Graduation

NonwhiteHS Graduation

WhiteCollege Att.

NonwhiteCollege Att.

0.2

.4.6

.81

1930 1940 1950 1960 1970 1980cohort

Figure 7. Trends in High School Graduation andCollege Attendance Rates, by Race

No Exposure Partial Exposure Full Exposure

-1-.5

0.5

1934 1944 1954 1964 1974 1984cohort

High School Graduation College Attendance

A. White

No Exposure Partial Exposure Full Exposure

-1-.5

0.51934 1944 1954 1964 1974 1984

cohort

High School Graduation College Attendance

B. Nonwhite

Figure 8. Intercohort Trends in the Gradients of High School Graduationand Some College Attendance in the 1960 Child Poverty Rate