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Working Paper

The effect of school finance reform on population heterogeneity


Abstract: This paper tests whether state school finance reform alters neighborhood income homogeneity. One implication of the Tiebout model is that within-community homogeneity declines as a result of an exogenous decrease in the ability of jurisdictions to set local tax and expenditure levels. The property tax revolt and the school finance equalization reform of the 1970s and 1980s offer a test of the role of state fiscal reform on aggregate population sorting behavior. The results show that school finance has a significant effect on school district income sorting, especially among low income communities.

Keywords: Education; Income; Finance;

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Bibliographic Information

Provider: Federal Reserve Bank of Chicago

Part of Series: Working Paper Series

Publication Date: 1998

Number: WP-98-11