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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu This paper sets out a new budget allocation formula for schools, designed to achieve a more equitable distribution of educational achievement. In addition to needs-based elements, the suggested composite allocation formula includes an improvement component, whereby schools receive budgetary allocations based on a new incentive measure developed in this paper (Improvement in the Educational Achievement Distribution, or IEAD). The development of the budget allocation formula is demonstrated utilizing Israeli data. Large scale, nationwide data sets relating students' academic achievement to student background variables, teacher profiles and school characteristics, were analyzed to identify appropriate needs-based formula components and to estimate their weights. The results are compared with the funding formulas currently used in Israel. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SJEL Classification: I22

Purpose Resource allocation is a key policy instrument that affects the educational achievement distribution (EAD). The literature on methods of allocation is focused mainly on equity issues. The purpose of this paper is to develop a composite funding formula, which adds to the equity-based element (i.e. a needs-based element compensating for students’ low starting points), an element of rewarding improvement in schools’ educational achievement distribution (IEAD) (i.e. raising the overall level of achievement and narrowing the achievement gap). Design/methodology/approach This formula is developed using advanced regression models as well as integrating further policy considerations. The data sets are comprised of nation-wide student-level information on longitudinal students’ achievements (8th graders of 2006, and four years later 12th graders 2010), as well as student background characteristics, and teacher profiles and school features. The Israel data serve as an interesting case study for other countries which are similarly characterized by its students’ diversity, and by its aspiration to improve its EAD and to narrow the achievement gap. Findings Results reveal that the variance among students’ performance is mostly explained by their past performance. In addition, other background characteristics also contribute to the explained variation in students’ performance; however, a lower contribution was found, compared with that of the previous performance. Specifically, schools’ value added contributes 25 percent to the overall 50 percent of explained variance. In other words, allocating resources to schools solely with accordance to equity issues might have an adverse effect on improvement. Yet, designing a composite mechanism that integrates both equity and improvement issues might be more effective. Practical implications Policy makers in other countries that strive to achieve improvement as well as equity in education might consider adjusting the technique developed in this work. The proposed technique might be adjusted based on each country’s nation-wide student-level data. The design of a research-based funding formula aimed at improvement in education as well as considering equity issues might be more effective, equitable, and efficient. Originality/value The main contribution of this work is the conceptual development of IEAD, as well as its measured weight in the funding formula. This work suggests an innovative method of allocation that rewards schools by allocating larger resources based on the improvement gained in the process of learning (not just on the inputs or outputs/outcomes). This research value lays in its design of a composite funding formula that takes into account, in addition to the equity component, an innovative improvement-based component. In addition to that, the value of this research lays on its policy implications. This research suggests and develops a technique for developing a research-based funding formula that might be useful for other countries aspire to improve their education.

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Purpose -The global age is characterized by demographic changes that challenge the feasibility of democratic states' redistribution mechanisms. This paper aims to rethink the strategies commonly used by states (via their resource allocation to education) to promote social cohesiveness and competitiveness, and to suggest an alternative strategy. The purpose of this paper is to provide useful insights into the relationships between education, social cohesiveness, and competitiveness. Design/methodology/approach -The common strategies utilized to promote social cohesiveness and competitiveness via alternative allocation methods are analyzed and the theories of political philosophies underlying these strategies are discussed. Additionally, an empirical analysis carried out using OLS regressions in order to explore the relationships among a state's future cohesiveness and competitiveness, its SES, and the global demographic changes. Findings -Results reveal that a state's future cohesiveness may be predicted by the demographic diversity of its student population and its interaction with SES. Furthermore, a state's future competitiveness may be predicted by its SES. Originality/value -The paper develops and suggests an alternative allocation mechanism, based on a comparative perspective of justice, as an innovative strategy to achieving both state cohesiveness and competitiveness. This strategy can be used by democratic states aimed at improving future competitiveness and, at the same time, to maintain their social cohesiveness.