Inequity in American Schools: A New Perspective on the Distributional Effects of School Expenditures on Economic Well‐Being

Abstract

This article explores how inequities in public K‐12 school spending impact the distribution of economic well‐being across American households with public school students in 1989 and 2000. Adapting concepts from the public finance literature, I explore the impact of school spending on the vertical and horizontal equity and its impact relative to other types of public spending on social programs and taxation. Conventionally, vertical equity refers to the size of the income gaps between households. Horizontal equity refers to the ranking of households along the income distribution with any change in ranks producing horizontal inequity. My main findings show that school spending, when converted into a component of income, served to reduce extended‐income inequality through improvements in vertical equity without the discriminatory implications of exacerbating horizontal inequity across households. Additionally, this impact was at least as large as that of spending on other social programs. This finding bolsters standard arguments for equity and progressivity of school finance across students.

What works to mitigate and reduce relative (and absolute) inequality? A systematic review

“…In this sense, if public health, for example, were not provided, individuals would have to finance it privately out of their disposable income. Thus, some studies attempted to calculate this income concept by imputing the cost of public services by household, using the average cost of these services (see Aaberge and Langørgen 2006;Mahoney 2013).…”