Do increased resources increase educational attainment during a period of rising expenditure? Evidence from English secondary schools using a dynamic panel analysis

Abstract

This article estimates the effects of school expenditure on school performance at Key Stage 4 in England, over the period 2003–07 during which real per pupil expenditure increased rapidly. It adds to previous investigations by using dynamic panel analysis to: exploit time series data on individual schools that only recently has become available; adjust for the potential endogeneity not only of expenditure but also of other determinants of performance; and differentiate the short‐run and the (higher) long‐run attainment effects of spending changes. Consistent with other recent work, the article reports a generally significant but small effect of expenditure on school performance, but it also finds that the effect varies between specialist and non‐specialist schools, with the effect on the latter being larger. Further, the article identifies significant dynamics in the school improvement process, quantifies the long‐run effect of expenditure changes, suggests that spending effects increase with socio‐economic disadvantage, and quantifies absence effects.

Acknowledgements

We thank the members of the Department for Children, Schools and Families (DCSF) Value for Money Team, in particular Jon Andrews, who commissioned the report from which this article is developed and who answered our numerous questions about the data. In addition, we thank the three referees whose comments helped to improve this article.

Notes

1. This model is estimated using the xtdpd programme in STATA 10. Replications were conducted to check the robustness of our results using xtabond2, which is a user‐written programme for STATA 9.2 or higher (Roodman, 2005). For details of the estimation method, see Pugh et al., 2008, Appendix 6.

2. Details available from the authors on request.