Public education expenditures, taxation and growth: a state-level analysis

ABSTRACT

In a 2007 paper, Blankenau, Simpson, and Tomljanovich (BST) find that public education expenditures have a positive impact on growth only after controlling for the government budget constraint. This note estimates a dynamic panel data model with U.S. state-level data over the period 1963–2015. Similar to BST, we find evidence of a positive relationship between public education expenditures and growth. Unlike BST, this relationship is not sensitive to the imposition of the government budget constraint.

KEYWORDS:

• Growth
• education spending
• taxation

JEL CLASSIFICATION:

• E62
• O47
• C23

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ See Baltagi (2008) for an excellent textbook discussion of (dynamic) panel estimators.

² To avoid multicollinearity, we use total taxes net of sales taxes.

³ Note that this is not the same regression estimated by BST due to differences in data and empirical methodology.