The Economic Return to School Quality: A Partial Survey

Abstract

We present a survey of the literature on the economic returns to school quality. A dozen studies conducted over the past 20 years show remarkably consistent estimates of the effect of school quality on students’ subsequent earnings. A 10 percent increase in school spending is associated with 1 to 2 percent higher annual earnings for students later in life. We argue that the similarity of the findings across data sources and research methods suggests that school quality has a true causal effect on student earnings. Increases in school resources are also associated with significantly higher educational attainment, although the range of estimates of the effect is relatively wide.