The Effects of Locally Financed Class-Size Reduction Initiatives

We build upon recent work by Cellini, Ferreira, and Rothstein (2010) who develop a dynamic regression discontinuity approach to examine the effect of school district expenditures by exploiting the natural discontinuity induced by voting thresholds in local bond referenda.

Our analysis extends their work by introducing a regression discontinuity gains model and by comparing the differential effects of approving parcel taxes versus general obligation bonds. More importantly, our analysis focuses on those bonds and parcel taxes specifically targeted to fund class size reduction efforts. Across all of our specifications, bond passage leads to modest reductions in class size several years after approval while parcel taxes appear to minimally affect class size.