Is There A School Finance Channel? Effects of Ambient Air Pollution on K-12 Education in USA Biplab Datta Georgia State University November 10, 2016 Biplab Datta (Georgia State University) Is There A School Finance Channel? Effects of Ambient Air Pollution on K-12 Education in November 10, 2016 1 / 19
Motivation Figure: Ozone Pollution and Property Tax Revenue per Pupil in Seattle-Tacoma-Bellevue CBSA, WA Property Tax Revenue per Pupil 4000 Property tax revenue per pupil (constant $) 3000 2000 1000 90 100 110 120 130 140 Ozone Pollution Level Biplab Datta (Georgia State University) Is There A School Finance Channel? Effects of Ambient Air Pollution on K-12 Education in November 10, 2016 2 / 19
What do I do? I derive a finance channel of pollution education nexus by extending the education production function framework. I analyze K-12 revenue and expenditure data for metropolitan school districts, and estimate a reduced form model. I use panel fixed effect model for empirical analysis. Unit of analysis: school district level. Sample Period: 1996 to 2008 (3-year intervals). Biplab Datta (Georgia State University) Is There A School Finance Channel? Effects of Ambient Air Pollution on K-12 Education in November 10, 2016 3 / 19
Model Education Production Function Y = y ( H , E , � F , � S ) (1) Biplab Datta (Georgia State University) Is There A School Finance Channel? Effects of Ambient Air Pollution on K-12 Education in November 10, 2016 4 / 19
Model Education Production Function Y = y ( H , E , � F , � S ) (1) Existing Literature Y = y ( h ( P ) , E , � F , � S ) (2) Biplab Datta (Georgia State University) Is There A School Finance Channel? Effects of Ambient Air Pollution on K-12 Education in November 10, 2016 4 / 19
Model Education Production Function Y = y ( H , E , � F , � S ) (1) Existing Literature Y = y ( h ( P ) , E , � F , � S ) (2) My Contribution Y = y ( h ( P ) , e ( P ) , � F , � S ) (3) Biplab Datta (Georgia State University) Is There A School Finance Channel? Effects of Ambient Air Pollution on K-12 Education in November 10, 2016 4 / 19
Model Property Tax Revenue R = m ( V ) v ( P ) (4) Biplab Datta (Georgia State University) Is There A School Finance Channel? Effects of Ambient Air Pollution on K-12 Education in November 10, 2016 5 / 19
Model Property Tax Revenue R = m ( V ) v ( P ) (4) Total differentiating equation (1) yields: dR dP = ( δ r δ P + δ r δ v δ m δ v δ P ) (5) δ V δ M δ V Biplab Datta (Georgia State University) Is There A School Finance Channel? Effects of Ambient Air Pollution on K-12 Education in November 10, 2016 5 / 19
Deriving School Finance Channel Figure: Policy Offsetting Effect Compound Growth Rate Comp. growth rate of property tax revenue 30 20 10 0 −10 0 5 10 15 20 Comp. growth rate of housing price Property Tax Rev Housing Price Index Biplab Datta (Georgia State University) Is There A School Finance Channel? Effects of Ambient Air Pollution on K-12 Education in November 10, 2016 6 / 19
Model Total differentiating equation (1) yields: dY dP = MPH δ h δ P + MPE ( δ r δ v δ P + δ r δ m δ P ) + MPS δ s δ v (6) δ V δ M δ V δ P Health Channel: MPH δ h δ P Finance Channel: MPE ( δ r δ v δ P + δ r δ m δ v δ P ) δ V δ M δ V Socioeconomic Channel: MPS δ s δ P Biplab Datta (Georgia State University) Is There A School Finance Channel? Effects of Ambient Air Pollution on K-12 Education in November 10, 2016 7 / 19
Empirical Model Current expenditure per pupil: E jst = γ 0 + γ 1 ln Pollution j , s , t − k + γ 2 ln Pollution j , s , t − k 2 (7) + State ′ st γ 3 + α j + λ t + ǫ jt State level controls are - state revenue as percentage of total K-12 revenue, and a state level index for average current expenditure per pupil. Biplab Datta (Georgia State University) Is There A School Finance Channel? Effects of Ambient Air Pollution on K-12 Education in November 10, 2016 8 / 19
Empirical Model Property tax revenue per pupil: R jst = β 0 + β 1 ln Pollution j , s , t − k + β 2 ln Pollution j , s , t − k 2 + State ′ st β 3 + Local ′ j , s , t − k β 4 + District ′ jst β 5 (8) + β 6 HPI s , t − k +1 + α j + λ t + ǫ jt District includes - total debt outstanding, and other local revenue share. Local includes - a measure of school quality capital outlay expenditure Biplab Datta (Georgia State University) Is There A School Finance Channel? Effects of Ambient Air Pollution on K-12 Education in November 10, 2016 9 / 19
Empirical Model Marginal effects: δ E jt = γ 1 + 2 γ 2 ln Pollution j , s , t − k (9) δ ln Pollution j , s , t − k δ R jt = β 1 + 2 β 2 ln Pollution j , s , t − k (10) δ ln Pollution j , s , t − k Biplab Datta (Georgia State University) Is There A School Finance Channel? Effects of Ambient Air Pollution on K-12 Education in November 10, 2016 10 / 19
Pollutants and Pollution Measure Ground level ozone, NO 2 , PM 10 , SO 2 3-year average annual pollution measure All pollution monitor located within 25 mile radius of the school district centroid, with at least 1 monitor within 12 mile radius. Weighted average of monitor readings, weighted by inverse of distance squared. Biplab Datta (Georgia State University) Is There A School Finance Channel? Effects of Ambient Air Pollution on K-12 Education in November 10, 2016 11 / 19
Results Current expenditure per pupil marginal effects: Pollutant Ozone NO 2 PM 10 SO 2 Biplab Datta (Georgia State University) Is There A School Finance Channel? Effects of Ambient Air Pollution on K-12 Education in November 10, 2016 12 / 19
Results Current expenditure per pupil marginal effects: Pollutant M.E. Ozone 49 , 030 − 5 , 810 ln( P ) NO 2 12 , 541 − 2 , 207 ln( P ) PM 10 − 12 , 078 + 1 , 659 ln( P ) SO 2 − 4 , 446 + 515 . 2 ln( P ) Biplab Datta (Georgia State University) Is There A School Finance Channel? Effects of Ambient Air Pollution on K-12 Education in November 10, 2016 12 / 19
Results Current expenditure per pupil marginal effects: 50 th Pc Value Pollutant M.E. Ozone 49 , 030 − 5 , 810 ln( P ) 4.454 NO 2 12 , 541 − 2 , 207 ln( P ) 3.091 PM 10 − 12 , 078 + 1 , 659 ln( P ) 3.332 SO 2 − 4 , 446 + 515 . 2 ln( P ) 4.094 Biplab Datta (Georgia State University) Is There A School Finance Channel? Effects of Ambient Air Pollution on K-12 Education in November 10, 2016 12 / 19
Results Current expenditure per pupil marginal effects: 50 th Pc Value M.E. at 50 th Pc Pollutant M.E. Ozone 49 , 030 − 5 , 810 ln( P ) 4.454 -2,730*** NO 2 12 , 541 − 2 , 207 ln( P ) 3.091 -896.5** PM 10 − 12 , 078 + 1 , 659 ln( P ) 3.332 -1,022*** SO 2 − 4 , 446 + 515 . 2 ln( P ) 4.094 -193.4* Biplab Datta (Georgia State University) Is There A School Finance Channel? Effects of Ambient Air Pollution on K-12 Education in November 10, 2016 12 / 19
Marginal Effects for Current Expenditure Figure: Marginal Effects at Different Percentiles Ozone NO2 −1000 1000 −2000 0 −1000 −3000 −2000 −4000 −3000 −5000 −4000 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 Percentiles (’0) Percentiles (’0) (a) Ozone (b) NO 2 PM10 SO2 1000 1000 500 0 −1000 0 −500 −2000 −1000 −3000 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 Percentiles (’0) Percentiles (’0) (c) PM 10 (d) SO 2 Biplab Datta (Georgia State University) Is There A School Finance Channel? Effects of Ambient Air Pollution on K-12 Education in November 10, 2016 13 / 19
Change in Pollution and Initial Pollution Level Figure: Compound Growth Rate of Pollution - 1992 to 2004 and Initial Pollution Ozone NO2 .02 .02 .01 Compound growth rate Compound growth rate 0 0 −.02 −.01 −.04 −.02 −.06 −.03 50 60 70 80 90 100 110 120 0 5 10 15 20 25 30 35 40 Pollution in 1992 Pollution in 1992 (a) Ozone (b) NO 2 PM10 SO2 .02 .1 .05 0 Compound growth rate Compound growth rate 0 −.02 −.05 −.04 −.1 −.06 −.15 10 20 30 40 50 0 50 100 150 200 250 300 350 400 Pollution level in 1992 Pollution level in 1992 (c) PM 10 (d) SO 2 Biplab Datta (Georgia State University) Is There A School Finance Channel? Effects of Ambient Air Pollution on K-12 Education in November 10, 2016 14 / 19
Results Current expenditure per pupil transmission channel: Pollutant Ozone NO 2 PM 10 SO 2 Biplab Datta (Georgia State University) Is There A School Finance Channel? Effects of Ambient Air Pollution on K-12 Education in November 10, 2016 15 / 19
Results Current expenditure per pupil transmission channel: Pollutant Original Ozone -2,730*** NO 2 -896.5** PM 10 -1,022*** -193.4* SO 2 Biplab Datta (Georgia State University) Is There A School Finance Channel? Effects of Ambient Air Pollution on K-12 Education in November 10, 2016 15 / 19
Results Current expenditure per pupil transmission channel: Pollutant Original State Rev Control Ozone -2,730*** -2,667*** NO 2 -896.5** -958.6*** PM 10 -1,022*** -825.5*** -193.4* -121.8 SO 2 Biplab Datta (Georgia State University) Is There A School Finance Channel? Effects of Ambient Air Pollution on K-12 Education in November 10, 2016 15 / 19
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