Strategic Interaction Among School Districts: A Spatial Analysis of Education Expenditures in Massachusetts

Document Type

Grant Proposal

Date Accepted

Summer 2006

Project Description/Abstract

Perhaps no local government fiscal or political issue generates as much or as intense public interest as the issue of school finance. Over the past few decades, parents, researchers and policy makers have given increased attention to the impact of inter-jurisdictional competition on school finance. However, empirical examination of the effect of this type of competition on the level of spending and the quality of education is relatively sparse. In this paper, I test the notion of strategic interaction among school districts in Massachusetts, that is, whether public school districts in Massachusetts incorporate the expenditure decisions of neighboring districts into their own decision-making process. The main purpose is to analyze expenditure interaction effects between public school districts and among public schools within a given district. The empirical analysis is carried out using a spatial econometrics framework, which is crucial in discerning the source of interdependence among school districts.

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