Peter Dolton, Ros Levacic and Anna Vignoles 1. INTRODUCTION Despite the strong belief amongst parents and educational professionals that expenditure on schooling is causally and positively related to student educational and labour market outcomes, the research evidence for this is equivocal (Burtless, 1996; Hanushek, 1986; Hanushek, 1997). For example, Hanushek et al. (1996) finds that in the US there is ‘no strong or consistent relationship between school resources and student performance’. Others dispute such findings, criticising Hanushek’s method of reviewing studies (Laine et al., 1996) and point to evidence, also from the US, that school inputs1 are positively related to outcomes, in particular subsequent earnings (Card and Krueger, 1992). There are a number of possible reasons for the mixed evidence on the effects of school quality, that is the impact of resourcing per pupil on outcomes. This chapter discusses the key methodological reasons for this mixed evidence and the difficulties associated with the use of production function analysis.2 It then highlights the significant findings from the US and European literature on this issue. Although the focus of this chapter is production function analysis, we acknowledge the importance of a complementary field of research, on school effectiveness. School effectiveness research has been concerned with measuring differences in school effects on student attainment and searching for school process factors associated with differential effectiveness.3 Apart from class size, this body of research has largely neglected school resources as explanatory factors for student attainment. In contrast, education production function research has largely focused on...
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