Estimating Education Production Functions in Rural and Urban Areas

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Abstract
Public elementary and secondary education represent the largest single expenditure by units of state and local governments. Nearly 30 percent of all tax dollars raised at the state and local level is spent for funding public elementary and secondary schools. The magnitude of expenditures for public education relative to other public goods makes questions concerning resource allocation for this service extremely important. It is not surprising that a great deal of attention has been directed toward determining if the educational process can be made more efficient. Politicians, school administrators and other decision-makers who deal with school finance problems in rural and urban areas face a key policy question concerning the educational production process: “Does the spending of additional tax dollars in local public schools necessarily insure increased scholastic achievement for all students?”

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