Economic Returns to Education Quality: An Empirical Analysis for Whites, Blacks, Poor Whites, and Poor Blacks. Institute for Research on Poverty Discussion Papers No. 224-74.

Social scientists with an interest in education policy have devoted a great deal of time in recent years to assessing if the level of per pupil school expenditures is related to any outputs of formal education that are valued by our society. In this paper we develop several alternative models for the purpose of estimating the effects of per pupil school expenditures on future earnings, and on the basis of these estimates we calculate a range of rates of return to expenditures. After a brief review of the literature, we describe our data, develop the models, and the present and discuss the empirical results. Most of the data comes from the University of Michigan Survey Research Center's Income Dynamics Panel. This survey contains information for the five years from 1968 through 1972. The study uses only male respondents who are between the ages of 30 and 55 in 1972. The Michigan Survey has such data as annual and hourly earnings for five years, years of schooling, age, race, and father's years of schooling. Researcher also obtained data from the 1930, 1940, 1950, and 1960 U.S. Censuses of Population on per pupil expenditures and per capita income by state. From 1930, 1940, and 1960 Biennial Surveys of Education, researchers obtained per pupil school expenditures by race for the 17 Southern states with separate school systems prior to 1954. (Author/JM)