Clara (Yehyun) Kyung

Resources or Rewards? The Impact of School District Funding and Incentives on Student Outcomes

with Haruka Uchida

Abstract: School funding and accountability are prevalent policy tools in public education, but their efficacy in improving student outcomes remains contested. We study the impacts of a statewide education reform in Texas that (1) changed the formula that links school district characteristics to funding, and, in a novel shift from test-based accountability, (2) introduced financial bonuses for districts based on high school graduates’ attainment outcomes, including college enrollment and industry-based certification. Using policy-driven, between-district variation in district spending and incentives, we find that both spending and incentives improved the composite attainment outcome targeted by the bonus policy. Relative to funding increases, incentives produced comparable gains at a lower government cost. Effects on attainment are driven by industry-based certifications, with little effect on college enrollment. However, by focusing on high school graduates’ outcomes, the bonus structure inadvertently incentivized districts to retain 12th graders who were unlikely to meet the attainment criteria: incentives reduced graduation rates and increased dropout rates. Consequently, we find mixed evidence on college and career outcomes one year after 12th grade: neither district spending nor incentives affected the share of students who were employed or enrolled in college, but incentives increased earnings. Our results highlight both the potential promise and design challenges of attainment-based incentive policies.

Outside Opportunities and Teacher Attrition

This paper investigates the impact of outside labor market opportunities on teacher attrition, with implications for STEM teacher shortages. I focus on Texas, where teachers with an alternative certification—who are more likely to teach STEM subjects—have been documented to have shorter tenure in the public school teaching profession than teachers with a standard certification. While correlational evidence suggests that alternatively certified teachers have better outside opportunities than standard-certified teachers, the causal link between outside opportunities and attrition has not been established. To move from correlational evidence to causal evidence, I exploit plausibly exogenous variation in local labor demand stemming from oil price shocks. I propose a difference-in-differences framework that compares the relative attrition rates of alternatively certified teachers vs standard certified teachers in counties that experience differential shocks to local labor demand. Under a common trends assumption that relative attrition rates of alternatively certified teachers in counties that experienced larger vs smaller shocks would have had the same trend absent the shock, this design tests the hypothesis that alternatively certified teachers are more elastic to outside opportunities and therefore contributes to diagnosing the problem of STEM teacher shortages.