2023/10/23 by Caterina Pavese, Enrico Rubolino · 1 voice
Social Sciences · Economics, Econometrics and Finance · #School Choice and Performance #Italy: Economic History and Contemporary Issues #Intergenerational and Educational Inequality Studies
paper · pdf · doi:10.1093/ej/uead092
openalex publication_date 2023/10/23 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/31
Abstract This paper shows that austerity spending cuts harmed student performance in standardised national tests. To identify this relationship, we use cross-municipality variation in the timing of eligibility for the Italian Domestic Stability Pact as an exogenous shifter of local public spending. We then compare test scores for students that were from the same municipality, but who were exposed to different levels of austerity cuts based on their birth year. Combining administrative data on public spending and test scores with an instrumental variable model, we show that the test score impact from austerity spending cuts is around 5.1% of a standard deviation in math and 4.6% in reading. These effects are more pronounced for children with limited resources at home. We provide suggestive evidence that school budget cuts account for most of the observed test score impact.