An analysis of educational outcomes and costs in U.S. schools shows rapidly increasing expenditures per student but little in the way of increased student performance. A decomposition of costs in the 20th century shows the powerful effects of decreased pupil-teacher ratios and increased costs of teachers. In the postwar period, however, teacher salaries have fallen relative to other college graduates. Other analyses of education production functions indicate that pupil-teacher ratios and currently structured salaries are not directly related to student learning. The obvious implication is that output based incentives are required to improve performance at acceptable costs.
Improving Educational Outcomes While Controlling Costs
Carnegie-Rochester Conference Series on Public Policy 37