Improving Educational Outcomes While Controlling Costs

Eric A. Hanushek
Steven G. Rivkin
Dean T. Jamison
Published Date
December 1992
Carnegie-Rochester Conference Series on Public Policy 37
pp. 205-238

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.