Suburbanization, demographic change and the consequences for school finance

The existing literature on the relationship between the share of elderly in a community and the support for local public education has led to mixed results to date. One potential reason behind this is that the share of elderly in a community is endogenous, and it is very difficult to disentangle the effects of individuals aging in place from that of dynamic Tiebout sorting. The point of this paper is to carefully document the degree to which aging in place has occurred in the American suburbs, and to estimate the degree to which it has influenced school finance once the initial settlers of these suburbs were no longer the parents of school-aged children. We hand-match data from the 1950 and 1960 Censuses of Population and Housing to more recent data to link postwar suburban development to later school finance. Using a novel method for identifying the causal effects of aging in place, we find that the percentage of elderly adults in a school district is negatively related to the level of support for public schooling, and that this is particularly true for school districts in metropolitan areas where the school-aged population is more heavily nonwhite relative to the elderly population. (C) 2011 Elsevier B.V. All rights reserved.