VOTING FOR FREE PUBLIC SCHOOLS
Christiana Stoddard
Montana State University Department of Agricultural Economics and Economics Bozeman MT 59717 Email: [email protected] Phone: (406) 994-5634
November 2012
When do voters choose to fully fund education through taxation? This paper examines theories of public provision, in particular focusing on the role of political power of the poor, rising incomes, and the external benefits of education. In the early 1800s, common schools in New York were funded through a combination of public funds and private tuition charges, much as in other states at the time. Private charges were sizable--about 60 percent of common school revenues in 1830 and 37 percent in 1850. In 1849 and 1850, New York held two direct voter referenda over an act requiring all public schools to be free of tuition charges. This paper tests theories of public provision using county level variation in private tuition charges, the relationship between subsidies and attendance, and direct voter support for free schools. The findings indicate a reversal of the effect of inequality over this period. The econometric results suggest that there may not be a uniform relationship between inequality and public funding, but one that is dependent on both political institutions and the external benefits of education.
I thank Rob Fleck, Jon Sonstelie, Nancy Beadie, William Fischel, and David Mitch for helpful comments, and participants at the Association for Education Finance and Policy meetings. I. Introduction
Public schools in the United States have not always been fully publicly funded. In the
early 1800s, most public primary schools in the United States had revenues from a combination
of public funds and private tuition charges known as “rate bills.” During the late 1800s, northern
and western states gradually abolished rate bills in favor of “free” common schools that were
fully tax supported. Similarly, in many developing countries, public schools often require fees or
other private charges. Public universities in the United States typically rely on a combination of
public and private sources of revenue.
Why would voters choose to subsidize education? And under what conditions will that
subsidy be only partial? This paper examines these questions using the transition to free public
schools in New York State. New York is an excellent place to test theories of public provision
for several reasons. First, New York underwent a substantial transition in its reliance on rate
bills, from supplying about 60 percent of revenues for common schools in 1829 to about 15 percent in the mid-1850s. Second, unlike most states, New York voters directly indicated their preferences in two referenda in 1849 and 1850 over the Free School Act. This act would have
eliminated rate bills and required full tax support of schools, and the referenda took place before
most other states had mandated free schools.1 Third, during this period, counties varied widely
in how reliant they were on rate bills, from New York City, which discontinued rate bills in
1832, to Erie and Rockland Counties, where rate bills were still more than 60 percent of revenues
1 Rate bills were never used in New Hampshire, and were abolished before the NY referenda in Massachusetts (1826), Maine (1820), and Wisconsin (1848). The next several years saw their elimination in most of the northern states, including Indiana (1852), Ohio (1853), Illinois (1855), Iowa (1858), and Vermont (1864), Connecticut (1868), Rhode Island (1868), Michigan (1869), New Jersey (1871), and Pennsylvania (1873). (Pennsylvania districts chose individually when to switch from the old pauper school law to the new free school law. The first district switched in 1834, the last in 1873.) See Cubberley (1920) and Goldin and Katz (2003) for details. in 1850. Finally, New York expanded voting rights in this period to individuals without
property, allowing for an examination of how political institutions affect public provision.
This transition allows for a test of theories related to public provision. The theoretical
literature on public funding often emphasizes the redistributive motives for publicly funded
education.2 In some of these models (e.g., Meltzer and Richard 1981), public education is essentially a transfer from voters with wealth above the mean to voters with wealth below the mean. A number of theorists taking this starting point have modeled a positive effect of inequality on public education: all else equal, higher gaps between mean wealth and the wealth of the median voter lead to a lower tax price to that voter and higher public funding.3 This
motivation is described (in negative terms) by an opponent of New York’s Free School Law:
“Of all the acts of popular government, there are none so ruinous to the principles of honesty as to sanction taxation by popular voice. Thousands of voters are not tax-payers, but will profit themselves by the violations of their neighbors’ rights. . . . If B. takes A.s money and purchases bread for his children, he is a felon and punished for the act, but if he pays for their schooling with it, it is a virtue sanctioned by law.” (Letter to the Rochester Daily Democrat, Feb 1850)4
Other work has emphasized that public education may be associated with social gains,
whether due to faster growth, lower crime, a better functioning democracy, socialization of
immigrants, network externalities, mitigation of credit constraints, or higher returns to physical
capital.5 In this case, voters may transfer resources from themselves to others in order to realize
2 For examples, see Epple and Romano (1996a, 1996b), Glomm and Ravikumar (1998), Fernandez and Rogerson (1995). 3 See Corcoran and Evans (2010) for some empirical support for a positive relationship between inequality and public funding using contemporary data. 4 Quoted in Finegan (1921) pg 256. 5 For example, see Lucas (1988) on growth; Chiswick (1972) and Lochner and Moretti (2004) on crime; Lott (1990) for social control and belief formation; Milligan, et.al.’s (2003) for democratic participation; Field (1979) for assimilation of immigrants; Becker’s (1964) on capital market imperfections; Soares (2003) and Acemoglu (1995) for human capital’s effect on returns to capital; Moretti (1999) and Ciccone and Peri (2002) on network externalities. these social gains. A proponent of the Free School Law described this motivation in the
following editorial:
“To the assertion that it is wrong to tax A to provide instruction for the children of B, we reply that we would tax both A and B, for school purposes, each in proportion to his ability, not as parents but as possessors of property, because property is deeply interested in the education of all. There is no farm, no bank, no mill, no shop (unless it be a grog shop) which is not more valuable and more profitable to its owner if located among a well educated, than if surrounded by an ignorant population.” (Letter to Canojoharie Radii, July 1850)6
Models incorporating these external benefits can generate the opposite predictions about the
impact of inequality, arguing that more equal areas may have better human capital institutions.
These models also typically incorporate variation in political power across voters. Benabou
(2000), for example, argues that with limited political power of the poor, more equal societies
favor greater redistribution when middle income voters benefit from the higher education levels
of lower income voters, who are credit constrained from optimal education investments. In a
similar vein, Galor, Moav and Vollrath (2008) argue that human capital promoting institutions
emerge only when capitalists are the political elite and benefit from a better educated labor force.
In their model, inequality prior to industrialization prevents the development of human capital
institutions. Internationally, Engerman and Sokoloff (2000) and Chaudhary, Musacchio,
Nafziger and Yan (2012) also emphasize the connection between political institutions and public education
Most of the empirical work on the growth of public schooling in the United States has focused either on attendance rates or on expenditures levels and has documented the period either after schools became free or the very early period, with somewhat mixed results. For example, Goldin and Katz (1997, 1998) find higher attendance in areas with more equal income
6 Quoted in Finegan (1921), pg 377. distributions. Go and Lindert (2007, 2010) report the effects of raising the vote share on
enrollment, finding that the expansion of the franchise was associated with increased attendance,
although their work does not examine the role of public funding in this transition.7
A few studies have examined the connection between public funding and inequality in
the early American experience: Stoddard (2009) finds more equal states had higher public
subsidies in 1850-1870, and Ramcharan (2010) finds higher public education expenditures in
more equal counties in 1890-1930. However, these results are not linked to direct voting
outcomes or voting institutions. The New York referendum was described in an early account by
Cubberley (1920), and Go (2009) examines the passage of free school laws and the New York
referendum returns, although not the level of public subsidies. Go (2009) finds mixed results of
the effect of inequality.
This paper helps to reconcile these findings using a wider range of outcomes (including
subsidy levels, voting outcomes and attendance) in a period when voting laws were changing to
see how the effect of economic inequality varied as voting institutions changed. The 1830
results represent some of the earliest analysis of public funding, coming only a few years after
voting laws in New York had changed to allow property-less men to vote, and the outcomes in
1850 come from a period when many counties had already made the transition to fully funded
schools. This allows for a cleaner test of how the equilibrium shifted as voting institutions and
the economic base changed. In particular, the empirical work tests three potential explanations
for the shift away from partial subsidies: rising political power of the poor, rising incomes of the
poor, and rising external benefits.
7 For more results on attendance and literacy, see Fishlow (1966), Kaestle (1983), Soltow and Stevens (1981). Mitch 1986), Gallego (2010), Engerman and Sokoloff (2002), and James (1992) examine this internationally. The results identify a striking change in the role of inequality. In the early part of the period, rate bills were higher in areas where many individuals had no property and had previously been disenfranchised. By the end of the period, this relationship was reversed: areas with more property-less individuals instead had lower rate bills. The empirical work finds that the results are most consistent with rising political power of the poor and rising external benefits of education. This helps to resolve the disparate empirical findings in the literature.
Furthermore, it suggests that there may not be a uniform relationship between inequality and public funding, but one that is dependent on both political institutions and the external benefits of education.
II The Transition to Free Schools in New York
In the early 1800s, New York funded its common school system much like other
Northern states. There were four main sources of funds. State revenues came largely from the interest on the state school fund, funded through land sales. These funds were distributed to districts for teacher salaries.8 Second, towns were required to raise a matching amount for salaries and could vote for additional taxation.9 District taxes were the smallest source of revenues and were used for school house repairs, fuel, and to pay the rate bill charges for children whose parents were self-declared paupers. Finally, families in most areas were charged a rate bill that made up the difference between the public funds and the amount needed for teacher salaries. These bills were sometimes based on individual student days attended.
8 State revenues were apportioned to counties on the basis of population, and counties apportioned these among towns based on the number of school aged children (ages 5-16). 9 The additional taxation could not exceed the amount apportioned by the state. A town therefore could have public funds of up to three times the amount of the state apportionment from the fixed state and town amounts and the additional voluntary taxation. In practice, few towns in established counties voted for additional funds, although towns in newly formed counties occasionally did. Figure 1 shows transition away from rate bills from 1828 through 1853.10 Overall, rate
bills made up about 60 percent of common school revenues from 1828 through 1839. In 1840,
state revenues more than doubled with the distribution of federal monies from the U.S. Deposit
fund. Because towns were required to match this money from the state, the federal influx
crowded out rate bills. Rate bills fell to about a third of school revenues as a result. (The rise in
the state share after 1850 is discussed below.)
Figures 2 shows the variation in public funds across counties in 1830. These varied
widely, from New York County, with a high of 96 percent of revenues from public funds to a
low of 25 percent in Orange and Richmond counties. For nearly all counties, much less than half
of their revenues came from public sources: most counties were heavily reliant on rate bills.
Children who wished to attend school for free had to have parents register on the tax lists
as paupers. This was fairly uncommon: less than half of 1 percent of individuals registered as
paupers in the State Census in 1835.11 In 1845, the State Superintendent estimated that about 7
percent of children ages 5 through 16 did not attend school because of rate bill charges.12
The map in Figure 3 shows that in 1850, the number of counties relying heavily on rate
bills had decreased substantially: while in 1830, 38 counties received 40 percent or less of funds
from public sources, by 1850 only 4 counties had this low of a proportion.
By the mid 1840s, a number of districts in New York had abolished rate bills, relying
instead on broader district taxation.13 Free school proponents began advocating that “the
property of the State educate the children of the State” and that rate bills should be abolished
10 Data are from Randall (1851). 11 Author’s calculations from New York State Census, 1835. 12 He estimates more than 46,000 children did not attend. State reports indicate that there were 690,914 children ages 5 through 16. 13 In 1845, these included Buffalo, Brooklyn, Syracuse, Rochester, Lansingburgh, Williamsburgh, Poughkeepsie, Flushing, Newtown, Bushwick, and New York City (Finegan, 1921). everywhere. The legislature in 1849 accordingly passed “An act establishing free school throughout the state.” This Free School Act required school district trustees to estimate the local tax required to make schools entirely free of charge. If voters refused the proposed tax, trustees were mandated to raise enough to keep schools open for only 4 months. The legislature had this act ratified by voters in the 1849 November elections. Figure 4 shows the percent of the vote in each county favoring the Public School Law: 56 of 59 counties had majorities in favor of the law, and overall the law was approved by 73 percent of voters.
After passage, the law went into effect for a single year but considerable hostility emerged. The legislative Select Committee noted 40 petitions for amending the law and more than 250 for its repeal. Part of this opposition was because some provisions were confusing, and the coordination of taxes between the government units was unclear. However, three more substantive objections emerged.
The first was that the law led to unequal rates of district taxes. Small school districts argued that they faced large fixed costs of establishing a school and hiring a teacher, but state and county funds were divided based on population, leading to higher tax rates in smaller districts. More rural districts also faced higher tax rates because the value of taxable property relative to the population was lower than in urban areas.
The second objection was with the provision that allowed district voters to reject the tax.
When voters rejected the proposed district tax, schools that formerly had been open for 8 or 10 months were only open for the mandated 4 months. Parents before had been able to pay rate bill charges to ensure that school stayed open longer, but after the law they no longer had that recourse.14
14 Fischel (2009) describes the role of the school calendar in education reform. The third objection was that it was not morally right for the state to raise taxes for
education. This essentially was an argument about the redistributive nature of public education:
“That A. and B. can, by their votes, levy a portion of the expense of educating their children directly upon C., who is perhaps, less able to bear the burden than themselves, is so revolting to every principle of equality and justice that it will be resisted in a thousand ways, giving rise to animosities and dissensions in neighborhoods and districts” (Letter to Binghamton Democrat Feb 1850)15
In variations on this, opponents argued that parents should take care of a child’s education, that it
was not right for minors to be taxed without their consent (as they could not vote), and that older
taxpayers who had paid for their own children under the old law were now required to pay for
others’ children under the new law.
As a result of these petitions, the legislature reconsidered the “free school” question. The
house passed an amended bill, but the Senate rejected it and proposed that the original bill be re-
submitted to the general public. In 1850, voters were asked to vote for or against the repeal of
the law. The Free School law was upheld by a majority of 53 percent of voters. Figure 5 shows
the proportion of votes in each county against the repeal and in favor of the original act. This time, support was much more concentrated in urban areas, and only 12 of the 59 counties voted against its repeal.
The referendum was not binding on the legislature, but was merely to inform lawmakers about public support. In 1851 the legislature instead passed a compromised bill, which increased the state funds from $285,000 to $800,000. As shown in Figure 1, rate bills dropped to about 15 percent of common school revenues after the increase. Districts were permitted to continue to allow rate bills, but over the 1850s and 1860s additional districts passed laws increasing district taxation and prohibiting rate bills. In 1867, New York finally outlawed rate bills in all districts.
15 Quoted in Finegan (1921) pg 244. III. Who Votes for Free Schools?
The original equilibrium in New York emerged in a period when families could supplement public schools with private funds and could also send their children to private schools.16 As a result, voters had to consider both the tax price of education and the price of
purchasing education privately. To understand the potential voting dynamics, consider first the simplest formulation of the tax price of education, where education funds from wealth taxes are shared equally by all households. In that case, a household’s tax price for a one dollar increase in educational spending per student is their own wealth relative to mean wealth, scaled by the number of students per household. As a result, if public funds were shared equally across all households, a family with wealth above the mean would face a tax price that was higher than the cost of purchasing education privately (assuming at least one child per household).
However, mandatory private supplements change the outcomes. If poor children cannot afford to attend school, the public funds are shared among a smaller group of households. This in turn lowers the tax price to families that can afford the private charges, leading some middle income families to support partial subsidies that would be shared by the smaller group.
Fernandez and Rogerson (1995) model this style of equilibrium, and show that partial subsidies result from an “ends against the middle” style equilibrium, with a coalition of the “middle class”
aligned against the “ends.” The “ends” include both the poor, who cannot afford the private
charges and therefore do not benefit from public subsidies, and the rich, whose tax prices exceed
the private cost of education and would prefer to purchase education privately.
The “free” schooling equilibrium in contrast is one that involves redistribution towards poorer households (e.g., from households with above mean wealth to households with below
16 Beadie (2008) documents in detail the tuition funding in one town in New York, describing the blurred nature of public and private funding for schools, where private schools received public funds and public schools charged private rates. mean wealth). This suggests that in New York and other states there was a change in the
coalition from an “ends against the middle” equilibrium to an equilibrium of transfers from high
to low wealth voters.
What might have caused the change? One explanation is a change in the political power
of the poor. Clearly, if the poor are disenfranchised, they cannot form a voting coalition. In that
case, a partially subsidized equilibrium is more likely to prevail. In New York, there were
several groups that were disenfranchised. Blacks without property wealth were disenfranchised
throughout this period, but made up a very small fraction of the population.17 Foreign born individuals who had not become naturalized also could not vote. This group made up the largest class of non-voters in New York in 1850. Prior to 1822, voters also had to own real property worth at least $50 or rent tenements of annual value of $5. After 1822, individuals could vote in state and national elections if they held wealth, paid state or highway taxes, had been enrolled in a militia, or had worked on the highway in lieu of paying taxes. This likely included most native men over the age of 21. After 1826, the taxpaying requirements for voting were also lifted for state and national elections. However, it may have been that some poor men still could not vote in district elections during this period. Voters in district elections had to own or lease land in the district or to have personal property worth more than $50 subject to taxation. It is unclear how many men were excluded from district voting due to the property limitations. The 1836
Superintendent Report indicates that few men after 1826 were excluded from school district votes. However, the 1841 report notes “the qualifications of voters at district meetings are not well defined by the existing law, and it admits persons with very questionable rights while it excludes others” (p.31).
17 Education was also provided separately for blacks and through a different funding scheme. The voting results for 1830 may be the result of voting rights that were still at least partially restricted. Additionally, the 1830 results may be a transitional outcome from the equilibrium in the mid-1820s when there were more voting restrictions. Kenny and Lott (1999) find that it took several decades before the full effect of expanding the franchise was felt in the
US, and likely the effects in 1830 may reflect some of the previous voting restrictions.
A second potential explanation for the shift away from partial subsidies to full subsidies is a change in the incomes of the poor. If poor households have incomes that are high enough that they will attend school even with partial subsidies, then private contributions will no longer exclude this group. Middle income voters then no longer have any reason to favor partial subsidies. As a result, individuals with wealth below the mean are more likely to align against those with wealth above the mean in favor of full subsidies. This theory would be substantiated if rising incomes, particularly for poorer individuals, positively affected public subsidies. It also implies that rising attendance rates fueled rising subsidies. Changes in subsidies, in contrast, would not affect attendance rates if school enrollment was no longer constrained by income.
A third explanation for the change might be an increase in the external benefit of education during this time period. Many of these social benefits center around influences on crime, democratic participation, and the assimilation of immigrants. If there are external benefits of education, then as the editorial noted, “property is deeply interested in the education of all,” and wealthier voters may favor greater transfers in spite of their higher tax prices. Galor, et al
(2009) emphasize the difference between the economic interests of landowners, who do not benefit from the education of agricultural workers and may oppose it to restrict mobility, as compared to the economic interests of manufacturers, who do benefit from higher human capital of workers. This external benefits theory implies that children from lower income families must have had lower attendance rates and that public subsidies raise their probability of attending.
Changes in the effect of manufacturing or immigration on public funding would also provide additional evidence that external benefits were the mechanism that led to free schools. These three theories (rising political power of the poor, rising incomes of the poor, and rising external benefits) are examined empirically below.
IV. Data and Empirical Analysis
New York in the 1800s lends itself to several tests of these models. The first part of the analysis examines the fraction of school revenues coming from rate bills in 1830 and in 1850.
The second part tests the effects of private charges on attendance rates and the dynamics of the relationship between subsidies and attendance. The final part of the analysis focuses on the referenda in 1849 and 1850 over the Free School Act.
Data
Data come from a number of sources. The fraction of non-state revenues from rate bills are from the Annual Report of the Superintendent of Common Schools from 1831 and 1851; demographic variables are from the New York State Census (1825 and 1835) and the US
Decennial Census (1840 and 1850); and the fraction voting for a presidential candidate comes from Burnham (1955).18 Throughout the empirical analysis, the variables are constructed for voters or the potential voting population whenever possible (e.g., percent over 65 is the percent
of native white men 21 and older over 65). The primary analysis is conducted for 1830, the first
18 School funding data for New York County are incomplete. Statistics for the New York City schools were published by the Board separately, and were not always consistent with the state reports. Even in the state reports, some data is missing for New York City. In some regressions, New York County is therefore excluded.
year school statistics consistently reported revenue from rate bills and other sources, and 1850,
the last year before the large increase in state funding that was passed after the referenda.
Wealth data are from the New York Electoral Survey of 1821 and the US Decennial
Census of 1850. The 1850 Census contains property wealth information for all individuals in the
survey. There are no measures of wealth in the 1830 state or national censuses. However, in
1821, the State Electoral Census reported the number of native men in each county in a number
of categories: those with freeholds worth more than $250, those with freeholds worth between
$50 and $250, those who rented property for an annual sum of $5, and other free male citizens
who did not own or rent property. Only 3 percent of men held property of between $50 and
$250, so these categories largely indicate the fraction of male citizens who did and did not own
property. The 1830 results use this wealth information. For consistency, the 1850 results also
use the fraction of native born men without property, although additional specifications also use
mean or median income as well [results available on request].
Table 1 reports the descriptive statistics. In 1830, public funds made up about 40 percent
of common school revenues on average across counties, with rate bills comprising the other 60 percent. By 1850, rate bills made up about 42 percent of common school revenues on average across counties. Table 1 also indicates a shift in property holding over this period. In 1821, in the average county about 58 percent of adult men who were citizens did not own property. In the average county in 1850, 43 percent of adult white native men did not own property. The number of immigrants also increased rapidly over this period. The average county had only 2 percent of the adult male population who were immigrants in 1830, but 14 percent by 1850. New York was also becoming less agricultural, and more oriented towards manufacturing, commercial, professional and service occupations. However, other demographic characteristics, like the age distribution or the fraction nonwhite, did not change much over this period.
Empirical Methods
The empirical specifications test three potential explanations for the transition from partial to full subsidies: increased political power of the poor, increased incomes of the poor, and/or increased external benefits from attendance of others. In general, empirical specifications are of the form
Pi = Wiγ1 + Xiγ2 + ei
where Pi measures either the fraction of common schooling funded through public sources as
opposed to rate bills or the fraction who voted in favor of the free school laws in county i, W
measures attributes of the wealth distribution, and X measures area demographics.
A number of variables are included in W. The first is the fraction of adult men without property. This measure is the most comparable wealth measure across 1830 and 1850 and is the measure linked to the expansion of the franchise. A negative coefficient indicates that areas with
more property-less men were less reliant on public funds and more reliant on rate bills, implying
a “middle-against-the-ends” equilibrium where rate bills may have restricted the subsidy to
children who could afford the private charges. This outcome is likely to occur when low income
men cannot vote or when their income is low enough that they cannot afford the charges and
hence vote against public subsidies that do not benefit them. On the other hand, a positive sign
on the fraction of men without property is consistent with an outcome where voters below the
mean vote for greater redistribution or where voters in areas with many poor families vote for
lower rate bills to encourage greater attendance and receive the social benefits that come from higher levels of education. Specifications also include variables measuring turnout in presidential elections to see if turnout is related to the education outcome.
Measures of incomes of the poor include average monthly agricultural wages with board in 1850 from Margo (2000) (no similar data is available in 1830). Alternative specifications also include mean wealth, median wealth, or wealth at the 25th percentile. Attendance regressions
(described more below) also allow for a test of whether children from low income households were less likely to attend school and were more likely to be influenced by public subsidies.
To identify external benefits, the regressions include the fraction of residents who were immigrants. Noncitizens were disenfranchised, and so greater support for public funding in areas with many immigrants would be indicative of support by natives, again indicating external benefits. The specifications also include the fraction employed in the manufacturing sector of the economy, again likely related to external benefits. Finally, area demographics include the fraction of adult men who are over 60 and the fraction of population who are school aged and the population per square mile.
Because outcomes may be related to the overall level of educational spending or the amount of time students went to school, some specifications also include the average number of months taught in each county.19 The voting data is at the county level, and some counties will contain districts that have already banned rate bills. In some specifications, this is included directly.
Explaining the Fraction of Revenues from Public Funds
19 Fishel (2009) also argues that part of the increased reliance on state funds was to standardize the academic year across districts. Table 2 shows the results for regressions of the fraction of revenues from public sources
on demographic and wealth variables in 1830 and 1850. The results indicate three important
shifts over this period. First, there was a reversal in the estimated effect of individuals without property on public funding. In 1830, counties with greater proportions of men without property were much less reliant on public funding and more reliant on rate bills. A 10 percentage point increase in the fraction of property-less men led to a 3-5 percentage point decrease in the fraction of funds from public sources. However, when property-less men were the majority, this effect was somewhat smaller.
By 1850, the relationship had reversed. In 1850, areas with a large fraction of men who
did not have any property wealth had higher, rather than lower, fraction of revenues from public
sources. In 1850, a 10 percentage point increase in the fraction of men without property led to
about a 4 percentage point increase in the fraction of revenues from public sources.
The effect of other demographics also changed between 1830 and in 1850. Most strikingly, the fraction of foreign born individuals (who were typically both lower wealth and disenfranchised) reduced reliance on public funds in 1830. However, in 1850, counties with more immigrants were more likely to rely on public funds instead of rate bills, with a 10 percentage point increase in the fraction of immigrants leading to a 5-10 percentage point increase in public funds. All of the above results are robust to excluding New York County, which was an outlier in terms of early reliance on full public funding, as well as including alternative measures of urbanization.
Why did the effect of property wealth change? There are a number of potential explanations. First, it may be that the change was due to the change in political power of this group. The 1830 equilibrium is consistent with an outcome where middle wealth voters used on rate bills to restrict public subsidies to the group of households that could afford private charges.
This outcome was easier to sustain when property-less men could not vote. As noted, property requirements for voting at the district level appears to have been poorly defined past the period when voting rights were extended for other elections, so many property-less men in 1830 may not have voted yet in local elections. The 1830 outcomes may also not fully reflect the
enfranchisement of the property-less as it took time for the funding changes to be made. As one
test of this, the results include turnout measures for the preceding and succeeding presidential
elections. In 1830, turnout does not increase public funds, while in 1850, turnout is positively
associated with greater tax support. This may be supportive of the idea that the equilibrium in
1830 may not have fully reflected the preferences of the new voters.
Second, these specifications cannot reveal whether the poor in 1850 voted for lower rate
bills or whether wealth-holders in 1850 voted for lower rate bills in areas with many poor
households in an attempt to realize potential external benefits from their attendance. If these
external benefits were higher in 1850 than in 1830, there might have been more political support
for subsidies by the wealthy. The results for immigrants are also consistent with this explanation
of rising external benefits. Attendance results below shed more light on this mechanism.
In contrast, it could be that the reversed effect of property-less men was because these
households were actually better off in 1850 than in 1830. Perhaps the incomes of the poor had
increased by enough by 1850 that rate bill charges did not limit attendance. In that case, middle
income voters would not benefit from partial funding that limited subsidies to a smaller group.
This would imply that rising attendance caused the shift in the equilibrium funding level, rather
than public funding causing changes in attendance. There is little supplemental income information in 1830, making it difficult to test this
theory. However, in 1850, specifications with alternative wealth measures including wealth at
other points in the distribution (like the 25th percentile or the 75th percentile, mean or median) do
not have significant or large coefficients, indicating that the overall level of wealth does not
appear to be as important as the fraction who did not own property.20 In 1850, average monthly
agricultural wages, another measure of incomes for poorer households, also are not significant.21
Attendance regressions below provide further tests of whether rising attendance fueled greater
subsidies or whether the subsidies caused rising attendance.
The Effect of Subsidies on Attendance
The 1850 Census records whether or not each child attended school at some point in the
year. (The 1830 Census did not provide this information.) Table 3 reports attendance regression
results for white children ages 6 through 14 in New York. Regressions include personal
characteristics of the child, including their age, age squared, whether they lived in an urban area,
lived in a farming household, were male, were native born, whether the head of the household
was literate, and the number of other children in the household. Regressions also include
whether or not the household had any wealth. Column I indicates that children in households
without wealth were 6 percentage points less likely to attend school than children in households
with wealth. Native children were 19 percentage points more likely to attend school than
immigrants. Column II finds a slightly smaller but still significant effect of wealth when county
fixed effects are included.
20 These specification results are available on request. 21 These wages generously provided by Robert Margo (See Margo (2000) for sources). Alternative specifications also included wages of common labor, both with and without board, with no differences in the results. Did subsidies affect the attendance of these children? Column III includes fraction of
revenues from public sources, and finds no effect. However, these results do not control for
county fixed effects, which are collinear with the county level fraction of revenues from public
sources. Column IV interacts the county level public subsidies with whether or not a child was from a household with no wealth and includes county fixed effects. The coefficient on the
interaction term in this specification measures the effect of subsidies on poor households,
controlling for overall average county differences in attendance rates. These results suggest that
a 10 percent increase in the reliance on public funds leads to about a 1.6 percent increase in the
probability of school attendance.
Did subsidies then cause the rising attendance rates or where rising attendance rates
fueling the higher subsidies? Table 4 examines time series evidence on the dynamics of
subsidies and attendance using a Granger causality style approach. Superintendent reports in
each year between 1830 and 1851 (prior to the infusion of state funds) report both the fraction of
revenues from rate bills, the number of children taught, and the population of children ages 5
through 16 for each county. Figure 6 shows the annual trends in rate bills and attendance rates.
The figure shows the gradual rise in attendance and fall in rate bills, with a discrete change in
1839 when the federal deposit funds were distributed.
The first two columns of Table 4 reports time series regressions of county level
attendance rates regressed on lagged public funds, allowing for a structural break in 1839.
County level fixed effects control for time invariant factors that led to persistent differences in
average county attendance rates. Column 2 includes lagged attendance rates and the average
number of months taught in the district, to control for differences in rate bills due to longer
teaching calendars. The results show that lagged rate bills significantly reduced attendance rates, consistent with the individual level attendance regressions. A ten percent increase in reliance on rate bills from the previous year reduces attendance by almost 4 percentage points. Lagged attendance rates, in contrast, are not associated with current attendance rates after controlling for rate bills and county fixed effects. (This is true even in alternative specifications of the structure of the lags.)
The second two panels perform the reverse analysis: here lagged attendance rates show no relationship with levels of rate bills, although rate bills show substantial persistence over time.
This provides additional evidence that the shift away from rate bills caused increased attendance
(consistent with explanations based on the rising political power of the property-less or with rising external benefits), as opposed to the hypothesis that higher incomes led to higher attendance of the poor, thus generating more support for full funding.
Explaining Votes to Eliminate Rate Bills
To understand better which groups politically favored lower rate bills, Table 5 the outcomes from the vote on the Free School bill referenda. (Note that the dependent variable is a log transformation of the fraction voting in favor of the act or against its repeal.) Demographics, political influence, and the wealth distribution may all affect the identity and preferences of the pivotal voter, but the equilibrium outcome for rate bills in the Table 2 regressions do not indicate the magnitude of support across the voting distribution. Table 5 regressions examine the fraction of the population that supported subsidies and capture the aggregate effects on voter support.
Specifications include demographic variables as well as measures of the current level of support for public schools within the county (the average number of months of education and whether or not schools in the county were already free). Wealth is again an important predictor. In the first vote, the fraction of men without
property was positively associated with votes for the Free School Act, although the effect is
significant only at the 10 percent level. The magnitude of the coefficient in the vote against the
repeal is similar and becomes highly significant. Again, average agricultural wages do not enter
significantly into the results. However, in these results, voter turnout does not appear to be
significant.
These results also provide some support for the idea that external benefits, particularly
related to immigrant populations, also mattered. The coefficient on percent foreign is positive in
all specifications, although it is not significant when controlling for the existence of schools that
were already free. The current level of schooling in the county also mattered: counties with
longer school years or where schools had already become free were more supportive of the Free
School Act.
Results for all of these regressions are robust to a number of other specifications. Most
importantly, none of the results was substantially affected by the exclusion of New York County,
which is an outlier. Results are also robust to including alternative measures of urbanization and
to including the fraction of individuals voting for the Whig candidate in the 1850 presidential
election.22
V. Conclusion
Why did public schools come to be fully tax supported as opposed to remaining partially
funded by parental contributions? Under what circumstances does greater tax support emerge?
Nineteenth century New York provides a useful test case for these questions, as the mix of funds
22 This is to control for any effect of partisan politics. It is never significant in any of the regressions, but is missing for a few counties, reducing the total number of observations.
varied between the counties of the state and over time. New York voters also voted twice on
mandating free schools, both before and after their experience with this form of finance.
The results suggest that redistributive interests and changes in political power were major
drivers of the transition. One of the most salient results is that the role of property inequality
reversed over this period. Initially, when property-less individuals had less political power, higher fractions of property-less households were associated with greater use of rate bills and
less tax support. These partial subsidies would have benefited the middle class at the expense of
the wealthiest and poorest households. Over time, however, the voting outcomes came to
resemble more classically redistributive outcomes, where areas with greater proportions of voters
without property were more likely to favor tax support. Greater reliance on public funds also
raised attendance rates, particularly for children from poorer families. There is also some
evidence that external benefits increased political support, particularly from the rising number of
immigrants. Overall, the case of New York implies that the relationship between inequality and public funding for education varies, depending on both political institutions and the external benefits of education.
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Figure 1 Sources of Revenues for Common Schools, 1828-1859
.6 .5 .4 .3 .2 .1
1830 1840 1850 1860 year
Fraction from Rate Bills Fraction from Local Fraction from State
Figure 2 Fraction of Total Revenues from Public Sources Across Counties, 1830
Fraction from Public Funds, 1830
<=0.2 0.4 0.5 0.6 >=0.8
Source: Annual Report of the Superintendent of Common Schools (1831) Data for Hamilton county not reported as county was incompletely organized in 1830. Figure 3 Fraction of Total Revenues from Public Sources Across Counties, 1850
Fraction from Public Funds, 1850
<=0.3 0.4 0.5 0.6 >=0.8
Source: Annual Report of the Superintendent of Common Schools (1851)
Figure 4 Support for Free School Law Across Counties, 1849
Percent Voting in Favor of Free Sc
<=0.5 0.6 0.7 0.8 >=0.8
Source: Randall, Samuel (1851) Figure 5 Support for Free School Law Across Counties, 1850
Percent Voting Against Repeal, 185
<=0.2 0.3 0.5 0.6 >=0.8
Source: Randall, Samuel (1851)
Figure 6 Attendance Rates and Fraction of Revenues from Rate Bills, 1830-1850 1.1 1 .9 .8 .7 .6 .5 .4
1830 1835 1840 1845 1850
Pupils/Kids 5-16 Fraction from Rate Bills
Table 1 County Descriptive Statistics Standard Deviations in parentheses
1830 1850
Fraction of revenues from public sources 0.392 0.576 (0.121) (0.133)
Percent households without real property wealth 0.579 0.430 (0.111) (0.152)
Number persons per square mile .151 .340 (.796) (1.985)
0.020 0.138 Percent foreign born (0.029) (0.098)
Percent adult men over age 60 0.090 0.101 (0.024) (0.019)
Percent population 5-16 0.286 0.261 (0.037) (0.063)
Percent nonwhite 0.021 0.013 (0.029) (0.016)
Percent men employed in manufacturing 0.781 0.532 (0.181) (0.184)
Average months of school 7.885 7.568 (1.555) (1.251)
Turnout in Presidential election (fraction of eligible voters) .764 .693 (.078) (.091)
Average agricultural wage -- 11.528 (1.330)
Indicator for >50% households without property .731 .271 (.448) (.448)
Number of counties 52 59
Table 2 Effect of Wealth and Demographics on Fraction of County Common School Revenue From Public Sources, 1830 and 1850 1830 1850 Percent no property -.349* -.490** -.435* .367** .522** .439** wealth (.175) (.184) (.216) (.170) (.206) (.203)
Majority no property .083* .075* -.067 -.034 wealth (.044) (.037) (.049) (.054)
Average agricultural wage .013 (.013) Population per square mile .104*** .111*** .109*** .015 .011 .012 (.014) (.012) (.015) (.010) (.010) (.009)
Percent over 60 -1.399 -.935 -.953 .090 .016 .583 (.863) (.895) (.927) (1.059) (1.049) (1.047)
Percent age 5-16 -1.119 -.978 -.967 .376 .296 -.299 (1.650) (1.441) (1.445) (1.248) (1.289) (1.430)
Percent foreign born -.689* -.862** -.938* .494** .566** 1.033*** (.375) (.389) (.470) (.218) (.212) (.268)
Percent manufacturing .020 .037 .049 -.454 -.438 -.148 (.058) (.050) (.055) (1.152) (1.127) (1.074)
Average months -.015 -.014 -.012 -.020 -.019 -.008 (.011) (.009) (.011) (.016) (.015) (.017)
Turnout subsequent .130 .652** presidential election (.220) (.256)
Observations 52 52 52 59 59 59 R-squared .486 .533 .538 .399 .421 .475 Robust standard errors in parentheses * significant at 10%; ** significant at 5%; *** significant and 1% Table 3 Effect of Wealth and Subsidies on Individual School Attendance, 1850 White Children 6-14 Years Old
I II III IV
Age .175*** .176*** .175*** .177*** (.024) (.023) (.024) (.023)
Age2 -.009*** -.009*** -.009*** -.009*** (.001) (.001) (.001) (.001)
Urban dummy .039** .063** .033 .059** (.016) (.025) (.022) (.025)
Farm HH dummy .029** .011 .029** .008 (.013) (.013) (.013) (.013)
Head of HH literate .007 .009* .007 .009* (.005) (.005) (.005) (.005)
Number kids in HH .027*** .030*** .027*** .030*** (.005) (.005) (.005) (.005)
Male .024** .022** .024** .021** (.011) (.011) (.011) (.011)
Immigrant -.190*** -.192*** -.191*** -.195*** (.023) (.023) (.023) (.023)
HH has no wealth -.062*** -.037*** -.062*** -.137*** (.013) (.013) (.013) (.051)
Percent county .019 -- education funds public (.047)
Percent funds public*HH has no wealth .169** (.082)
County F.E. no yes no yes Observations 5177 5177 5177 5177 R-squared .054 .088 .054 .088 Robust standard errors in parentheses * significant at 10%; ** significant at 5%; *** significant and 1%
Table 4 Time Series Relationship between Attendance Rates and Reliance on Rate Bills, New York Counties 1829-1849
Dependent Variable: Dependent Variable: Attendance Rate Percent Funds from Rate (Pupils/Kids 5-16) Bills
Lagged attendance rate -.052 -.002 .000 (.093) (.003) (.001)
Lagged percent from rate bills -.359*** -.378*** .171*** (.111) (.135) (.042)
Average Months -.095 -.096 -.003* .003 (.079) (.080) (.002) (.006)
Break: year 1839 or later .107** .110* -.194*** -.169*** (.052) (.057) (.005) (.008)
County fixed effects Yes Yes Yes Yes
Observations 621 621 623 620
R-squared .247 .249 .829 .831 Newey-West standard errors in parentheses adjusted for autocorrelation * significant at 10%; ** significant at 5%; *** significant and 1%
Table 5 Effect of Wealth and Demographics on Voting for Free School Law Dependent variable is log(% vote for law/1-% vote for law)
1849 Vote for Free 1850 Vote Against Repeal
Population per square mile -.031 -.110** -.036 .091*** .052* .091*** (.036) (.049) (.038) (.024) (.029) (.025)
Percent foreign 2.057** .570 1.058 1.429** .826 1.292 (1.011) (.977) (.948) (.695) (.749) (.774)
Percent over 60 -6.574 -8.707 -5.225 -4.135 -5.660 -3.759 (6.691) (5.338) (6.963) (3.985) (3.432) (4.237)
Percent age 5-16 -6.312 -6.698 -6.223 -14.817*** -15.888*** -14.317*** (5.886) (5.626) (5.947) (3.715) (3.556) (3.813)
Percent manufacturing -.634 1.040 -.878 1.942 2.192 2.296 (4.319) (3.940) (4.822) (2.620) (2.414) (2.838)
Percent no property 1.004 1.069* 1.298* 1.142** 1.266** 1.171** wealth (.678) (.631) (.714) (.522) (.480) (.508)
Average agricultural wage -.152 -.125 -.149 -.075 -.068 -.076 (.119) (.080) (.118) (.059) (.047) (.060)
Average Months .032** .028* .021** .021** (.015) (.016) (.008) (.009)
Already free 1.536* .680* (.816) (.384) Turnout 1848 election -1.592 -.134 (1.425) (1.051)
Observations 58 58 57 58 58 57 R-squared .565 .653 .573 .818 .833 .819 Robust standard errors in parentheses * significant at 10%; ** significant at 5%; *** significant and 1%