The effect of school resources on educational attainment: evidence from Denmark

We investigate the effect of school inputs in primary and lower secondary schools on the probability of eventually passing upper secondary or vocational education. Danish administrative register data for a large number of young people and their parents are used. Educational outcome and controls for family background are measured at the individual level, whereas school expenditure and controls for municipal socioeconomic characteristics are measured at the municipal level. As unobserved characteristics may be correlated for pupils within the same municipality, we estimate linear probability and logit models with random municipal‐specific effects in addition to standard OLS and logit models. With the full sample of pupils and the full set of controls, we find that expenditure per pupil has a statistically significant, but rather small, positive effect on educational attainment. Effects of teacher–pupil ratios are less significant. The expenditure effects are generally higher for pupils from disadvantaged backgrounds.