Persistent increases in spending on elementary and secondary schools have gone virtually undocumented. Real expenditure per student increased 31/2 percent per year over the period 1890-1990. Decomposition of the spending growth shows that it resulted from a combination of falling pupil-staff ratios, increasing real wages to teachers, and rising expenditure outside of the classroom. Although the expansion of education for the handicapped has had a disproportionate effect on spending, most of the growth in expenditure during the 1980s came from other sources. Significant teacher salary increases, particularly for females, have failed to keep up with wages in other occupations.

Eric A. Hanushek is a professor of economics at the University of Rochester. Steven G. Rivkin is a professor of economics at Amherst College. This work was supported by grants from the Pew Charitable Trusts and the William H. Donner Foundation. The initial design of this study was discussed extensively with Dean Jamison. Discussions with Finis Welch helped clarify key issues about the interpretation of the cost changes. The authors are also indebted to Charles Clotfelter, Stanley Engerman, Jonathan Marshall, Mary Beth Savio, Julie Sommers, Robert Strauss, Lori Taylor, Michael Wolkoff, and the referees for many valuable comments on an earlier draft. The data used in this article can he obtained beginning in June 1997 through May 2000 from Steven Rivkin, Department of Economics, Amherst College, Amherst, MA 01002.

© 2002 by the Board of Regents of the University of Wisconsin System

US ISSN 0022-166X

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