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24 Am. L. & Econ. Rev. 1 (2022)

handle is hein.journals/aler24 and id is 1 raw text is: School Finance Reforms and Juvenile Crime Hamid Noghanibehambari , University of Wisconsin-Madison Send correspondence to: Hamid Noghanibehambari, Center for Demography of Health and Aging, University of Wisconsin-Madison, 1180 Observatory Drive, Madison, WI 53706, USA; Tel: 806-620-1812; E-mail: noghanibeham@wisc.edu. Several states initiated school finance reforms during the post-1990s, commonly named the adequacy era, with the primary purpose of providing adequate funding for low-income school districts. This article uses the space-time variation in court- ordered reforms in this period as shocks to school spending and investigates its effects on juvenile arrest rates and risky behaviors. Using a 2SLS-DDD approach and a wide range of data sets, I find that exposure to reform reduces the juvenile arrest rates, increases the likelihood of high school graduation, increases the time spent on educational activities, and reduces risky behaviors at schools. A 10% rise in real per-pupil spending is associated with 7.4 fewer arrests per 1,000 in the population aged 15-19. This rise is equivalent to a reduction of roughly 90,806 arrests annually. It also implies a minimum of 20% return in school spending due to the avoided costs of deterred crimes. (JEL: H72, I22, I24, K42) 1. Introduction Crime has been one of the most controversial and debated issues in the U.S. policy environment. The number of inmates was roughly 700 per 100,000 persons in 2014, which gives the United States the highest rate of The author would like to thank two anonymous referees for their useful comments which contributed to the production of this article. He also thanks J.J. Prescott, Kaj Gittings, Masha Rahnama, Misak Avetisyian, seminar participants of Western Eco- nomic Association, and participants of 9th Annual Arts and Humanities Research Paper Conference at Texas Tech University for their comments and suggestions. American Law and Economics Review doi: 10.1093/aler/ahac001 © The Author 2022. Published by Oxford University Press on behalf of the American Law and Economics Association. All rights reserved. For permissions, please e-mail: joumals.permissions@oup.com