Recent Clinton urban education initiatives and the role of school quality in metropolitan finance

Recent Administration proposals would expand federal support of local public education, especially for urban schools that serve students from poor families. These education initiatives include subsidizing the hiring of more teachers to lower class sizes in the early grades, encouraging of grade retention as an important feature of local accountability requirements, and providing greater federal subsidies of borrowing by schools to finance construction projects. After describing these initiatives and discussing what is known or not known about their likely effects, I turn to the local public finance literature to examine the empirical importance of school quality in metropolitan location decisions.