For a Few Dollars More: Compensatory Spending in Schooling

Compensatory education programs seek to reduce educational inequality, yet evidence on their effectiveness remains mixed. I estimate the impact of a program in Chile that targets additional resources to schools with a share of disadvantaged students above four different thresholds (15, 30, 45 and 60%). Effect estimates are consistently statistically indistinguishable from zero at each cutoff, for both academic and non-academic outcomes. I link the absence of detectable effects to the fact that schools at the cutoffs do not meaningfully increase their spending. These results suggest that policies that provide modest, formula-based marginal revenue increases may prove ineffective if they are not accompanied by strong implementation guidance on how to spend.