In this paper we take a “market-based” approach to examine whether increased school expenditures
are valued by potential residents and whether the current level of public school provision is inefficient. We
do so by employing an instrumental variables strategy to estimate the effect of state education aid on
residential property values. We find evidence that, on average, additional state aid is valued by potential
residents and that school districts appear to spend efficiently or, if anything, underspend. We also find that
school districts spend less efficiently in areas in which they face little or no competition from other public
schools, in large districts, and in areas in which residents are poor or less educated. One interpretation of
these results is that increased competition has the potential to increase school efficiency in some areas.

Women's labor force participation rate has increased sharply over the last two decades.
The increase has been particularly dramatic for married women with young children suggesting
that women are spending less time out of the labor force for child-bearing and rearing. Using the
relatively detailed information available in the National Longitudinal Survey of Youth, this paper
explores women's decisions to return to work within one year of the birth of their first child,
focusing particularly on the effect of child care costs. By constructing two indices of child care
cost across states, I am able to utilize instrumental variables estimation to reduce the effect of
measurement error on the estimated influence of child care cost. Consistent with economic
theory, women who face lower child care costs are more likely to return to work after giving birth
as are women with higher potential wages and lower family income from other sources.