Empirical literature on the effects of intergovernmental grants on educational spending is reviewed in this document, which examines 40 published works covering the last two decades. Intergovernmental grants include both state grants to local governments and federal grants to state and local governments. The review's first section summarizes…

Analyzes the allocation of student time from the perspective of economic theory with an economic model that predicts a small increase in educational achievement relative to substantial increases in instructional time. Predictions are supported by empirical evidence. Policy consequences are examined. (MLF)

Explains overeducation as an economic phenomenon using several labor-market models. Establishes theoretically the effect of overeducation on production, using a production function model that characterizes production as a two-phase process. (PGD)