British Educational Research Journal Vol. 37, No. 1, February 2011, pp. 163–189 ISSN 0141-1926 (print)/ISSN 1469-3518 (online)/11/010163-27 © 2011 British Educational Research Association DOI: 10.1080/01411920903452563 Do increased resources increase educational attainment during a period of rising expenditure? Evidence from English secondary schools using a dynamic panel analysis Geoff Pugh a* , Jean Mangan a and John Gray b a Institute for Education Policy Research, Staffordshire University, Stoke-on-Trent, UK; b Faculty of Education, Cambridge University, UK Taylor and Francis CBER_A_445617.sgm 10.1080/01411920903452563 British Education Research Journal 0141-1926 (print)/1469-3518 (online) Original Article 2009 British Educational Research Association 00 0000002009 Professor GeoffreyPugh g.t.pugh@staffs.ac.uk This article estimates the effects of school expenditure on school performance at Key Stage 4 in England, over the period 2003–07 during which real per pupil expenditure increased rapidly. It adds to previous investigations by using dynamic panel analysis to: exploit time series data on individual schools that only recently has become available; adjust for the potential endogeneity not only of ex- penditure but also of other determinants of performance; and differentiate the short-run and the (higher) long-run attainment effects of spending changes. Consistent with other recent work, the article reports a generally significant but small effect of expenditure on school performance, but it also finds that the effect varies between specialist and non-specialist schools, with the effect on the latter being larger. Further, the article identifies significant dynamics in the school improvement process, quantifies the long-run effect of expenditure changes, suggests that spending effects increase with socio-economic disadvantage, and quantifies absence effects. 1. Introduction Internationally, there has been no consistent finding in the literature regarding the relationship between school resources and school outcomes. Recent studies using English data, although finding a statistically significant positive effect between expen- diture and performance, have found the size of the effect to be very small. In England over the period 2003–07 real (inflation-adjusted) expenditure per pupil in maintained secondary schools rose by more than 20% (Figure 1). The increases were rapid, *Corresponding author. Institute for Education Policy Research, Staffordshire University, Leek Road, Stoke-on-Trent, ST4 2DF, UK. Email: g.t.pugh@staffs.ac.uk