School desegregation might have induced unintended behavioral responses of white families as well as state and local governments. This paper examines these responses and is the first to study the effects of desegregation on the finances of school districts. Desegregation induced white flight from blacker to whiter public school districts and to private schools, but the local property tax base and local revenue were not adversely affected. The state legislature directed significant new funding to districts where whites were particularly affected by desegregation. Desegregation therefore appears to have achieved its intended goal of improving resources available in schools that blacks attended.

Title I of the 1965 Elementary and Secondary Education Act explicitly directed more federal aid for K-12 education to poorer areas for the first time in US history, with a goal of promoting regional convergence in school spending. Using newly collected data, we find some evidence that Title I narrowed the gap in per-pupil school spending between richer and poorer states in the short- to medium-run. However, the program was small relative to then-existing poverty gaps in school spending; even in the absence of crowd-out by local or state governments, the program could have reduced the gap by only 15 percent.

This paper examines how a large conditional grants program influenced school desegregation in the American South. Exploiting newly collected archival data and quasi-experimental variation in potential per-pupil federal grants, we show that school districts with more at risk in 1966 were more likely to desegregate just enough to receive their funds. Although the program did not raise the exposure of blacks to whites like later court orders, districts with larger grants at risk in 1966 were less likely to be under court order through 1970, suggesting that tying federal funds to nondiscrimination reduced the burden of desegregation on federal courts.