Money Changes Everything? Education and Regional Deprivation Revisited

A long line of literature has sought to explain the relationship between regional deprivation and education outcomes. To date, however, this literature has struggled to advance notions of deprivation beyond the purely economic. Focus has fallen on attempts to isolate causality using experimental and quasi-experimental approaches, yet the transfer mechanism of financial deprivation remains unclear and under-explained. Employing a multi-domain deprivation measure for Northern Ireland, this paper revisits the question and confirms a negative relationship between regional deprivation and education outcomes. Using random effects and error-component 2SLS models and employing the spatial variation of historical violence as an instrument we find no unique effect of financial deprivation over and above the effect of other deprivation metrics. This confirms the limitations of using wealth as a proxy for deprivation, whilst suggesting that policies focusing only on income redistribution will be unsuccessful in improving educational outcomes.