See
The political economy of vouchers and churches from Marginal Revolution.
"A while ago I had some email with Noah Smith on this topic, now we are getting somewhere, this is from a new NBER working paper by Daniel M Hungerman, Kevin J. Rinz, and Jay Frymark:
We use a dataset of Catholic-parish finances from
Milwaukee that includes information on both Catholic schools and the
parishes that run them. We show that vouchers [funded by the government]
are now a dominant source of funding for many churches; parishes in our
sample running voucher-accepting schools get more revenue from vouchers
than from worshipers. We also find that voucher expansion prevents
church closures and mergers. Despite these results, we fail to find
evidence that vouchers promote religious behavior: voucher expansion
causes significant declines in church donations and church spending on
non-educational religious purposes. The meteoric growth of vouchers
appears to offer financial stability for congregations while at the same
time diminishing their religious activities.
I’ve long maintained that the fiscal effects of vouchers, if they
were implemented on a much larger scale, are the elephant in the room.
For better or worse."
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