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Neighborhood sorting and the value of public school quality

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  • Caetano, Gregorio

Abstract

This paper develops a method to estimate the parental value of public school quality with two novel features. First, it estimates the value of public school quality in the same unit in which public schools’ costs are measured and private school tuition is charged: per year, per child at each grade level. Second, it develops a novel approach to control for unobservables correlated to school quality, including those generated by sorting. People without school-age children enjoy neighborhood-level amenities but do not enjoy school-level amenities, so data about their residential choice can be used to control for neighborhood unobservables, isolating the value of school quality per se. I embed this idea into a dynamic model of neighborhood choice, building on previously unconnected literatures. Using the 2000 U.S. Census data, I find that parents tend to value school quality more in elementary and high school grades relative to middle school grades. However, improving public school quality currently costs more than is worth to parents even at the most valued grades, so externalities in education are necessary to justify such investments. These findings highlight the importance of improving the efficiency with which school resources are spent.

Suggested Citation

  • Caetano, Gregorio, 2019. "Neighborhood sorting and the value of public school quality," Journal of Urban Economics, Elsevier, vol. 114(C).
    • Handle: RePEc:eee:juecon:v:114:y:2019:i:c:s0094119019300701
    DOI: 10.1016/j.jue.2019.103193
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    Cited by:

    1. Greaves, Ellen & Turon, Hélène, 2024. "School Choice and Neighborhood Sorting: Equilibrium Consequences of Geographic School Admissions," IZA Discussion Papers 16805, Institute of Labor Economics (IZA).
    2. Erich Battistin & Lorenzo Neri, 2017. "School Performance, Score Inflation and Economic Geography," Working Papers 837, Queen Mary University of London, School of Economics and Finance.
    3. Huai, Yue & Lo, Hong K. & Ng, Ka Fai, 2021. "Monocentric versus polycentric urban structure: Case study in Hong Kong," Transportation Research Part A: Policy and Practice, Elsevier, vol. 151(C), pages 99-118.
    4. Andreas Bjerre-Nielsen & Lykke Sterll Christensen & Mikkel H{o}st Gandil & Hans Henrik Sievertsen, 2023. "Playing the system: address manipulation and access to schools," Papers 2305.18949, arXiv.org.
    5. DiSalvo, Richard W. & Yu, Jia H., 2023. "Housing Affordability and School Quality in the United States," Journal of Housing Economics, Elsevier, vol. 60(C).
    6. Bjerre-Nielsen, Andreas & Christensen, Lykke Sterll & Gandil, Mikkel & Sievertsen, Hans Henrik, 2023. "Playing the System: Address Manipulation and Access to Schools," IZA Discussion Papers 16197, Institute of Labor Economics (IZA).
    7. Caetano, Gregorio & Macartney, Hugh, 2021. "What determines school segregation? The crucial role of neighborhood factors," Journal of Public Economics, Elsevier, vol. 194(C).
    8. Mathur, Shishir, 2022. "Non-linear and weakly monotonic relationship between school quality and house prices," Land Use Policy, Elsevier, vol. 113(C).

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    More about this item

    Keywords

    School quality; Willingness to pay; Neighborhood sorting; Neighborhood amenities; Dynamic demand estimation; Public schools; Housing market;
    All these keywords.

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • H4 - Public Economics - - Publicly Provided Goods
    • I2 - Health, Education, and Welfare - - Education
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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