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Valuing school quality using boundary discontinuities

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  • Gibbons, Stephen
  • Machin, Stephen
  • Silva, Olmo

Abstract

Existing research shows that house prices respond to local school quality as measured by average test scores. However, higher test scores could signal higher academic value-added or higher ability, more sought-after intakes. In our research, we show that both school value-added and student prior achievement – linked to the background of children in schools – affect households’ demand for education. In order to identify these effects, we improve the boundary discontinuity regression methodology by matching identical properties across admissions authority boundaries; by allowing for boundary effects and spatial trends; by re-weighting our data towards transactions that are closest to district boundaries; by eliminating boundaries that coincide with major geographical features; and by submitting our estimates to a number of novel falsification tests. Our results survive this battery of tests and show that a one-standard deviation change in either school average value-added or prior achievement raises prices by around 3%.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 75 (2013)
Issue (Month): C ()
Pages: 15-28

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Handle: RePEc:eee:juecon:v:75:y:2013:i:c:p:15-28

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Web page: http://www.elsevier.com/locate/inca/622905

Related research

Keywords: House prices; School quality; Boundary discontinuities;

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References

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Citations

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Cited by:
  1. Scott Andrew Imberman & Michael Lovenheim, 2013. "Does the Market Value Value-Added? Evidence from Housing Prices after a Public Release of School and Teacher Value-Added," CESifo Working Paper Series 4105, CESifo Group Munich.
  2. Steve Gibbons & Olmo Silva, 2009. "School Quality, Child Wellbeing and Parents Satisfaction," CEE Discussion Papers 0103, Centre for the Economics of Education, LSE.
  3. Graves, Jennifer, 2013. "School calendars, child care availability and maternal employment," Journal of Urban Economics, Elsevier, vol. 78(C), pages 57-70.
  4. Gibbons, Steve & Silva, Olmo & Weinhardt, Felix, 2011. "Everybody Needs Good Neighbours? Evidence from Students' Outcomes in England," IZA Discussion Papers 5980, Institute for the Study of Labor (IZA).
  5. Machin, Stephen & Salvanes, Kjell G., 2010. "Valuing School Quality via a School Choice Reform," IZA Discussion Papers 4719, Institute for the Study of Labor (IZA).
  6. Costas Meghir & Steven Rivkin, 2010. "Econometric methods for research in education," IFS Working Papers W10/10, Institute for Fiscal Studies.
  7. Feng, Hao & Lu, Ming, 2013. "School quality and housing prices: Empirical evidence from a natural experiment in Shanghai, China," Journal of Housing Economics, Elsevier, vol. 22(4), pages 291-307.
  8. Stephen Gibbons & Olmo Silva & Felix Weinhardt, 2010. "Do Neighbours Affect Teenage Outcomes? Evidence from Neighbourhood Changes in England," CEE Discussion Papers 0122, Centre for the Economics of Education, LSE.
  9. Boustan, Leah Platt, 2013. "Local public goods and the demand for high-income municipalities," Journal of Urban Economics, Elsevier, vol. 76(C), pages 71-82.
  10. Steve Gibbons & Henry G. Overman, 2010. "Mostly Pointless Spatial Econometrics?," SERC Discussion Papers 0061, Spatial Economics Research Centre, LSE.
  11. Stephen Machin & Sandra McNally, 2012. "The Evaluation of English Education Policies," National Institute Economic Review, National Institute of Economic and Social Research, vol. 219(1), pages R15-R25, January.
  12. Nguyen-Hoang, Phuong & Yinger, John, 2011. "The capitalization of school quality into house values: A review," Journal of Housing Economics, Elsevier, vol. 20(1), pages 30-48, March.

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