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Public good provision and local employment – Evidence from grammar school closures in East Germany

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  • Freier, Ronny
  • Simmler, Martin
  • Wittrock, Christian

Abstract

This paper assesses the impact of public good provision on the spatial distribution of employment as predicted by a local labor market model that allows for commuting. Using local grammar school closures in East Germany after 2000 in a difference-in-differences estimation framework coupled with an entropy balancing strategy, we find that the school closures triggered a decline in the number of (employed) residents by 11%. The number of local employees, in contrast, decreases by just 5% as in-commuters do not respond to the school closures. Moreover, we find – as predicted – that the school closures reduce house prices and that the share of land used for housing declines, albeit only to a small extent.

Suggested Citation

  • Freier, Ronny & Simmler, Martin & Wittrock, Christian, 2021. "Public good provision and local employment – Evidence from grammar school closures in East Germany," Regional Science and Urban Economics, Elsevier, vol. 88(C).
    • Handle: RePEc:eee:regeco:v:88:y:2021:i:c:s0166046221000326
    DOI: 10.1016/j.regsciurbeco.2021.103672
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    More about this item

    Keywords

    Local schools; Employment; House price; Land use; Commuting;
    All these keywords.

    JEL classification:

    • J4 - Labor and Demographic Economics - - Particular Labor Markets
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • H4 - Public Economics - - Publicly Provided Goods

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