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Opting-out and income mixing in urban economies:the role of neighborhood effects

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Abstract

Residence-based public education systems promote income segregation across neighborhoods or school districts (e.g. Epple and Romano, 2002). It has been argued that allowing private schools to enter the market may reduce the levels of income segregation because private education severs the link among school quality and place of residence for those using a private school. On the other hand, the socalled neighborhood effects constitute another segregating force in urban areas. We use a two-neighborhood model of an urban economy in order to study whether such externalities inhibit the desegregating effects of private education or not. The analysis reveals that they may indeed reduce or completely eliminate private education induced income mixing. This will happen if the best public school is located where neighborhood effects are most beneficial. However, it may also be the case that neighborhood effects promote the mixing of high income households using a private school with low income ones using a public school in the neighborhood providing the most beneficial neighborhood effects.

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Paper provided by Centro de Estudios Andaluces in its series Economic Working Papers at Centro de Estudios Andaluces with number E2004/67.

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Length: 38 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:cea:doctra:e2004_67

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Keywords: residential mobility; segregation; neighborhood effects; school choice.;

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  1. John Conlon & Mwangi Kimenyi, 1991. "Attitudes towards race and poverty in the demand for private education: The case of Mississippi," The Review of Black Political Economy, Springer, Springer, vol. 20(2), pages 5-22, December.
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  3. Kurt Schmidheiny, 2002. "Income Stratifcation in Multi-Community Models," Diskussionsschriften, Universitaet Bern, Departement Volkswirtschaft dp0215, Universitaet Bern, Departement Volkswirtschaft.
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  8. Dennis N. Epple & Richard Romano, 2003. "Neighborhood Schools, Choice, and the Distribution of Educational Benefits," NBER Chapters, National Bureau of Economic Research, Inc, in: The Economics of School Choice, pages 227-286 National Bureau of Economic Research, Inc.
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  13. Lankford, Hamilton & Wyckoff, James, 1997. "The changing structure of teacher compensation, 1970-1994," Economics of Education Review, Elsevier, Elsevier, vol. 16(4), pages 371-384, October.
  14. Figlio, David N. & Stone, Joe A., 2001. "Can Public Policy Affect Private School Cream Skimming?," Journal of Urban Economics, Elsevier, vol. 49(2), pages 240-266, March.
  15. Lankford R. H. & Lee E. S. & Wyckoff J. H., 1995. "An Analysis of Elementary and Secondary School Choice," Journal of Urban Economics, Elsevier, vol. 38(2), pages 236-251, September.
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