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The Distributional Consequences of Public School Choice

Author

Listed:
  • Christopher Avery
  • Parag A. Pathak

Abstract

School choice systems aspire to delink residential location and school assignments by allowing children to apply to schools outside of their neighborhood. However, choice programs also affect incentives to live in certain neighborhoods, and this feedback may undermine the goals of choice. We investigate this possibility by developing a model of public school and residential choice. School choice narrows the range between the highest and lowest quality schools compared to neighborhood assignment rules, and these changes in school quality are capitalized into equilibrium housing prices. This compressed distribution generates an ends-against-the-middle trade-off with school choice compared to neighborhood assignment. Paradoxically, even when choice results in improvement in the lowest-performing schools, the lowest type residents need not benefit.

Suggested Citation

  • Christopher Avery & Parag A. Pathak, 2021. "The Distributional Consequences of Public School Choice," American Economic Review, American Economic Association, vol. 111(1), pages 129-152, January.
    • Handle: RePEc:aea:aecrev:v:111:y:2021:i:1:p:129-52
    DOI: 10.1257/aer.20151147
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    Cited by:

    1. Yongbin Huang & Hai Hong, 2023. "The heterogeneous impact of house purchase limits policy on housing prices: Comparison between elite and non‐elite school district houses," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 51(5), pages 1055-1078, September.
    2. Gazmuri, Ana M., 2024. "School segregation in the presence of student sorting and cream-skimming: Evidence from a school voucher reform," Journal of Public Economics, Elsevier, vol. 238(C).
    3. Wigger, Cora J.L., 2025. "Persistence and variation of schools as housing amenities," Regional Science and Urban Economics, Elsevier, vol. 110(C).
    4. Estrada, Ricardo, 2022. "The effect of the demand for elite schools on stratification," Economics Letters, Elsevier, vol. 215(C).
    5. Hafalir, Isa & Pan, Siqi & Tomoeda, Kentaro, 2025. "Optimal top-n policy," Mathematical Social Sciences, Elsevier, vol. 133(C), pages 34-48.
    6. Tong, Jian & Zhang, Cong & Yue, Tong & Bai, Yanfeng & Shao, Lei, 2024. "The distributional effects of introducing a lottery system in school assignment rule: Evidence from an experiment in Beijing, China," International Journal of Educational Development, Elsevier, vol. 107(C).
    7. Klein, Thilo & Aue, Robert & Ortega, Josué, 2024. "School choice with independent versus consolidated districts," Games and Economic Behavior, Elsevier, vol. 147(C), pages 170-205.
    8. Xue, Jing & Liu, Zhenzhen & Tong, Jian & Li, Chengxuan, 2025. "Equity of educational outcomes and families’ school choices preferences: Evidence from education reform in China," Journal of Housing Economics, Elsevier, vol. 69(C).
    9. Xiaokuai Shao, 2021. "Matching under school and home bundling," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(3), pages 567-611, June.
    10. Behrang Kamali-Shahdadi, 2016. "Sorting and Peer Effects," PIER Working Paper Archive 16-002, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 08 Feb 2016.
    11. Atila Abdulkadiroğlu & Parag A. Pathak & Jonathan Schellenberg & Christopher R. Walters, 2020. "Do Parents Value School Effectiveness?," American Economic Review, American Economic Association, vol. 110(5), pages 1502-1539, May.
    12. Stuart Gabriel & Owen Hearey & Matthew E. Kahn & Ryan K. Vaughn, 2016. "Public School Quality Valuation Over the Business Cycle," NBER Working Papers 22668, National Bureau of Economic Research, Inc.
    13. Francisco Martinez-Mora & Antonio Miralles & Caterina Calsamiglia, 2017. "Sorting in public school districts under the Boston Mechanism," Working Papers 949, Barcelona School of Economics.
    14. Estrada, Ricardo, 2016. "The Effect of the Increasing Demand for Elite Schools on Stratification," Economics Working Papers MWP2016/02, European University Institute.
    15. Kamali Shahdadi, Behrang, 2021. "The effects of student composition on teachers' effort and students' performance: Implications for tracking, school choice, and affirmative action," Games and Economic Behavior, Elsevier, vol. 130(C), pages 384-399.
    16. Zhao, Yang & Ma, Jingchun & Lan, Zhu, 2024. "Balancing education and real estate: The impact of the teacher rotation policy on school district housing prices," Finance Research Letters, Elsevier, vol. 69(PA).
    17. Francesco Agostinelli & Margaux Luflade & Paolo Martellini, 2021. "On the Spatial Determinants of Educational Access," Working Papers 2021-042, Human Capital and Economic Opportunity Working Group.
    18. Ambrose, Brent W. & Valentin, Maxence, 2025. "Federal tax policy and the capitalization of local public goods," Regional Science and Urban Economics, Elsevier, vol. 114(C).
    19. Doojin Ryu & Jengei Hong & Hyunjae Jo, 2024. "Capturing locational effects: application of the K-means clustering algorithm," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 73(1), pages 265-289, June.
    20. Caterina Calsamiglia & Francisco Martínez-Mora & Antonio Miralles, 2021. "School Choice Design, Risk Aversion and Cardinal Segregation," The Economic Journal, Royal Economic Society, vol. 131(635), pages 1081-1104.
    21. Li Chen, 2023. "Timing of preference submissions under the Boston mechanism," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 25(4), pages 803-820, August.
    22. Sadegh Eshaghnia & James J. Heckman & Goya Razavi, 2023. "Pricing Neighborhoods," NBER Working Papers 31371, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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