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Valuing school quality using boundary discontinuities

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

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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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
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622905

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