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Public School Reform, Expectations, and Capitalization: What Signals Quality to Homebuyers?


  • Velma Zahirovic-Herbert

    () (Department of Housing and Consumer Economics, University of Georgia, 213 Dawson Hall, Athens, GA 30602-3622, USA)

  • Geoffrey K. Turnbull

    () (Department of Economics, Andrew Young School of Policy Studies, Georgia State University, P.O. Box 3992, Atlanta, GA 30302-3992, USA)


This paper offers new evidence on how housing markets capitalize school quality information. We use school assessment measures and house transaction data from a single school district that is coterminous with a unified city-county local government to examine the effects of two school assignment policy changes. The unusual school district-city-county government structure minimizes property tax rate and public service variation across observations, reducing the source of one problem that plagues many capitalization studies. The school reassignment events reveal direct ties between school quality capitalization and households’ expectations—the latter reflected in private school enrollment and tax referendum voting. Different school performance measures convey different information to home owners. In particular, student test scores do not affect house prices when broader school performance measures are published. Prices respond to measured school improvement, but improvements in a given school are more highly valued than being reassigned to a better school.

Suggested Citation

  • Velma Zahirovic-Herbert & Geoffrey K. Turnbull, 2009. "Public School Reform, Expectations, and Capitalization: What Signals Quality to Homebuyers?," Southern Economic Journal, Southern Economic Association, vol. 75(4), pages 1094-1113, April.
  • Handle: RePEc:sej:ancoec:v:75:4:y:2009:p:1094-1113

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    Cited by:

    1. repec:eee:regeco:v:64:y:2017:i:c:p:98-116 is not listed on IDEAS
    2. Thompson, Paul N., 2016. "School district and housing price responses to fiscal stress labels: Evidence from Ohio," Journal of Urban Economics, Elsevier, vol. 94(C), pages 54-72.
    3. 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.
    4. Siqi Zheng & Wanyang Hu & Rui Wang, 2016. "How Much Is a Good School Worth in Beijing? Identifying Price Premium with Paired Resale and Rental Data," The Journal of Real Estate Finance and Economics, Springer, vol. 53(2), pages 184-199, August.

    More about this item

    JEL classification:

    • H4 - Public Economics - - Publicly Provided Goods
    • I2 - Health, Education, and Welfare - - Education
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General


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