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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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  • Francisco Martínez Mora, 2004. "Opting-out and income mixing in urban economies:the role of neighborhood effects," Economic Working Papers at Centro de Estudios Andaluces E2004/67, Centro de Estudios Andaluces.
  • Handle: RePEc:cea:doctra:e2004_67
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    More about this item

    Keywords

    residential mobility; segregation; neighborhood effects; school choice.;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • I20 - Health, Education, and Welfare - - Education - - - General
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • 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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