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Valuing School Quality Using Boundary Discontinuities

  • Stephen Gibbons
  • Stephen Machin
  • Olmo Silva

Existing research shows that house prices respond to local school quality as measured by average test scores. However, higher test scores could signal better quality teaching and academic value-added, or higher ability, sought-after intakes. In our research, we show decisively that value-added drives households' demand for good schooling. However, prior achievement - linked to the background of children in school - also matters. 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 experiments 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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File URL: http://cee.lse.ac.uk/ceedps/ceedp132.pdf
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Paper provided by Centre for the Economics of Education, LSE in its series CEE Discussion Papers with number 0132.

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Date of creation: Jan 2012
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Handle: RePEc:cep:ceedps:0132
Contact details of provider: Web page: http://cee.lse.ac.uk/publications.htm

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