The effect of a partial relaxation of the school-district system on land prices and academic performance: An empirical analysis in Japan

This study investigates the extent to which gradual and partial relaxation of the school-district system for public high schools impacts land prices and student academic achievement. In Matsue City, Japan, students from outside the school district were strictly prohibited from enrolling in general public schools. For many years, students who lived beyond the district boundary were unable to attend the most academic high school that prepared students to apply to high-status universities. In 2008, however, the school-district system was eliminated in the top academic track, where students were preparing to apply to prestigious universities. In the general track, up to 5% of all prospective candidates were allowed to enroll from outside the school district. Since 2016, the percentage of students allowed to enroll from outside the school district has risen to 20%. The present study applies hedonic land-price models using the fixed-effect approach, together with panel data from 2003 to 2018 and a regression discontinuity approach focusing on the boundary of the school district. The findings show that relaxing the school-district system significantly reduced land-prices within school districts with high-quality high schools. This suggests that relaxing the school-district system may reduce the value attributed to living in a high-quality school district. The impact of this change on the number of candidates successfully applying to universities is also analyzed. Although partial relaxation of the school-district system will expand the disparity of the ratio of successful applicants attending prestigious universities, the ratio of students attending national universities or all universities does not change. This implies that a partial relaxation of the system may affect only highly academic students.