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Which School Attributes Matter? The Influence of School District Performance and Demographic Composition on Property Values

  • John M. Clapp

    (University of Connecticut)

  • Anupam Nanda

    (University of Connecticut)

  • Stephen L. Ross

    (University of Connecticut)

Increasing levels of segregation in American schools raises the question: do home buyers pay for test scores or demographic composition? This paper uses Connecticut panel data spanning eleven years from 1994 to 2004 to ascertain the relationship between property values and explanatory variables that include school district performance and demographic attributes, such as racial and ethnic composition of the student body. Town and census tract fixed effects are included to control for neighborhood unobservables. The effect of changes in school district attributes is also examined over a decade long time frame in order to focus on the effect of long run changes, which are more likely to be capitalized into prices. The study finds strong evidence that increases in percent Hispanic has a negative effect on housing prices in Connecticut, but mixed evidence concerning the impact of test scores on property values. Evidence is also found to suggest that student test scores have increased in importance for explaining housing prices in recent years while the importance of percent Hispanic has declined. Finally, the study finds that estimates of property tax capitalization increase substantially when the analysis focuses on long run changes.

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Paper provided by University of Connecticut, Department of Economics in its series Working papers with number 2005-26.

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Length: 26 pages
Date of creation: Jul 2005
Date of revision: Jan 2007
Handle: RePEc:uct:uconnp:2005-26
Note: Authors appreciate helpful comments from Donald Haurin, Allen Goodman, David Brasington, Randell Reback, as well as participants at the 2006 American Economics Association Meetings, 2005 Southern Economics Association Meetings, 2004 AREUEA International Meetings, and the 2005 University of Connecticut Seminar Series.
Contact details of provider: Postal: University of Connecticut 365 Fairfield Way, Unit 1063 Storrs, CT 06269-1063
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