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Capitalizing Performance of 'Free' Schools and the Difficulty of Reforming School Attendance Boundaries

School attendance boundaries are a contentious issue in New Zealand, and have been relaxed and re-imposed depending upon political sentiment. Critics contend that a supposedly egalitarian state school system becomes one of selection by mortgage, with the value of ‘free’ schools capitalized into property prices. Attendance boundaries restrict the schooling opportunity set facing a student, who typically is unable to study at nearby high-performing schools if they live outside their boundary. We relate schooling opportunity sets to sales prices of over 8000 houses in Christchurch, controlling for dwelling attributes, neighborhood characteristics and geographic accessibility to a wide range of services. Our model explains over three-quarters of the variation in prices and we use this model to predict property prices if there were no attendance boundaries. Abolishing boundaries expands most schooling opportunity sets and predicted house prices generally rise. But prices would fall in some higher income neighborhoods with highly educated residents, who are likely to oppose reform of school attendance boundaries.

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File URL: ftp://mngt.waikato.ac.nz/RePEc/wai/econwp/1408.pdf
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Paper provided by University of Waikato, Department of Economics in its series Working Papers in Economics with number 14/08.

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Length: 23 pages
Date of creation: 03 Jul 2014
Date of revision:
Handle: RePEc:wai:econwp:14/08
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  1. Clark Jeremy & Kim Bonggeun, 2012. "The Effect of Neighborhood Diversity on Volunteering: Evidence From New Zealand," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-49, March.
  2. Ian Davidoff & Andrew Leigh, 2007. "How Much Do Public Schools Really Cost? Estimating the Relationship Between House Prices and School Quality," CEPR Discussion Papers 558, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  3. Brunner, Eric & Sonstelie, Jon, 2003. "Homeowners, property values, and the political economy of the school voucher," Journal of Urban Economics, Elsevier, vol. 54(2), pages 239-257, September.
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