Valuing school quality using boundary discontinuity

Stephen Gibbons, Stephen Machin and Olmo Silva ()

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: 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%.

Keywords: house prices; school quality; boundary discontinuities (search for similar items in EconPapers)
JEL-codes: C21 H75 I20 R21 (search for similar items in EconPapers)
Date: 2013-11-16
New Economics Papers: this item is included in nep-edu and nep-ure
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Citations: View citations in EconPapers (109)

Published in Journal of Urban Economics, 16, November, 2013, 75, pp. 15-28. ISSN: 0094-1190

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:45246

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