Paying for Primary Schools: Admission Constraints, School Popularity or Congestion?

Stephen Gibbons and Stephen Machin

Economic Journal, 2006, vol. 116, issue 510, C77-C92

Abstract: School quality is capitalised in house prices if access to schools is rationed by residential location. We generate empirical predictions from three different theoretical approaches linking house prices to school performance, distance to school and capacity. These are respectively based upon admission constraints, school popularity and congestion effects. We find that test-score-based school performance significantly increases property prices, but only the best one in ten schools generate higher than average prices close by, and that prices are higher close to popular, over-capacity schools. We conclude that the empirical evidence is more in line with the school popularity model. Copyright 2006 Royal Economic Society.

Date: 2006
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