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By Stephen Gibbons, Stephen Machin, Olmo Silva and Steve Gibbons

Abstract

A large body of international research has provided evidence of a house price response to local school quality measured in terms of outputs such as school average test scores. But better school average test scores could occur through improvements in school intake ability or through better progress within schools, and existing house price studies rarely differentiate between these two channels. Our research estimates the response of house prices to both school composition, ‘valueadded’ and resources, and is thus able to distinguish more clearly between the role of composition, expenditure and expected pupil progress in the demand for schooling. In order to achieve consistent estimates, we push the use of geographical boundary discontinuities in hedonic models to the limit by matching identical properties across education admissions authority boundaries; by allowing for a variety of boundary effects and spatial trends; by re-weighting our data to only consider the transactions that are closest to education district boundaries (on average 200 metres); and by submitting the data to a number of potentially highly destructive falsification tests. Our results survive this battery of experiments and show that a one-standard deviation change in either value-added or prior achievement raises prices by around 3%. We find n

Year: 2008
OAI identifier: oai:CiteSeerX.psu:10.1.1.187.1118
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