Growing concerns over the achievement of U.S. students have led to proposals to reward good teachers and penalize (or fire) bad ones. The leading method for assessing teacher quality is "value added" modeling (VAM), which decomposes students' test scores into components attributed to student heterogeneity and to teacher quality. Implicit in the VAM approach are strong assumptions about the nature of the educational production function and the assignment of students to classrooms. In this paper, I develop falsification tests for three widely used VAM specifications, based on the idea that future teachers cannot influence students' past achievement. In data from North Carolina, each of the VAMs' exclusion restrictions are dramatically violated. In particular, these models indicate large "effects" of 5th grade teachers on 4th grade test score gains. I also find that conventional measures of individual teachers' value added fade out very quickly and are at best weakly related to long-run effects.

Despite extensive public infrastructure spending, surprisingly little is known about its economic return. In this paper, we estimate the value of school facility investments using housing markets: standard models of local public goods imply that school districts should spend up to the point where marginal increases would have zero effect on local housing prices. Our research design isolates exogenous variation in investments by comparing school districts where referenda on bond issues targeted to fund capital expenditures passed and failed by narrow margins. We extend this traditional regression discontinuity approach to identify the dynamic treatment effects of bond authorization on local housing prices, student achievement, and district composition. Our results indicate that California school districts underinvest in school facilities: passing a referendum causes immediate, sizable increases in home prices, implying a willingness to pay on the part of marginal homebuyers of $1.50 or more for each $1 of capital spending. These effects do not appear to be driven by changes in the income or racial composition of homeowners, and the impact on test scores appears to explain only a small portion of the total housing price effect. This paper estimates the impact of investments in school facilities using the housing market. We draw on the unique characteristics of California's system of school finance, comparing districts in which school bond referenda passed or failed by narrow margins. We extend the traditional regression discontinuity (RD) design to account for the dynamic nature of bond referenda: the probability of future proposals depends on the outcomes of past elections. Using our "dynamic RD" estimator, we first show that bond funds stick exclusively in the capital account, with no effect on current expenditures or other revenues. We can thus interpret the effect of referendum passage as reflecting the impact of improvements in the quality of school facilities. We find that passing a referendum causes immediate, sizable increases in home prices, implying a willingness-to-pay on the part of marginal homebuyers of $1.50 or more for each dollar per pupil of facility spending. These effects do not appear to be driven by changes in the income or racial composition of homeowners. While we find suggestive evidence that bond passage leads to increases in student test scores, this effect cannot explain more than a small portion of the housing price effect, indicating that bond passage leads to improvements in other dimensions of school output (e.g., safety) that may be not captured by test scores. Disciplines Economics | Real Estate

In a classic paper, Schelling (1971) showed that extreme segregation can arise from social interactions in white preferences: once the minority share in a neighborhood exceeds a critical "tipping point," all the whites leave. We use regression discontinuity methods and Census tract data from 1970 through 2000 to test for discontinuities in the dynamics of neighborhood racial composition. White population flows exhibit tipping-like behavior in most cities, with a distribution of tipping points ranging from 5% to 20% minority share. The estimated discontinuities are robust to controls for a wide variety of neighborhood characteristics, and are as strong in the suburbs as in tracts close to high-minority neighborhoods, ruling out the main alternative explanations for apparent tipping behavior. In contrast to white population flows, there is no systematic evidence that rents or housing prices exhibit non-linearities around the tipping point. Finally, we relate the location of the estimated tipping points in different cities to measures of the racial attitudes of whites, and find that cities with more tolerant whites have higher tipping points.