When do better schools raise housing prices? Evidence from Paris public and private schools

Abstract

In this paper, we investigate how housing prices react to the quality of education offered by neighboring public and private schools. The organization of secondary schooling in the city of Paris, which combines residence-based assignment to public schools with a well-developed and almost entirely publicly funded private school system, offers a valuable empirical context for analyzing how private schools affect the capitalization of public school performance in housing prices. Using comprehensive data on both schools and real estate transactions over the period 1997-2004, we develop a matching framework to carefully compare sales across school attendance boundaries. We find that a standard deviation increase in public school performance raises housing prices by 1.4 to 2.4%. Moreover, we show that the capitalization of public school performance in the price of real estate shrinks as the availability of private schools increases in the neighborhood. Our results confirm the predictions of general equilibrium models of school choice that private schools, by providing an advantageous outside option to parents, tend to mitigate the impact of public school performance on housing prices

Valuing school quality using boundary discontinuities

“…This method was popularised for use in property value analysis by the work of Black (1999), and has been employed several times since (e.g. Bogart and Cromwell, 2000;Gibbons andMachin, 2003, 2006;Bayer and McMillan, 2005;Kane et al, 2005;Davidoff and Leigh, 2007;Fack and Grenet, 2010;Bayer et al, 2007, and very recently Ries and Somerville, 2011 on boundary re-drawing in Vancouver). Closely related thinking provides the foundation of studies that investigate the effects of market access when there are changes in national borders or their permeability.…”

“…With this purpose, we extend the standard methodology and produce a series of powerful robustness and (Gibbons andMachin, 2006, andFack andGrenet, 2010 apply a similar method). This approach borrows from the literature on non-parametric discrete-cell matching, first pioneered by Rubin (1973).…”

Dynamics of social norms in the city

“…Using data on public middle schools in Paris, Fack and Grenet (2010) find that performance varies significantly across space. Best public middle schools tend to be located in both the central and western parts of Paris while the worst public schools are in the north-eastern district.…”

Wealth Differences Across Borders and the Effect of Real Estate Price Dynamics: Evidence from Two Household Surveys

“…Conversely, districts with bad crime rates suffer from lower demand, in turn depressing house prices (e.g. Black, 1999;Gibbons and Machin, 2003, 2006and Fack and Grenet, 2010 for schools andLynch Rasmussen, 2001 andGibbons, 2004 for crime). In the international context, the prime example relates to international price differences.…”