Federal Reserve Bank of St. Louis Review | 2010
Authors:
DOI: 10.20955/r.92.185-204
Journal: Federal Reserve Bank of St. Louis Review
Year: 2010
Publisher: Federal Reserve Bank of St.Louis
Document Type: Article
Open Access: All Open Access; Gold Open Access
Cited by: 43
We reexamine the relationship between quality of public schools and house prices and find it to be nonlinear. Unlike most studies in the literature, we find that the price premium parents must pay to buy a house in an area associated with a better school increases as school quality increases. This is true even after controlling for neighborhood characteristics, such as the racial composition of neighborhoods, which is also capitalized into house prices. In contrast to previous studies that use the boundary discontinuity approach, we find that the price premium from school quality remains substantially large, particularly for neighborhoods associated with high-quality schools. (JEL C21, I20, R21). © 2010, The Federal Reserve Bank of St. Louis.