Existing research shows that house prices respond to local school quality as measured by average test scores. However, higher test scores could signal higher academic value-added or higher ability, more sought-after intakes. In our research, we show that both school value-added and student prior achievement - linked to the background of children in schools - affect households' demand for education. In order to identify these effects, we improve the boundary discontinuity regression methodology by matching identical properties across admissions authority boundaries; by allowing for boundary effects and spatial trends; by re-weighting our data towards transactions that are closest to district boundaries; by eliminating boundaries that coincide with major geographical features; and by submitting our estimates to a number of novel falsification tests. Our results survive this battery of tests and show that a one-standard deviation change in either school average value-added or prior achievement raises prices by around 3%.

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1 May 2013

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Journal of Urban Economics 75(1) , pp.15-28, 2013

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DOI: 10.1016/j.jue.2012.11.001

https://www.sciencedirect.com/science/article/pii/S0094119012000769

This Journal article is published under the centre's Education programme.

This publication comes under the following theme: Inequality and social mobility