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ERIC Number: ED529882
Record Type: Non-Journal
Publication Date: 2010-Oct
Pages: 49
Abstractor: ERIC
ISSN: ISSN-2045-6557
When Do Better Schools Raise Housing Prices? Evidence from Paris Public and Private Schools. CEE DP 119
Fack, Gabrielle; Grenet, Julien
Centre for the Economics of Education (NJ1)
In France, as in many other countries, there is an ongoing debate on how residence-based assignment to schools affects both educational and residential segregation. Theoretical models (including Benabou, 1993; Fernandez and Rogerson, 1996; Epple and Romano, 2003; Rothstein, 2006) have shown that the existence of peer effects in education yields income and residential sorting in equilibrium. One of these models' key parameters is the willingness of parents to pay for school performance. The higher the value of this parameter, the higher the level of sorting when admission to schools is tied to residence. However, this sorting process can be reversed once school choice is introduced (Epple and Romano, 2003; Rothstein, 2006). In particular, private schools, which operate under different admission rules, expand educational choices and might mitigate sorting effects. In this paper, the authors test the theoretical predictions of models of housing markets in which public and private schools coexist (Nechyba, 1999, 2000, 2003). They estimate the impact of school performance on housing prices and investigate how this effect varies with the availability of private schools in the neighborhood. Using different measures of school performance, the authors find that a standard deviation increase in school performance raises housing prices by 1.4 to 2.4%. The size of this effect is similar to existing US and UK estimates and can explain roughly 5% of observed differences in housing prices between adjacent school zones. They also find that the price premium attached to better performing public schools exhibits spatial heterogeneity and varies with the availability of private schools in the neighborhood. In line with the theoretical predictions of general equilibrium models of school choice, the presence of good private schools in certain neighborhoods tends to attenuate the capitalization of public school performance in housing prices, by providing an advantageous outside option to parents. Computation of school performance indexes is appended. (Contains 7 tables, 5 figures and 43 footnotes.)
Centre for the Economics of Education. London School of Economics and Political Science, Houghton Street, London, WC2A 2AE, UK. Tel: +44-20-7955-7673; Fax: +44-20-7955-7595; e-mail:; Web site:
Publication Type: Reports - Research
Education Level: Middle Schools
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: London School of Economics & Political Science, Centre for the Economics of Education
Identifiers - Location: France (Paris)