Panel Paper: Housing Market Impacts of Extreme School Choice

Thursday, November 7, 2019
Plaza Building: Concourse Level, Governor's Square 14 (Sheraton Denver Downtown)

*Names in bold indicate Presenter

Cora J.L. Wigger, Northwestern University

Economists have confidently established that the quality of neighborhood schools is capitalized into housing values, operating as an extension of the Tiebout sorting mechanism. With the expansion of school choice and a move away from neighborhood schools, some believe that this relationship is weakening, though likely not disappearing (Schwartz, Voicu, & Horn, 2014). Avery and Pathak (2015) theorize that under extreme school choice that completely decouples addresses from school assignment, schools will integrate and school quality will equalize along with the premium paid for local schools in the cost of housing. I investigate how school enrollment and housing markets respond to an extreme case of school choice in Denver Public Schools (DPS). In 2012, DPS began introducing School Enrollment Zones in portions of the city, which require families to rank their school choices according to their zoned options. Unlike in most cases of school choice, the DPS zone system completely decouples addresses from individual school assignment within zones, shifting away from the neighborhood schools model.

I use event study and difference-in-difference frameworks to exploit the timing of the phased-in implementation of this policy to assess its effects on housing values and neighborhood and school enrollment demographics. Specifically, I compare housing values for homes sold within the newly established enrollment zones to homes sold in areas that had yet to be added to the new zones. I use data on individual housing transactions from the City and County of Denver Assessor’s Office, school enrollment data from the Colorado Department of Education, neighborhood demographics from the American Community Survey, and student assignment boundary maps from Denver Public Schools. Early results show that houses previously associated with “performing” schools (as opposed to “non-performing” schools) that were absorbed into enrollment zones saw a relative decline in housing prices compared to other houses associated with performing schools that were not yet added to zones. This finding suggests that the new policy lowers the housing cost premium paid for access to relatively higher-performing schools. Schools added to zones also see a change in the demographic composition of students enrolled compared to those within the pre-existing, traditional boundaries. Next steps of this paper include analyzing the effects of the new assignment policy on neighborhood demographics and indicators of gentrification.