School choice, housing prices, and residential sorting: Empirical evidence from inter-and intra-district choice

Abstract

This paper explores the relationship between school choice and housing price as well as residential sorting using school choice reform in the Seoul metropolitan area. With the newly implemented choice program, students are able to choose high schools outside as well as within their school districts. I estimate hedonic models using boundary fixed approach and panel fixed approach together. With sales price, rental price and advertised price of apartments as dependent variables, the findings consistently reveal that school choice reform reduces housing prices in a high-performing school district relative to the housing prices in a low-performing school district by approximately 10-27%. In addition, after reform, people in a high-performing school district are more likely to outmigrate to other communities compared to one in a low-performing school district. This implies that school choice could have unintended consequences driven by change in housing price and student composition. (C) 2015 Elsevier B.V. All rights reserved.