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American Law and Economics Review Advance Access originally published online on August 9, 2006
American Law and Economics Review 2006 8(2):183-212; doi:10.1093/aler/ahl007
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© The Author 2006. Published by Oxford University Press on behalf of the American Law and Economics Association. All rights reserved. For permissions, please e-mail: journals.permissions@oxfordjournals.org

School Quality, Neighborhoods, and Housing Prices

Thomas J. Kane

Harvard Graduate School of Education

Stephanie K. Riegg

George Washington University

Douglas O. Staiger

Dartmouth College

Send correspondence to: Thomas J. Kane, Harvard Graduate School of Educa-tion, Gutman Library, Appian Way, Cambridge, MA 02138; E-mail: kaneto{at}gse.harvard.edu.

We study the relationship between school characteristics and housing prices in Mecklenburg County, North Carolina, between 1994 and 2001. During this period, the school district was operating under a court-imposed desegregation order and drew school boundaries so that students living in the same neighborhoods were often sent to very different schools in terms of racial mix and average test scores of the students. We use differences in housing prices along assignment zone boundaries to disentangle the effect of schools and other neighborhood characteristics. We find systematic differences in house prices along school boundaries although the impact of schools is only one-quarter as large as the naive cross-sectional estimates would imply. Part of the impact of school assignments is mediated by differences in the characteristics of the population and the quality of the housing stock that have arisen on either side of the school assignment boundary.


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