Mobility, Housing Markets, and Schools: Estimating General Equilibrium Effects of Interdistrict Choice

Henry M. Levin, Ph.D.

It has long been theorized that individuals and families choose to live in communities or neighborhoods based on that location’s availability of public goods and services. Education is often cited as one of the main public goods driving this residential sorting process. When school enrollment is based strictly on neighborhood or district residence, the districts with higher quality schools will be the most sought after areas in which to live. This demand on housing will then drive housing prices up in the districts with high quality schools.

Changing school enrollment policy from restricting students to neighborhood or district schools to one of choice among any available school would be expected to affect the housing market as well as the distribution of middle class households within an area. It is thought that when families are able to choose a school located within any district no matter the location of their residence, housing prices are less likely to rise based on the attractiveness of neighborhood school assignment. In other words, household location will not be tied to the quality of schools, as parents will be able to choose any accessible school. Price differences in housing across districts will then become less pronounced, and household income will be less likely to determine school enrollment for specific locations as access to schooling is equalized by choice.  This paper is one of the first to offer direct empirical evidence testing this link between school quality, residential selection, and school enrollment policy. 

The authors find that school enrollment policies based on choice instead of residential location tends to equalize housing prices across districts with the effect of reducing income disparities across neighborhoods. By providing opportunity to select the most appropriate school for their family through choice, regardless of where they live, they are able to focus their residential selection on other interests. As a result, income becomes a less defining criterion for the ability to move to any particular neighborhood as housing prices are more nearly equalized.

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