An Economic Study of US Housing and Education Policy

This dissertation consists of three studies of the relationship between neighborhoods, housing policy, and local public schools. In the first chapter I analyze mortgage loans and home val-ues from 2000-2014 to study housing markets in neighborhoods near racially diverse schools. Using a national sample of over 3,600 middle schools, I construct a measure of school de-mographic diversity and estimate how home values and mortgage loan amounts change as diversity increases. For identification I isolate variation in school demographics associated with the quasi-random timing of rental housing development under the Low-Income Housing Tax Credit (LIHTC) program. I find that mortgage amounts rise by nearly 6.7%, holding median home values constant and controlling for changes in local income levels and home buyer socioeconomic character-istics. The magnitude of the eect is consistent for white, black, and Hispanic home buyers, and coincides with a decrease in home values of 2.5% near diversifying schools. The eect is reversed for white home buyers near diverse schools in low-income areas, who borrow less for housing holding home values constant. I present two explanations for these findings, both which shed light on neighborhood wealth, down payment ability, and the consequences of household sorting over local amenities. The second chapter is a joint work with Pat Bayer and Peter Blair. We estimate how much parents value school expenditure and their willingness to finance it through higher taxes. Exploiting plausibly exogenous variation in expenditures and taxes from school finance reforms, we find that a 1 percent increase in taxes to fund education increases house pricesby an economically small and statistically insignificant 0.06 percent. We find larger price changes in regions with less elastic housing supply. Our results provide support the core prediction of Tiebout (1956) that decentralized jurisdictions can eÿciently provide local public goods such as education. The third chapter is a descriptive study of a key provision of the Low-Income Housing Tax Credit Program that reserves certain rental units for families with children. I show that this type of development in particular has an eect on schools that is statistically distinguishable from other types of LIHTC development. I then test whether changes at the school level induced by this provision alter the way districts allocated resources for schooling. The preliminary results of this analysis open the door for future research using more sophisticated inference techniques