School Quality and Housing Prices: Empirical Evidence Based on a Natural Experiment in Shanghai, China

The extent to which the quantity and quality of education is capitalized into housing prices is a key issue in understanding the relationship between allocation of educational resources and the housing market. Using monthly panel data of 52 residential areas in Shanghai and employing a natural experiment of designating Shanghai Experimental Model Senior High Schools (EMSHS), we find that housing prices in Shanghai have capitalized the access to quality schools and other public goods. One quality school per square kilometer raises average housing prices by approximately 19%, and one best EMSHS per square kilometer increases housing prices by 21%. We also match the schools designated for EMSHS with schools of similar quality but not designated for EMSHS, and compare housing prices in the corresponding areas. We find that the designation increased the housing prices, showing that dissemination of information about school quality was significantly affected by the designation.グローバルCOEプログラム = Global COE Program31 p