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🚨 NEW STUDY — How much is school choice worth?
When Germany’s biggest state removed school zoning for primary schools, families responded — and so did real estate prices.
Let’s unpack a brilliant study on school markets, housing & equity. 📚🏘️
🧵(1/25)
🚨 NEW STUDY — How much is school choice worth?
When Germany’s biggest state removed school zoning for primary schools, families responded — and so did real estate prices.
Let’s unpack a brilliant study on school markets, housing & equity. 📚🏘️
🧵(1/25)
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🇩🇪 Context: In 2008, North Rhine–Westphalia (NRW) ended mandatory “catchment areas” for primary schools.
Before: kids had to attend their assigned neighborhood school.
After: parents could apply anywhere — with proximity still a tiebreaker.
🇩🇪 Context: In 2008, North Rhine–Westphalia (NRW) ended mandatory “catchment areas” for primary schools.
Before: kids had to attend their assigned neighborhood school.
After: parents could apply anywhere — with proximity still a tiebreaker.
3/
🎯 Research question:
When parents gain access to better schools thanks to this reform, how much does that affect house prices?
Answering this helps measure the monetary value of school choice in a public system.
🎯 Research question:
When parents gain access to better schools thanks to this reform, how much does that affect house prices?
Answering this helps measure the monetary value of school choice in a public system.
4/
📦 Data:
•1.35 million housing listings (2007–2015)
•Full registry of NRW primary schools
•School-to-secondary track transition rates
•Socio-demographics (1km² grid)
Massive, detailed, spatially matched dataset. 🔍
📦 Data:
•1.35 million housing listings (2007–2015)
•Full registry of NRW primary schools
•School-to-secondary track transition rates
•Socio-demographics (1km² grid)
Massive, detailed, spatially matched dataset. 🔍
🔍
⸻
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🧪 Empirical setup:
•Difference-in-Differences (DiD)
•“Treatment”: homes that gained access (post-reform) to better schools within 2 km
•“Control”: homes that didn’t
•Key metric: price per square meter (log)
⸻
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🧪 Empirical setup:
•Difference-in-Differences (DiD)
•“Treatment”: homes that gained access (post-reform) to better schools within 2 km
•“Control”: homes that didn’t
•Key metric: price per square meter (log)
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📈 Main result:
Homes that gained access to a more academically successful school saw +1.5% price increases, on average.
That’s ~€24 per m².
Not trivial — but also not explosive. A modest, but measurable capitalization.
📈 Main result:
Homes that gained access to a more academically successful school saw +1.5% price increases, on average.
That’s ~€24 per m².
Not trivial — but also not explosive. A modest, but measurable capitalization.
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🕰️ Timing:
Effects took ~5 years to fully materialize.
Parents gradually adjusted behavior, and the housing market slowly priced in the reform.
🕰️ Timing:
Effects took ~5 years to fully materialize.
Parents gradually adjusted behavior, and the housing market slowly priced in the reform.
8/
📍Distance matters:
•≤500m from a better school → +3.5% price bump
•2,250m → effect disappears
Families value close options most. School choice is still constrained by space.
📍Distance matters:
•≤500m from a better school → +3.5% price bump
•2,250m → effect disappears
Families value close options most. School choice is still constrained by space.
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🎓 What counts as “better”?
Authors use the academic track transition rate — % of kids going from primary to Gymnasium (university-track high school).
It’s a strong predictor of long-term outcomes in Germany.
🎓 What counts as “better”?
Authors use the academic track transition rate — % of kids going from primary to Gymnasium (university-track high school).
It’s a strong predictor of long-term outcomes in Germany.
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📊 Extra finding:
If the best alternative school has an academic track rate 1 SD above the local default, the price goes up by +0.8%.
Quality matters even more than distance — but both interact.
📊 Extra finding:
If the best alternative school has an academic track rate 1 SD above the local default, the price goes up by +0.8%.
Quality matters even more than distance — but both interact.
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⚠️ But not all areas saw gains.
Where school choice already existed (e.g., via denominational schools), the effect of the reform on house prices was ~zero.
Meaning: access matters most when it’s new.
⚠️ But not all areas saw gains.
Where school choice already existed (e.g., via denominational schools), the effect of the reform on house prices was ~zero.
Meaning: access matters most when it’s new.
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💡 Policy intuition:
You don’t need to build new schools to change value. Just changing access rules alters market dynamics.
Even static infrastructure can become more valuable if options expand.
💡 Policy intuition:
You don’t need to build new schools to change value. Just changing access rules alters market dynamics.
Even static infrastructure can become more valuable if options expand.
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🏠 Demand-side story:
Parents with school-age kids tend to buy, not rent.
Ownership coincides with childbearing.
So the reform affects homeowners more than tenants — reinforcing wealth divides.
🏠 Demand-side story:
Parents with school-age kids tend to buy, not rent.
Ownership coincides with childbearing.
So the reform affects homeowners more than tenants — reinforcing wealth divides.
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🔍 Methodological strengths:
•High-resolution spatial data
•Rich controls (housing traits, local demographics)
•SCA fixed effects → controls for pre-reform residential sorting
•Event-study graph confirms parallel trends ✅
🔍 Methodological strengths:
•High-resolution spatial data
•Rich controls (housing traits, local demographics)
•SCA fixed effects → controls for pre-reform residential sorting
•Event-study graph confirms parallel trends ✅
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📉 Robustness:
•Tested with driving time instead of distance → same results
•Urban vs rural: similar effects
•Controlled for school closures
•Clean sample (excludes early reformers)
📉 Robustness:
•Tested with driving time instead of distance → same results
•Urban vs rural: similar effects
•Controlled for school closures
•Clean sample (excludes early reformers)
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🏗️ Limitations acknowledged:
•Misclassification of school zones (used distance-based proxies)
•Real estate data covers ~70% of transactions
•No control for general equilibrium spillovers within SCAs
🏗️ Limitations acknowledged:
•Misclassification of school zones (used distance-based proxies)
•Real estate data covers ~70% of transactions
•No control for general equilibrium spillovers within SCAs
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🧠 Interpretation:
School choice reforms redistribute access, but that access gets capitalized into housing.
🧠 Interpretation:
School choice reforms redistribute access, but that access gets capitalized into housing.
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📏 Comparison:
In the US, access to a charter school raises house prices by 5–8% (Zheng 2022, Andreyeva & Patrick 2017).
Here, public-to-public school choice adds only ~1.5%.
Private/charter options are more “valuable” on the market.
📏 Comparison:
In the US, access to a charter school raises house prices by 5–8% (Zheng 2022, Andreyeva & Patrick 2017).
Here, public-to-public school choice adds only ~1.5%.
Private/charter options are more “valuable” on the market.
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💬 Interpretation:
Why smaller effect?
Because traditional public schools are more similar.
Also, charters tend to locate in low-quality zones → bigger delta.
In contrast, this reform allowed choice within the public system.
💬 Interpretation:
Why smaller effect?
Because traditional public schools are more similar.
Also, charters tend to locate in low-quality zones → bigger delta.
In contrast, this reform allowed choice within the public system.
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🧭 Key nuance:
In areas where neighborhood schools were very bad, the effect was larger: +2.7%.
So choice helps the most where the default is worst — a potentially progressive outcome.
🧭 Key nuance:
In areas where neighborhood schools were very bad, the effect was larger: +2.7%.
So choice helps the most where the default is worst — a potentially progressive outcome.
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🏛️ Political takeaway:
If policymakers want to expand educational opportunity, opening access helps.
But unless housing markets are regulated, choice may get priced out.
🏛️ Political takeaway:
If policymakers want to expand educational opportunity, opening access helps.
But unless housing markets are regulated, choice may get priced out.
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👀 Subtle insight:
Even when no new schools are built, perceived improvement in options leads to new bids for homes.
The market reacts to relative quality and proximity, not just capacity.
👀 Subtle insight:
Even when no new schools are built, perceived improvement in options leads to new bids for homes.
The market reacts to relative quality and proximity, not just capacity.
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📚 Contribution to literature:
•Bridges housing economics & education policy
•Expands on Black (1999), Machin & Salvanes (2016), Brunner et al. (2012)
•First to study public-public school choice capitalization at large scale
📚 Contribution to literature:
•Bridges housing economics & education policy
•Expands on Black (1999), Machin & Salvanes (2016), Brunner et al. (2012)
•First to study public-public school choice capitalization at large scale
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🧾 Citation:
“The Value of School Choice Opportunities”
Lukas Hörnig & Max Schäfer (2025)
Forthcoming in Labour Economics
doi.org/10.1016/j.labe…
🧾 Citation:
“The Value of School Choice Opportunities”
Lukas Hörnig & Max Schäfer (2025)
Forthcoming in Labour Economics
doi.org/10.1016/j.labe…
25/
📢 TL;DR
•School choice has real market value
•Even in public systems, access is « capitalized »
•Effects are modest, local, and quality-sensitive
•Equity implications: school choice ≠ equal opportunity by default
📢 TL;DR
•School choice has real market value
•Even in public systems, access is « capitalized »
•Effects are modest, local, and quality-sensitive
•Equity implications: school choice ≠ equal opportunity by default
Fin.
RT to share.
#SchoolChoice #EducationPolicy #EconTwitter 🧵✅
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#SchoolChoice #EducationPolicy #EconTwitter 🧵✅
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