Elite school designation and housing prices-quasi-experimental evidence from Beijing, China✰

Abstract

We explore recent policy changes which aim to equalize access to elite elementary schools in Beijing in order to identify the effect of access to quality education on housing prices. Using property transaction records from Beijing over the period 2013–2016, we construct a balanced panel of residential complexes, each of which is linked to designated primary schools. Whereas the multi-school dicing policy involves randomly assigning previously ineligible pupils to key elementary schools through lotteries, the policy of school federation led by elite schools consolidates ordinary primary schools through alliances with elite schools. Moreover, a residential complex in an ordinary primary school catchment can be reassigned to a key elementary school catchment through a “pure” re-designation effect. We allow for systemic differences between the treated and non-treated residential complexes using the Matching Difference-in-Differences (MDID) approach. Our estimates indicate that the effect on house prices of being eligible to enrol in a municipal-level key primary school is about 4–8%, while the premium for being eligible for a less prestigious district-level key primary school is only about 2–3%. Our findings are robust to two alternative measures of primary school prestige: an unofficial ranking from a popular parenting support website; and the number of awards in academic tournaments.