The Economic Benefits of New York City's Public School Reforms, 2002-2013

Abstract

This study examines some of the economic consequences associated with the public school reforms introduced in New York City (NYC) by Mayor Michael Bloomberg, including their impact on housing values. The reforms focused primarily on increasing the autonomy and accountability of a school’s principal and teachers, and expanding school choice and charter schools. We found that those reforms have been followed by substantial improvements in a number of key measures of student performance, including Math and English test scores, high school graduation rates, and college enrollment rates. From 2006 to 2009, for example, the four-year graduation rate of NYC high school students increased from 49.1 percent to 60.4 percent, improvements driven mainly by the progress of African-American and Hispanic students. We estimate that from 2008 to 2012, 41,000 more NYC public high school students earned diplomas than would have occurred assuming the graduation rates for NYC students in 2006; and the net present value of the additional income that these additional high school graduates should earn over their lifetimes is $8.9 billion. Similarly, from 2008 to 2012, 30,900 more NYC public high school students enrolled in institutions of higher learning than would have occurred assuming the college enrollment rates of NYC students in 2006; and the net present value of the additional income that these additional NYC college attendees should earn over their lifetimes is $6.4 billion. Our analysis further found that rising high school graduation rates increase housing demand in the neighborhoods where those graduation rates rose, which in turn has led to increased residential property values. We estimate that increasing NYC graduation rates by 1 percentage point in a zip code leads to an increase in residential property prices of 0.54 percent in that zip code. On this basis, we estimate that NYC’s rising graduation rates added as much as $37.1 billion to NYC residential housing prices or values. Finally, the number of NYC charter schools climbed from 14 in 2001 to 183 in 2013, an average increase of 0.96 charter schools per zip code. We found that adding one new NYC charter school in a zip code increased residential property prices there by an estimated 3.69 percent. On this basis, the expansion of charter schools in NYC may have added as much as $22.45 billion to NYC residential property prices or values.