The value of school in urban China: a spatial quantile regression with housing transactions in Beijing

Abstract

ABSTRACTThis study adopts microdata of individual housing transactions in Beijing to explore the value that households place on high-quality schools. It is among the first to match exactly the housing unit with its corresponding school in studies on Chinese housing markets. We find a significant school premium of 21.1% in Beijing’s housing market after controlling the unobservable neighbourhood effects using regressions with a spatial lag. We have further discovered different school premiums across quantiles with a spatial quantile regression. The result finding a larger school premium in the lower-priced housing units suggests that low-income households prefer high-quality schools over housing consumption. Our results indicate that public education influences households’ residential location choice and housing consumption decisions, which thus have important policy implications in public goods provision, housing development and urban planning.