Which Schools Matter?

This paper examines the impact of investments in individual public schools on neighborhood economic development as measured by property values. Specifically, we investigate which specific characteristics of schools are most critical in driving house prices and whether those characteristics matter even for schools which do not use student residence as the sole determinant of admission, which we call ‘choice schools’, and measure the impact of school openings and closings on property values. To study these questions, we use rich data on New York City public elementary schools geocoded and matched to data on property sales for a fifteen-year period beginning in 1988.

Our results suggest that the quality of locally zoned schools, as measured by education outcomes such as performance on reading tests and school inputs such as teacher-pupil ratio and teachers’ experience, is valuable to the public and therefore, investments or reforms that increase that quality may spur neighborhood economic development. We also find that the presence of choice schools has a large positive impact on neighborhood property values, although the link between property values and the quality of nearby choice schools is less evident in our data. The results of our analysis of school openings and closings suggest that investments in new schools might not be conducive to neighborhood revitalization if those schools have weak performance.