IDEAS home Printed from https://ideas.repec.org/a/eee/juecon/v94y2016icp54-72.html
   My bibliography  Save this article

School district and housing price responses to fiscal stress labels: Evidence from Ohio

Author

Listed:
  • Thompson, Paul N.

Abstract

This paper examines the effect of the Ohio fiscal stress labeling system on school district outcomes and housing prices. Under this policy, financially troubled districts are labeled and required to implement financial recovery plans. In response to these plans, districts increase local tax revenues and decrease capital and operating expenditures. Although these recovery plans lead to better long-term financial health for school districts, there appear to be some negative impacts on welfare in these districts during the duration of the label. I find that residential home sale prices fall following fiscal stress label receipt, but rise again once the label is removed. These districts also undergo substantial restructuring, including reductions in enrollments, teachers, and schools, which coincide with a transitory reduction in math proficiency rates following label receipt.

Suggested Citation

  • Thompson, Paul N., 2016. "School district and housing price responses to fiscal stress labels: Evidence from Ohio," Journal of Urban Economics, Elsevier, vol. 94(C), pages 54-72.
    • Handle: RePEc:eee:juecon:v:94:y:2016:i:c:p:54-72
    DOI: 10.1016/j.jue.2016.05.004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0094119016300158
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jue.2016.05.004?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Steven G. Rivkin & Eric A. Hanushek & John F. Kain, 2005. "Teachers, Schools, and Academic Achievement," Econometrica, Econometric Society, vol. 73(2), pages 417-458, March.
    2. Sandra E. Black, 1999. "Do Better Schools Matter? Parental Valuation of Elementary Education," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(2), pages 577-599.
    3. Harris, Douglas N. & Sass, Tim R., 2011. "Teacher training, teacher quality and student achievement," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 798-812, August.
    4. Yolanda Kodrzycki, 1998. "Fiscal pressures and the privatization of local services," New England Economic Review, Federal Reserve Bank of Boston, issue Jan, pages 39-50.
    5. Gibbons, Stephen & Machin, Stephen & Silva, Olmo, 2013. "Valuing school quality using boundary discontinuity," LSE Research Online Documents on Economics 45246, London School of Economics and Political Science, LSE Library.
    6. Patrick Bayer & Fernando Ferreira & Robert McMillan, 2007. "A Unified Framework for Measuring Preferences for Schools and Neighborhoods," Journal of Political Economy, University of Chicago Press, vol. 115(4), pages 588-638, August.
    7. Fack, Gabrielle & Grenet, Julien, 2010. "When do better schools raise housing prices? Evidence from Paris public and private schools," Journal of Public Economics, Elsevier, vol. 94(1-2), pages 59-77, February.
    8. Ian Davidoff & Andrew Leigh, 2008. "How Much do Public Schools Really Cost? Estimating the Relationship between House Prices and School Quality," The Economic Record, The Economic Society of Australia, vol. 84(265), pages 193-206, June.
    9. Gibbons, Stephen & Machin, Stephen & Silva, Olmo, 2013. "Valuing school quality using boundary discontinuities," Journal of Urban Economics, Elsevier, vol. 75(C), pages 15-28.
    10. Bruce Sacerdote, 2012. "When the Saints Go Marching Out: Long-Term Outcomes for Student Evacuees from Hurricanes Katrina and Rita," American Economic Journal: Applied Economics, American Economic Association, vol. 4(1), pages 109-135, January.
    11. Stephanie Riegg Cellini & Fernando Ferreira & Jesse Rothstein, 2010. "The Value of School Facility Investments: Evidence from a Dynamic Regression Discontinuity Design," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(1), pages 215-261.
    12. Clapp, John M. & Nanda, Anupam & Ross, Stephen L., 2008. "Which school attributes matter? The influence of school district performance and demographic composition on property values," Journal of Urban Economics, Elsevier, vol. 63(2), pages 451-466, March.
    13. Krueger, Alan B & Whitmore, Diane M, 2001. "The Effect of Attending a Small Class in the Early Grades on College-Test Taking and Middle School Test Results: Evidence from Project STAR," Economic Journal, Royal Economic Society, vol. 111(468), pages 1-28, January.
    14. John P. Forrester & Charles J. Spindler, 1990. "Managing Municipal Services In An Era Of Decuning Federal Assistance," Review of Policy Research, Policy Studies Organization, vol. 10(1), pages 63-84, September.
    15. Gibbons, Steve & Machin, Stephen, 2003. "Valuing English primary schools," Journal of Urban Economics, Elsevier, vol. 53(2), pages 197-219, March.
    16. Black, Sandra E. & Machin, Stephen, 2011. "Housing Valuations of School Performance," Handbook of the Economics of Education, in: Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), Handbook of the Economics of Education, edition 1, volume 3, chapter 10, pages 485-519, Elsevier.
    17. Engberg, John & Gill, Brian & Zamarro, Gema & Zimmer, Ron, 2012. "Closing schools in a shrinking district: Do student outcomes depend on which schools are closed?," Journal of Urban Economics, Elsevier, vol. 71(2), pages 189-203.
    18. Brummet, Quentin, 2014. "The effect of school closings on student achievement," Journal of Public Economics, Elsevier, vol. 119(C), pages 108-124.
    19. Jonah E. Rockoff, 2004. "The Impact of Individual Teachers on Student Achievement: Evidence from Panel Data," American Economic Review, American Economic Association, vol. 94(2), pages 247-252, May.
    20. David N. Figlio & Maurice E. Lucas, 2004. "What's in a Grade? School Report Cards and the Housing Market," American Economic Review, American Economic Association, vol. 94(3), pages 591-604, June.
    21. Nguyen-Hoang, Phuong & Yinger, John, 2011. "The capitalization of school quality into house values: A review," Journal of Housing Economics, Elsevier, vol. 20(1), pages 30-48, March.
    22. Jon H. Fiva & Lars J. Kirkebøen, 2011. "Information Shocks and the Dynamics of the Housing Market," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113(3), pages 525-552, September.
    23. Stephen Gibbons & Stephen Machin, 2006. "Paying for Primary Schools: Admission Constraints, School Popularity or Congestion?," Economic Journal, Royal Economic Society, vol. 116(510), pages 77-92, March.
    24. Joshua D. Angrist & Victor Lavy, 1999. "Using Maimonides' Rule to Estimate the Effect of Class Size on Scholastic Achievement," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(2), pages 533-575.
    25. Velma Zahirovic-Herbert & Geoffrey K. Turnbull, 2009. "Public School Reform, Expectations, and Capitalization: What Signals Quality to Homebuyers?," Southern Economic Journal, John Wiley & Sons, vol. 75(4), pages 1094-1113, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Thompson, Paul N., 2019. "Are school officials held accountable for fiscal stress? Evidence from school district financial intervention systems," Economics of Education Review, Elsevier, vol. 72(C), pages 44-54.
    2. Paul N. Thompson & Joseph Whitley, 2017. "The effect of school district and municipal government financial health information on local tax election outcomes: evidence from fiscal stress labels in Ohio," Public Choice, Springer, vol. 170(3), pages 265-288, March.
    3. Hirota, Haruaki & Yunoue, Hideo, 2022. "Fiscal rules and creative accounting: Evidence from Japanese municipalities," Journal of the Japanese and International Economies, Elsevier, vol. 63(C).
    4. Thompson, Paul N., 2019. "Does a Day Lost Equal Dollars Saved? The Effects of Four-Day School Weeks on School District Expenditures," IZA Discussion Papers 12698, Institute of Labor Economics (IZA).
    5. Thompson, Paul N., 2017. "Effects of fiscal stress labels on municipal government finances, housing prices, and the quality of public services: Evidence from Ohio," Regional Science and Urban Economics, Elsevier, vol. 64(C), pages 98-116.
    6. Lavertu, Stéphane & Clair, Travis St., 2018. "Beyond spending levels: Revenue uncertainty and the performance of local governments," Journal of Urban Economics, Elsevier, vol. 106(C), pages 59-80.
    7. Lang (Kate) Yang, 2022. "Fiscal transparency or fiscal illusion? Housing and credit market responses to fiscal monitoring," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(1), pages 1-29, February.
    8. Siodla, James, 2020. "Debt and taxes: Fiscal strain and US city budgets during the Great Depression," Explorations in Economic History, Elsevier, vol. 76(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Imberman, Scott A. & Lovenheim, Michael F., 2016. "Does the market value value-added? Evidence from housing prices after a public release of school and teacher value-added," Journal of Urban Economics, Elsevier, vol. 91(C), pages 104-121.
    2. Thompson, Paul N., 2017. "Effects of fiscal stress labels on municipal government finances, housing prices, and the quality of public services: Evidence from Ohio," Regional Science and Urban Economics, Elsevier, vol. 64(C), pages 98-116.
    3. Melser, Daniel & Moallemi, Morteza & Kim, Jun Sung, 2021. "Preferences for single-sex schools: Evidence from the housing market," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 710-726.
    4. Agarwal, Sumit & Rengarajan, Satyanarain & Sing, Tien Foo & Yang, Yang, 2016. "School allocation rules and housing prices: A quasi-experiment with school relocation events in Singapore," Regional Science and Urban Economics, Elsevier, vol. 58(C), pages 42-56.
    5. Chan, Jimmy & Fang, Xian & Wang, Zhi & Zai, Xianhua & Zhang, Qinghua, 2020. "Valuing primary schools in urban China," Journal of Urban Economics, Elsevier, vol. 115(C).
    6. Christian A. L. Hilber, 2017. "The Economic Implications of House Price Capitalization: A Synthesis," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 45(2), pages 301-339, April.
    7. Eli Beracha & William G. Hardin, 2021. "The housing price premium associated with charter schools," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 49(4), pages 1267-1289, December.
    8. Gibbons, Stephen & Machin, Stephen & Silva, Olmo, 2013. "Valuing school quality using boundary discontinuities," Journal of Urban Economics, Elsevier, vol. 75(C), pages 15-28.
    9. Depro, Brooks & Rouse, Kathryn, 2015. "The effect of multi-track year-round academic calendars on property values: Evidence from district imposed school calendar conversions," Economics of Education Review, Elsevier, vol. 49(C), pages 157-171.
    10. Nguyen-Hoang, Phuong & Yinger, John, 2011. "The capitalization of school quality into house values: A review," Journal of Housing Economics, Elsevier, vol. 20(1), pages 30-48, March.
    11. Xuejuan Su & Huayi Yu, 2022. "Valuing elementary schools: evidence from public school acquisitions in Beijing," Scandinavian Journal of Economics, Wiley Blackwell, vol. 124(4), pages 1117-1141, October.
    12. Crocker H. Liu & Patrick S. Smith, 2023. "School quality as a catalyst for bidding wars and new housing development," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 51(4), pages 785-818, July.
    13. Feng, Hao & Lu, Ming, 2013. "School quality and housing prices: Empirical evidence from a natural experiment in Shanghai, China," Journal of Housing Economics, Elsevier, vol. 22(4), pages 291-307.
    14. Margaret Brehm & Scott A. Imberman & Michael Naretta, 2017. "Capitalization of Charter Schools into Residential Property Values," Education Finance and Policy, MIT Press, vol. 12(1), pages 1-27, Winter.
    15. Hussain, Iftikhar, 2023. "Housing market and school choice response to school quality information shocks✰," Journal of Urban Economics, Elsevier, vol. 138(C).
    16. Lovenheim, Michael F. & Walsh, Patrick, 2018. "Does choice increase information? Evidence from online school search behavior," Economics of Education Review, Elsevier, vol. 62(C), pages 91-103.
    17. Kang Mo Koo & Jerry Liang, 2021. "The Effect of Bilingual Education on Housing Price-a Case Study of Bilingual School Conversion," The Journal of Real Estate Finance and Economics, Springer, vol. 62(4), pages 629-664, May.
    18. Machin, Stephen, 2011. "Houses and schools: Valuation of school quality through the housing market," Labour Economics, Elsevier, vol. 18(6), pages 723-729.
    19. Luigi Benfratello & Giuseppe Sorrenti & Gilberto Turati, 2020. "Tracking in the tracks in the Italian public schooling: Inequality patterns in an urban context," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2020(2), pages 39-70.
    20. Hilber, Christian A. L., 2011. "The economics implications of house price capitalization a survey of an emerging literature," LSE Research Online Documents on Economics 58596, London School of Economics and Political Science, LSE Library.

    More about this item

    Keywords

    Fiscal stress; School finance; Housing prices; Property taxes;
    All these keywords.

    JEL classification:

    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I2 - Health, Education, and Welfare - - Education
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:juecon:v:94:y:2016:i:c:p:54-72. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622905 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.