Moving to better opportunities? Housing market responses to the top 4% policy

This paper studies the housing market responses to the California Top 4% policy adopted in 2001, which guarantees that the top 4% of seniors in each high school receive admission to the University of California system. The policy increased the desirability of houses in low-ranked high schools catchment areas (HSCAs). Using transaction-level property sales data, the study finds that homes in low-ranked HSCAs experienced a five percent increase in home prices after the policy relative to those in higher-ranked HSCAs. Furthermore, we analyze heterogeneous effects using ethnic last names to identify Asian and Hispanic homeowners and find that Asian homeowners seem to be more responsive to the policy than average, while Hispanic homeowners respond similarly to an average household. Finally, by matching co-owners’ full names, we construct a household panel to understand potential moving patterns that drive the price effect. We find that households who would have moved from a bottom two quintiles HSCA to higher-ranked HSCAs were more likely to move to a similarly ranked HSCA instead.