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The effect of school zone on housing prices: evidence from a quasi-natural experiment in New Zealand

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  • Peng Sun
  • Tom Coupé
  • Jeremy Clark

Abstract

We analyse a quasi-experiment where a much sought-after state secondary school with no close substitutes unexpectedly reduced its enrolment zone twice over a three-year period. We use difference-in-differences to estimate the impact of the two downsizings on housing sales prices. We use controls for housing characteristics for pooled cross section or housing fixed effects for repeat sales, test for parallel trends, and conduct numerous robustness checks. In our main analysis, we find the first downsizing may decrease housing prices between 3.2% and 12.9%, with most estimates statistically significant, while the second downsizing may decrease prices between 2.1% and 7.2%, with most estimates insignificant. Tests in the pre-treatment period suggest parallel trends cannot be rejected, though some cross section interactions are significant when the two downsizings are analysed separately. We conclude the school zone’s first downsizing likely had a negative effect on housing prices of a small to moderate magnitude.

Suggested Citation

  • Peng Sun & Tom Coupé & Jeremy Clark, 2024. "The effect of school zone on housing prices: evidence from a quasi-natural experiment in New Zealand," New Zealand Economic Papers, Taylor & Francis Journals, vol. 58(2), pages 147-178, May.
    • Handle: RePEc:taf:nzecpp:v:58:y:2024:i:2:p:147-178
    DOI: 10.1080/00779954.2023.2226671
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    1. 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.
    2. Atkinson, Scott E & Crocker, Thomas D, 1987. "A Bayesian Approach to Assessing the Robustness of Hedonic Property," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 2(1), pages 27-45, January.
    3. Card, David & Krueger, Alan B, 1992. "Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 1-40, February.
    4. 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.
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    More about this item

    JEL classification:

    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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