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Best Education Money Can Buy? Capitalization of School Quality in Finland

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  • Saarimaa, Tuukka
  • Harjunen, Oskari
  • Kortelainen, Mika

Abstract

By international comparison, Finnish pupil achievement is high and school achievement differences small. The Finnish education system is unusual also because there are no national testing programs and information on school quality measures is not publicly disclosed. Is school quality capitalized into house prices in this environment? Using a boundary discontinuity research design and data from Helsinki, we find that it is: a one standard deviation increase in average test scores increases prices by roughly 2.5 percent, which is comparable to findings from the U.K and the U.S. This price premium is related to pupils' socioeconomic background rather than school effectiveness.

Suggested Citation

  • Saarimaa, Tuukka & Harjunen, Oskari & Kortelainen, Mika, 2014. "Best Education Money Can Buy? Capitalization of School Quality in Finland," Working Papers 58, VATT Institute for Economic Research.
    • Handle: RePEc:fer:wpaper:58
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    Cited by:

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    2. Federico Belotti & Edoardo Di Porto & Gianluca Santoni, 2018. "Spatial Differencing: Estimation and Inference," CESifo Economic Studies, CESifo Group, vol. 64(2), pages 241-254.
    3. Andersson, Henrik & Blind, Ina & Brunåker, Fabian & Dahlberg, Matz & Fredriksson, Greta & Granath, Jakob & Liang, Che-Yuan, 2023. "What's in a Label? On Neighbourhood Labelling, Stigma and Housing Prices," SocArXiv xu759, Center for Open Science.
    4. Ismail, Mohammad & Warsame, Abukar & Wilhelmsson, Mats, 2022. "Schools' capitalization into housing values in a context of free school choices," Working Paper Series 22/4, Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance.
    5. Huang, Bin & He, Xiaoyan & Xu, Lei & Zhu, Yu, 2020. "Elite School Designation and Housing Prices: Quasi-Experimental Evidence from Beijing, China," IZA Discussion Papers 12897, Institute of Labor Economics (IZA).
    6. Venla Bernelius & Katja Vilkama, 2019. "Pupils on the move: School catchment area segregation and residential mobility of urban families," Urban Studies, Urban Studies Journal Limited, vol. 56(15), pages 3095-3116, November.

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    More about this item

    Keywords

    Boundary discontinuity; House prices; School quality; Spatial differencing; Local public economics; Kunnallistalous; Public services; Julkiset palvelut; C210 - Econometric Methods: Single Equation Models; Single Variables: Cross-Sectional Models; Spatial Models; Treatment Effect Models; I200 - Education: General; R210 - Urban; Rural; and Regional Economics: Housing Demand; H750 - State and Local Government: Health; Education; Welfare; Public Pensions;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I20 - Health, Education, and Welfare - - Education - - - General
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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