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Public Education and Intergenerational Housing Wealth Effects

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Abstract

While rising house prices are known to benefit existing homeowners, we document a new channel through which house price shocks have intergenerational wealth effects. Using panel data from school zones within a large U.S. school district, we find that higher local house prices lead to improvements in local school quality, thereby increasing children's human capital and future incomes. We quantify this housing wealth channel using an overlapping generations model with neighborhood choice, spatial equilibrium, and endogenous school quality. We find that housing market shocks generate large intergenerational wealth effects that account for around one-third of total housing wealth effects.

Suggested Citation

  • Michael Gilraine & James Graham & Angela Zheng, 2024. "Public Education and Intergenerational Housing Wealth Effects," Opportunity and Inclusive Growth Institute Working Papers 100, Federal Reserve Bank of Minneapolis.
    • Handle: RePEc:fip:fedmoi:98965
    DOI: 10.21034/iwp.100
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    More about this item

    Keywords

    Intergenerational mobility; Intergenerational wealth effects; school quality; Neighborhood choice; House prices;
    All these keywords.

    JEL classification:

    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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