Quasi-Experimental Evidence of a School Equalization Reform on Housing Prices in Beijing

Abstract

This study examines the effect of a reasonably exogenous school equalization reform in Beijing on housing values. Based on sales records of secondhand housing between 2012 and 2016 in four core urban districts in Beijing straddling the reform, the authors find that reform-induced improvement in school quality is on average associated with a 1.7% increase in housing prices. It takes more than one year for the effect to become noticeable and it intensifies to a 12% increase 24 months after the reform. Furthermore, heterogeneity effects analyses show that the effects tend to concentrate on housing units that are smaller and that are associated with stronger and lasting improvement in school quality. Our results, therefore, cast doubts on whether such school equalization reforms are beneficial to low socioeconomic status, cash-strapped families with improved educational opportunities in the Chinese context.

Keywords:

• event study model
• housing prices
• school quality
• school equalization

ACKNOWLEDGMENTS

The authors would like to thank participants at the 42nd Annual Conference of Association for Education Finance and Policy. This research was supported by the Ministry of Education of China (14JJD880011).

Notes

1 The unit price of second-hand houses in the attendance zones of the most popular schools can be as high as 300 thousand yuan/m², five to six times the average value in the Metropolitan Area. By contrast, the average disposable income per capita of urban households in Beijing as of 2015 is 52,859 yuan (Beijing Municipal Bureau of Statistics & NBS Survey Office in Beijing 2015).

2 District is a county-level administrative division subordinate to municipality.

3 Similar to Google News, Baidu News (http://news.baidu.com/) provides links to a selection of local, national and international news relevant to the user’s query, but all the results it displays are from Chinese sources. In our effort to compile the list of target schools, we used a number of keywords in our queries including “Beijing school equalization 2014,” “Beijing compulsory education reform,” and the like. We carefully read through the retrieved news articles, and added into our list keep only those schools that are reported to be target ones by reliable media outlets and news agencies.

4 Lianjia (http://www.lianjia.com/) has a large business in the resale market of houses, with a share over 50% in Beijing. It also has the information of most remaining resales which are not transacted through its agents. More importantly, all of these resale records that Lianjia possesses are posted on its website, which provides a nearly full sample of Beijing’s resales.

Additional information

Notes on contributors

Wei Ha

Wei Ha is Associate Dean and a professor in the Graduate School of Education and Institute of Educational Economics, Peking University.

Renzhe Yu

Renzhe Yu is a Master Student in the Graduate School of Education and China Institute for Educational Finance Research, Peking University.