The desegregating effect of school tracking

This paper makes the following point: “detracking” schools, that is preventing them from allocating students to classes according to their ability, may lead to an increase in income residential segregation. It does so in a simple model where households care about the school peer group of their children. If ability and income are positively correlated, tracking implies that some high income households face the choice of either living in the areas where most of the other high income households live and having their child assigned to the low track, or instead living in lower income neighbourhoods where their child would be in the high track. Under mild conditions, tracking leads to an equilibrium with partial income desegregation where perfect income segregation would be the only stable outcome without tracking

Capitalising the value of free schools : the impact of supply characteristics and uncertainty

There has been a growing literature in both the US (for example Haurin and Brasington 1996, and Black 1999) and the UK (for example Gibbons & Machin, 2003) that estimates the way in which school quality is capitalised into house prices. Cheshire and Sheppard 1995 and 1999 estimated hedonic models in which the quality of the secondary school to which a household was assigned was a significant variable which provided evidence that secondary school quality was being capitalised into the price of houses. In contrast Gibbons and Machin concluded that primary schools were more significant. Each of these analyses is predicated on the assumption that the value of local schools should be reflected in the value of houses. We argue here that this is rather too simple. We should expect variation in the capitalised price of a given school quality at either primary or secondary level according to the elasticity of supply of ‘school quality’ in the local market, the certainty with which that quality can be expected to be maintained over time and the suitability of the dwelling to accommodate children. These factors will vary systematically between and perhaps within cities. This paper explores the sources and the impact of such variations as well as the impact of model specification. The results provide new evidence on the complex and subtle ways in which housing markets capitalise the value of local public goods such as school quality and perhaps most importantly suggest that this is highly non-linear: houses in the catchment areas of only the best state schools command substantial premiums but such capitalised values can be very substantial indeed