Household Location and Schools in Metropolitan Areas with Heterogeneous Suburbs; Tiebout, Alonso, and Government Policy

45 Pages Posted: 19 Apr 2010 Last revised: 28 Jun 2010

See all articles by Eric A. Hanushek

Eric A. Hanushek

Stanford University - Hoover Institution on War, Revolution and Peace; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute)

Kuzey Yilmaz

Koc University - Department of Economics

Date Written: April 2010

Abstract

An important element in considering school finance policies is that households are not passive but instead respond to policies. Household behavior is especially important in considering how households affect the spatial structure of metropolitan areas where different jurisdictions incorporate bundles of advantages and disadvantages. This paper adds richness to existing urban models by incorporating multiple workplace locations, alternative public services by jurisdiction (school qualities), and voter- determined school expenditure. In our general equilibrium model of residential location and community choice, households base optimizing decisions on commuting costs, school quality, and land rents. The resulting equilibrium has heterogeneous communities in terms of income and tastes for schools. This basic model is used to analyze a series of conventional policy experiments, including school district consolidation and district power utilization. The important conclusion within our range of simulations is that welfare falls for all families with the restrictions on choice that are implied by these approaches.

Suggested Citation

Hanushek, Eric A. and Yilmaz, Kuzey, Household Location and Schools in Metropolitan Areas with Heterogeneous Suburbs; Tiebout, Alonso, and Government Policy (April 2010). NBER Working Paper No. w15915. Available at SSRN: https://ssrn.com/abstract=1590744

Eric A. Hanushek (Contact Author)

Stanford University - Hoover Institution on War, Revolution and Peace ( email )

Stanford, CA 94305-6010
United States
650-736-0942 (Phone)
650-723-1687 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Kuzey Yilmaz

Koc University - Department of Economics ( email )

Rumeli Feneri Yolu
Sariyer 80910, Istanbul
Turkey

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