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

Government Institute for Economic Research Working Papers No. 58

33 Pages Posted: 11 Dec 2014

See all articles by Oskari Harjunen

Oskari Harjunen

Urban Research and Statistics, City of Helsinki

Mika Kortelainen

Government of the Republic of Finland - VATT Institute for Economic Research; University of Manchester

Tuukka Saarimaa

Aalto University - School of Business; Aalto University - School of Engineering

Date Written: December 5, 2014

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.

Keywords: Boundary discontinuity, house prices, school quality, spatial differencing

JEL Classification: R210, H750, I200, C210

Suggested Citation

Harjunen, Oskari and Kortelainen, Mika and Saarimaa, Tuukka, Best Education Money Can Buy? Capitalization of School Quality in Finland (December 5, 2014). Government Institute for Economic Research Working Papers No. 58. Available at SSRN: https://ssrn.com/abstract=2536274

Oskari Harjunen (Contact Author)

Urban Research and Statistics, City of Helsinki ( email )

Helsinki
Finland

Mika Kortelainen

Government of the Republic of Finland - VATT Institute for Economic Research ( email )

Arkadiankatu 7
P.O Box 1279
Helsinki, FIN-00531
Finland

University of Manchester ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom

Tuukka Saarimaa

Aalto University - School of Business ( email )

P.O. Box 21210
AALTO, FI-00076
Finland

Aalto University - School of Engineering ( email )

PO BOX 14100
Aalto 00076
Finland

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