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
Date Written: December 5, 2014
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
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