Public Education Inequality and Intergenerational Mobility
43 Pages Posted: 28 Dec 2017 Last revised: 12 Oct 2020
Date Written: September 20, 2020
Public school funding depends heavily on local property tax revenue. Consequently, low-income households have limited access to quality education in neighborhoods with high house prices. In a dynamic life-cycle model with neighborhood choice and endogenous local school quality, we show that this property tax funding mechanism reduces intergenerational mobility and accounts for the spatial correlation between house prices and mobility. A housing voucher experiment improves access to schools, with benefits that can last for multiple generations. Additionally, a policy that redistributes property tax revenues equally across schools improves mobility and welfare. However, the benefits can take generations to be realized.
Keywords: intergenerational mobility, neighbourhood choice, education policy
JEL Classification: J24, J62, I24
Suggested Citation: Suggested Citation