Public Education Inequality and Intergenerational Mobility
39 Pages Posted: 28 Dec 2017 Last revised: 18 Dec 2019
Date Written: November 25, 2019
Recent work has shown that neighborhoods with better schools tend to have higher house prices. In this paper, we investigate how the link between house prices and school quality affects intergenerational mobility. We build a dynamic heterogeneous agent model where individuals can choose to live in different neighborhoods whose house prices are determined in equilibrium. School quality in each neighborhood comes from property tax revenue. Simulations from the calibrated model show that neighborhoods with worse schools have lower mobility and create poverty traps. We then evaluate policies that can improve mobility such as equal school funding and housing vouchers.
Keywords: intergenerational mobility, neighbourhood choice, education policy
JEL Classification: J24, J62, I24
Suggested Citation: Suggested Citation