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Why do households without children support local public schools?: linking house price capitalization to school spending

Hilber, Christian A. L. and Mayer, Christopher (2009) Why do households without children support local public schools?: linking house price capitalization to school spending. Journal of Urban Economics, 65 (1). pp. 74-90. ISSN 0094-1190

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Abstract

While residents receive similar benefits from many local government programs, only about one-third of all households have children in public schools. We argue that capitalization of school spending into house prices can encourage even childless residents to support spending on schools. We identify a proxy for the extent of capitalization—the supply of land available for new development—and show that towns in Massachusetts with little undeveloped land have larger changes in house prices in response to a plausibly exogenous spending shock. Towns with little available land also spend more on schools. We extend these results using data from school districts in 46 states, showing that per pupil spending is positively related to the percentage of developed land. This positive correlation persists only in districts where the median resident is a homeowner and is stronger in districts with more elderly residents who do not use school services and have a shorter expected duration in their home. Our findings support models in which capitalization encourages the provision of durable local public goods and provides an additional reason why some elderly support local school spending.

Item Type: Article
Official URL: http://journals.elsevier.com/00941190/journal-of-u...
Additional Information: © 2009 Elsevier
Library of Congress subject classification: H Social Sciences > HC Economic History and Conditions
L Education > L Education (General)
Journal of Economic Literature Classification System: H - Public Economics > H4 - Publicly Provided Goods
H - Public Economics > H7 - State and Local Government; Intergovernmental Relations
I - Health, Education, and Welfare > I2 - Education
R - Urban, Rural, and Regional Economics > R3 - Production Analysis and Firm Location > R31 - Housing Supply and Markets
Sets: Departments > Geography and Environment
Research centres and groups > Spatial Economics Research Centre
Collections > Economists Online
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 27 Jan 2011 10:13
URL: http://eprints.lse.ac.uk/31746/

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