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Research Seminars & Workshops @ IRES

Professor Daniel McMillen
University of Illinois at Urbana-Champaign

House Prices and School Choice: Evidence from Chicago’s Magnet Schools Proximity Lottery


14 October 2015 (Wednesday)


4.00pm - 5.30pm


School Conference Room, SDE1 #03-07


Studies of open school policies suggest that prices rise in areas served by low-quality schools when the students gain access to high-quality schools outside of their local district. However, excess demand may lead some students to be denied admission to high-quality schools. We take advantage of changes in admission policies to Chicago’s magnet schools to test whether a higher probability of admission to high-quality schools leads to higher house prices. Chicago adopted policies that increased the probability of admission for students living within 1.5 miles of a magnet school. A comparison of house prices on either side of the 1.5-mile contour suggests that the increase in admission probabilities due to the 1997 reform increased house prices for homes within the 1.5-mile radius by about 5.4%, and the premium is still higher for homes in areas near multiple magnet schools. The 2009 reform is estimated to have produced a premium of more than 14% for homes within the 1.5-mile radius by allowing homes near magnet schools to avoid some of the dramatic drop in house prices that began at the end of 2007. Quantile estimates suggest that the reforms had the largest effect on moderately-priced homes.

About the Speaker

Daniel McMillen is Professor of Economics at the University of Illinois at Urbana-Champaign. He has served as co-editor of Regional Science and Urban Economics since 2007. Since receiving his Ph.D. in economics from Northwestern University in 1987, he has been a member of the economics departments at the University of Oregon, Santa Clara University, Tulane University, and the Chicago and Urbana-Champaign campuses of the University of Illinois. He has published widely in real estate, urban economics, housing economics, and related fields. He is a Fellow of the Homer Hoyt Institute, a consultant in the Regional Analysis group at the Federal Reserve Bank of Chicago, and a visiting fellow at the Lincoln Institute of Land Policy.

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