Winning at the starting line: The primary school premium and housing prices in Beijing

Abstract

Using housing transaction data from Beijing during 2013–16, this paper evaluates the education premium for good primary schools and its changes. We use the regression discontinuity method to estimate the average education premium and its variation year by year. We take advantage of differences in the right to school enrollment between homeowners and renters to determine the discontinuity boundaries. Furthermore, the difference-in-differences method is applied to investigate the changes in housing prices triggered by changes in the school attendance zones. We find that the average education premium for the top 59 high-quality primary schools in Beijing was about 11% and increased each year. During the sample period, the increase accumulated to more than 50%. The changes in the school attendance zones led to a significant 1.5%–3.5% rise in housing prices. This shows that it would be better to increase the supply of quality education rather than only guiding the demand for it to promote educational equity.