Private school, off-campus academic class and public school district housing premium: Evidence from a natural experiment in Hangzhou, China

Private schools and off-campus academic classes (so called “shadow education”) may affect housing price premiums in high-quality public school districts by offering alternative educational resources. This paper leverages China's recent compulsory education reform—which restricted private school admissions and curtailed shadow education—as a natural experiment to test this hypothesis. Using transaction data from Hangzhou, we find that the reform induced a significant increase in housing prices within high-quality school districts relative to comparable ordinary school district properties. We reveal this effect operates through two distinct channels: restrictions on private schools increased the school district premium, while limitations on off-campus academic classes partially offset this increase. Our findings contribute to a greater understanding of how market-based alternatives to public education influence housing market dynamics.