Pricing the value of the chance to gain admission to an elite senior high school in Beijing : The effect of the LDHSE policy on resale housing prices

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Original languageEnglish
Article number103238
Journal / PublicationCities
Volume115
Online published12 May 2021
Publication statusPublished - Aug 2021

Abstract

Elite schools are highly sought after worldwide. Measuring the influence of elite schools on housing prices is an important issue not only to researchers but also to all residents. On March 19, 2015, the Beijing municipal government enacted a policy called locking districts for senior-high-school admission examination (hitherto referred to as LDHSE). This policy prevents senior high schools in the Xicheng, Dongcheng, and Haidian districts, where the most elite senior high schools in Beijing are located, from admitting students from other districts. This study explores the effect of the LDHSE policy on housing prices, and estimates the value of the chance to gain admission to an elite senior high school in Beijing, China. Using the difference-in-difference (DID) + regression discontinuity design (RD) methodology, we find an overall 5.4% rise in housing prices in locked districts. After narrowing the bandwidths, we find a rise of approximately 6.4%, 3.4%, 2.8%, 3.5%, and 2.7% for bandwidths within 5 km, 2 km, 1 km, IK optimal bandwidth 2.687 km, and CCT optimal bandwidth 1.680 km, respectively. Furthermore, the LDHSE increases the transaction volume, supporting the argument that the policy definitively increases the demand for housing in districts with high-quality schools. The value of the chance to gain admission to an elite senior high school is estimated to be approximately 1.18–1.37 million CNY. These results reflect the fact that households not only attach great importance to children's education, but also choose to pay a hefty price to create future opportunities of access to elite high schools for their children.

Research Area(s)

  • Elite senior high school, Housing prices, Locking districts in the senior-high-school examination (LDHSE), School choice