Capitalization of the Break-Up of LAUSD into 11 Sub-Districts
This study investigates the effects of the breakup of the Los Angeles Unified School District (LAUSD) on housing prices. Under increasing pressure of falling test scores and high drop out rates, the School Board of the LAUSD unanimously voted to break up the district into 11 mini-districts in April 2000. Theoretically, this should increase school choice and school quality, which in turn would get capitalized into housing prices. I use a hedonic property value model to determine if these cause and effect relationships play out leading to an increase in housing prices in LAUSD compared to other school district regions. I control for physical characteristics of the house and neighborhood effects to determine the implicit price of this particular policy decision. Two of my models find that there is a statistically significant increase (1-1.2%) in house property values in LAUSD compared to houses lying outside the region resulting from the policy proposal. My third model, which allows for specific time trends both within and outside LAUSD and both before and after the cut-off date finds a negative effect. However, these inconclusive results could be due to the fact that I lack housing prices data immediately before the policy was first made public in October 1999.
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