Schools and Location: Tiebout, Alonso, and Government Policy / Eric A. Hanushek, Kuzey Yilmaz.

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Hanushek, Eric A

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TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w12960.Publication details: Cambridge, Mass. National Bureau of Economic Research 2007.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: An important element in considering school finance policies is that households are not passive. Instead they respond to policies with a combination of modified residential choice and political choice of tax levels. The highly stylized decision models of most existing analyses, however, lead to conerns about the policy evaluations. In our general equilibrium model of residential location and community choice, households base optimizing decisions on commuting costs, school quality, and land rents. With both centralized and decentralized employment, the resulting equilibrium has heterogeneous communities in terms of income and tastes for schools. This model is used to analyze a series of conventional policy experiments, including school district consolidation, district power utilization, and different equalization devices. The important conclusion is that welfare falls for all families with the restrictions in choice that are implied by these approaches.

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Previous	nber w12958 Projecting Behavioral Responses to the Next Generation of Retirement Policies /	nber w12959 A Theory of Liquidity and Regulation of Financial Intermediation /	nber w1296 Stock Prices and Economic News /	nber w12960 Schools and Location: Tiebout, Alonso, and Government Policy /	nber w12961 Incomplete Cost Pass-Through Under Deep Habits /	nber w12962 Do Bonds Span Volatility Risk in the U.S. Treasury Market? A Specification test for Affine Term Structure Models /	nber w12963 No-Arbitrage Semi-Martingale Restrictions for Continuous-Time Volatility Models subject to Leverage Effects, Jumps and i.i.d. Noise: Theory and Testable Distributional Implications /	Next

March 2007.

An important element in considering school finance policies is that households are not passive. Instead they respond to policies with a combination of modified residential choice and political choice of tax levels. The highly stylized decision models of most existing analyses, however, lead to conerns about the policy evaluations. In our general equilibrium model of residential location and community choice, households base optimizing decisions on commuting costs, school quality, and land rents. With both centralized and decentralized employment, the resulting equilibrium has heterogeneous communities in terms of income and tastes for schools. This model is used to analyze a series of conventional policy experiments, including school district consolidation, district power utilization, and different equalization devices. The important conclusion is that welfare falls for all families with the restrictions in choice that are implied by these approaches.