Public school funding depends heavily on local property tax revenue. Consequently, low-income households have limited access to quality education in neighborhoods with high house prices. In a dynamic life-cycle model with neighborhood choice and endogenous local school quality, we show that this property tax funding mechanism reduces intergenerational mobility and accounts for the spatial correlation between house prices and mobility. A housing voucher experiment improves access to schools, with benefits that can last for multiple generations. Additionally, a policy that redistributes property tax revenues equally across schools improves mobility and welfare. However, the benefits can take generations to be realized.
Zheng, Angela, and James Graham.
"Public Education Inequality and Intergenerational Mobility."
American Economic Journal: Macroeconomics,
State and Local Taxation, Subsidies, and Revenue
State and Local Government: Health; Education; Welfare; Public Pensions
Analysis of Education
Educational Finance; Financial Aid
Job, Occupational, and Intergenerational Mobility; Promotion
Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
Housing Supply and Markets