Paradise or Parasite? College Proximity and Local Educational Inequality

• In Event: Drivers of Educational Attainment

Abstract

How colleges affect their local school districts remains an under-explored process in economic literature. Their property tax exemptions via non profit status may undercut revenues for districts especially reliant on local funding sources. Concurrently, colleges may serve as positive engines for local economic activity, boosting the base values of taxable properties located nearby within a school district. I weigh the strengths of these two channels using an 11-year panel of parcel-level data for North Carolina, where I explore how between-school district variation in college presence and spatial expansion translates to differences in school funding and local property values. Initial estimates reveal that school districts with larger college spatial presence receive more money from local funding sources, as well as spend more on elementary and secondary programs and instructional salaries and benefits. This holds for total (local, state, and federal combined) funding, despite the state’s ostensible role of equalizing funding to counteract gaps in local property wealth across districts. Notably, this result appears unique to colleges, as I show the opposite relationship exists between school funding and the share of tax-exempt properties located within district boundaries. Further, using housing sales transactions data and hedonic regressions, I present evidence that residents in North Carolina are willing to pay more to live closer to colleges, independent of house and neighborhood characteristics and local amenities, with the largest premiums (roughly 15%) appearing for houses within 1 mile of a college. Preliminary results on mechanisms indicate these facts stem from the effects of colleges on both local demographic and amenity mix.

Author

• Lavar Edmonds, Stanford University
  Presenting Author