The Supply and Demand for Public Goods: School Quality with Hedonic House Prices and 3sls
Posted: 18 Jul 1997
Date Written: April 24, 1997
Abstract
Public good provision is an important topic. I calculate theimplicit price of school quality from the housing marketusing a hedonic approach, then I estimate the demand andsupply of school quality. This is the first supply ofeducation quality estimation. I find a price elasticity ofsupply of 0.21. Other studies have used expenditures tomeasure demand for educational equality. I show that use ofexpenditures produces results that are inconsistent witheconomic theory; instead, employing educational outcomemeasures works much better. I also evaluate the impact ofusing 3SLS instead of single-equation techniques.
JEL Classification: odes: H41, R21, R22
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