Canceling the admission priority of private schools enlarges housing price gap in public school districts: Evidence from Shanghai's new admission policy

In 2018, Shanghai implemented an admission policy that canceled the admission priority of private schools to promote education equity. Since this policy is a unique measure for adjusting private and public school competition and discouraging private school choice priority, little is known about the policy effects. In this research, to examine the impact of the new admission policy on the capitalization of public education quality, we apply boundary fixed effect and Difference in Differences (DID) analysis to housing transaction records before and after the policy. The admission policy on average led to an additional 2% housing price premium for every standard deviation increase in public school quality. However, this average increase in premium was mainly driven by elite (top 5%) school districts, where an additional 8.6% housing price premium was generated by the policy. Housing prices in nonelite school districts, on the other hand, demonstrated no significant changes. These results indicate that the policy enlarges the housing price gap among school districts with different education quality. Thus, rather than promoting education equity, this policy may overall worsen the housing affordability in good public-school districts and make access to quality education more exclusive.