Working Paper: NBER ID: w13311
Authors: Leah Platt Boustan
Abstract: Affluent towns often deliver high-quality public services to their residents. I estimate the willingness to pay to live in a high-income suburb, above and beyond the demand of wealthy neighbors, by measuring changes in housing prices across city-suburban borders as the income disparity between the two municipalities changes over time. I find that a $10,000 increase in town-level median income is associated with a seven percent increase in housing values at the border. The estimated demand for high-income municipalities is primarily driven by school quality and lower property tax rates.
Keywords: Suburbanization; Income Segregation; Public Goods
JEL Codes: H71; H72; H73; N92; R21
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| direction and pace of change in housing and neighborhood quality (R28) | housing prices at city-suburban borders (R31) |
| $10,000 increase in town-level median income (R23) | 7% increase in housing values at the border (R21) |
| town-level median income (H79) | housing prices at the border (R31) |
| jurisdiction characteristics (K40) | housing prices across subsamples (R31) |
| lack of response of housing prices to town-level median income in placebo sample (R21) | housing prices at city-suburban borders (R31) |