The capitalization of school quality into house values: A review

This paper provides a comprehensive review of empirical studies on the capitalization of school quality into house values that have appeared since 1999. We explore their methodological innovations and capitalization results. Most studies find significant capitalization especially for educational outputs, although the magnitudes are smaller for studies with fixed-effects estimation strategies. These studies find that house values rise by below 4% for a one-standard deviation increase in student test scores. Although major conceptual and estimation challenges remain, much progress has been made on this topic.