Economic Theory and Experiments Seminar - Georgy Artemov (University of Melbourne)

Title: School Choice, Housing, and Inequality

Abstract: We study how school choice mechanisms affect inequality of access to neighborhoods and schools in a model with an endogenous location choice and a subsequent shock on preferences over schools. We show that neighborhood inequality is the lowest under the neighborhood rule (N), followed by Deferred Acceptance (DA), and the highest under Top Trading Cycles (TTC). The flexibility of school choice under DA and TTC mitigates school access inequality, but it does not reverse the ranking; school inequality is the lowest under N and the highest under TTC. The housing price premium -- which can be thought of as an externality of a school choice mechanism -- also increases from N to DA to TTC.