The Dynamic Evolution Of Educational Facilities' Capitalization Effect

With the growth of economy and living standards,residents start to pay special attention to public goods.Out of the traditional idea of "education cannot be left ",Chinese parents highly value nearby educational facilities when making housing purchase decisions.However,education-related issues have become increasingly prominent and plagued most Chinese people,such as expensive school district housing and scarcity of high-quality educational facilities.Unfortunately,the capitalization effect of educational facilities has not been fully explored in China yet.most empirical studies in China mainly used the hedonic price model to obtain a static and average capitalization effect.There are still several deficiencies in these studies compared with western literature.For example,the dynamic influence of educational facilities on housing price needs to be investigated,and more attention needs to be paid to the spatial attributes of the dataset.Consequently,this study investigates the dynamic heterogeneous effect of educational facilities on housing prices from temporal-spatial-social perspective.Based on the hedonic price theory,urban public goods theory and market segmentation theory,this study uses the six main urban districts in Hangzhou as research area,and uses a comprehensive dataset from 2007 to 2017 to build a series of models,including hedonic price model,spatial econometric model(spatial lag model(SLM)and spatial error model(SEM)),geographically weighted regression model(GWR),two-stage spatial quantile regression model(2SQR)and geographic information system(GIS).Four main conclusions are drawn as follows:(1)From the global perspective,the value of primary school quality,secondary school quality and nearby universities have been significantly capitalized into housing price.During 2007 to 2017,every grade increased in primary school quality and secondary school quality lifts housing price in the corresponding school district by 2.3%to 6.1%(about 460-1,219 yuan/m2)and 3.0%to 6.3%(about 600-1,259 yuan/m2),respectively.The capitalization effect of secondary school is slightly higher than that of primary school;Universities increase nearby housing price(within 1 km of a university)by 2.5%to 4.4%(about 500-879 yuan/m2)after 2011:Kindergarten proximity slightly increases housing price in a few years;Primary school distance,secondary school distance and high school proximity do not affect housing prices.Moreover,a significant spatial autocorrelation is found between housing samples.The spatial econometric model improves the interpretation ability of the traditional hedonic price model by controlling the spatial effect of the data.(2)From the temporal perspective,the capitalization effects of primary school quality,secondary school quality,and university proximity have gradually increased over time.The marginal prices of primary school quality and secondary school quality significantly increase by 161%and 90%from 2007 to 2017;the marginal price of university proximity gradually increases by 23%from 2011 to 2017.These results reveal that residents have recently paid more and more attention to the quality of primary and secondary school districts and the proximity of universities.(3)From the spatial perspective,significant spatial heterogeneity is observed in the effect of educational facilities on housing prices.GWR results show that the capitalization effects of primary and secondary schools are significant in most urban areas from 2010 to 2017.In addition,the proximity of kindergarten,senior high school and university only shows significant capitalization effects in part of the urban areas.These results reveal that residents in different regions show different preferences and willingness to pay for educational facilities and reveal the fact that the spatial distribution of urban educational facilities in Hangzhou is not balanced.In particular,the capitalization effect of primary school quality gradually decreases from the city center to surrounding area since 2011,while a peak of the capitalization effect of secondary school is observed in the west of the city since 2015.The empirical results further show that the spatial heterogeneous effects of primary and secondary schools become increasingly significant as time passes by,indicating that school choice is more and more popular.(4)From the social perspective,the capitalization effect of educational facilities shows social heterogeneity.2SQR results show that the capitalization effects of primary and secondary schools are significant in most quantiles recently,indicating that people from different social classes or income levels attach great importance to primary and secondary school education.Since 2014,housing prices at medium-low quantiles are more affected by primary school quality,while housing prices at higher quantiles are more affected by secondary school quality;the proximity of kindergarten only shows a significant effect on housing prices at medium-low quantiles;the proximity of university has a significant positive impact on housing prices at medium-high quantiles after 2011;senior high school proximity does not show any significant effect on housing prices at all quantiles.These results reveal that people from different social classes and income levels pay different attention to educational facilities.In addition,the regression coefficients of primary school quality remain stable at all quantiles,while the regression coefficients of secondary school quality show an upward trend in most of the years after 2012,indicating that those who purchase higher-priced housing show more significant preference and willingness to pay for high-quality secondary schools.It may cause unfair allocation of educational facilities in the social dimension.The empirical results from temporal-spatial-social perspectives help to reveal the value of educational facilities and the heterogenous effects of educational facilities on housing price.The empirical results of this study show that under the market-driven real estate market,the nearby enrollment policy,which was originally designed to prohibit school choice and promote education equity,may make educational facilities become exclusive and competitive.This study analyzes the formation mechanism of educational capitalization effect.Also,empirical evidence and policy recommendations are provided for the government to carry out relevant education policy reform,promote rational allocation of educational facilities,and ensure the healthy development of the real estate market.At the meantime,the research framework and the econometric model system of this paper provide theoretical reference for other scholars to conduct similar studies in China.This may be helpful to further explore the relationship between urban public goods and housing price,and deepen the understanding and investigation on the value of urban public goods in China.