Zoned Out: The Long-Term Consequences of School Choice for Wealth Segregation

TL;DR

This paper examines how different school choice mechanisms influence long-term wealth and school segregation, showing that mechanisms like TTC and DA reduce school segregation but can increase neighborhood segregation and housing prices.

Contribution

It introduces an endogenous model linking residential choice and school assignment mechanisms, analyzing their long-term effects on segregation and housing markets.

Findings

Neighborhood segregation increases from N to DA to TTC.

DA and TTC reduce school-level segregation but not enough to reverse neighborhood segregation.

Housing prices in oversubscribed zones rise in the same order as segregation levels.

Abstract

We study how school choice mechanisms shape wealth segregation in the long term by endogenizing residential choice. Families buy houses in school zones that determine admission priority, experience shocks to school preferences, and participate in one of three mechanisms: neighborhood assignment (N), Deferred Acceptance (DA), or Top Trading Cycles (TTC). Neighborhood segregation increases from N to DA to TTC. DA and TTC reduce school-level segregation relative to neighborhoods but typically not enough to reverse this ranking, and housing prices in oversubscribed zones rise in the same order. Two desegregation policies further illustrate how short- and long-term perspectives can differ.