Does restricting private school enrollment increase the public school housing premium? Evidence from the Chengdu real estate market

Despite a growing body of literature demonstrating the role of private schools in narrowing the housing premium associated with high-quality public schools, there is little evidence on how policy shocks that limit access to private schools affect this premium. Using 21,364 observations of house transaction data from 2017 to 2021, this paper examines the impact of one policy limiting private schools' autonomy in enrolling students on the public school housing premium in Chengdu, China. My findings reveal that when private schools lose the right to select students, the housing premium associated with high-quality public schools increases significantly. The escalation in high-quality school housing premium is attributed to the growing uncertainty regarding the accessibility of private schools as alternative options. The policy effect on housing premium remains robust at school district boundaries. My conclusion implies that policy-makers should pay attention to the positive role of private schools in promoting educational equity.