TY  - JOUR
AU  - Hanushek,Eric A.
AU  - Yilmaz,Kuzey
TI  - Schools and Location:  Tiebout, Alonso, and Government Policy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12960
PY  - 2007
Y2  - March 2007
UR  - http://www.nber.org/papers/w12960
L1  - http://www.nber.org/papers/w12960.pdf
N1  - Author contact info:
Eric A. Hanushek
Hoover Institution
Stanford University
Stanford, CA  94305-6010
Tel: 650/736-0942
Fax: 650/723-1687
E-Mail: hanushek@stanford.edu

Kuzey Yilmaz
University of Rochester
Rochester, NY 14627
E-Mail: kuyilmaz@hotmail.com
AB  - An important element in considering school finance policies is that households are not passive. Instead they respond to policies with a combination of modified residential choice and  political choice of tax levels.  The highly stylized decision models of most existing analyses, however, lead to conerns about the policy evaluations. In our general equilibrium model of residential location and community choice, households base optimizing decisions on commuting costs, school quality, and land rents.  With both centralized and decentralized employment, the resulting equilibrium has heterogeneous communities in terms of income and tastes for schools.  This model is used to analyze a series of conventional policy experiments, including school district consolidation, district power utilization, and different equalization devices. The important conclusion is that welfare falls for all families with the restrictions in choice that are implied by these approaches.
ER  -