Escape from the City? The Role of Race, Income, and Local Public Goods in Post-War Suburbanization
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NBER Working Paper No. 13311
Issued in August 2007
NBER Program(s): DAE
The attraction of wealthy suburbs rests, in part, on their political and fiscal autonomy from the low-income electorate and poor tax base in many central cities. I estimate the willingness to pay to live in an affluent suburb by measuring changes in housing prices on opposite sides of city-suburban borders as the income gap between the city and suburb widens (or narrows) over time. I find that a $10,000 increase in town-level median income is associated with a seven percent increase in housing values. The demand for high-income municipalities is driven by school quality and lower property tax rates.
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This paper was revised on August 22, 2011 Acknowledgments
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