The distributional effects of introducing a lottery system in school assignment rule: Evidence from an experiment in Beijing, China

Abstract

This paper examines the distributional effects of a multi-school districting reform, involving lottery property allocation, on families’ school choice behavior in Beijing, China. Employing a competitive school district housing market model, we investigate the reform's implications on housing prices and school enrollment patterns. Using a unique dataset that combines second-hand housing transaction records and school enrollment data, we document this notable consequence: a substantial 4.57% decrease in housing prices in Haidian District post-reform, resulting in enhanced access to high-quality schools for middle-income families. However, the impact on school choice behavior exhibits structural disparities. While the reform creates opportunities for middle-income families, lower-income families may encounter challenges in accessing public primary schools, where housing prices with improved educational quality have risen by 1.21%. Conversely, affluent families opt for private schools to secure high-quality educational resources, evident in a 4.25% increase in corresponding rent. Additionally, Chinese families prefer proximity to schools to minimize commuting expenses, as reflected in a 0.56% rise in rents near public primary schools. These findings emphasize the importance of addressing both “excessive school choice competition” and the diverse educational preferences of families when implementing school assignment rule reforms in developing countries. Our research expands the literature on primary education and extends concepts for education reform in other developing countries.