Desegregation Litigation and School Quality Capitalization

Abstract

Previous research focuses on how sample characteristics and research methods affect school quality capitalization estimates. This paper instead examines how the institutional environments of each market affect capitalization, specifically, desegregation litigation and forced busing. The meta-analysis shows that previous desegregation litigation and forced busing are associated with significantly weaker school quality capitalization. The capitalization literature reports a wide range of estimates, so it is not surprising that the range of effects of prior litigation and forced busing on the market valuation of a one standard deviation in school quality fall between $80–$2000 and $130–$3250, respectively, for the studies examined.