We examine the housing market, residential mobility, and academic performance changes that occur soon after a school fails to achieve Adequate Yearly Progress (AYP) (for the second time) in the Charlotte, NC school district. Charlotte is a school district with substantial opportunities for school choice and a number of oversubscribed, high quality schools. To comply with the 2002 No Child Left Behind (NCLB) Act, students within the attendance zone of Title 1 schools that fail to meet AYP are given an advantage in the lotteries for oversubscribed schools. That advantage may create an incentive for households with strong preferences for school choice and/or school quality to move into the attendance zones of failing schools in order to improve their likelihood of being admitted into high performing, oversubscribed schools. Consistent with that notion, we find that housing prices and the incomes of new homebuyers rise in the highest quality neighborhoods within attendance zones of failing schools in comparison to trends in nearby neighborhoods just outside of the attendance zone. We also find that residential mobility decreases while the probability of attending a non-assigned traditional school or magnet school increases in these high quality neighborhoods. Further analysis reveals that the effect of failing designation on non-assigned school attendance is driven largely by the school choice decisions of new residents who are most likely to exploit the school choice advantages offered by a second failure to achieve AYP.
I24: Education and Inequality
I28: Education: Government Policy
R21: Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand