Pursuing educational equality and divergence in the housing market: How do educational equality policies affect housing prices in Shanghai?*

Property prices being linked to education creates and perpetuates issues of inequality. This study explores the effect of education equality policies on housing prices using data on existing housing transactions in Shanghai. Based on the propensity score matching (PSM) and difference in difference (DID) models, we find a significant phenomenon of educational capitalization, with residential housing prices in high-quality school districts being significantly higher than those in neighboring districts by 5-19 %. The policy shock of simultaneous admission to private and public schools further exacerbates residential price divergence. The results prove that the policy aims to promote educational equity may increase educational capital premiums and lead to another form of inequality in the housing market, which requires further attention.