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Public Good Provision and Local Employment: Evidence from Grammar School Closures in East Germany

Aufsätze referiert extern - Web of Science

Ronny Freier, Martin Simmler, Christian Wittrock

In: Regional Science & Urban Economics 88 (2021), 103672, 18 S.


This paper assesses the impact of public good provision on the spatial distribution of employment as predicted by a local labor market model that allows for commuting. Using local grammar school closures in East Germany after 2000 in a difference-in-differences estimation framework coupled with an entropy balancing strategy, we find that the school closures triggered a decline in the number of (employed) residents by 11%. The number of local employees, in contrast, decreases by just 5% as in-commuters do not respond to the school closures. Moreover, we find – as predicted – that the school closures reduce house prices and that the share of land used for housing declines, albeit only to a small extent.

Ronny Freier

Research Associate in the Public Economics Department

JEL-Classification: J4;R3;H4
Keywords: Local schools, Employment, House price, Land use, Commuting