School Performance, Score Inflation, and Neighborhood Development

We show that score inflation yields residential sorting around what households expect to be better schools, with long-term consequences on the economic geography of neighborhoods. We consider primary school exams in England, where grading standards have triggered an inflation of indicators in the national performance tables since the mid-1990s. Local neighborhoods were gentrified because of school improvements artificially signaled by score inflation. Competition between schools increased, yielding a real improvement in their quality. Effects of score inflation on house prices, deprivation and local economic activities are identifiable through to the present day.