Since school changes induced by residential moves appear to harm the outcomes of the school-changing students themselves, policies that seek to limit such changes within the academic year may uniformly raise test scores, at least in the short run.

Aside from effects on nearby property values, research is sparse on how foreclosures may generate negative externalities. Employing a unique dataset that matches individual student records from Boston Public Schools—including test scores, demographics, home address moves, and school changes—with real estate records indicating whether the student lived at an address involved in foreclosure, we investigate the degree to which the test scores of students attending high-foreclosure schools suffer, even among students not directly experiencing foreclosure. We also explore the impact on individual test scores of school-level (by grade and year) student mobility—that is, inflows of new students to a school during the school year—including mobility induced by residential moves (in some cases caused by foreclosures) and mobility arising for other reasons. We find fairly robust evidence that higher student mobility at a school, induced by residential moves, imposes significant negative effects on test scores of students at the receiving school. Beyond this channel, school-level foreclosure prevalence does not appear to generate externalities. Since we also find that residential-move-induced school changes appear to harm the outcomes of the school-changers themselves, policies that seek to limit such changes within the academic year may uniformly raise test scores, at least in the short run.