I've heard this theory and do wonder if there is evidence to support it.

Originally Posted by mithawk
families interested in education move to towns with strong school systems.
Families interested in education may also home school or send their children to other schools including private/independent school, parochial school, or boarding school. Not all families interested in education are interested primarily in obtaining a local public education for their children. Also, families often live in (or move to) towns adjacent to parental employment.

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It is a conscious self-selection process because these towns have higher costs relative to otherwise similar towns with lesser school systems.
Again, that depends. How do you define lesser school systems... lower ratings/rankings? Less teaching to the test?

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The parents in turn support the school system through higher taxes relative to other towns
The higher taxes may be based upon property value, which depends upon many factors including anticipated resale value, amount of money homeowners tend to reinvest in remodeling/improvements/maintenance of their residential property, crime rate, and local employment. There have been areas where a large employer closed or moved operations, followed by massive unemployment, foreclosures on mortgaged homes, a decrease in property values, and blighted neighborhoods. Therefore some may say that it is not the "strong school system" but a strong local economy which determines relative cost.

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hold the school system accountable for high standards.
Unfortunately, many public schools have seen "alignment" to weaker standards under common core.

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Teachers are selected based upon quality
Is this not also true in other schools, including private/independent and parochial schools? It is currently an employer's market, as high unemployment means large numbers of applicants for each job opening.

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teachers partially self-select themselves because good teachers love good students.
Again, that depends. By "good students", do you mean those easily teachable with minimal effort? Some good teachers obtain deep satisfaction from helping outlier children with gifted, LD, 2e, SES, language, or cultural challenges... those often not perceived as "good students".

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Students compete against each other, making everyone stronger.
Again, that depends. When students compete against each other, that creates a competitive atmosphere. Some may thrive on competition, some may be altruistic and non-competitive by nature, thriving in a cooperative, reciprocal environment.

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Parents and students see the older students perform exceptionally and know that the same might be possible for their children, given the right talent, effort, and coaching. Exceptional local teachers or former teachers offer high-level coaching outside of school, and there is ample demand for it.
In discussing "coaching outside of school", it is revealed that the school per se is not to be credited for the accomplishments and achievements of the students.

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In short, a strong school system becomes the center of a self-reinforcing ecosystem of high performance.
Some may say this sounds a bit like the folk tale of "Nail Soup" or "Stone Soup", wherein possibly too much credit is given to the nail/stone or school system. The nail/stone or school system is used for a rallying point or marketing.