nep-geo New Economics Papers
on Economic Geography
Issue of 2006‒06‒10
nine papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Do Spatial Agglomeration and Local Labor Market Competition Affect Employer - Provided Training? Evidence from the UK By Giorgio Brunello; Francesca Gambarotto
  2. Measuring Housing Price Growth – Using Stratification to Improve Median-based Measures By Nalini Prasad; Anthony Richards
  3. Firm Specific Wage Spread in Germany - Decomposition of regional differences in inter firm wage dispersion By Bernd Görzig; Martin Gornig; Axel Werwatz
  4. There Goes the Neighborhood? Estimates of the Impact of Crime Risk on Property Values From Megan%u2019s Laws By Leigh L. Linden; Jonah E. Rockoff
  5. Australian House Prices: A Comparison of Hedonic and Repeat-sales Measures By James Hansen
  6. The Economic Impact of Colleges and Universities By John J. Siegfried; Allen R. Sanderson; Peter McHenry
  7. Megacities vs. Global Cities. The institutional hypothesis. By BOURDEAU-LEPAGE, Lise; HURIOT, Jean-Marie
  8. Is Distance a Good Proxy for Transport Costs?: The Case of Competing Transport Modes By Inmaculada Martínez-Zarzoso; Felicitas Nowak-Lehmann D.
  9. East Germany’s Wage Gap: A non-parametric decomposition based on establishment characteristics By Bernd Görzig; Martin Gornig; Axel Werwatz

  1. By: Giorgio Brunello (University of Padua); Francesca Gambarotto (University of Padua)
    Abstract: In this paper we use British data to ask whether local employment density - which we take as a proxy of labor market competition - affects employer - provided training. We find that training is less frequent in economically denser areas. We interpret this result as evidence that the balance of poaching and local agglomeration effects on training is negative. The effect of density on training is not negligible: when evaluated at the average firm size in the local area, a 1 percent increase in density reduces the probability of employer - provided training by 0.014, close to 4 percent of the average incidence of this type of training in the UK.
    JEL: J24 R12
    Date: 2006–05
  2. By: Nalini Prasad (Reserve Bank of Australia); Anthony Richards (Reserve Bank of Australia)
    Abstract: Developments in housing prices are of interest to households, policy-makers and those involved in the housing industry. This has been the case both in Australia and in other countries where house price developments are having significant macroeconomic impacts. However, the construction of measures of city-wide or nationwide average housing prices is not a straightforward exercise. One problem is that the sample of dwellings transacted in any period may be far from random and the characteristics of the sample may change from period to period. As a result, widely used measures of growth in mean or median housing prices will reflect changes in the composition of dwellings sold as well as changes in demand and supply conditions. We demonstrate that median price measures in most major Australian capitals are significantly affected by such compositional change. In this paper, we propose a simple measure of house price growth that addresses the problem of compositional change by stratifying individual transactions into different groups. Our measure differs from those commonly used internationally in that we group small geographic regions (suburbs) according to the long-term average price level of dwellings in those regions, rather than just clustering smaller geographic regions into larger geographic regions. This produces a measure of price growth that substantially improves upon median price measures, and one that is highly correlated with more sophisticated (but more computationally intensive) measures. While we focus on providing a basic framework for measuring house price growth, the stratification techniques contained in this paper have broader applications for dealing with datasets that are affected by compositional change.
    Keywords: housing; house prices
    JEL: G12 R31
    Date: 2006–05
  3. By: Bernd Görzig; Martin Gornig; Axel Werwatz
    Abstract: The purpose of this paper is to sort out firm-related differences from effects that result from different economic structures. A non-parametric decomposition is used to analyse firm level difference between the wage spread in the two major regions of unified Germany. If firm-specific effects explain wage dispersion between firms, a decomposition of the wage dispersion between firms is necessary. The decomposition can help to find out, whether the economy-wide results for different regions are due to the composition of the regional economies by industries and firm-size, or whether the differences are due to firm-specific influences, like distinctions in market power. For Germany, a considerable part of the difference in the wage spread between the East and the West can be explained by different economic structures. However, by far the greater part of the difference in the wage spread between firms in the two parts of the country results from lower wages paid by firms of the same type in East Germany compared with their counterparts in West Germany.
    Keywords: Productivity, Wage Differentiation, Wage Spread, Firm Wage Levels, Wage Sharing, Non Parametric Analysis, Decomposition
    JEL: L16 C14 J30
    Date: 2006–05
  4. By: Leigh L. Linden; Jonah E. Rockoff
    Abstract: We combine data from the housing market with data from the North Carolina Sex Offender Registry to estimate how individuals value living in close proximity to a convicted criminal. We use the exact location of these offenders to exploit variation in the threat of crime within small homogenous groupings of homes, and we use the timing of sex offenders’ arrivals to control for baseline property values in the area. We find statistically and economically significant negative effects of sex offenders’ locations that are extremely localized. Houses within a one-tenth mile area around the home of a sex offender fall by four percent on average (about $5,500) while those further away show no decline. These results suggest that individuals have a significant distaste for living in close proximity to a known sex offender. Using data on crimes committed by sexual offenders against neighbors, we estimate costs to victims of sexual offenses under the assumptions that all of the decline in property value is due to increased crime risk and that neighbors’ perceptions of risk are in line with objective data. We estimate victimization costs of over $1 million—far in excess of estimates taken from the criminal justice literature. However, we cannot reject the alternative hypotheses that individuals overestimate the risk posed by offenders or view living near an offender as having costs exclusive of crime risk.
    JEL: R2 K4
    Date: 2006–05
  5. By: James Hansen (Reserve Bank of Australia)
    Abstract: House prices are intrinsically difficult to measure due to changes in the composition of properties sold through time and changes in the quality of housing. I provide an overview of the theoretical nature of these issues and consider how regression-based measures of house prices – hedonic and repeat-sales measures – can control for compositional and quality change. I then explore whether these regression-based alternatives can provide accurate estimates of pure house price changes in the Australian context. Using unit record data for Australia’s three largest cities – Sydney, Melbourne and Brisbane – between 1993 and 2005, the results suggest that the two regression-based approaches provide similar estimates of the pure price change in housing. The measures are comparable in terms of statistical fit, with around half of the variation in prices growth (for those houses sold more than once) explained. The regression-based measures also produce similar estimates of pure price changes to those obtained by a mix-adjusted measure. However, all three measures behave quite differently from a simple median, implying that compositional change matters empirically. These results confirm that regression-based measures are likely to be a useful analytical tool when measuring pure house price changes in Australia.
    Keywords: house prices; hedonic; repeat-sales
    JEL: G12 R21 R31
    Date: 2006–05
  6. By: John J. Siegfried (Department of Economics, Vanderbilt University and AEA); Allen R. Sanderson (Department of Economics, University of Chicago); Peter McHenry (Department of Economics, Yale University)
    Abstract: This essay describes methodological approaches and pitfalls common to studies of the economic impact of colleges and universities. Such studies often claim local benefits that imply annualized rates of return on local investment exceeding 100 percent. We address problems in these studies pertaining to the specification of the counterfactual, the definition of the local area, the identification of "new" expenditures, the tendency to double count economic impacts, the role of local taxes, and the omission of local spillover benefits from enhanced human capital created by higher education, and offer several suggestions for improvement. If these economic impact studies were conducted at the level of accuracy most institutions require of faculty research, their claims of local economic benefits would not be so preposterous, and, as a result, trust in and respect for higher education officials would be enhanced.
    Keywords: Colleges, universities, local economic impact, economic impact study
    JEL: I23 R11
    Date: 2006–05
  7. By: BOURDEAU-LEPAGE, Lise (LEG - CNRS UMR 5118 - Université de Bourgogne); HURIOT, Jean-Marie (LEG - CNRS UMR 5118 - Université de Bourgogne)
    Keywords: cities
    Date: 2006
  8. By: Inmaculada Martínez-Zarzoso; Felicitas Nowak-Lehmann D.
    Abstract: In this paper, we analyze separately the determinants of maritime transport and road transport costs for Spanish exports to Poland and Turkey (markets for which maritime and road transport are competing modes) and investigate the different effects of these costs on international trade. First, we investigate the extent to which maritime and road transport costs depend on different factors such as unit values, distances, transport conditions, service structures, and service quality. Second, we analyze the relative importance of road and maritime transport costs in comparison with distance measures as determinants of trade flows. The main results of this investigation indicate that real distance is not a good proxy for transportation costs and identify the central variables influencing road and maritime transportation costs: for both modes, transport conditions are strong determinants, whereas efficiency and service quality are more important for maritime transport costs, and geographical distance is more important for road transport. Road and maritime transport costs are central explanatory factors of exports and they seem to deter trade to a greater extent than road or maritime transit time when endogeneity is considered.
    Keywords: transport costs, transport mode, Spanish exports, international trade
    JEL: F1 O1 O55
    Date: 2006–06–02
  9. By: Bernd Görzig; Martin Gornig; Axel Werwatz
    Abstract: East German wages have been below the West German wage level since unification. Moreover, the East-West wage gap implied by the contractual wages specified in collective wage agreements is drifting ever further apart from the wage gap in terms of effective wages. This paper looks at the role of establishment-specific factors — such as sectoral affiliation and size of the labour force — in this process. A non-parametric decomposition that has played a prominent role in the gender wage-gap literature is applied to breakdown the East-West wage gap into its constituent components. Using establishment data from the German employment statistics, the paper demonstrates that the divergence between wage agreements and effective wages is probably not a consequence of a massive escape from collective wage agreements, or the intense use of opt-out clauses in such agreements in East Germany. Rather, the shift of East Germany’s economic structure towards lower-paying types of companies has caused the lagging behind in the adjustment of wages.
    Keywords: Regional Wage Gap, Decomposition, Nonparametric Regression
    JEL: J31 L16 C14 C31
    Date: 2006–05

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