nep-geo New Economics Papers
on Economic Geography
Issue of 2008‒09‒29
25 papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Searching for clusters in tourism. A quantitative methodological proposal By Cristina Santos; Alexandre Almeida; Aurora A.C. Teixeira
  2. The non-stationary influence of geography on the spatial agglomeration of production in the EU By Chasco, Coro; López, Ana María; Guillain, Rachel
  3. An agent-based computational approach to explaining persistent spatial unemployment disparities By McArthur, David; Thorsen, Inge; Ubøe, Jan
  4. Economic Performace in Rural England By Nigel Curry; Don Webber
  5. Pecuniary Knowledge Externalities: Evidence from European Regions By Antonelli Cristiano; Patrucco Pierpaolo; Quatraro Francesco
  6. Regional Assessment of Openness and Productivity Spillovers in China from 1979 to 2006: A Space-Time Model By Sélin Ozyurt
  7. Inversión en infraestructuras, crecimiento y convergencia regional By Angel de la Fuente
  8. Building an Environmental Quality Index for a big city: a spatial interpolation approach with DP2 By Montero, José María; Larraz, Beatriz; Chasco, Coro
  9. Housing Externalities By Esteban Rossi-Hansberg; Pierre-Daniel Sarte; Raymond Owens III
  10. Comparing Regional Development in China and India By Wu, Yanrui
  11. Real Wage Inequality By Enrico Moretti
  12. Drivers of regional efficiency differentials in Italy: technical inefficiency or allocative distortions? By Fabrizio Erbetta; Petraglia Carmelo
  13. Have amenities become relatively more important than firm productivity advantages in metropolitan areas? By Richard Deitz; Jaison R. Abel
  14. Identification of Regional Fundamental Economic Structure (FES) of India: An Input-Output and Field of Influence Creation-date: 2008 By Thakur, Sudhir K.
  15. Efficiency and Equity in the use of eminent domain, with local externalies By Jonathan Pincus; Perry Shapiro
  16. Innovativeness of Small and Medium Size Enterprises in Regional Innovation System: Evidences from Turkey By Bahar C. Erbas; Ali Fýkýrkoca; Arcan Tuzcu
  17. International Integration and Regional Development in China By Gries, Thomas; Redlin, Margarete
  18. Getting out of the car: an institutional/evolutionary approach to sustainable transport policies By Gerardo Marletto
  19. Geographic Equity in Hospital Utilization: Canadian Evidence Using a Concentration-Index Approach By Jeremiah Hurley; Michel Grignon; Li Wang; Tara McGrath
  20. Measuring the Vulnerability of Subnational Regions By Naude, Wim; McGillivray, Mark; Rossouw, Stephanie
  21. Science and technology-based regional entrepreneurship in the Netherlands: By Jolanda Hessels; Kashifa Suddle; Willem Hulsink
  22. Neighborhood Diversity Characteristics in Iowa and their Implications for Home Loans and Business Investment By Eathington, Liesl; Swenson, David A.
  23. The Impact of Local Public Services and Geographical Cost of Living Differences on Poverty Estimates By Aaberge, Rolf; Langørgen, Audun; Mogstad, Magne; Østensen, Marit
  24. Housing affordability and tenure choices: an empirical investigation By Giaccaria Sergio; Talarico Antonio; Bravi Marina
  25. Do regional payroll tax reductions boost employment? By Bennmarker, Helge; Mellander, Erik; Öckert, Björn

  1. By: Cristina Santos (Faculdade de Economia, Universidade do Porto); Alexandre Almeida (Faculdade de Economia, Universidade do Porto); Aurora A.C. Teixeira (INESC Porto, CEMPRE, Faculdade de Economia, Universidade do Porto)
    Abstract: The tourism industry is one of Europe’s leading employers, and for many regions highly dependent on tourists’ spending, innovation is the difference between growth and stagnation. Thus, at a regional level, tourism may function as a driving force of socioeconomic development and thus contribute to the demise of regional disparities. Such lever effect is usually associated to a geographical concentration abusively denominated of clusters. Most of the studies within the tourism industry identify clusters resorting to simplistic analyses of geographic location measures or experts’ opinions. These latter tend to neglect the essence of the cluster concept, namely the inter-linkages among regional actors. In the present paper, we propose a methodology to rigorously identify tourism clusters, stressing the importance of networks and cooperation between agents.
    Keywords: Clusters; Tourism; Methodology
    JEL: R12 R15 L83 C67
    Date: 2008–09
  2. By: Chasco, Coro; López, Ana María; Guillain, Rachel
    Abstract: In this paper, we investigate the relative importance of geographic features on the location of production in the EU. Specifically, we want to quantify how much of the spatial pattern of GDP can be attributed to only exogenous first nature elements (physical and political geography) and how much can be derived from endogenous second nature factors (man-made agglomeration economies). In order to disentangle both effects empirically, and to learn how they are interrelated, we control for second nature. We use a methodology based on an analysis of variance (ANOVA), which is applied to a panel of 1,171 European NUT-3 in 2006. We demonstrate that -due to a high degree of spatial non-stationarity present in the data- results can be biased if spatial autocorrelation and spatial heterogeneity, as well as multicollinearity and endogeneity, are not properly taken into account.
    Keywords: Agglomeration; Geography; Spatial Heterogeneity; Endogeneity; EU Regions
    JEL: C51 O18 C52 R12 O52 C21
    Date: 2008–09–24
  3. By: McArthur, David (Stord/Haugesund University College); Thorsen, Inge (Stord/Haugesund University College); Ubøe, Jan (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)
    Abstract: This paper explores possible reasons for persistent spatial unemployment disparities using agent-based computational methods. The method relies on observing the actions of thousands of individuals within an artificial society. The paper models the effect of unemployment insurance, wage disparities, region specific amenities and innate residential preferences on regional labour market interactions, accounting for both migration and commuting. An empirical example of Rogaland county in south-west Norway is given, where unemployment disparities have proved remarkably persistent for decades. The model provides non-trivial insight into the nature of spatial unemployment disparities as well as making a valuable contribution to the policy debate.
    Keywords: Unemployment insurance; wage disparities; region specific amenities; innate residential preferences; regional labour market interactions
    JEL: R10 R12 R15
    Date: 2008–09–22
  4. By: Nigel Curry (Countryside and Community Research Institute, Cheltenham); Don Webber (School of Economics, University of the West of England, Bristol)
    Abstract: English economic policy requires different levels of government to pursue incommensurate, urban-centric, objectives. Rural areas are characterised by ‘softer’ development approaches centring on relocalisation. Measuring rural economic performance is obscured by the simultaneous use of two spatial platforms: the ‘city-region’ and the ‘rural definition’. The characteristics of these spatial platforms for measuring rural economic performance are explored through plant level productivity data. In general, English rural districts are less productive but particularly where they are both lagging and fall outside city regions. The city-region platform makes the rural productivity performance look worse than it really is but since 2000, rural districts have not been charged with pursuing productivity objectives anyway.
    Keywords: Rural economic policy; productivity; skills; industrial structure
    JEL: R3 O18
    Date: 2008–08
  5. By: Antonelli Cristiano (University of Turin); Patrucco Pierpaolo (University of Turin); Quatraro Francesco (University of Turin)
    Abstract: The paper investigates the effects of agglomeration and specialization of technological activities on regional productivity growth,applying the notion of pecuniary knowledge externalities. The latter are indirect interdependencies between firms mediated by the price system. Pecuniary knowledge externalities enable to appreciate both the positive and negative effects associated with the regional concentration of knowledge generating activities. Our analysis leads to specify the hypothesis of an inverted U-shaped relationship between the agglomeration of innovation activities and productivity growth. The empirical investigation, based upon 138 European regions in the years 1996 through 2003, supports the hypothesis that agglomeration yields diminishing positive net effects beyond a maximum. The homogeneity of knowledge generating activities however reduces absorption costs and hence rises the net benefits at each agglomeration level.
    Date: 2008–03
  6. By: Sélin Ozyurt
    Abstract: This study investigates the impact of inward foreign direct investment (FDI) flows and international trade on labour productivity in 30 Chinese provinces over the period 1979-2006. Since China launched the “open door” policy in 1978, the country has been attracting a growing share of FDI flows and its international trade has been expanding considerably. China’s accession into the WTO in 2001 has also started a new era in its integration into the world economy. In this paper, we model labour productivity as dependent on FDI, foreign trade and other traditional variables such as capital intensity, infrastructure and human capital development. Our empirical analysis improves the existing wide literature by taking into account spatial effects and potential econometric issues they imply. Using recently developed spatial data analysis tools, we explore the pattern, (weather it be negative or positive) and the extent of spatial interaction of labour productivity between regions. Thereby, we extend previous research by testing the explanatory power of additional variables such as spatially lagged independent and dependent variables. The explicit consideration of spatial dependence in the modelling scheme provides us a better understanding of the regional spillovers process. Our results indicate a general trend of spatial autocorrelation in labour productivity during the study period. Put differently, in China, the productivity of a given region is highly determined by those of surrounding regions. In addition, our empirical outcomes yield support for positive and significant impacts of FDI and foreign trade on labour productivity. Furthermore, in China, FDI and trade exhibit a positive spatial pattern and give rise to interregional productivity spillovers among provinces. These findings are robust to a number of alternative spatial weighting matrix specifications.
    Date: 2008–09
  7. By: Angel de la Fuente
    Abstract: This paper presents estimates of the contribution of infrastructure investment to the growth of output and employment in Spain and its regions and investigates the impact of this factor on the process of regional convergence in income per capita during the period 1965-2004.
    Keywords: infrastructures, growth, regional convergence
    JEL: O47 H54 R11
    Date: 2008–08–15
  8. By: Montero, José María; Larraz, Beatriz; Chasco, Coro
    Abstract: The elaboration of Environmental Quality Indexes (EQI) for big cities is one of the main topics in regional and environmental economics. One of the usual methodological paths consists of generating a single measure as a linear combination of several air contaminants applying Principal Component Analysis (PCA). Then, as a final step, a spatial interpolation is carried out to determine the level of contamination across the city in order to point out the so-called ‘hot points’. In this article, we propose an alternative approach to build an EQI introducing some methodological and practical novelties. From the point of view of the selection of the variables, first we will consider noise -joint to air pollution- as a relevant environmental variable. We also propose to add ‘subjective’ data -available at the census tracts level- to the group of ‘objective’ environmental variables, which are only available at a number of environmental monitoring stations. This combination leads to a mixed environmental index (MEQI), which is more complete and adequate in a socioeconomic context. From the point of view of the computation process, we use kriging to match the monitoring stations registers to the Census data. We follow an inverse process as usual, since it leads to better estimates. In a first step, we krige the environmental variables to the complete surface and finally, we elaborate the environmental index. At last, in order to build the final synthetic index, we do not use Principal Components Analysis -as it is usual in this kind of exercises- but a better one, the Pena Distance method (DP2).
    Keywords: Environmental index; Air pollution; Noise; Subjecive expectations; Kriging; Distance indicators
    JEL: C43 Q53 C21
    Date: 2008–09–24
  9. By: Esteban Rossi-Hansberg; Pierre-Daniel Sarte; Raymond Owens III
    Abstract: Using data compiled from concentrated residential urban revitalization programs implemented in Richmond, VA, between 1999 and 2004, we study residential externalities. Specifically, we provide evidence that in neighborhoods targeted by the programs, sites that did not directly benefit from capital improvements nevertheless experienced considerable increases in land value relative to similar sites in a control neighborhood. Within the targeted neighborhoods, increases in land value are consistent with externalities that fall exponentially with distance. In particular, we estimate that housing externalities decrease by half approximately every 990 feet. On average, land prices in neighborhoods targeted for revitalization rose by 2 to 5 percent at an annual rate above those in the control neighborhood. These increases translate into land value gains of between $2 and $6 per dollar invested in the program over a six-year period. We provide a simple theory that helps us interpret and estimate these effects.
    JEL: D62 H23 R21 R31
    Date: 2008–09
  10. By: Wu, Yanrui
    Abstract: Economic growth in China and India has attracted many headlines recently. As a result, the literature comparing the two Asian giants has expanded substantially. This paper adds to the literature by comparing regional growth, disparity and convergence in the two economies. This is the first of its kind. The paper presents a detailed examination of economic growth in the regions of China and India over the past twenty years. It also provides an assessment of regional disparity in the two countries and investigates whether there is any evidence of regional convergence during the period of rapid economic growth. It attempts to identify the sources of regional disparity and hence draw policy implications for economic development in the two countries in the near future.
    Keywords: regional development, China, India, disparity, convergence
    Date: 2008
  11. By: Enrico Moretti
    Abstract: A large literature has documented a significant increase in the return to college over the past 30 years. This increase is typically measured using nominal wages. I show that from 1980 to 2000, college graduates have increasingly concentrated in metropolitan areas that are characterized by a high cost of housing. This implies that college graduates are increasingly exposed to a high cost of living and that the relative increase in their real wage may be smaller than the relative increase in their nominal wage. To measure the college premium in real terms, I deflate nominal wages using a new CPI that allows for changes in the cost of housing to vary across metropolitan areas and education groups. I find that half of the documented increase in the return to college between 1980 and 2000 disappears when I use real wages. This finding does not appear to be driven by differences in housing quality and is robust to a number of alternative specifications. The implications of this finding for changes in well-being inequality depend on why college graduates sort into expensive cities. Using a simple general equilibrium model, I consider two alternative explanations. First, it is possible that the relative supply of college graduates increases in expensive cities because college graduates are increasingly attracted by amenities located in those cities. In this case, higher cost of housing reflects consumption of desirable local amenities, and there may still be a significant increase in well-being inequality even if the increase in real wage inequality is limited. Alternatively, it is possible that the relative demand of college graduates increases in expensive cities due to shifts in the relative productivity of skilled labor. In this case, the relative increase in skilled workers' standard of living is offset by higher cost of living. The empirical evidence indicates that relative demand shifts are more important than relative supply shifts, suggesting that the increase in well-being inequality between 1980 and 2000 is smaller than the increase in nominal wage inequality.
    JEL: J01 J2 J31 R00
    Date: 2008–09
  12. By: Fabrizio Erbetta (University of Piemonte Orientale, Faculty of Economics / HERMES, Higher Education and Research on Mobility and the Economics of Public Services / CERIS-CNR, Institute for Economic Research on Firms and Growth); Petraglia Carmelo (University of Napoli "Federico II", Department of Economics)
    Abstract: This paper estimates regional economic efficiency differentials at the firm level in the Italian manufacturing sector over the period 1998-2003. We implement an input distance function approach providing measures of both technical inefficiency and allocative distortions in the choice of input mixes. Our results confirm the substantial technical efficiency gap suffered by firms located in Southern regions, thus providing empirical support to the “structural and technological gap” interpretation of the Italian dualism. On the other hand, allocative distortions in the use of inputs show less remarkable regional differences. As for policy implications, our results suggest the need for a re-allocation of public resources for development policies from business incentives measures towards public investments.
    Keywords: Technical and allocative efficiency, Input distance function, Development policies
    JEL: C44 D21 D24 O14 O20 R0
    Date: 2008–06
  13. By: Richard Deitz; Jaison R. Abel
    Abstract: We analyze patterns of compensating differentials to determine whether a region's bundle of site characteristics has a greater net effect on household location decisions relative to firm location decisions in U.S. metropolitan areas over time. We estimate skill-adjusted wages and attribute-adjusted rents using hedonic regressions for 238 metropolitan areas in 1990 and 2000. Within the framework of the standard Roback model, we classify each metropolitan area based on whether amenities or firm productivity advantages dominate and analyze the extent to which these classifications change between 1990 and 2000. We then decompose compensating differentials into amenity and firm productivity advantage components and examine how these components change. Empirical results suggest that while the relative importance of amenities appears to have increased slightly between 1990 and 2000, firm productivity advantages continued to dominate amenities in the vast majority of metropolitan areas during this decade.
    Keywords: Metropolitan areas - Statistics ; Industrial location ; Households ; Industrial productivity
    Date: 2008
  14. By: Thakur, Sudhir K.
    Abstract: This study provides an understanding of the Indian regional economy utilizing the fundamental economic structure (FES) approach. The FES construct implies that selected characteristics of an economy will vary predictably with region size, as measured by net state domestic product, population, and total gross output. The big question addressed in this study is if identifiable patterns of relations between various macro aggregates and economic transactions can be revealed via regional input-output tables. Jensen et al. (1988) discuss the tiered, partitioned, and temporal approaches to the identification of FES using input-output tables. This research addresses the following four questions: (1) Does a regional FES exist for the Indian economy during the period 1965? (2) What proportions of the cells are predictable? (3) Can the 1965 regional FES predict 1983-84 table for Punjab economy? (4) Does regional FES manifest an enhanced understanding of the Indian regional structure? Regression analyses are used to identify the FES and non-FES cells for the Indian regional economy. The regional input-output tables for 21 States and Union Territories provide data for the analysis. Analysis reveals regional FES includes primary and secondary sectors as components of FES. This research has extended the notion of FES to include: weak, moderate and strong FES cells.
    Keywords: regions, economic structure, input-output, India
  15. By: Jonathan Pincus (School of Economics, University of Adelaide); Perry Shapiro
    Abstract: In Shapiro and Pincus (2008), we proposed a method for arriving at just compensation of private owners of urban land, in cases like Kelo v New London, in which government has plans to use eminent domain to `take' private properties, to be assembled into a single parcel for some public purpose. The required quantum of just compensation can be discovered when the public purpose is to be pursued via private use of the assembled land parcel, and when the private user can be selected through an auction of the assembled land. This paper extends the auction mechanism to include properties which lie outside the area `taken' or resumed by government, but which will be affected by the new use made of the assembled area. The auction provides an efficiency test: does the proposed change in use increase the aggregate value of the land to be resumed plus the affected properties? Local externalities are internalised through the auction. We briefly discuss the political economy of the mechanism.
    Date: 2008–09
  16. By: Bahar C. Erbas; Ali Fýkýrkoca; Arcan Tuzcu
    Date: 2008–09
  17. By: Gries, Thomas; Redlin, Margarete
    Abstract: Concerns about the duration of China?s growth and hence the question of a permanent significant contribution of China to world economic growth relate, amongst other things, to the problem of reducing regional disparity in China. While China?s high average growth is driven by a small number of rapidly developing provinces, the majority of provinces have experienced more moderate development. To obtain broad continous growth it is important to identify the determinants of provincial growth. Therefore, we introduce a stylized model of regional development which is characterized by two pillars: (i) International integration indicated by FDI and/or trade lead to imitation of international technologies, technology spill overs and temporary dynamic scale economies, and (ii) domestic factors indicated by human and real capital available through interregional factor mobility. Using panel data analysis and GMM estimates our empirical analysis supports the predictions from our theoretical model of regional development. Positive and significant coefficients for FDI and trade support the importance of international integration and technology imitation. A negative and significant lagged GDP per capita indicates a catching up, non steady state process across China?s provinces.Highly significant human and real capital identifies the importance of these domestic growth restricting factors. However, other potentially important factors like labor or government expenditures are (surprisingly) insignificant or even negative. Further, in contrast to implications from NEG models indicators for urbanization and agglomeration do not contribute significantly.
    Keywords: international integration, regional development, FDI, China
    Date: 2008
  18. By: Gerardo Marletto
    Abstract: Orthodox economics sees transport as a market which can be made more sustainable by improving its self-regulating capacity. To date this static approach has not been able to limit the growing demand for transport and its increasing environmental impact. Better results might be obtained by using evolutionary and institutional economics. Starting from these theories, a sustainable transport policy should be based on three fundamental considerations. First, transport is not a market, but a sum of systems affected by path-dependence and lock-in phenomena. Second, transport is not sustainable because it is locked in environmentally sub-optimal systems. Third, structural changes in technologies and organisations, institutions, and values are needed to establish more sustainable transport systems. We give an example of the use of an institutional/evolutionary approach to sustainable transport policies in the transition from the system of mass motorisation to the new urban mobility system.
    Keywords: Sustainable transportation; Transport policy; Environmental economics; Institutional economics; Evolutionary economics
    JEL: B52 Q58 R40
    Date: 2008
  19. By: Jeremiah Hurley (Department of Economics, Centre for Health Economics and Policy Analysis, Department of Clinical Epidemiology and Biostatistics, McMaster University); Michel Grignon (Department of Economics, Centre for Health Economics and Policy Analysis, Department of Health, Aging and Society, McMaster University); Li Wang (Centre for Health Economics and Policy Analysis, Department of Clinical Epidemiology and Biostatistics, McMaster University); Tara McGrath (Accelerated Economics Training Program, Government of Canada)
    Abstract: Distance-related geographic barriers challenge the ability of health systems to allocate health care resources equitably according to need. The paper adapts the concentration-index approach, commonly used for measuring income-related equity, to assess distance-related equity in hospital utilization in the province of Ontario, Canada. The analysis is based on individual-level data from the Canadian Community Health Survey, which provides information on respondents’ hospital utilization, health status, demographic, socio-economic status and location, merged with data on Ontario hospitals, and a geo-coded measure of each respondent’s distance to the nearest general acute-care hospital. We find no evidence of a relationship between distance to the nearest hospital and either the probability of hospitalization or the annual number of hospital nights. Supplementary analyses provide insight into hypothesized pathways between distance and hospitalization. Although having a regular medical doctor is positively associated with distance to the nearest hospital, controlling for this does not affect the estimated distance-hospitalization relationship. Both the size and occupancy rate of the nearest hospital are correlated with distance and are strongly related to the probability of hospitalization, but again controlling for these factors did not affect the estimated relationship between hospital use and distance to the nearest hospital. We do, however, find a strong positive gradient between the probability of hospitalization and distance to the nearest large hospital. This gradient is driven by the fact that, for most of those far from a large hospital, the nearest hospital is small with a low occupancy rate. Calculation of the distance-related horizontal inequity index confirms no distance-related inequity in hospital utilization when distance is measured to the nearest hospital of any size; however, when distance is instead measured to the nearest large hospital, we observe large, pro-distance inequity. These distance-use relationships are not captured by traditional geographic measures based on measures of urbanization/ruralness.
    Keywords: hospital utilization, equity, geography
    Date: 2008
  20. By: Naude, Wim; McGillivray, Mark; Rossouw, Stephanie
    Abstract: A small but growing literature has been concerned about the economic (and environmental) vulnerability on the level of countries. Less attention is paid to the economic vulnerability of different regions within countries. By focusing on the vulnerability of subnational regions, our paper contributes to the small literature on the ?vulnerability of place?. We see the vulnerability of place as being due to vulnerability in various domains, such as economic vulnerability, vulnerability of environment, and governance, demographic and health fragilities. We use a subnational dataset on 354 magisterial districts from South Africa, recognize the potential relevance of measuring vulnerability on a subnational level, and construct a local vulnerability index (LVI) for the various districts. We condition this index on district per capita income and term this a vulnerability intervention index (VII) interpreting this as an indicator of where higher income per capita, often seen in the literature as a measure of resilience, will in itself be unlikely to reduce vulnerability.
    Keywords: vulnerability, regional development, decentralization, South Africa
    Date: 2008
  21. By: Jolanda Hessels; Kashifa Suddle; Willem Hulsink
    Abstract: In this contribution we develop a theoretical framework derived from the national system of innovation literature and the subsequent criticisms voiced by regional scientists and industry/technology experts who emphasize the importance of the intermediate subnational and sectoral levels to analysing science- and technology-based regional entrepreneurship in the Netherlands. The national system of innovation of the Netherlands, and its specifics and peculiarities, and the country's general entrepreneurship policy, and the most important policy and support initiatives are subsequently discussed. Based on a desire to overcome the knowledge paradox between fundamental research and market needs and on the recognition that the Netherlands lags behind other countries when it comes to innovative entrepreneurship, various changes and initiatives were recently introduced in the Netherlands. The impresson is of an overambitious national government with numerous programmes, schemes and agencies involved, sometimes working with each other but at other times separately as well, and its effectiveness can be questioned. Serious paperwork and preparation is involved in the participation in most programes and, together with the complexity of these programmes and policies, small and young entrepreneurs are neither informed, ready or wellequipped; some of them are not even interested in participating in those schemes.
    Date: 2008–09–16
  22. By: Eathington, Liesl; Swenson, David A.
    Abstract: The geographic concentration of the state’s minority population within a relatively small number of diverse neighborhoods suggests an additional important dimension for analysis and begs an important question: How do these racially and ethnically diverse neighborhoods differ from less diverse areas of the state? Furthermore, what are the implications for these concentrations of racial or ethnic diversity for homeownership and business development?
    JEL: R0
    Date: 2008–09–17
  23. By: Aaberge, Rolf (Statistics Norway); Langørgen, Audun (Statistics Norway); Mogstad, Magne (Statistics Norway); Østensen, Marit (Statistics Norway)
    Abstract: Despite a broad consensus on the need to take into account the value of public services and geographical cost of living differences when measuring poverty, there is little reliable evidence on how these factors actually affect poverty estimates. Unlike the standard approach in studies of the distribution of public services, this paper employs a method for valuing sector-specific local public services that allows for differences between municipalities in unit costs for providing public services. Furthermore, recipient frequencies in various demographic groups are used as the basis for determining the allocation of the value of these services on citizens of the municipalities. Geographical differences in living costs are taken into account by using municipal housing price indices or by replacing the country-specific poverty line with municipal-specific poverty lines. Applying Norwegian register data for the period 1993-2001, we find that disregarding the value of local public services and geographical cost of living differences yields a misleading picture of poverty.
    Keywords: geographical cost of living differences, in-kind transfers, public services, poverty, housing price indices, municipal-specific poverty lines
    JEL: D31 H72 I30
    Date: 2008–09
  24. By: Giaccaria Sergio (University of Turin); Talarico Antonio; Bravi Marina
    Abstract: Several empirical studies have established that tenure choice and households mobility decisions are highly correlated (Ozyildirim et al., 2005). In the literature, there have been two methods that have used to estimate tenure choice models. The first uses a sample of recent movers while the second employs a sample of all households. Other approaches are mixed (Painter, 2000). This work refers on the results of an empirical analysis, developed to the urban level, by a sample of movers (renters and homeowners). The main goal is to test if homeownership is systematically preferred to leasing and if the housing affordability effect can be estimated by a tenure choice model. A random utility approach is used to model observed choices of renterswithin and between rent and property markets. The analytical results confirm, as expected, the strong trend to the homeownership for the families of renters. But, in current economic situation, the high value of the rent is systematically associated with a reduced chance of changing for the medium-income households. Monetary estimates of affordable rents are given in the last part of the paper, conditioned to the income level, the family size and the previous and actual level of affordability.
    Date: 2008–11
  25. By: Bennmarker, Helge (IFAU - Institute for Labour Market Policy Evaluation); Mellander, Erik (IFAU - Institute for Labour Market Policy Evaluation); Öckert, Björn (IFAU - Institute for Labour Market Policy Evaluation)
    Abstract: Using a Difference-in-Differences approach we evaluate the effects of a 10 percentage points reduction in the payroll tax introduced in 2002 for firms in the northern part of Sweden. We find no employment effects for existing firms and can rule out that a 1 percentage point payroll tax reduction would increase employment with more than 0.2 percent. We do, however, find that tax reductions have significantly positive effects on the average wage bill per employee. These are likely to be driven by higher average wages, but might also be due to more hours worked. As a sensitivity check we investigate if reduced payroll taxes affect the likelihood of firm entry and exit, and find some support for a net firm inflow. Our attempts to assess concomitant effects on employment indicate that payroll tax reductions might yield increases in employment through the start-up of new firms.
    Keywords: Payroll tax; Labour demand; Incidence; Firm entry/exit; Difference-in-Differences
    JEL: H22 J23 J38 J58 J68
    Date: 2008–09–05

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