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on Urban Economics and Policy |
| By: | Nicolás Forteza (BANCO DE ESPAÑA); José M. Labeaga (UNIVERSIDAD NACIONAL DE EDUCACIÓN A DISTANCIA, SPAIN) |
| Abstract: | Low emission zones (LEZs) have emerged as a primary policy instrument to combat urban air pollution in Europe, yet rigorous evidence on their effectiveness and spatial spillovers remains limited. Using a high-resolution geospatial panel dataset covering 1km grid cells across 33 European countries from 2007 to 2022, we estimate that LEZ adoption reduces PM2.5 exposure by approximately 4% within designated zones. We find robust evidence of positive spillovers: pollution also declines in areas adjacent to LEZ boundaries. These average effects mask substantial heterogeneity: reductions are concentrated in larger, denser cities and in cities with medium-sized zones relative to total urban area, while the smallest cities and zones show no detectable effect. These findings suggest LEZs generate city-wide environmental benefits extending beyond formal boundaries, consistent with network effects and technology spillovers dominating displacement mechanisms. To contextualize these results, we estimate the pollution-density elasticity for European cities using instrumental variables based on historical settlement patterns, finding that a 1% increase in population density raises PM2.5 exposure by 6% (approximately half the magnitude documented for US cities). We interpret our findings through a spatial equilibrium model that formalizes how LEZs alter the pollution production function in monocentric cities. Our results indicate that moderate-stringency LEZs, as typically implemented across Europe, deliver meaningful aggregate pollution reductions of approximately 1.8% city-wide, with modal shift complementarities and fleet renewal mechanisms dominating traffic displacement effects. |
| Keywords: | low emission zones, air pollution, PM2.5, urban density |
| JEL: | I10 Q53 Q58 R11 R12 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:bde:wpaper:2621 |
| By: | Adrian Fernandez-Perez (University College of Dublin); Marta Gómez-Puig (Universitat de Barcelona); Simón Sosvilla-Rivero (Universidad Complutense de Madrid) |
| Abstract: | This paper contributes to the literature on real estate market dynamics by analysing rental and sales price behaviour in Spain’s two largest cities —Madrid and Barcelona— between May 2007 and December 2024. Using monthly data from Idealista.com, Spain’s leading real estate platform, we detect episodes of explosive dynamics in both markets, examine their key determinants, and investigate contagion effects across cities and market segments. Our results show that, although relatively few episodes of price explosiveness occurred, they were of substantial duration. We also find evidence of contagion: explosive behaviour in rental markets precedes similar dynamics in sales prices, overall in recent years, highlighting the pivotal role of rental markets in driving housing price surges. Among the key determinants, a higher number of hotel stays is associated with a reduced probability of rapid housing price escalation, suggesting that more hotel-based tourists may help stabilise real estate markets in both cities. Additionally, rising interest rates are also linked to a lower risk of explosive episodes. In contrast, increasing resident numbers significantly raises the likelihood of a sharp housing price acceleration, whereas higher unemployment mitigates it. These findings offer critical insights for housing policy and market monitoring in major urban areas. Concretely, they suggest that housing policies should prioritise the rental market, not only because it impacts the most vulnerable groups, but also because pressures in the rental sector often extend into the sale market. On the other hand, policies that encourage the relocation of residents to areas with lower housing demand (e.g., improving the interurban transport network) or promote the issuance of housing certificates could help mitigate the risk of explosive housing price behaviour. |
| Keywords: | Explosive price dynamics, local projections, contagion, real estate markets |
| JEL: | R |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:inf:wpaper:2026.03 |
| By: | Yusuf Emre Akgunduz; Muhammed Hamza Kayrici |
| Abstract: | This paper investigates the impact of the February 2023 Türkiye earthquakes on housing markets in unaffected regions using online real estate listings and a time-based Regression Discontinuity Design. We document a sharp post-disaster demand shock driven by large-scale population displacement, with effects concentrated in the residential rental market. Consistent with a residential displacement shock, no significant effects are detected in commercial property markets. Price increases were highly segmented: pressures were strongest for multi-room units, reflecting the larger family structures of displaced households, and for newly constructed units, indicating a post-disaster flight-to-safety. Cross-sectional province-level and difference-in-differences estimates show that pre-existing migration networks and geographic distance are the primary determinants of rental price pressures. |
| Keywords: | Natural disasters, Housing markets, Rental prices, Internal displacement, Migration networks, Regression discontinuity design |
| JEL: | C21 Q54 R21 R23 R31 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:tcb:wpaper:2613 |
| By: | Kota Ogasawara |
| Abstract: | This study examines the impact of the 1923 Great Kanto Earthquake on population distribution within Tokyo City. The earthquake triggered massive fires that devastated nearly half of the city, including much of its urban core. To investigate its consequences, I digitized systematic census statistics and conducted regression analyses using variation in fire damage across areas. The results show that land readjustment implemented as part of the reconstruction project reduced residential land area within the burned area, leading to higher unit rents. Although the total residential floor area eventually recovered through the construction of multi-story dwellings, the population of the burned area remained below its pre-earthquake level throughout the period examined. In addition, the zoning system established before the earthquake had little effect on population redistribution. These findings suggest that post-disaster population distribution was shaped primarily by market-based price adjustments rather than institutional regulations. The analysis further shows that rising rents reduced the number of kinship households while increasing incentives for workers to rent rooms as lodgers. The rent burden borne by lodgers, relative to that borne by landlords, was lower in the burned area, making housing sharing an effective response. Overall, the post-disaster population decline in the burned area reflected the net effect of two opposing forces: population loss driven by rising rents and population retention through increased housing sharing among worker households seeking to mitigate those rent increases. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.02978 |
| By: | Egger, Dennis; Faber, Benjamin; Li, Ming; Lin, Wei |
| Abstract: | We combine a new collection of microdata from China with a natural policy experiment to investigate the extent to which reductions in rural-urban migration barriers affect flows of trade and investments between cities and the countryside. We find that increases in worker eligibility for urban residence registration (Hukou) across origin-destination pairs increase rural-urban exports, imports, capital inflows and outflows, both in terms of bilateral transaction values and the number of unique buyer-seller matches. To quantify the implications at the regional level, we interpret these estimates through the lens of a spatial equilibrium model in which migrants can reduce buyer-seller matching frictions. We find that a 10% increase in a rural county's migration market access on average leads to a 1.5% increase in the county's trade market access and a 2% increase in investment market access. In the context of China's recent Hukou reforms, we find that these knock-on effects on market integration were on average larger among the urban destinations compared to the rural origins, reinforcing incentives for rural-urban migration. |
| Keywords: | Economic development; market integration |
| JEL: | F63 O12 R11 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20521 |
| By: | Henderson, J. Vernon; Libano-Monteiro, Francisco; Manara, Martina; Michaels, Guy; Regan, Tanner |
| Abstract: | Urban planning has shaped cities for millennia, demarcating property rights and mitigating coordination failures, but its rigidities often conflict with market-driven development, which reflects preferences. Although planning is widespread in high-income countries, rapidly growing cities in the developing world are characterized by urban informality. Despite its importance, urban planning lacks an $economic$ framework to evaluate planners' choices. This paper offers a starting framework and applies it to a flagship project in Dar es Salaam, Tanzania, which partitioned greenfield land on the urban fringe into more than 36, 000 formal plots that people purchased and built homes on. To study this project, we assemble a novel dataset using administrative records, satellite imagery, and primary surveys. We develop and estimate a dynamic model in which planning design constrains the decisions of households of varying incomes to sort into formal areas. This model complements our reduced-form analysis, which uses within-neighborhood variation and spatial RD to study planning choices' effects. We find that the project secured property rights and access, raised land values relative to unplanned areas, and attracted highly educated owners. Within project areas, access to main paved roads, gridded layouts, and natural amenities are valued; plot development and public service provision have been slow; and the price elasticity of bare land with respect to plot size is -0.5. Counterfactual analysis using the model shows that while land value maximization involves the provision of larger plots, welfare maximization entails the provision of smaller plots to serve more lower-income people. |
| Keywords: | Africa |
| JEL: | R58 R31 O18 R14 O21 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20245 |
| By: | Desmet, Klaus; Nagy, Dávid Krisztián; Rossi-Hansberg, Esteban |
| Abstract: | This paper studies how human capital shapes the economic geography of development. We develop a model in which the cost of acquiring human capital varies across space, and regions with higher human capital innovate more. Locations are spatially connected through migration and trade. There are localized agglomeration economies, and human-capital-augmenting technology diffuses across space. Using high-resolution data on income and schooling, we quantify and simulate the model at the 1° x 1° resolution for the entire globe. Over the span of two centuries, the model predicts strong persistence in the spatial distribution of development — unlike spatial dynamic models without human capital, which predict convergence. Proportionally lowering the cost of education in sub-Saharan Africa or Central and South Asia raises local outcomes but reduces global welfare, whereas the same policy in Latin America improves global outcomes. An alternative policy equalizing educational costs across sub-Saharan Africa generates relatively worse outcomes, as population reallocates within the region toward less productive areas. Central to these results is the estimated negative correlation between the education costs and local fundamentals, as well as inefficiencies in the spatial allocation due to externalities. |
| Keywords: | Human capital; Geography; Development; Education policy; Global inequality; Dynamic spatial models |
| JEL: | E24 F10 I24 J24 O11 O18 O33 R12 R23 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20671 |
| By: | Chikis, Craig A.; Kleinman, Benny; Prato, Marta |
| Abstract: | Most U.S. innovation output originates from firms that operate R&D facilities across multiple local markets. We study how this geographic structure influences aggregate innovation and growth, and whether it is socially optimal. First, we develop an endogenous growth model featuring multi-market innovative firms that generate knowledge spillovers to geographically proximate firms. In equilibrium, firms may operate in too few or too many local markets, depending on how sensitive the local spillovers they generate are to their local size. Second, to quantify these effects, we link the model to data on firms’ R&D locations, patents, and citation networks. Using an event-study design, we show that firms’ spatial expansion increases spillovers to other firms and estimate how these spillovers depend on a firm’s local footprint. Our estimates imply that U.S. innovative firms operate in too few markets relative to the social optimum. Third, using quantitative counterfactuals, we find that policies promoting broader spatial scope yield larger welfare gains than standard R&D subsidies. Moreover, unlike R&D subsidies, such policies can also reduce regional inequality. |
| Keywords: | Innovation |
| JEL: | O30 O40 R10 L10 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20408 |
| By: | DeBonis, Riccardo; Liberati, Danilo; Muellbauer, John; Rondinelli, Concetta |
| Abstract: | Most econometric policy models at central banks use a ‘representative agent’ aggregate consumption function in which net worth (summing all household assets less debt) proxies for balance sheet effects and borrowing and liquidity constraints are absent. This conventional formulation is inconsistent with heterogeneous agent behaviour under uncertainty in incomplete markets. Using aggregate quarterly Italian data from 1980-2019, our more general model rejects the above formulation. We instead find different marginal propensities to consume out of liquid and less liquid wealth components. Moreover, rising housing prices have a dual effect on consumption, increasing housing wealth for owners, and worsening housing affordability. |
| JEL: | E32 E44 E51 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20766 |
| By: | Kompil Mert; Proietti Paola; Dorati Chiara (European Commission - JRC); Jacobs-crisioni Chris; Dijkstra Lewis (European Commission - JRC) |
| Abstract: | This study examines the drivers of population change in EU settlements, focusing on villages and towns, and analyses the influence of local characteristics and broader area-based factors on population trends. Settlements are defined using the Degree of Urbanisation method at a one-square-kilometre spatial resolution, enabling consistent cross-country comparisons. Comparing the 2021 and 2011 censuses, the study identifies patterns of population change related to key settlement dimensions, including: I) spatial characteristics and functional ranking, II) demographic characteristics, III) quality of infrastructure, spatial and digital accessibility, IV) public and private service provision and tourism capacity, and V) geographical and climate-related characteristics. Results indicate that faster population growth is associated with higher employment rates, a larger share of working-age and foreign-born residents, larger area, proximity to cities, beaches, and train stations, presence of public services (e.g., schools and hospitals), robust road and broadband infrastructure, as well as status as a city, capital city, or regional centre or part of a Functional Urban Area (FUA). In contrast, population decline is linked to higher initial population density and population size, more hot or frosty days, higher tourism capacity, proximity to national land borders, and location within a Functional Rural Area (FRA). |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:termod:202604 |
| By: | André Luis Squarize Chagas (Department of Economics, University of São Paulo) |
| Abstract: | Regional policies often affect untreated but spatially exposed units, making standard difference-in-differences comparisons difficult to interpret. This paper develops a treatment-exposure framework for regional policy evaluation with spatial spillovers. It shows that two-way fixed effects estimators that omit exposure conflate the direct treatment effect with spillover and treated-exposure components whose signs depend on the exposure design. A decomposed specification separates direct effects, spillovers on untreated exposed units, and reinforcement among treated exposed units, provided that the spatial weights matrix is specified as a causal exposure mapping before estimation. The paper translates these conditions into an identification protocol for selecting, diagnosing, and challenging exposure mappings. An application to London’s Ultra Low Emission Zone estimates a direct NO2 reduction of 6.6 percent and an implied reduction of 6.2 percent at the mean positive exposure level among untreated exposed units. Spatially bounded evaluations restricted to directly treated units may understate the affected population and misstate the costs and benefits of the intervention. |
| Keywords: | spatial spillovers; difference-in-differences; regional policy evaluation; exposure mapping; spatial counterfactuals; Ultra Low Emission Zone |
| JEL: | C21 C23 C31 C54 R11 R58 Q53 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ris:nereus:023113 |
| By: | Daniel Fetter; Lee Lockwood; Paul Mohnen |
| Abstract: | Both historically and today, support of aging parents has largely taken the form of in-kind transfers that require physical proximity, such as housing and caregiving. If Social Security substitutes for such support, it can relax constraints on where recipients' children live and work. We investigate the long-run intergenerational effects of the early Social Security program, exploiting within-occupation, cross-industry differences in coverage, and a new dataset linking parents to their children's later-life outcomes. We find that sons whose parents had greater predicted coverage moved farther from their childhood homes, earned more, and lived in better neighborhoods late in life. We find no such effects for daughters, who tended to provide forms of support less easily replaced by Social Security. The gains considerably exceeded the associated Social Security benefits for the average family, with migration to better-matched labor markets a likely key driver. We propose that the early program enabled families to realize gains from migration that were back-loaded, uncertain, and difficult to contract on. |
| Keywords: | Social Security; social insurance; old-age support; intergenerational transfers; coresidence; geographic mobility; internal migration; intergenerational mobility; linked census data; New Deal; public pensions |
| JEL: | H55 N32 J61 R23 J14 D15 |
| Date: | 2026–07–16 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedawp:103553 |
| By: | Manysheva, Kristina; Mestieri, Marti; Schauer, Johanna |
| Abstract: | Despite the formal end of Apartheid in 1994, South Africa remains one of the most unequal countries in the world. This paper investigates the mechanisms behind this persistence of inequality by developing a spatial dynastic model with heterogeneous agents, incomplete markets, and endogenous choices over education, occupation, savings, and location. Drawing on newly assembled micro-geographic data, we document a shift in inequality from being primarily across races to increasingly within the Black population, with spatial segregation — especially the legacy of Townships — playing a key role. Our model, disciplined by detailed spatial and socioeconomic data, captures the slow intergenerational convergence in education and occupational outcomes observed in post-Apartheid South Africa. It shows how inherited spatial disadvantages — through high commuting costs, disparities in school quality, and limited access to credit — continue to shape households’ educational, occupational, and locational choices, reinforcing inequality long after formal legal barriers have been removed. Quantitatively, we find that removing persistent spatial distortions in Townships accelerates the transition to a race-blind equilibrium by 40% and reduces income inequality by 10%. |
| Keywords: | Inequality; Segregation |
| JEL: | D5 D63 E24 J62 O11 O18 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20472 |
| By: | Edcleutson de Souza Silva (Federal University of Paraíba); André Luis Squarize Chagas (Department of Economics, University of São Paulo); Carlos Roberto Azzoni (Department of Economics, University of São Paulo); Aléssio Tony Cavalcanti de Almeida (Federal University of Paraíba); Wallace Patrick Santos de Farias Souza (Federal University of Paraíba) |
| Abstract: | Wind power deployment is often framed as a source of regional job creation, but its local economic incidence may be sectorally uneven and spatially dispersed. This paper estimates the effects of wind farm expansion on formal labor markets in North eastern Brazil from 2004 to 2019. Using an annual panel of 1, 478 municipalities and a spatial difference-in-differences design, we estimate direct effects on host municipalities and spillover effects on nearby municipalities across industry, commerce and services, and agriculture. The results indicate a pattern of sectoral reallocation rather than broad-based employment growth. Host municipalities experience large short-run gains in industrial employment and establishment counts, while agricultural employment declines, with the strongest evidence in the short run and persistent negative point estimates at longer horizons. Neighboring municipalities also exhibit negative labor market spillovers, especially in industrial wages and wage bills and in short-run agricultural employment and wage bills. Exploratory analyses suggest more negative point estimates in inland municipalities and among low-skilled agricultural workers, although these results are based on smaller effective samples. The findings show that wind farms operate not only as energy-capacity investments, but also as spatially targeted infrastructure shocks with uneven distributive effects across sectors, workers, and municipalities. They also underscore the importance of accounting for spatial spillovers when designing quasi-experimental evaluations of renewable energy infrastructure. |
| Keywords: | wind power deployment; renewable energy infrastructure; local labor markets; spatial spillovers; difference-in-differences; just transition |
| JEL: | Q42 Q43 R11 R23 J21 C23 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ris:nereus:023114 |