nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2005‒01‒09
nine papers chosen by
Steve Ross
University of Connecticut

  1. School Choice and the Flight to Private Schools: To What Extent Are Public and Private Schools Substitutes? By David Brasington
  2. Agglomeration, Transport, and Regional Development in Indonesia By Uwe Deichmann; Kai Kaiser; Somik V. Lall; Zmarak Shalizi
  3. Casinos, Crime, and Community Costs By Earl L. Grinols; David B. Mustard
  4. Are there booms and busts in the UK housing market? By Stuart Wattam
  5. Resolving the Identification Problem in Linear Social Interactions Models: Modeling with Between-Group Spillovers By Ethan Cohen-Cole
  6. Spatial Clustering, Inequality and Income Convergence By Mark V. Janikas; Sergio J. Rey
  7. Social Isolation and Inequality By Andrew Postlewaite; Dan Silverman
  8. Thresholds for Employment and Unemployment. A Spatial Analysis of German Regional Labour Markets 1992-2000 By Reinhold Kosfeld; Christian Dreger
  9. New Economic Geography By Hans-Friedrich Eckey; Reinhold Kosfeld

  1. By: David Brasington
  2. By: Uwe Deichmann (World Bank); Kai Kaiser; Somik V. Lall (World Bank); Zmarak Shalizi (World Bank)
    Abstract: How effective are public interventions in addressing significant regional disparities in formal manufacturing concentration in a developing economy? Deichmann, Kaiser, Lall, and Shalizi examine the aggregate and sectoral geographic concentration of manufacturing industries for Indonesia, and estimate the impact of factors influencing location choice at the firm level. They distinguish between natural advantage, including infrastructure endowments, wage rates, and natural resource endowments, and production externalities, arising from the co-location of firms in the same or complementary industries. The methodology pays special attention to empirically distinguishing the impact of measured production externalities from unobserved local characteristics. Depending on the sector, the authors find that a mix of both forms of regional advantage explains the geographic distribution of firms. Based on the estimated location choice model, they illustrate the potential impacts of policy interventions on manufacturing distribution by simulating the effectiveness of transport improvements on relocation of firms. The findings suggest that improvements in transport infrastructure may only have limited effects in attracting industry to secondary industrial centers outside of Java, especially in sectors already established in leading regions. The findings underscore the challenges for addressing the industrial fortunes of lagging regions, either through local decentralized policy interventions or national policies focused on infrastructure development. This paper—a product of the Infrastructure and Environment Team, Development Research Group—is part of a larger effort in the group to examine the impacts of spatial policy interventions on the location and performance of economic activity.
    Keywords: Infrastructure; Industry; Urban Development
    Date: 2005–01–06
  3. By: Earl L. Grinols (University of Illinois); David B. Mustard (University of Georgia)
    Abstract: We examine the relationship between casinos and crime using county-level data for the US between 1977 and 1996. Casinos were non-existent outside Nevada before 1978, and expanded to many other states during our sample period. Most factors that reduce crime occur before or shortly after a casino opens, while those that increase crime, including problem and pathological gambling, occur over time. The results suggest that the effect on crime is low shortly after a casino opens, and grows over time. Roughly 8 percent of crime in casino counties in 1996 was attributable to casinos, costing the average adult $75 per adult per year.
    Keywords: Crime, Casinos, Social Costs, Problem and Pathological Gambling
    JEL: K
    Date: 2005–01–05
  4. By: Stuart Wattam (MDR Associates)
    Abstract: This paper examines the historical record of UK house prices to establish if there is evidence to suggest that there have been significant changes in the prices of houses. It does this be examining a measure of affordability. This is defined as the average UK house price over the Average wage. This paper attempts to generate a simple model of the housing market and compares this with the actual data to make a forecast of likely movement
    Keywords: Houseprice, markets, booms
    JEL: E
    Date: 2005–01–06
  5. By: Ethan Cohen-Cole (University of Wisconsin - Madison)
    Abstract: The linear-in-means model has been a theoretical and empirical workhorse of the social interactions field. As was noted by Manski (1993), the collinearity between group-level 'contextual' and 'endogenous' effects leads to an inability to identify the structural parameters of this model. Manski called this the 'reflection' problem. This paper suggests that Manksi’s reflection problem is unique to a special case of a more general context in which agents care about multiple reference groups. Specifically, the identification problem is resolved through a model generalization to include between-group and within-group effects.
    Keywords: Social Interactions, Identification, Linear-in- Means Model
    JEL: C31 D10
    Date: 2005–01–03
  6. By: Mark V. Janikas (San Diego State University); Sergio J. Rey (San Diego State University)
    Abstract: This paper examines the relationship between spatial clustering and inequality at the county scale with overall state per capita income in the U.S. over the period 1969-2000. For each of the 48 coterminous states we examine measures of inequality and spatial clustering and explore how a state's overall income level may be influenced by, or influence, these measures. Our exploratory analysis utilizes the open- source package Space-Time Analysis of Regional Systems (STARS) to illustrate some new techniques for analyzing regional income dynamics. The results provide insight into the possible relationships between inequality, clustering and relative income levels, and generates a number of interesting avenues for future research.
    Keywords: spatial clustering; spatial dependence; inequality; convergence; geocomputation
    JEL: C21 O18 O51 R11 R12
    Date: 2005–01–06
  7. By: Andrew Postlewaite (Department of Economics, University of Pennsylvania); Dan Silverman (Department of Economics, University of Michigan)
    Abstract: There is an increasing interest in the concept of social exclusion and the related concept of social isolation and their potential role in understanding inequality. We examine the degree to which voluntary separation from social activities during adolescence affects adult wages. It is well-known that participation in high school athletic programs leads to higher adult wages. We present empirical evidence that this premium is not primarily due to selection on predetermined characteristics valued in the labor market.
    Keywords: Decision making; Bayesian; Behavioral Economics
    JEL: D81
    Date: 2004–02–01
  8. By: Reinhold Kosfeld (Author-Workplace-Name: Department of Economics, University of Kassel); Christian Dreger (Author-Workplace-Name: Institute for Economic Research Halle (IWH))
    Abstract: Changes in production, employment and unemployment are closely related over the course of the business cycle. However, as exemplified by the laws of Verdoorn (1949, 1993) and Okun (1962, 1970), thresholds seem to be present in the relationship. Due to capacity reserves of the firms, output growth must exceed certain levels for the creation of new jobs or a fall in the unemployment rate. In order to get efficient estimates of these bounds, we take a wide range of information into account. In particular, thresholds for employment and unemployment are determined on the grounds of 180 German regional labour markets. To capture cross section dependencies, a spatial SUR model is built up utilizing the eigenfunction decomposition approach suggested by Griffith (1996, 2000). The results indicate, that minimum output growth sufficient for a rise in employment is below the level which is needed for a simultaneous drop in the unemployment rate. Especially, the thresholds turn out to be about 1.2 and 2.2 percent, respectively. The ordering is related both to demographic changes and institutional settings on the labour market, such as the working of the unemployment benefit system. If spatial effects are not controlled for, the thresholds seem to be overrated.
    Keywords: Threshold employment and unemployment, regional labour markets, spatial filtering techniques, spatial SUR analysis
    JEL: C21 C23 E24 E32
    Date: 2004–01
  9. By: Hans-Friedrich Eckey (Author-Workplace-Name: Department of Economics, University of Kassel); Reinhold Kosfeld (Author-Workplace-Name: Department of Economics, University of Kassel)
    Abstract: The standard model of New Economic Geography (NEG) presents a synthesis of polarization and neo-classical theories. Within a monopolistic competition framework it aims to explain processes of concentration and deconcentration of manufacturing in a two-sector economy. In this paper the effects of several assumptions of spatial agglomeration processes are addressed. In particular, we investigate the effects of transport costs for agricultural goods, spatial spillovers, the presence of non-tradable services and limited mobility of the labour force. It becomes clear that the tendency towards deconcentration of manufacturing is more marked - the higher the transport costs for agricultural goods, - the stronger the positive spillovers across the regions, - the more income spent on services, - the more limited the mobility of the labour force.
    Keywords: Neue Ökonomische Geographie, Transportkosten, nicht handelbare Dienstleistungen, Spillovers
    JEL: R10 R12
    Date: 2004–11

This nep-ure issue is ©2005 by Steve Ross. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.