nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2005‒01‒16
seven papers chosen by
Steve Ross
University of Connecticut

  1. On the Incidence of a Tax on Pure Rent with Infinite Horizons By Alberto Petrucci
  2. Housing Market Dynamics: On the Contribution of Income Shocks and Credit Constraints (Revised Version) By Ortalo-Magne, Francois; Rady, Sven
  3. Place of Work and Place of Residence: Informal Firing Networks and Labor Market Outcomes By Patrick Bayer; Stephen Ross; Giorgio Topa
  4. Drinking and Academic Performance in High School By Jeff DeSimone; Amy M. Wolaver
  5. Parental Education and Children’s Schooling Outcomes: Is the Effect Nature, Nurture, or Both? Evidence from Recomposed Families in Rwanda By Damien de Walque
  6. Localization and Corruption: Panacea or Pandora’s Box? By Tugrul Gurgur; Anwar Shah
  7. Self-Selection and Student Achievement By Honggao Cao

  1. By: Alberto Petrucci (LUISS G. Carli)
    Abstract: This paper studies the incidence of a tax on pure rent within an intertemporal optimizing model of capital accumulation and endogenous labor with infinite-lived agents. Two cases are considered for the labor market: the neoclassical theory, characterized by perfectly competitive wages and no unemployment, and the incentive-wage theory of the labor-turnover type, characterized by real wage rigidity and structural unemployment. In the neoclassical equilibrium, the land rent tax is unshifted when consumers are lump-sum compensated for the tax. If tax revenues are used to finance government spending, pure rent taxation increases employment, boosts capital accumulation and reduces real wage as well as land yield. In the incentive-wage economy, the land rent tax, regardless of the way in which tax proceeds are employed, always increases employment, capital stock, and land reward, but exerts an ambiguous effect on the wage rate.
    Keywords: Pure rent taxation, Capital formation, Land, Structural unemployment
    JEL: E21 E62 H22
    Date: 2004–12
  2. By: Ortalo-Magne, Francois; Rady, Sven
    Abstract: We propose a life-cycle model of the housing market with a property ladder and a credit constraint. We focus on equilibria which replicate the facts that credit constraints delay some households' first home purchase and force other households to buy a home smaller than they would like. The model helps us identify a powerful driver of the housing market: the ability of young households to afford the down payment on a starter home, and in particular their income. The model also highlights a channel whereby changes in income may yield housing price overshooting, with prices of trade-up homes displaying the most volatility, and a positive correlation between housing prices and transactions. This channel relies on the capital gains or losses on starter homes incurred by credit-constrained owners. We provide empirical support for our arguments with evidence from both the U.K. and the U.S.
    JEL: R21 G21 G12 E32
    Date: 2005–01
  3. By: Patrick Bayer; Stephen Ross; Giorgio Topa
    Abstract: We use a novel dataset and research design to empirically detect the effect of social interactions among neighbors on labor market outcomes. Specifically, using Census data that characterize residential and employment locations down to the city block, we examine whether individuals residing in the same block are more likely to work together than those in nearby but not identical blocks. We find significant evidence of social interactions: residing on the same versus nearby blocks increases the probability of working together by over 50 percent. We also provide evidence as to which types of matches between individuals result in greater levels of referrals. These findings are robust across various specifications intended to address concerns related to sorting and reverse causation. Further, our estimated match effects have a significant impact on a wide range of labor market outcomes more generally including employment and wages.
    JEL: J41 R14
    Date: 2005–01
  4. By: Jeff DeSimone; Amy M. Wolaver
    Abstract: This paper examines the relationship between drinking and academic performance for high school students in 2001 and 2003 Youth Risk Behavior Survey (YRBS) data. In particular, we attempt to determine the extent to which the observed negative association between alcohol use and grades reflects correlated unobserved factors rather than a true causal impact of drinking. Taking advantage of the abundant information the YRBS collects on behaviors that are potentially related with both drinking and academic performance, we estimate regressions that successively add proxies for risk and time preference, mental health and self-esteem, along with measures of other substances used. Results indicate that although estimated effects of drinking on grades are substantially reduced in magnitude when these additional covariates are included, they typically remain significantly negative. The impact on the extensive margin is over twice as large for binge drinking than for non-binge drinking, and binge drinking also has intensive margin effects that non-binge drinking does not. Drinking-related grade reductions are larger among those who are more risk averse and future-oriented. An absence of effects on outcomes with which drinking is likely associated in a non-causal way provides further support for our interpretation of the coefficient estimates as causal effects.
    JEL: I1 I2
    Date: 2005–01
  5. By: Damien de Walque (World Bank)
    Abstract: Educated parents tend to have educated children. But is intergenerational transmission of human capital more nature, more nurture, or both? De Walque uses household survey data from Rwanda that contains a large proportion of children living in households without their biological parents. The data allows him to separate genetic from environmental parental influences. The nonrandom placement of children is controlled by including the educational attainment of the absent biological parents and the type of relationship that links the children to their “adoptive” families. The results of the analysis suggest that the nurture component of the intergenerational transmission of human capital is important for both parents, contrary to recent evidence proposed by Behrman and Rosenzweig (2002) and Plug (2004). The author concludes that mothers’ education had no environmental impact on children’s schooling. Interestingly, mothers’ education matters more for girls, while fathers’ education is more important for boys. Finally, an important policy recommendation in the African context emerges from the analysis: the risk for orphans or abandoned children to lose ground in their schooling achievements is minimized if they are placed with relatives. This paper—a product of the Public Services Team, Development Research Group—is part of a larger effort in the group to understand the determinants of education and its intergenerational transmission.
    Keywords: Education
    Date: 2005–01–10
  6. By: Tugrul Gurgur; Anwar Shah (World Bank)
    Abstract: An extensive literature on the relationship between decentralization (or localization) and corruption has developed in recent years. While some authors argue that there is a positive relationship between decentralization and corruption, others claim that decentralization in fact leads to a reduction in the level of corruption. This important policy question has not yet been laid to rest since previous empirical work simply uses eclectic regressions and lacks a conceptual framework to discover the root causes of corruption. Gurgur and Shah attempt to fill this void by presenting a framework in identifying the drivers of corruption both conceptually and empirically to isolate the role of centralized decisionmaking on corruption. The following results emerge: • For a sample of 30 countries (developing and industrial), corruption is caused by a lack of service orientation in the public sector, weak democratic institutions, economic isolation (closed economy), colonial past, internal bureaucratic controls, and centralized decisionmaking. • Decentralization is found to have a negative impact on corruption, with the effect being stronger in unitary than in federal countries. This paper—a product of the Poverty Reduction and Economic Management Division, World Bank Institute—is part of a larger effort in the institute to exchange ideas on the reform of public sector governance.
    Keywords: Governance; Public Sector Management
    Date: 2005–01–12
  7. By: Honggao Cao (Institute for Social Research, University of Michigan)
    Abstract: Students in any schools are not a random collection from the population. They become schoolmates because of their parents' selections of school quality that are contingent on their genetic abilities and family background. Even specified correctly, the conventional educational production functions cannot be used to find the effects of school inputs or quality. Therefore, the weak or zero relationship between school inputs and student achievement widely documented in the literature by no means implies that school inputs or quality does not matter. Further, since students enter schools by self-selection, any observed differences in student achievement between public and private schools do not necessarily mean that these schools have any differences in the effectiveness of operation.
    Keywords: Self-selection, school quality, educational production function, student achievement
    JEL: I
    Date: 2005–01–08

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