nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2005‒04‒03
seventeen papers chosen by
Steve Ross
University of Connecticut

  1. “What Gets Measured Gets Done”: Headteachers’ Responses to the English Secondary School By Deborah Wilson; Bronwyn Croxson; Adele Atkinson
  2. Sorting and Choice in English Secondary Schools By Simon Burgess; Brendon McConnell; Carol Propper; Deborah Wilson
  3. Consistent House Allocation By Ehlers,Lars; Klaus,Bettina
  4. People People: Social Capital and the Labor-Market Outcomes of Underrepresented Groups By Borghans,Lex; Weel,Bas,ter; Weinberg,Bruce
  5. Friendship Relations in the School Class and Adult Economic Attainment By Andrea Galeotti; Gerrit Müller
  6. Higher Education, Localization and Innovation: Evidence from a Natural Experiment By Andersson, Roland; John M. Quigley, John M.; Wilhelmsson, Mats
  7. Urban Health Status in Ahmedabad city: GIS based study of Baherampura, Kubernagar, and Vasna wards By Ramani K V; Mehandiratta Sweta; Patel Amit; Joshi Diptesh; Patel Nina
  8. Ethnic Enclaves and Welfare Cultures: Quasi-Experimental Evidence By Olof Åslund; Peter Fredriksson
  9. Financing Cities By Robert Inman
  10. Industrialization and Urbanization: Did the Steam Engine Contribute to the Growth of Cities in the United States? By Sukkoo Kim
  11. Asymmetric Crime Cycles By H. Naci Mocan; Turan G. Bali
  12. Does Competition Among Public Schools Benefit Students and Taxpayers? A Comment on Hoxby (2000) By Jesse Rothstein
  13. Competition Among Schools: A Reply to Rothstein (2004) By Caroline M. Hoxby
  14. The Economic Case for Fiscal Federalism in Scotland By Ronald MacDonald; Paul Hallwood
  15. Business Improvement Districts - An Approach for Retail-Area Revitalization in American Downtowns By Michael Rüscher
  16. Striking Out? The Economic Impact of Major League Baseball Work Stoppages on Host Communities By Victor Matheson; Robert Baade
  17. Gains and losses from tax competition with migration By Honkapohja, Seppo; Turunen-Red, Arja H.

  1. By: Deborah Wilson; Bronwyn Croxson; Adele Atkinson
    Abstract: English secondary schools operate within a performance management system, which includes league tables reporting school performance across a number of indicators. This paper reports the results of an interview-based study, showing that head teachers care about their school’s place in the league tables, and that they believe this system affects behaviour. The effects they identify include some unintended consequences, not necessarily related to improved overall school performance, including focusing on borderline students who can boost a pivotal indicator: the number of students gaining five A*-Cs at GCSE. This behaviour reflects, in part, the dual role played by headteachers: they are both educationalists (serving the interests of all pupils); and school marketers, concerned with promoting the school to existing and prospective parents. The behaviour is also consistent with economic theory, which predicts a focus on that which is measured, potentially at the expense of that which is important, in sectors characterised by incomplete measurement, by multiple stakeholders and containing workers with diverse objectives. We conclude that, given that performance indicators do affect behaviour, it is important to minimise unintended consequences, and we suggest the use of value-added indicators of student performance.
    Keywords: education, performance measures
    JEL: I2
    Date: 2004–08
  2. By: Simon Burgess; Brendon McConnell; Carol Propper; Deborah Wilson
    Abstract: This paper focuses on one of the outcomes arising from England’s choice based education system; the extent to which different types of pupils are sorted across schools. Pupil sorting will in turn impact on attainment outcomes, if there are peer group effects operating within schools. We consider three dimensions across which sorting may occur: ethnicity, income, and, for the first time using UK data, ability. We use a very large administrative dataset which contains linked histories of test scores for every pupil in England, as well as pupil level markers for ethnicity and low household income, and their home postcode (zip code). We first establish that choice is both feasible for and exercised by the majority of pupils in England. We then characterise and describe ability sorting and related it to feasibility of choice. We compare sorting across schools with sorting across neighbourhoods. We establish that post-residential school choice is an important component of the overall schooling decision. We show that there is a difference in the school-neighbourhood sorting relationship between areas that operate under different student-to-school assignment rules.
    Keywords: choice, segregation, schools
    JEL: I2
    Date: 2004–10
  3. By: Ehlers,Lars; Klaus,Bettina (METEOR)
    Abstract: In practice we often face the problem of assigning indivisible objects (e.g., schools, housing, jobs, offices) to agents (e.g., students, homeless, workers, professors) when monetary compensations are not possible. We show that a rule that satisfies consistency, strategy-proofness, and efficiency must be an efficient generalized priority rule; i.e., it must adapt to an acyclic priority structure, except - maybe - for up to three agents in each object''s priority ordering.
    Keywords: microeconomics ;
    Date: 2005
  4. By: Borghans,Lex; Weel,Bas,ter; Weinberg,Bruce (ROA rm)
    Abstract: Despite indications that interpersonal interactions are important for understanding individual labor-market outcomes and have become more important over the last decades, there is little analysis by economists. This paper shows that interpersonal interactions are important determinants of labor-market outcomes, including occupations and wages. We show that technological and organizational changes have increased the importance of interpersonal interactions in the workplace. We particularly focus on how the increased importance of interpersonal interactions has affected the labor-market outcomes of underrepresented groups. We show that the acceleration in the rate of increase in the importance of interpersonal interactions between the late 1970s and early 1990s can help explain why women’s wages increased more rapidly, while the wages of blacks grew more slowly over these years relative to earlier years.
    Keywords: education, training and the labour market;
    Date: 2005
  5. By: Andrea Galeotti (University of Essex, UK); Gerrit Müller (Erasmus Universiteit Rotterdam)
    Abstract: We analyze the impact of adolescents' friendship relations in their final-year class of high school on subsequent labor market success. Based on a typology of network positions we locate each student within the social system of the school class as either: an <I>isolate</I>, a <I>sycophant</I>, a <I>broker</I> or a <I>receiver</I>. These positions identify individuals' social standing within the group of classmates and proxy for their interpersonal behavior and social competencies. We offer empirical evidence that differential social standing in adolescence predicts large and persistent earnings disparities over the entire life course. The estimated wage premia and penalties do not appear to be substantially confounded by measures of family and school resources, and materialize largely independent of differences in cognitive abilities, grade rank in class or friends' characteristics. A moderate share of the earnings inequalities is mediated by differential post-secondary human and social capital investment. From a conceptual point of view, we contribute an application of egocentered network methods within conventional labor economic survey research.
    Keywords: friendship ties; social capital; earnings
    JEL: A14 I21 J31
    Date: 2005–03–23
  6. By: Andersson, Roland (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); John M. Quigley, John M. (University of CaliforniaBerkeley, CA, USA); Wilhelmsson, Mats (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: During the past fifteen years, government policy has decentralized post-secondary education in Sweden. We investigate the economic effects of this decentralization policy on the level of innovation and its spatial distribution in the Swedish economy. We rely upon micro data on patent activity over time, which records the home address of each patent awardee during the past eight years. These measures of innovation, together with data documenting the decentralization of university-based researchers and students, permit us to estimate the effects of exogenous changes in educational policy upon the extent and locus of innovative activity. We find important and significant effects of this policy upon the locus of knowledge production, suggesting that the decentralization has affected regional development through local innovation and increased creativity. We also find some evidence that this policy has affected the aggregate output of “knowledge industries.”
    Keywords: Higher Education; Localization; Innovation; Natural Experiment
    JEL: N34 O31 R11
    Date: 2005–03–18
  7. By: Ramani K V; Mehandiratta Sweta; Patel Amit; Joshi Diptesh; Patel Nina
    Abstract: Urbanization is an important demographic shift worldwide. Today, nearly half the world population is urban. In the 1991-2001 decade, Indian population grew by 2 %, urban India by 3 %, mega cities at 4 %, and slum population by 5 % (2-3-4-5 syndrome). Slum growth in future is expected to surpass the capacities of civic authorities to respond to health and infrastructure needs of this population group. Managing urban health, thus assumes critical importance to achieve better health outcomes in the country. Historically, Government of India’s focus has been on development of rural health system. However, since the 9th Five year Plan, Government has started giving priority to urban health as well, but hardly any progress has been achieved in this area. In this working paper, we discuss our initiatives in a pilot study of urban health management in Ahmedabad city, the seventh largest mega city in India with a population of 3.5 million consisting of 1.5 million people living in slums and slum-like conditions. Our objective is to understand the nature, magnitude, and complexity of issues in the management of urban health. Towards this, our pilot study focuses on three wards, in three different parts (zones) of Ahmedabad. Our GIS based analysis provides some very interesting insights into the status of health in the selected wards. Our next task is to understand private health care in Ahmedabad, analyze existing public private partnerships in the city, and thereby build a Model Urban Health Centre with Public private Participation.
    Keywords: Urban health, management, Public-private partnership
    Date: 2005–03–29
  8. By: Olof Åslund (IFAU); Peter Fredriksson (Uppsala University, CESIfo, IFAU and IZA Bonn)
    Abstract: We examine peer effects in welfare use among immigrants to Sweden by exploiting a governmental refugee placement policy. We distinguish between the quantity of contacts – the number of individuals of the same ethnicity – and the quality of contacts – welfare use among members of the ethnic group. OLS regressions suggest that both these factors are positively related to individual welfare use. Instrumental variables estimations yield the conclusion that only the quality of contacts matter. An increase of the fraction of the ethnic group on welfare by 10 percent raises the individual probability of welfare use by almost 7 percent.
    Keywords: immigrants, welfare use, ethnic concentration, welfare cultures
    JEL: I38 J15
    Date: 2005–03
  9. By: Robert Inman
    Abstract: The macro-economic and micro-economic evidences makes a persuasive case for cities as important centers for productive efficiency, innnovation, and economic growth. For cities to achieve their full economic potential, however, complementary public services are required. This paper reviews the arguments and the evidence for the efficient financing and governance of city public services. Against the criterion of efficiency, city services should be limited to those services valued by city residents; financing should assign residential taxes to residential services and business land taxes and fees to business services; and city governance should foster competition and choice.
    JEL: H11 H7 R38 R51
    Date: 2005–03
  10. By: Sukkoo Kim
    Abstract: Industrialization and urbanization are seen as interdependent processes of modern economic development. However, the exact nature of their causal relationship is still open to considerable debate. This paper uses firm-level data from the manuscripts of the decennial censuses between 1850 and 1880 to examine whether the adoption of the steam engine as the primary power source by manufacturers during industrialization contributed to urbanization. While the data indicate that steam-powered firms were more likely to locate in urban areas than water-powered firms, the adoption of the steam engine did not contribute substantially to urbanization.
    JEL: N60 N90 R38
    Date: 2005–03
  11. By: H. Naci Mocan; Turan G. Bali
    Abstract: Recent theoretical models based on dynamic human capital formation, or social influence, suggest an inverse relationship between criminal activity and economic opportunity and between criminal activity and deterrence, but predict an asymmetric response of crime. In this paper we use three different data sets and three different empirical methodologies to document this previously-unnoticed regularity. Using nonparametric methods we show that the behavior of property crime is asymmetric over time, where increases are sharper but decreases are gradual. Using aggregate time-series U.S. data as well as data from New York City we demonstrate that property crime reacts more (less) strongly to increases (decreases) in the unemployment rate, to decreases (increases) in per capita real GDP and to decreases (increases) in the police force. The same result is obtained between unemployment and property crime in annual state-level panel data. These results suggest that it may be cost effective to implement mechanisms to prevent crime commission rates from rising in the first place.
    JEL: K4
    Date: 2005–03
  12. By: Jesse Rothstein
    Abstract: In an influential paper, Hoxby (2000) studies the relationship between the degree of so-called "Tiebout choice" among local school districts within a metropolitan area and average test scores. She argues that choice is endogenous to school quality, and instruments with the number of larger and smaller streams. She finds a large positive effect of choice on test scores, which she interprets as evidence that school choice induces greater school productivity. This paper revisits Hoxby's analysis. I document several important errors in Hoxby's data and code. I also demonstrate that the estimated choice effect is extremely sensitive to the way that "larger streams" are coded. When Hoxby's hand count of larger streams is replaced with any of several alternative, easily replicable measures, there is no significant difference between IV and OLS, each of which indicates a choice effect near zero. There is thus little evidence that schools respond to Tiebout competition by raising productivity. <p> <a href=""> A data appendix for this paper is available online</a>
    JEL: H7 I2 R5
    Date: 2005–03
  13. By: Caroline M. Hoxby
    Abstract: Rothstein has produced two comments, Rothstein (2003) and Rothstein (2004), on Hoxby "Does Competition Among Public Schools Benefit Students and Taxpayers," American Economic Review, 2000. In this paper, I discuss every claim of any importance in the comments. I show that every claim is wrong. I also discuss a number of Rothstein's innuendos--that is, claims that are made by implication rather than with the support of explicit arguments or evidence. I show that, when held up against the evidence, each innuendo proves to be false. One of the major points of Rothstein (2003) is that lagged school districts are a valid instrumental variable for today's school districts. This is not credible. Another major claim of Rothstein (2003) is that it is better to use highly non-representative achievement data based on students' self-selecting into test-taking than to use nationally representative achievement data. This claim is wrong for multiple reasons. The most important claim of Rothstein (2004) is that the results of Hoxby (2000) are not robust to including private school students in the sample. This is incorrect. While Rothstein appears merely to be adding private school students to the data, he actually substitutes error-prone data for error-free data on all students, generating substantial attenuation bias. He attributes the change in estimates to the addition of the private school students, but I show that the change in estimates is actually due to his using erroneous data for public school students. Another important claim in Rothstein (2004) that the results in Hoxby (2000) are not robust to associating streams with the metropolitan areas through which they flow rather than the metropolitan areas where they have their source. This is false: the results are virtually unchanged when the association is shifted from source to flow. Since 93.5 percent of streams flow only in the metropolitan area where they have their source, it would be surprising if the results did change much. The comments Rothstein (2003) and Rothstein (2004) are without merit. All of the data and code used in Hoxby (2000) are available to other researchers. An easy-to-use CD provides not only extracts and estimation code, but all of the raw data and the code for constructing the dataset.
    JEL: H70 I20
    Date: 2005–03
  14. By: Ronald MacDonald (University of Glasgow); Paul Hallwood (University of Connecticut)
    Abstract: In this paper we consider the case for assigning tax revenues to Scotland, by which we mean that taxes levied on Scottish tax bases should be returned to the Scottish budget. The budget, however, would continue to be supplemented by transfers from the Westminster budget. This arrangement differs from the current situation whereby public spending is largely financed by a bloc grant from Westminster. Our suggestion falls short of full fiscal federalism for Scotland . meaning that Scotland had control over choice of tax base and of tax rates, and fiscal transfers from Westminster would be minimal. We use propositions drawn from the theory of fiscal federalism to argue for a smaller vertical imbalance between taxes retained in Scotland and public spending in Scotland. A closer matching of spending with taxes would better signal to beneficiaries the true costs of public spending in terms of taxes raised. It would also create more complete incentives for politicians to provide public goods and services in quantities and at qualities that voters are actually willing to pay for. Under the current bloc grant system, the marginal tax cost of spending does not enter into political agents. calculations as spending is out of a fixed total budget. Moreover, the Scottish electorate is hindered in signaling its desire for local public goods and services since the size of the total budget is determined by a rigid formula set by Westminster. At the present time we reject proposals for full fiscal federalism because in sharply reducing vertical imbalance in the Scottish budget, it is likely to worsen horizontal balance between Scotland and the other UK regions. Horizontal balance occurs where similarly situated regions enjoy the same per capita level of public goods and services at the same per capita tax cost. The complete removal of the bloc grant under full fiscal federalism would remove the mechanism that currently promotes horizontal equity in the UK. Variability in own-source tax revenues creates other problems with full fiscal federalism. Taxes derived from North Sea oil would constitute a large proportion of Scottish taxes, but these are known to be volatile in the face of variable oil prices and the pound-dollar exchange rate. At the present time variability in oil tax revenue is absorbed by Westminster. Scotland is insulated through the bloc grant. This risk sharing mechanism would be lost with full fiscal federalism. It is true that Scotland could turn to financial markets to tide itself over oil tax revenue downturns, but as a much smaller and less diversified financial entity than the UK as a whole it would probably have to borrow on less favorable terms than can Westminster. Scotland would have to bear this extra cost itself. Also, with full fiscal federalism it is difficult to see how the Scottish budget could be used as a macroeconomic stabilizer. At present, tax revenue downturns in Scotland - together with the steady bloc grant - are absorbed through an increase in vertical imbalance. This acts as an automatic stabilizer for the Scottish economy. No such mechanism would exist under full fiscal federalism. The borrowing alternative would still exist but on the less favorable terms - as with borrowing to finance oil tax shortfalls
    Keywords: Barnett formula, bloc grants, devolution, fiscal federalism, local public goods, oil taxes, regional economics, Scottish economy, soft budget constraint, tax assignment, UK economy, UK fiscal system.
    JEL: E62 H1 H61 H7 H87
    Date: 2004–07
  15. By: Michael Rüscher
    Date: 2005–03–31
  16. By: Victor Matheson (Department of Economics, College of the Holy Cross); Robert Baade (Department of Economics and Business, Lake Forest College)
    Abstract: Major League Baseball teams have used the lure of economic riches as an incentive for cities to construct new stadiums at considerable public expense. Estimates of the economic impact of a MLB on host communities have typically been in the vicinity of $300 million. Our analysis suggest these numbers are wildly inflated. Using the baseball strikes of 1981, 1994, and 1995 as test cases, we find the net economic impact for a MLB team on a host city of $16.2 million under one model and $132.3 million under a second modeLength: 34 pages
    Keywords: impact analysis, sports, baseball, strikes, sports economics
    JEL: L83 R53
    Date: 2005–04
  17. By: Honkapohja, Seppo; Turunen-Red, Arja H.
    Abstract: We consider international labor (entrepreneur) mobility in a two-country overlapping-generations model. Interactions of decreasing and increasing returns in production yield multiple equilibria that are stable under adaptive learning. Governments have an unilateral incentive to reduce income taxes at the joint optimum. We compare the Nash equilibrium in taxes under full labor mobility to the closed economy with no mobility. Despite strategic tax setting, the free mobility outcome is often better in welfare terms. Large, discrete gains in welfare may be attained because of the tax competition. Expectational barriers for discrete welfare improvements can be overcome through tax competition.
    Keywords: Tax policy, Mobility of labor, Multiple equilibria, Expectation traps
    JEL: H87 F22 H21
    Date: 2004–02–17

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