nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2005‒05‒29
fourteen papers chosen by
Steve Ross
University of Connecticut

  1. The impact of teachers’ wages on students’ performance in the presence of heterogeneity and endogeneity. Evidence from Brazil. By Maresa, SPRIETSMA; Fabio, WALTENBERG
  2. A simple model of economic geography à la Helpman-Tabuchi By Yasuda, MURATA; Jacques-François, THISSE
  3. Early Literacy Achievements, Population Density and the Transition to Modern Growth By Raouf, BOUCEKKINE; David, DE LA CROIX; Dominique, PEETERS
  4. Putting new economic geography to the test: Free-ness of trade and agglomeration in the EU regions By Brakman, S.; Garretsen, H.; Schramm, M.
  5. The excess burden associated to characteristics of the goods: Application to housing demand By Amelia Bilbao; Celia Bilbao; José M. Labeaga
  6. Agricultural surplus, division of labour and the emergence of cities: A spatial general equilibrium model By Gilles Spielvogel
  7. The Effects of School Class Size on Length of Post-Compulsory Education: Some Cost-Benefit Analysis By Paul Bingley; Vibeke Myrup Jensen; Ian Walker
  8. Evidence of Environmental Migration: Housing values alone may not capture the full effects of local environmental disamenities By Trudy Ann Cameron; Ian McConnaha
  9. Market structure and environmental amenities in hedonic pricing of rural cottages By Mollard, A.; Rambonilaza, M.; Vollet, D.
  10. Urban Growth By Yannis Ioannides; Esteban Rossi-Hansberg
  11. The Effects of Critical Habitat Designation on Housing Supply: An Analysis of California Housing Construction Activity By Robert W. Paterson; Jeffrey E. Zabel
  12. The Impact of Direct Democracy on Public Education: Performance of Swiss Students in Reading By Justina A.V. Fischer
  13. The Poverty Concentration Implications of Housing Subsidies: A Cellular Automata Thought Experiment By Kevin Jewell

    Abstract: In this paper we estimate the effect of teachers’ wages on students’ achievement in a developing country. We use test scores of pupils enrolled in the 8th grade of primary school, surveyed in 2001 in Brazil. We regress individual student test scores on gross monthly teacher wages allowing for nonlinearities. Given the strong heterogeneity of Brazilian pupils and teachers, we estimate quantile regressions (QR), which provide, instead of a constant mean coefficient, a detailed characterization of the effect of teachers’ wages on conditional pupils’s scores. For the same reason, we also run separate regressions for private and public schools. We then account for potential endogeneity of teachers’ wages through the estimation of instrumental variables models (IV). Finally, we estimate two-stage least absolute deviation models (2SLAD), that allow us to cope simultaneously with the heterogeneity of the student-teacher relationship and with the endogeneity of teachers’s wages. Our results show that wages of language teachers have a small, but positive and significant effect, on student test scores in private schools, controlling for endogeneity, but that they are insignificant, or even negative, in public schools. We also observe that teacher wages show a decreasing effect as we move along the conditional distribution of scores. The same effects are found for mathematics teachers, but the results are less robust and the coefficients are smaller.
    Keywords: economics of education; human capital; resource allocation; eduction production functions; instrumental variables; two-stage least-squares; quatile regression; two-stage least absolute deviation
    JEL: I2 J24 J31
    Date: 2005–03–25
  2. By: Yasuda, MURATA; Jacques-François, THISSE
    Abstract: This paper explores the interplay between commodities’ transportation costs and workers’ commuting costs within a general equilibrium framework à la Dixit-Stiglitz. Workers are mobile and choose a region where to work as well as an intraurban location to live. We sow that a more integrated economy need not be more agglomerated. Instead, low transportation costs lead to the dispersion of economic activities. This is because workers are able to alleviate the burden of urban costs by being dispersed, while retaining a good access to all varieties. By contrast, low commuting costs foster the agglomeration of economic activities.
    Keywords: Commuting costs; urban costs; transportation costs; economic geography; agglomeration
    JEL: F12 R12
    Date: 2004–09–14
  3. By: Raouf, BOUCEKKINE; David, DE LA CROIX; Dominique, PEETERS
    Abstract: The transition from economic stagnation to sustained growth is often modelled thanks to “population-induced” productivity improvements, which are assumed rather than derived from primary assumptions. In this paper the effect of population on productivity is derived from optimal behavior. More precisely, both the number and location of education facilities are chosen optimally by municipalities. Individuals determine their education investment depending on the distance to the nearest school, and also on technical progress and longevity. In this setting, higher population density enables the set-up costs of additional schools to be covered, opening the possibility to reach higher educational levels. Using conterfactual experiments we find that one third of the rise in literacy can be directly attributed to the effect of density, while one sixth is linked to higher longevity and one half to technical progress. Moreover, the effect of population density in the model is consistent with the available evidence from England, where it is shown that schools were established at a high rate over the period 1540-1620.
    Keywords: Human Capital; Population Density; Education Investment;School Location;Technical Progress
    JEL: O41 I21 R12 J11
    Date: 2005–03–18
  4. By: Brakman, S.; Garretsen, H.; Schramm, M. (Groningen University)
    Abstract: Based on a new economic geography model by Puga (1999), we use the equilibrium wage equation to estimate two key structural model parameters for the NUTS II EU regions. The estimation of these parameters enables us to come up with an empirically based free-ness of trade parameter. We then confront the empirically grounded free-ness of trade parameter with the theoretical relationship between this parameter and the degree of agglomeration. This is done for two versions of our model: one in which labor is immobile between regions, and one in which labor is mobile between regions. Overall, and in line with related studies, our main finding is that agglomeration forces still have only a limited geographical reach in the EU. Agglomeration forces appear to be rather localized
    Date: 2005
  5. By: Amelia Bilbao; Celia Bilbao; José M. Labeaga
    Abstract: This paper shows that conditional subsidies aimed at certain kinds of goods do not merely generate the traditional excess burden: there is an alternative welfare loss as the distortion affects good characteristics rather than prices. We provide empirical evidence of the welfare loss after estimating a linear hedonic price model and using predicted prices in a quadratic almost ideal demand system for housing characteristics. We identify the sources of the losses and we also provide a monetary measure that suggests that, under plausible parameter values, it can be quantitatively high.
  6. By: Gilles Spielvogel (DIAL, Paris)
    Abstract: n this paper, we expose the economic conditions of cities emergence in a spatial general equilibrium framework. The presence of increasing returns based on the division of labour, transport costs and the possible existence of an agricultural surplus are enough to generate different possible urban equilibrium. A city may not be sustainable if internal transport costs are too high. On the other hand, a persistent migratory pressure may exist between the city and the surrounding rural hinterland if the urban labour market is saturated. In addition, we study the conditions of stability of the monocentric equilibrium in the different cases.
    Keywords: Urbanization, division of labour, agricultural surplus, monocentric urban system
    JEL: R13 R14 O18
  7. By: Paul Bingley (NCRR, University of Aarhus); Vibeke Myrup Jensen (NCRR, University of Aarhus); Ian Walker (University of Warwick, Institute for Fiscal Studies and IZA Bonn)
    Abstract: This paper is concerned with the relationship between class size and the student outcome - length of time in post-compulsory schooling. Research on this topic has been problematic partly because omitted unobservables, like parents’ incomes and education levels, are likely to be correlated with class size. Two potential ways to resolve this problem are to exploit either experimental or instrumental variation. In both cases, the methods require that the variation in both class size and the outcome should not be contaminated by other unobservable factors that affect the outcome - like family background. An alternative approach, which we pursue here, is to take advantage of variation in class size between siblings which allows unobservable family effects to be differenced out. Our aim is to provide estimates of the effect of class size and use these to conduct an evaluation of the costs and benefits of a reduction in class sizes.
    Keywords: class size, regression discontinuity, sibling differences
    JEL: I22 C23
    Date: 2005–05
  8. By: Trudy Ann Cameron (Department of Economics, University of Oregon); Ian McConnaha (Student, Department of Economics, University of Oregon)
    Abstract: In hedonic property value models, economists typically assume that changing perceptions of environmental risk should be captured by changes in housing prices. However, for long-lived environmental problems, we find that many other features of neighborhoods seem to change as well, because households relocate in response to changes in perceived environmental quality. We consider spatial patterns in census variables over three decades in the vicinity of four Superfund sites. We find many examples of moving and staying behavior, inferred from changes in the relative concentrations of a wide range of socio-demographic groups in census tracts near the site versus farther away.
    Keywords: hedonic property values, environmental disamenities
    JEL: Q53 R31 R11
    Date: 2005–01–01
  9. By: Mollard, A.; Rambonilaza, M.; Vollet, D.
    Abstract: Site-specific characteristics are attributes of tourism services for consumers and a factor influencing their costs and quality for producers. These services are a fine illustration of territorial rents. Using estimates from hedonic price equations, we test the role of environmental/territorial variables as services differentiation tools in the context of a non-competitive market, and recover the value of territorial rent generated by tourism managers' strategies. Two territories of reference are chosen, one currently benefiting from the renewed interest of the public, and a usual tourist destination. The results of a comparative analysis suggest that tourists' preferences for new destinations, combined with firms' strategies generate some catching up effect by emerging territories.
    JEL: Q21 Q26 R14
    Date: 2004
  10. By: Yannis Ioannides; Esteban Rossi-Hansberg
    Abstract: Urban growth refers to the process of growth and decline of economic agglomerations. The pattern of concentration of economic activity, and its evolution, has been found to be an important determinant, and in some cases the result, of urbanization, the structure of cities, the organization of economic activity, and national economic growth. The size distribution of cities is the result of the patterns of urbanization, which result in city growth and city creation. The evolution of the size distribution of cities is in turn closely linked to national economic growth.
    JEL: E0 O4 R0
    Date: 2005
  11. By: Robert W. Paterson; Jeffrey E. Zabel
    Abstract: Under the Endangered Species Act, the U.S. Fish and Wildlife Service is required to designate critical habitat for listed species. Designation could result in modification to or delay of residential development projects within habitat boundaries, generating concern over potential housing market impacts. This paper draws upon a large dataset of municipal-level (FIPS) building permit issuances and critical habitat designations in California over a 13-year period to identify changes in the spatial and temporal pattern of development activity associated with critical habitat designation. We find that the proposal of critical habitat results in a 20.5% decrease in the annual supply of housing permits in the short-run and a 32.6% decrease in the long-run. Further, the percent of the FIPS area that is designated as critical habitat significantly affects the number of permits issued. We also find that the impact varies across the two periods in which critical habitat is designated and by the number of years relative to when critical habitat was first proposed.
    Date: 2005
  12. By: Justina A.V. Fischer
    Abstract: This paper analyzes the impact of direct legislation at the cantonal level on the quality of public education in Switzerland, using a cross-section of individual data on reading performance similar to that used in the OECD-PISA study. For this purpose, a structural and a reduced form of an educational production function is estimated. The OLS esti­mate of a composite index of direct democracy supports the findings previously ob­tained for U.S. states in which initiative-driven tax limits have had a deleterious effect on student performance in public schools. For a more complete picture, the impact of direct democracy on several portions of the conditional test score distribution is also in­vestigated using a quantile regression method. The negative impact appears to be equal in size between the estimated quantiles and to occur exclusively through the budgetary channel. Moreover, the equipment of schools is found to matter for student per­formance. Finally, no redistributive influence on students attending the same class is found.
    JEL: H41 I28 H10
    Date: 2005–04
  13. By: Kevin Jewell
    Abstract: Looking at data from HUD’s low income housing tax credit database from 1987 to 2001, we examine how the US tax credit program has concentrated poverty in neighborhoods by offering advantages to developing low income housing projects in low income census tracts. We then use a simple Cellular Automata model to explore how alternative programs structures could impact economic diversity and poverty concentration. This model suggests that many widely dispersed fixed location affordable housing projects increase local economic diversity over alternative housing allocation rules. If policymakers wish align the Low Income Housing Tax Credit program with the goal of promoting economic diversity in our neighborhoods, they should restructure the bonus to reward to projects in areas without a concentration of subsidized housing.
    Keywords: low income housing tax credit; Residential Location; Simulation; segregation; cellular automata
    JEL: R14 R21 R31
    Date: 2005–05–22
  14. By: Olga Alonso-Villar (Dpto. de Economia Aplicada. Universidad de Vigo)
    Abstract: There is no doubt that people like to migrate to large cities because they can acquire a wider range of products and jobs, but also because they can exchange information and ideas in an easier way. In this respect, we will attempt to explain the formation of metropolitan areas through a general equilibrium model in which concentration emerges not only from the interaction between increasing returns to scale at the rm level, transport costs and the mobility of labor, but also from human capital externalities. Our aim is to underline the role of human capital as a factor that fosters both the agglomeration of the economic activity and cities' growth. The paper shows that there is new scope for government activities.
    Keywords: Monopolistic Competition; Agglomeration; Human Capital; Education

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