nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2005‒09‒11
seventeen papers chosen by
Steve Ross
University of Connecticut

  1. A Model of Regional Housing Markets in England and Wales By Arnab Bhattacharjee; Chris Jensen-Butler
  2. Determinants of City Growth in Brazil By Daniel da Mata; U. Deichmann; J. Vernon Henderson; Subir V. Lall; H.G. Wang
  3. Causes of sprawl: A portrait from space By Marcy Burchfield; Henry G. Overman; Diego Puga; Matthew A. Turner
  4. Experimental Analysis of Neighborhood Effects By Jeffrey R. Kling; Jeffrey B. Liebman; Lawrence F. Katz
  5. Social Networks in Labor Markets By Antoni Calvo-Armengol; Yannis M. Ioannides
  6. Where do human capital externalities end up? By Alberto Dalmazzo; Guido de Blasio
  7. How Do House Prices Affect Consumption? Evidence From Micro Data By John Y. Campbell; João F. Cocco
  8. The Diffusion of Mexican Immigrants During the 1990s: Explanations and Impacts By David Card; Ethan G. Lewis
  9. Commitment, Risk, and Consumption: Do Birds of a Feather Have Bigger Nests? By Stephen H. Shore; Todd Sinai
  10. Employment Effects of Dispersal Policies on Refugee Immigrants: Empirical Evidence By Piil Damm, Anna; Rosholm, Michael
  11. Immigrants’ Location Preferences: Exploiting a Natural Experiment By Piil Damm, Anna
  13. Local Factors and Innovativeness – An Empirical Analysis of German Patents for Five Industries By T. Broekel; T. Brenner
  14. Heritage and Agglomeration: The Akron Tire Cluster Revisited By G. Buenstorf; S. Klepper
  15. Vehicle Choices, Miles Driven, and Pollution Policies By Ye Feng; Don Fullerton; Li Gan
  16. The Long and Winding Road: Social Capital and Commuting By Poulsen, Odile; Svendsen, Gert Tinggaard
  17. Bootstrapping Hedonic Price Indices: Experience From Used Cars Data By Michael Beer

  1. By: Arnab Bhattacharjee; Chris Jensen-Butler
    Abstract: We propose and estimate an economic model of regional housing markets in England andWales, incorporating both the macroeconomic relationships between prices, demand and supply and a microeconomic model of search, matching and price formation. The empirical model, estimated separately for each of the 10 government office regions in England and Wales, validates the economic model. However, we find substantial heterogeneity across the regions, which is potentially useful in informing housing and land-use policies. In addition, the model allows completely unrestricted inter-regional spatial relationships. The estimated spatial autocorrelations imply different drivers of spatial diffusion in different regions, the understanding of which can be improved by further work.
    Keywords: Housing markets; Search and matching; Spatial diffusion; Housing demand; Housing Supply.
    JEL: R21 R31 R33 C31
    Date: 2005–06
  2. By: Daniel da Mata; U. Deichmann; J. Vernon Henderson; Subir V. Lall; H.G. Wang
    Abstract: In this paper, we examine the determinants of Brazilian city growth between 1970 and 2000. We consider a model of a city, which combines aspects of standard urban economics and the new economic geography literatures. For the empirical analysis, we constructed a dataset of 123 Brazilian agglomerations, and estimate aspects of the demand and supply side as well as a reduced form specification that describes city sizes and their growth. Our main findings are that increases in rural population supply, improvements in inter-regional transport connectivity and education attainment of the labor force have strong impacts on city growth. We also find that local crime and violence, measured by homicide rates impinge on growth. In contrast, a higher share of private sector industrial capital in the local economy stimulates growth. Using the residuals from the growth estimation, we also find that cities who better administer local land use and zoning laws have higher growth. Finally, our policy simulations show that diverting transport investments from large cities towards secondary cities do not provide significant gains in terms of national urban performance.
    JEL: O R
    Date: 2005–08
  3. By: Marcy Burchfield; Henry G. Overman; Diego Puga; Matthew A. Turner
    Abstract: We study the extent to which US urban development is sprawling and consider what determines differences in sprawl across space. Using remote-sensing data to track the evolution of land use on a grid of 8.7 billion 30x30 metre cells, we measure sprawl as the amount of undeveloped land surrounding an average urban dwelling. On this measure, while the extent of sprawl remained roughly unchanged between 1976 and 1992, it varied dramatically across metropolitan areas. Ground water availability, temperate climate, rugged terrain, decentralized employment, early public transport infrastructure, uncertainty about metropolitan growth, and unincorporated land in the urban fringe all increase sprawl.
    JEL: R14 O51
  4. By: Jeffrey R. Kling; Jeffrey B. Liebman; Lawrence F. Katz
    Abstract: Families, primarily female-headed minority households with children, living in high-poverty public housing projects in five U.S. cities were offered housing vouchers by lottery in the Moving to Opportunity program. Four to seven years after random assignment, families offered vouchers lived in safer neighborhoods that had lower poverty rates than those of the control group not offered vouchers. We find no significant overall effects of this intervention on adult economic self-sufficiency or physical health. Mental health benefits of the voucher offers for adults and for female youth were substantial. Beneficial effects for female youth on education, risky behavior, and physical health were offset by adverse effects for male youth. For outcomes exhibiting significant treatment effects, we find, using variation in treatment intensity across voucher types and cities, that the relationship between neighborhood poverty rate and outcomes is approximately linear.
    JEL: H43 I18 I38 J38
    Date: 2005–08
  5. By: Antoni Calvo-Armengol; Yannis M. Ioannides
    Abstract: Research in sociology and economics point to important role for social networks in labor markets. Social contacts mediate propagation of rich and reliable information among indi- viduals and thus help workers find jobs and employers find employees. Recent theoretical advances show that for agents connected through networks employment is positively cor- related across time and agents, unemployment exhibits duration dependence, and inequal- ity can persist. Recent empirical findings underscore nonlinearities in social interactions and potentially important effects of self-selection. Socioeconomic characteristics can explain substantial spatial dependence in unemployment.
    Keywords: networks, labor markets, social connections, unemployment, proximity, spatial dependence, information networks, neighborhoods and jobs
    JEL: D85 A14 J64 J31 J70 L14
    Date: 2005
  6. By: Alberto Dalmazzo (University of Siena); Guido de Blasio (Bank of Italy)
    Abstract: Recent literature has aimed at evaluating human capital externalities by estimating the effect of human capital on wages at urban level. We argue that this methodology might not identify properly human capital spillovers. We consider a general equilibrium model based on Roback (1982) where both wages and rents are simultaneously determined at the local level. We show that human capital externalities cannot be identified unless the joint effect of local human capital on both wages and rents is considered. Empirically, we study the effects of local human capital on household-level rents and individual-level wages for a sample of Italian local labour markets. Our results show a positive and robust effect of local human capital on rents. This unambiguously demonstrates that the concentration of human capital at the local level generates positive externalities. As for the relative importance of consumption and production externalities, our results suggest that the two effects have a similar impact on wages.
    Keywords: human capital; externalities; local markets
    JEL: R0 J0 I2
    Date: 2005–06
  7. By: John Y. Campbell; João F. Cocco
    Abstract: Housing is a major component of wealth. Since house prices fluctuate considerably over time, it is important to understand how these fluctuations affect households' consumption decisions. Rising house prices may stimulate consumption by increasing households' perceived wealth, or by relaxing borrowing constraints. This paper investigates the response of household consumption to house prices using UK micro data. We estimate the largest effect of house prices on consumption for older homeowners, and the smallest effect, insignificantly different from zero, for younger renters. This finding is consistent with heterogeneity in the wealth effect across these groups. In addition, we find that regional house prices affect regional consumption growth. Predictable changes in house prices are correlated with predictable changes in consumption, particularly for households that are more likely to be borrowing constrained, but this effect is driven by national rather than regional house prices and is important for renters as well as homeowners, suggesting that UK house prices are correlated with aggregate financial market conditions.
    JEL: D1 G1
    Date: 2005–08
  8. By: David Card; Ethan G. Lewis
    Abstract: Mexican immigrants were historically clustered in a few cities, mainly in California and Texas. During the past 15 years, however, arrivals from Mexico established sizeable immigrant communities in many "new" cities. We explore the causes and consequences of the widening geographic diffusion of Mexican immigrants. A combination of demand-pull and supply push factors explains most of the inter-city variation in inflows of Mexican immigrants over the 1990s, and also illuminates the most important trend in the destination choices of new Mexican immigrants – the move away from Los Angeles. Mexican inflows raise the relative supply of low-education labor in a city, leading to the question of how cities adapt to these shifts. One mechanism, suggested by the Hecksher Olin model, is shifting industry composition. We find limited evidence of this mechanism: most of the increases in the relative supply of low-education labor are absorbed by changes in skill intensity within narrowly defined industries. Such adjustments could be readily explained if Mexican immigrant inflows had large effects on the relative wage structures of different cities. As has been found in previous studies of the local impacts of immigration, however, our analysis suggests that relative wage adjustments are small.
    JEL: J61
    Date: 2005–08
  9. By: Stephen H. Shore; Todd Sinai
    Abstract: We show that incorporating consumption commitments into a standard model of precautionary saving can complicate the usual relationship between risk and consumption. In particular, we present a model where the presence of plausible adjustment costs can cause a mean-preserving increase in unemployment risk to lead to increased consumption. The predictions of this model are consistent with empirical evidence from dual-earning couples. Couples who share an occupation face increased risk as their unemployment shocks are more highly correlated. Such couples spend more on owner-occupied housing than other couples, spend no more on rent, and are more likely to rent than own. This pattern is strongest when the household faces higher moving costs, or when unemployment insurance provides a less generous safety net.
    JEL: E21 R21 D8
    Date: 2005–08
  10. By: Piil Damm, Anna (Department of Economics, Aarhus School of Business); Rosholm, Michael (Department of Economics, University of Aarhus)
    Abstract: Do dispersal policies on refugee immigrants promote their labour <p> market outcomes? To investigate this we estimate the effects of location <p> characteristics and the average effect of geographical mobility <p> on the hazard rate into first job of refugee immigrants subjected to <p> the Danish Dispersal Policy 1986-1998. We correct for selection into <p> relocation to another municipality by joint estimation of the duration <p> of the first non-employment spell and time until relocation. <p> We find, first, that the hazard rate into first job is decreasing in the <p> local population size and the local share of immigrants. These findings <p> support dispersal policies. Second, on average geographical mobility <p> had large, positive effects on the hazard rate into first job, suggesting <p> that restrictions on placed refugees’ subsequent out-migration would <p> hamper labour market integration of ref
    Keywords: Dispersal Policies on Refugees; Employment Effects; Migration
    JEL: J15 J61 J64
    Date: 2005–09–02
  11. By: Piil Damm, Anna (Department of Economics, Aarhus School of Business)
    Abstract: This paper exploits a dispersal policy for refugee immigrants to <p> estimate the importance of local and regional factors for refugees’ location <p> preferences. <p> The main results of a mixed proportional hazard competing risks <p> model are that placed refugees react to high regional unemployment <p> and lack of a local immigrant population by migrating to large municipalities. <p> Lack of local fellow countrymen, however, increases the <p> exit rate to medium-sized as well as large municipalities. This finding <p> is likely to be a result of the dispersal policy. Finally, refugees react <p> strongly to assignment to small municipalities by migrating mainly to <p> medium-sized municipalities.
    Keywords: Location Preferences; Internal Migration; Immigrants; Dispersal Policies; Duration Analysis
    JEL: J15 R15
    Date: 2005–09–02
  12. By: Hutlkrantz, Lars (Department of Business, Economics, Statistics and Informatics); Armelius, Hanna (Uppsala universitet)
    Abstract: A full-scale road pricing seven months trial will be performed in Stockholm in 2006. The road tolls are bundled with major improvements of public transport. The trial will be followed by a local referendum. <p> We conduct numerical simulations with a model of modal choice to estimate the welfare effects of road tolls on commuters crossing the toll zone. We find that in the absence of revenue recycling, few commuters gain from the road-toll reform. However, the fraction who gain rises considerably when public transport is improved as planned in Stockholm.
    Keywords: Congestion charges; road tolls; distributional effects; modal choice
    JEL: H23 H54 R48
    Date: 2005–08–12
  13. By: T. Broekel; T. Brenner
    Abstract: A growing body of work emphasizes the role that the spatial component plays in the in the innovation process. These perspectives brought the region's infrastructure and its endowment with crucial factors into the focus of research. Given that these factors do significantly influence the innovativeness of local firms, it is important to identify precisely which regional characteristics matter. The aim of this paper is to identify a number of key influences out of a multitude of structural factors that are thought to influence the firm's innovation activity. We examine more than eighty variables that approximate the financial, geographical and social-economic factor endowment of a region. The variables are tested with a linear and log - linear model. The two staged procedure examines the variable's bivariate correlation with patent data of five industries. Based on these outcomes multivariate regression models are applied in the second stage. The results for the different models are compared and their advantages and disadvantages are discussed. We find a strong impact of economic agglomeration, extramural science institutions and human capital. In the case of human capital, especially the graduates at the technical colleges are collocated with high regional innovativeness. Furthermore, significant differences are observed for the five industries and for using the two models.
    Date: 2005–08
  14. By: G. Buenstorf; S. Klepper
    Abstract: We use new data on the location and background of entrants into the U.S. tire industry to analyze the factors that caused the industry to be so regionally concentrated around Akron, Ohio, a small city with no particular advantages for tire production. We analyze the states where firms entered and for the Ohio entrants the counties where they originated and entered, and we conduct various analyses of how proximity to other tire firms and to demanders affected the longevity of tire producers. We also examine how the heritage of the Ohio entrants influenced their longevity. Our findings suggest that the Akron tire cluster grew primarily through a process of organizational reproduction and heredity rather than through agglomeration economies, as has been commonly posited by scholars of the industry.
    Date: 2005–08
  15. By: Ye Feng; Don Fullerton; Li Gan
    Abstract: Mobile sources contribute large percentages of each pollutant, but technology is not yet available to measure and tax emissions from each vehicle. We build a behavioral model of household choices about vehicles and miles traveled. The ideal-but-unavailable emissions tax would encourage drivers to abate emissions through many behaviors, some of which involve market transactions that can be observed for feasible market incentives (such as a gas tax, subsidy to new cars, or tax by vehicle type). Our model can calculate behavioral effects of each such price and thus calculate car choices, miles, and emissions. A nested logit structure is used to model discrete choices among different vehicle bundles. We also consider continuous choices of miles driven and the age of each vehicle. We propose a consistent estimation method for both discrete and continuous demands in one step, to capture the interactive effects of simultaneous decisions. Results are compared with those of the traditional sequential estimation procedure.
    JEL: D12 H23 Q58
    Date: 2005–08
  16. By: Poulsen, Odile (Department of Economics, Aarhus School of Business); Svendsen, Gert Tinggaard (Aarhus University, Department of Public Policy)
    Abstract: We develop a two-sector model to analyze which kind of social <p> organization generates trust. Social capital is de…ned as trust. We examine two <p> communities: the bedroom community in which people commute long distance <p> to work and the virility community in which people do not commute to work. <p> The hypothesis is that people do not have time to interact spontaneously out- <p> side work in the bedroom community. We show that in the bedroom community <p> social capital cannot accumulate. Hence our results show that time spent in- <p> teracting with your neighbor must be added as an important production factor <p> when considering the formation of social capital in society. Thus, in a commu- <p> nity where agents only interact when producing output, social capital may not <p> accumulate To our knowledge, no such attempt to model social capital has yet <p> been undertaken and this gap or ‘missing link’in economic debates has to be <p> developed to grasp a more holistic understanding of the big di¤erences in the <p> wealth of nations or regions
    Keywords: Social capital; Two-Sector Model; Indeterminacy
    JEL: A12 C61 D90 O41
    Date: 2005–09–02
  17. By: Michael Beer (Department of Quantitative Economics)
    Abstract: Every hedonic price index is an estimate of an unknown economic parameter. It depends, in practice, on one or more random samples of prices and characteristics of a certain good. Bootstrap resampling methods provide a tool for quantifying estimation errors. Following some general reflections on hedonic elementary price indices, this paper proposes a case-based and a model-based bootstrap approach for estimating confidence intervals for hedonic price indices. Empirical results are obtained for a data set on used cars in Switzerland. A semi-logarithmic model is fit to monthly samples serving as the input to different index formulae. Finally, bootstrap confidence intervals are estimated for Jevons-type hedonic elementary price indices.
    Keywords: hedonic regression; hedonic price indices; bootstrap methods; confidence intervals; used cars
    JEL: C43 C15 E31 L62
    Date: 2005–07–22

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