nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2005‒09‒29
forty-four papers chosen by
Steve Ross
University of Connecticut

  1. Assessing High House Prices: Bubbles, Fundamentals, and Misperceptions By Charles Himmelberg; Christopher Mayer; Todd Sinai
  2. Smart Cities: Quality of Life, Productivity, and the Growth Effect of Human Capital By Jesse M. Shapiro
  3. The Divergence of Human Capital Levels Across Cities By Christopher R. Berry; Edward L. Glaeser
  4. How Do Criminals Locate? Crime and Spatial Dependence in Minas Gerais By Frédéric Puech
  5. The Rent-Price Ratio for the Aggregate Stock of Owner-Occupied Housing By Morris A. Davis; Andreas Lehnert; Robert F. Martin
  6. Bi-Directional Impacts of Economic, Social and Environmental Changes and the New Zealand Housing Market By Arthur Grimes; Suzi Kerr; Andrew Aitken
  7. Housing and the macroeconomy: the role of implicit guarantees for government-sponsored enterprises By Karsten Jeske; Dirk Krueger
  8. Technology Adoption In and Out of Major Urban Areas: When Do Internal Firm Resources Matter Most? By Chris Forman; Avi Goldfarb; Shane Greenstein
  9. Optimal Commodity Taxation when Land and Structures must be Taxed at the Same Rate By Saku Aura; Thomas Davidoff
  10. Cities and Countries By Rose, Andrew K
  11. Housing, portfolio choice, and the macroeconomy By Pedro Silos
  12. Attracting redevelopment in “inner-ring” municipalities of U.S. metropolitan areas – focusing on Los Angeles and Boston By Sofia Dermisi
  13. Industry location patterns in metropolitan area office markets - Central Business Districts versus suburbs By Sofia Dermisi
  14. Urbanization Externalities, Market Potential and Spatial Sorting of Skills and Firms By Mion, Giordano; Naticchioni, Paolo
  15. Peer Effects and Social Networks in Education and Crime By Calvó-Armengol, Antoni; Patacchini, Eleonora; Zenou, Yves
  16. Airport-related noise, proximity, and housing prices in Atlanta By Jeffrey P. Cohen; Cletus C. Coughlin
  17. Regional Variation in Rental Costsfor Larger Households By Arthur Grimes; Robert Sourell; Andrew Aitken
  18. What’s the Beef with House Prices? Economic Shocks and Local Housing Markets By Arthur Grimes; Andrew Aitken
  19. Corporate location decision making in light of terrorism threaten city environments – The cases of New York and Chicago By Sofia Dermisi
  20. Towards better transport pricing and taxation in Belgium By Stef Proost; Inge Mayeres
  21. Bildungsreform und Werteerziehung: Eine ökonomische Betrachtung By Benedikt Langner
  22. Games of School Choice under the Boston Mechanism By Haluk Ergin; Tayfun Sönmez
  23. The impact of local predatory lending laws By Giang Ho; Anthony Pennington-Cross
  24. Heterogeneous Homebuyers, Mortgage Choice and the use of Mortgage Brokers By D. Duffy; M.J. Roche
  25. GSE Funding Advantages and Mortgagor Benefits: Answers from Asset Pricing By Willemann, Søren
  26. Identifying the Socioeconomic Determinants of Crime in Spanish Provinces By Paolo Buonanno and Daniel Montolio
  27. The Coordinate-Wise Core for Multiple-Type Housing Markets is Second-Best Incentive Compatible By Klaus,Bettina
  28. Education, Inequality and Violent Crime in Minas Gerais By Frédéric Puech
  29. The Law and Economics of Antidiscrimination Law By John J. Donohue III
  30. Defining Geographic Communities By Michelle Poland; David C Maré
  31. Intra- and Inter-Channel Competition in Local-Service Sectors By Cleeren, K.; Dekimpe, M.G.; Verboven, F.
  32. Spatial Cournot Oligopoly with Vertical Linkages By André Rocha; José Pedro Pontes
  33. Job Contact Networks and the Ethnic Minorities By Battu, Harminder; Seaman, Paul T; Zenou, Yves
  34. School Choice: An Experimental Study By Yan Chen; Tayfun Sönmez
  35. Political economy of municipal water service privatization in Spain: a duration model analysis By Miralles, A.
  36. Indirect investment in real estate: Listed companies and funds By Suarez, Jose L.; Vassalo, Amparo
  37. Municipal activation policy: A case study of the practical work with unemployed social assistance recipients By Hjertner Thorén, Katarina
  38. O Brother, Where Art Thou? The Effects of Having a Sibling on Geographic Mobility and Labor Market Outcomes By Helmut Rainer; Thomas Siedler
  39. On the Negative Relationship between Labor Income Uncertainty and Homeownership: Risk Aversion vs. Credit Constraints By Luis Diaz-Serrano
  40. Modeling Industrial Lot Sizing Problems: A Review By Jans, R.; Degraeve, Z.
  41. Banks, markets, and efficiency By Falko Fecht; Antoine Martin
  42. Status Equilibrium in Local Public Good Economies By Anne van den Nouweland; Myrna H. Wooders
  43. Implementation of Anti-Discrimination Policy: Does Judicial Selection Matter? By Besley, Timothy; Payne, A. Abigail
  44. Through Children's Eyes An Initial Study Of Children's Personal Experiences And Coping Strategies Growing Up Poor In An Affluent Netherlands By Tamara van der Hoek

  1. By: Charles Himmelberg; Christopher Mayer; Todd Sinai
    Abstract: We construct measures of the annual cost of single-family housing for 46 metropolitan areas in the United States over the last 25 years and compare them with local rents and incomes as a way of judging the level of housing prices. Conventional metrics like the growth rate of house prices, the price-to-rent ratio, and the price-to-income ratio can be misleading because they fail to account both for the time series pattern of real long-term interest rates and predictable differences in the long-run growth rates of house prices across local markets. These factors are especially important in recent years because house prices are theoretically more sensitive to interest rates when rates are already low, and more sensitive still in those cities where the long-run rate of house price growth is high. During the 1980s, our measures show that houses looked most overvalued in many of the same cities that subsequently experienced the largest house price declines. We find that from the trough of 1995 to 2004, the cost of owning rose somewhat relative to the cost of renting, but not, in most cities, to levels that made houses look overvalued.
    JEL: R21 R31 G10
    Date: 2005–09
  2. By: Jesse M. Shapiro
    Abstract: From 1940 to 1990, a 10 percent increase in a metropolitan area's concentration of college-educated residents was associated with a .8 percent increase in subsequent employment growth. Instrumental variables estimates support a causal relationship between college graduates and employment growth, but show no evidence of an effect of high school graduates. Using data on growth in wages, rents and house values, I calibrate a neoclassical city growth model and find that roughly 60 percent of the employment growth effect of college graduates is due to enhanced productivity growth, the rest being caused by growth in the quality of life. This finding contrasts with the common argument that human capital generates employment growth in urban areas solely through changes in productivity.
    JEL: R11 N92 J24
    Date: 2005–09
  3. By: Christopher R. Berry; Edward L. Glaeser
    Abstract: Over the past 30 years, the share of adult populations with college degrees increased more in cities with higher initial schooling levels than in initially less educated places. This tendency appears to be driven by shifts in labor demand as there is an increasing wage premium for skilled people working in skilled cities. In this paper, we present a model where the clustering of skilled people in metropolitan areas is driven by the tendency of skilled entrepreneurs to innovate in ways that employ other skilled people and by the elasticity of housing supply.
    JEL: J0
    Date: 2005–09
  4. By: Frédéric Puech (CERDI)
    Abstract: The aim of this paper is to investigate the existence of a spatial dependence of crime rates at a local level in the case of municipalities of Minas Gerais, one of the 26 Brazilian states. Results suggest the existence of a positive spatial autocorrelation of municipal violent crime rates. However, it also appears that violent crime against property and against persons do not follow the same spatial behavior. While violent economic crime seems to spread a lot, interpersonal violence is a much more localized phenomenon.
    Keywords: violent crime, spatial autocorrelation, Brazil
    JEL: C31 K42 I20 R12
    Date: 2005–09–17
  5. By: Morris A. Davis (federal reserve board); Andreas Lehnert (federal reserve board); Robert F. Martin (federal reserve board)
    Abstract: We construct a time series of the rent-price ratio for the owner- occupied stock of housing, starting in 1960:1, by merging micro data from the last five Decennial Censuses of Housing with price indexes for house prices and rents.
    Keywords: House Prices, Housing, Rents, CMHPI, Capitalization Rates
    JEL: R
    Date: 2005–09–19
  6. By: Arthur Grimes (Motu Economic & Public Policy Research); Suzi Kerr (Motu Economic & Public Policy Research); Andrew Aitken (Motu Economic & Public Policy Research)
    Abstract: This report was prepared for the Centre for Housing Research Aotearoa New Zealand (CHRANZ). The aim of this study is to identify a set of housing research projects addressing two related topics. First, the impact of economic, social and environmental changes on housing in New Zealand's non-metropolitan regions; and second, the economic, social and environmental impacts of the New Zealand housing market. Identification of these projects is designed to help CHRANZ in developing and prioritising its research agenda pertaining to policy-relevant housing research within New Zealand. By doing so, we aim to outline coherent programmes of research that develop a comprehensive body of knowledge about the housing sector and its interactions with other key elements of society. The study suggests a set of research questions leading to coherent programmes of research, rather than to answer the research questions. We concentrate on posing questions that are of policy concern. Some are matters of current official policy concern. Others relate to issues that non-official sources consider should be of policy concern or which we judge may become of official concern in future years. Thus our analysis is informed by current policy priorities, but seeks to take a strategic look also at forthcoming priorities that may emerge over the next five years.
    Keywords: Housing markets, Housing policy
    JEL: R21 R31
    Date: 2005–09–12
  7. By: Karsten Jeske; Dirk Krueger
    Abstract: This paper studies the macroeconomic effects of implicit government guarantees of the obligations of government-sponsored enterprises. We construct a model with competitive housing and mortgage markets in which the government provides banks with insurance against aggregate shocks to mortgage default risk. We use this model to evaluate aggregate and distributional impacts of this government subsidy of owner-occupied housing. Preliminary findings indicate that the subsidy leads to higher equilibrium housing investment, higher mortgage default rates, and lower welfare. The welfare effects of this policy vary substantially across members of the population with different economic characteristics.
    Date: 2005
  8. By: Chris Forman; Avi Goldfarb; Shane Greenstein
    Abstract: How much do internal firm resources contribute to technology adoption in major urban locations, where the advantages from agglomeration are greatest? The authors address this question in the context of a business's decision to adopt advanced Internet technology. Drawing on a rich data set of adoption decisions by 86,879 U.S. establishments, the authors find that the marginal contribution of internal resources to adoption is greater outside of a major urban area than inside one. Agglomeration is therefore less important for highly capable firms. The authors conclude that firms behave as if resources available in cities are substitutes for both establishment-level and firm-level internal resources.
    JEL: R30 O33 L86
    Date: 2005–09
  9. By: Saku Aura; Thomas Davidoff
    Abstract: We show that the optimal property tax rate rises with the ratio of land rents to structure and land development costs. California’s high ratio of income to property tax revenue and the distribution of Federal housing subsidies thus appear geographically misplaced. Proportional taxation of non-housing commodities is not optimal, even when elasticities with respect to wages are identical. Absent externalities, the desirability of transportation taxes and “anti-sprawl” growth controls hinge on the relative importance of time versus money in commuting costs.
    JEL: H21 R13
    Date: 2005
  10. By: Rose, Andrew K
    Abstract: If one ranks cities by population, the rank of a city is inversely related to its size, a well-documented phenomenon known as Zipf's Law. Further, the growth rate of a city's population is uncorrelated with its size, another well-known characteristic known as Gibrat's Law. In this paper, I show that both characteristics are true of countries as well as cities; the size distributions of cities and countries are similar. But theories that explain the size-distribution of cities do not obviously apply in explaining the size-distribution of countries. The similarity of city- and country-size distributions is an interesting riddle.
    Keywords: distribution; empirical; Gibrat; growth; logarithm; mean; rank; size; Zipf
    JEL: F00 R12
    Date: 2005–09
  11. By: Pedro Silos
    Abstract: Much of the macroeconomics literature dealing with wealth distribution has become abstracted from modeling housing explicitly. This paper investigates the properties of the wealth distribution and the portfolio composition regarding housing and equity holdings and their relationship to macroeconomic shocks. To this end, I construct a business cycle model in which agents differ in age, income, and wealth and derive utility from housing services. The model is consistent with several facts such as the life-cycle pattern of housing-to-wealth ratios, the larger degree of concentration for nonhousing wealth, and the smaller weight of housing in richer households’ portfolios as well as the larger housing-to-wealth ratios in recessions. In addition, the model delivers the familiar business-cycle moments regarding relative standard deviations and procyclicality of consumption, investment, and employment.
    Date: 2005
  12. By: Sofia Dermisi (Roosevelt University)
    Abstract: This paper examines the underlying socio-economic conditions that are likely to explain redevelopment activity in the “inner-ring” municipalities of a metropolitan area. The area of study consists of 54 municipalities within Los Angeles county limits and 33 municipalities in the Boston metropolitan area. The time length covered is from 1970 through 2000, focusing on the rate of change in socioeconomic and development conditions from 1970 to 2000 and 1980 to 2000. Among the selected municipalities for the two metropolitan areas, we focused on two groupings based on income - those with median household income within the 20th – 50th percentile and those within the 51st – 100 percentile. The results indicate that local socioeconomic conditions appear to have greater impact on property values in the Los Angeles area than in Boston. Although, new residential activity seems to be influenced by socioeconomic trends in Los Angeles, the empirical analysis in both cities indicates that other factors, such as public incentives, may impact new development activity more significantly.
    JEL: R
    Date: 2005–09–12
  13. By: Sofia Dermisi (Roosevelt University)
    Abstract: This paper is an initial study of the location patterns among Information, Finance Insurance & Real Estate companies locating in Central Business Districts (CBD) versus suburbs, using SIC/NAICS codes at the zip code level. These patterns are initially studied through statistical analysis and then their effect on the probability of a company locating at a CBD versus the suburbs is determined through econometric modeling of real estate office market and economic parameters. In addition, the effect of all these factors on both areas’ vacancy rate is also studied. The studied cities include Atlanta, Boston, Chicago, Washington and Los Angeles with the study period being from 1998 through 2001, with quarterly data.
    JEL: R
    Date: 2005–09–12
  14. By: Mion, Giordano; Naticchioni, Paolo
    Abstract: Using a matched employer-employee dataset on Italy we look at the spatial distribution of wages among provinces. We find evidence of both urbanization and market potential externalities, with the second one being more relevant. However, spatial sorting of skills is at work and explains a great deal of spatial wage variability. We further show that this sorting is only partially due to migrations and it dampens estimates of spatial externalities. The evidence concerning the sorting of firms is instead quite weak. In the paper, we also find support of self-selection of migrants based on skills and a moderate evidence of the wage growth hypothesis. Finally, we show that the well-established correlation between the employer size and workers' skills is not simply the outcome of a co-location phenomenon.
    Keywords: firms' heterogeneity; panel data; skills; sorting; spatial externalities
    JEL: J31 J61 R23 R30
    Date: 2005–08
  15. By: Calvó-Armengol, Antoni (ICREA and Universitat Autònoma de Barcelona); Patacchini, Eleonora (Università di Roma "La Sapienza"); Zenou, Yves (The Research Institute of Industrial Economics)
    Abstract: This paper studies whether structural properties of friendship networks affect individual outcomes in education and crime. We first develop a model that shows that, at the Nash equilibrium, the outcome of each individual embedded in a network is proportional to her Bonacich centrality measure. This measure takes into account both direct and indirect friends of each individual but puts less weight to her distant friends. Using a very detailed dataset of adolescent friendship networks, we show that, after controlling for observable individual characteristics and unobservable network specific factors, the individual's position in a network (as measured by her Bonacich centrality) is a key determinant of her level of activity. A standard deviation increase in the Bonocich centrality increases the level of individual delinquency by 45% of one standard deviation and the pupil school performance by 34% of one standard deviation.
    Keywords: Centrality Measure; Peer Influence; Network Structure; Delinquency; School Performance
    JEL: A14 I21 K42
    Date: 2005–07–05
  16. By: Jeffrey P. Cohen; Cletus C. Coughlin
    Abstract: Using hedonic pricing models, we focus on the effects of proximity and noise on housing prices in neighborhoods near Hartsfield-Jackson Atlanta International Airport. We find that proximity to the Atlanta airport is related positively to housing prices and that airport-related noise is associated with lower prices. Relative to this latter result, estimates are generated showing evidence of a shrinking noise discount between 1995 and 2002. An important question is whether this result reflects a reduced effect of a given noise level on house prices or declining noise levels in the areas subject to relatively more noise. One explanation is that soundproofing of houses in noisy areas has increased their values. A lack of data, however, prevents definitive statements concerning the importance of soundproofing. A second explanation is that the trend reflects the limitations of the underlying noise contours. Over time, houses in the neighborhoods near the airport have been subjected to less airport-related noise. Evidence is presented consistent with this explanation.
    Keywords: Housing - Prices ; Airports
    Date: 2005
  17. By: Arthur Grimes (Motu Economic & Public Policy Research); Robert Sourell (Motu Economic & Public Policy Research); Andrew Aitken (Motu Economic & Public Policy Research)
    Abstract: Housing costs comprise a major part of most household budgets. Larger households require greater space than do smaller households but do not necessarily have larger incomes. The cost of extra housing space (e.g. the cost of an extra bedroom) may vary across different locations, both absolutely (dollars per week) and proportionately (percentage of overall costs). If this is the case, differential regional costs of additional space may provide an incentive for different sized households to locate in particular areas where housing costs most appropriately fit their needs. Our analysis uses tenancy bond rental data to analyse the cost of renting an extra bedroom in different locations throughout New Zealand. It discusses the theory of what determines rents. We then examine the nature of regional rental costs, testing whether the documented patterns fit with theoretical predictions. Finally, we reflect on what the results may imply for social outcomes and housing policy in New Zealand. To give a flavour of the issues, consider the following. In 2003, the average weekly rental cost of a two bedroom dwelling in Auckland was $37 more than for a one bedroom dwelling. The cost of a third bedroom was an extra $50 and the cost of a fourth bedroom was an additional $90. Thus weekly rental cost for a four bedroom dwelling exceeded that of a one bedroom dwelling by $177. In Manawatu-Wanganui, the cost of a two bedroom dwelling was $38 more than for a one bedroom dwelling - almost identical to the margin in Auckland. But the cost of additional bedrooms was much lower than in Auckland: $29 for a third bedroom and $33 for a fourth bedroom. This raw data might suggest that it would be beneficial for larger households to locate in Manawatu-Wanganui and for smaller households to locate in Auckland. However, the interaction with other factors has to be taken into account before such a conclusion can be reached. At the minimum, the data suggests there is a material issue to be addressed relating to disparities in regional housing costs for different sized households.
    Keywords: House Rents; Deprivation; Regional Disparities
    JEL: R21 R31 R51
    Date: 2005–09–12
  18. By: Arthur Grimes (Motu Economic & Public Policy Research); Andrew Aitken (Motu Economic & Public Policy Research)
    Abstract: We examine the impact of shocks on community outcomes. The shocks that we examine are exogenous economic shocks which occur externally to the local community, and which are hypothesised to impact on the community. By testing the impact of these shocks on community developments, we enrich understanding of what causes communities to develop as they do over time. In particular, we gain a greater understanding of the impact of factors largely or wholly outside the control of local communities which lead to inequality in outcomes between communities. To focus our analysis, we concentrate on the price of houses within each community as the community outcome variable. The local price of houses summarises, in one dimension, a host of tangible and intangible components relating to the community of interest. We use a multivariate panel structure to estimate the long-run and short-run impacts of price, production and demographic variables on real house prices.
    Keywords: House prices, commodity prices, regional shocks, adjustment dynamics
    JEL: R10 R21
    Date: 2005–09–12
  19. By: Sofia Dermisi (Roosevelt University)
    Abstract: For many years, corporate location decision-making has been based, among numerous factors, on proximity to transit sources, concentration of qualified employees, relationship with peer and other institutions. Downtowns of major cities have always offered significant benefits in all the aforementioned areas compared to remote locations, attracting corporations in significant numbers. After the terrorist attacks of September 11, 2001 in the U.S., corporations are highly concerned not only with their security at high-risk downtown locations but also with cost of redundant locations. This paper examines the corporate relocation patterns of tenants of the World Trade Center complex after its collapse and the psychological shockwaves the terrorist attack spread to Chicago, a city with a major concentration of corporations and the site of the tallest office building in the U.S. The results of the study indicate a very limited disperse of corporate tenants of the former World Trade Center complex beyond Manhattan, a trend not followed by Chicago. The paper also highlights additional reasoning for the diverse effect of terrorism in an impacted city (New York) versus a city under threat (Chicago).
    JEL: R
    Date: 2005–09–12
  20. By: Stef Proost (K.U.Leuven-Center for Economic Studies; UCL - CORE); Inge Mayeres (Federal Planning Bureau, Brussels)
    Abstract: Starting from the fundamental principles of transport pricing the paper discusses the relative merits of a number of policy measures. It is argued that in the short to medium run the discouragement of the purchase of new diesel cars is the most important environmental measure that can be taken. A further increase in the fuel efficiency is no priority. In the same time frame parking charges and a cordon toll around major cities have an important role to play, while subsidies to public transport are justified only if a number of conditions are met. A toll on trucks is mainly an interesting way to make transit traffic pay taxes, but could be less useful to control the congestion levels. In the long run prices should be based on marginal social costs. Such pricing measures should be accompanied by a well-directed use of the revenues to correct for the effects on the poorest income groups.
    Keywords: Transport Pricing, transport taxes, transport externalities
    Date: 2005–03
  21. By: Benedikt Langner
    Abstract: Recent articles of the public choice literature emphasize the socializing role of education in order to explain the widespread practice of publicly run schools. In schools pupils are not only provided with basic skills, e.g. literacy and numeracy, but are also instilled with norms and values. Since successful economic transactions are assumed to be more likely the more homogeneous the cultural background of agents, a centralized education system with a common curriculum might be the optimal choice of a constituency that cares for the economic wellbeing of its descendants. Hence, the socializing role of education might be used as an argument against the introduction of market mechanisms into the education system, e.g. the use of school vouchers that could lead to social segregation. This article critically analyzes this line of reasoning and tries to reveal its shortcomings. For example: If a common cultural background were really that important to economic development, how could the phenomenon of international trade be explained? This and other arguments developed in this paper question the need to trade off potential gains in educational achievement due to market-driven education reforms with potential losses in social cohesion that such reforms might provoke.
    Keywords: Public Education, Social Cohesion, Education Reform
    JEL: I21 I22 I28 O15
    Date: 2005–08
  22. By: Haluk Ergin (MIT); Tayfun Sönmez (Boston College)
    Abstract: Many school districts in the U.S. use a student assignment mechanism that we refer to as the Boston mechanism. Under this mechanism a student loses his priority at a school unless his parents rank it as their first choice. Therefore parents are given incentives to rank high on their list the schools where the student has a good chance of getting in. We characterize the Nash equilibria of the induced preference revelation game. An important policy implication of our result is that a transition from the Boston mechanism to the student-optimal stable mechanism would lead to unambiguous efficiency gains.
    Keywords: student assignment, Boston mechanism, induced preference revelation, mechanism design
    JEL: C78 D61 D78 I20
    Date: 2005–09–12
  23. By: Giang Ho; Anthony Pennington-Cross
    Abstract: Local authorities in North Carolina, and subsequently in at least 23 other states, have enacted laws intending to reduce predatory and abusive lending. While there is substantial variation in the laws, they typically extend the coverage of the Federal Home Ownership and Equity Protection Act (HOEPA) by including home purchase and open-end mortgage credit, by lowering annual percentage rate (APR) and fees and points triggers, and by prohibiting or restricting the use of balloon payments and prepayment penalties. Empirical results show that the typical local predatory lending law tends to reduce applications and rejections, while having little impact on the flow of credit and only a modest impact on interest rates. However, the strength of the law, measured by the extent of market coverage and prohibitions, can have strong impacts on both the flow and cost of credit.
    Keywords: Mortgages ; Banking law ; Home equity loans
    Date: 2005
  24. By: D. Duffy (The Economic and Social Research Institute); M.J. Roche (Economics, NUI Maynooth, Ireland)
    Abstract: Choosing a mortgage product in the face of labor income risk, interest rate risk and borrowing constraints is one of the most important decisions facing a household. This paper investigates the choice between a variety of fixed rate mortgages and adjustable rate mortgages. We find that households with a high loan-to-value ratio, risky income and high risk aversion are more likely to choose a fixed rate mortgage. Choosing a mortgage product relies market search and information. The paper finds that in general first-time homebuyers and those with a high loan-to-value ratio are more likely to use a mortgage broker.
    Keywords: Mortgage choice,First-time homebuyer,Mortgage broker
    JEL: E40 G21 R51
    Date: 2005–02
  25. By: Willemann, Søren (Department of Accounting, Aarhus School of Business)
    Abstract: No abstract
    Keywords: Government sponsored enterprises; Mortgage backed bonds; Credit risk
    Date: 2005–09–23
  26. By: Paolo Buonanno and Daniel Montolio (Universitat de Barcelona)
    Abstract: In this paper we study, having as theoretical reference the economic model of crime (Becker, 1968; Ehrlich, 1973), which are the socioeconomic and demographic determinants of crime in Spain paying attention on the role of provincial peculiarities. We estimate a crime equation using a panel dataset of Spanish provinces (NUTS3) for the period 1993 to 1999 employing the GMM-system estimator. Empirical results suggest that lagged crime rate and clear-up rate are positively correlated to all typologies of crime rate considered. Property crimes are better explained by socioeconomic variables (GDP per capita, GDP growth rate and percentage of population with high school and university degree), while demographic factors reveal important and significant influences, in particular for crimes against the person. These results are obtained using an instrumental variable approach that takes advantage of the dynamic properties of our dataset to control for both measurement errors in crime data and joint endogeneity of the explanatory variables.
    Keywords: Crime, Socioeconomic factors, Panel Data.
    JEL: I2 J24 K42
    Date: 2005
  27. By: Klaus,Bettina (METEOR)
    Abstract: We consider the generalization of Shapley and Scarf''s (1974) model of trading indivisible objects (houses) to so-called multiple-type housing markets. We show (Theorem 1) that the prominent solution for these markets, the coordinate-wise core rule, is second-best incentive compatible. In other words, there exists no other strategy-proof trading rule that Pareto dominates the coordinate-wise core rule. Given that for multiple-type housing markets Pareto efficiency, strategy-proofness, and individual rationality are not compatible, by Theorem 1 we show that applying the coordinate-wise core rule is a minimal concession with respect to Pareto efficiency while preserving strategy-proofness and individual rationality.
    Keywords: microeconomics ;
    Date: 2005
  28. By: Frédéric Puech (CERDI, CNRS & Université d'Auvergne)
    Abstract: This paper presents an economic model of individual crime decision relying on relative deprivation and discusses the role of education. It distinguishes between property and interpersonal crime and proposes an econometric estimation of the model for 723 municipalities of Minas Gerais, one of the 26 Brazilian states. Education has a significant reducing effect upon interpersonal crime but not on violent property crime, which is mainly influenced by inequality.
    Keywords: violent crime, deprivation, education, Minas Gerais
    JEL: D63 I21 K42 O54
    Date: 2005–09–17
  29. By: John J. Donohue III
    Abstract: This essay provides an overview of the central theoretical law and economics insights concerning antidiscrimination law across a variety of contexts including discrimination in labor markets, housing markets, consumer purchases, and policing. The different models of discrimination based on animus, statistical discrimination, and cartel exploitation are analyzed for both race and sex discrimination. I explore the theoretical arguments for prohibiting private discriminatory conduct and illustrates the tensions that exist between concerns for liberty and equality. I also discuss the critical point that one cannot automatically attribute observed disparities in various economic or social outcomes to discrimination, and illustrate the complexities in establishing the existence of discrimination. The major empirical findings showing the effectiveness of federal law in the first decade after passage of the 1964 Civil Rights Act are contrasted with the generally less optimistic findings from subsequent antidiscrimination interventions.
    JEL: H J K
    Date: 2005–09
  30. By: Michelle Poland (The Families Commission); David C Maré (Motu Economic & Public Policy Research)
    Abstract: The purpose of this paper is to provide a guide to concepts, ideas, and measurements of geographic communities. The paper investigates the various concepts of geographic communities found in the literature and reviews existing studies to determine how researchers measure geographic communities in practice.
    Keywords: Geographic communities, Local labour markets
    JEL: R11
    Date: 2005–09–12
  31. By: Cleeren, K.; Dekimpe, M.G.; Verboven, F. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Although economically very important, local-service sectors have received little attention in the extensive literature on competitive interactions. Detailed data gathering in these sectors is hard, not only because of the multitude of local players, but also because key service dimensions are hard to quantify. Using empirical entry models, we show how to infer information on these sectors’ degree of intra- and inter-channel competition from the observed entry decisions in different local markets. The approach also controls for relevant socio-demographic characteristics of the trading area that may affect performance. We apply the proposed empirical entry model to the video-rental market. Additional entries of video stores are found to significantly increase the level of intra-channel competition. Unlike the predictions of many normative economic models, we find this increase to be larger when the entry occurs in a duopoly than in a monopoly, a pattern consistent with recent experimental research on collusive behavior in oligopolies. We also find evidence of inter-channel cannibalization from the upstream channel (movie theatres), but not from the downstream channel (premium cable). Finally, various socio-demographic characteristics of the trading zone, such as income and household size, are found to also have a significant impact on store performance.
    Keywords: Channel competition;Empirical entry models;Movie industry;
    Date: 2005–03–30
  32. By: André Rocha; José Pedro Pontes
    Abstract: This paper examines the equilibrium of location of N vertically-linked firms. In a spatial economy composed of two regions, a monopolist firm supplies an input to N consumer goods firms that compete in quantities. It was concluded that, when there are increases in the transport cost of the input, downstream firms prefer to agglomerate in the region where the upstream firm is located, in order to obtain savings in the production cost. On the other hand, increases in the general transport cost or in the number of downstream firms lead to a dispersion of these firms, in order to reduce competition and locate closer to the final consumer.
    Keywords: Agglomeration; Intermediate Goods; Spatial Oligopoly.
    JEL: R30 L13 C72
  33. By: Battu, Harminder; Seaman, Paul T; Zenou, Yves
    Abstract: This paper examines the job finding methods of different ethnic groups in the UK. The theoretical framework shows that less-assimilated ethnic unemployed workers are more likely to use their friends and family as their main method of search but they have less chance of finding a job using this method compared to whites and more assimilated ethnic unemployed workers that use formal job search methods (adverts, employment agencies, etc.). Using data from the UK Quarterly Labour Force Survey (QLFS), we test these hypotheses. Our empirical findings are consistent with the theory since they suggest that, though networks are a popular method of finding a job for the ethnic minorities, they are not necessarily the most effective either in terms of gaining employment or in terms of the level of job achieved. However, there are important differences across ethnic groups with the Pakistani and Bangladeshi groups and those born outside the UK (the least assimilated), losing out disproportionately from using personal networks.
    Keywords: ethnic disadvantage; job search; networks; social capital
    JEL: J15 J64
    Date: 2005–09
  34. By: Yan Chen (University of Michigan - Ann Arbor); Tayfun Sönmez (Boston College)
    Abstract: We present an experimental study of three school choice mechanisms. The Boston mechanism is influential in practice, while the two alternative mechanisms, the Gale-Shapley and Top Trading Cycles mechanisms, have superior theoretical properties in terms of incentives and efficiency. Consistent with theory, this study indicates a high preference manipulation rate under the Boston mechanism. As a result, efficiency under Boston is significantly lower than that of the two competing mechanisms in the designed environment. However, contrary to theory, Gale-Shapley outperforms the Top Trading Cycles mechanism and generates the highest efficiency. Our results suggest that replacing the Boston mechanism with either Gale-Shapley or Top Trading Cycles mechanism might significantly improve efficiency, however, the efficiency gains are likely to be more profound when parents are educated about the incentive compatibility of these mechanisms.
    Keywords: school choice, Boston mechanism, mechanism design, Gale-Shapley mechanism, Top Trading Cycles mechanism
    JEL: C78 C92 D82
    Date: 2004–10–20
  35. By: Miralles, A. (Universitat de Barcelona)
    Abstract: This empirical work applies a duration model to the study of factors determining privatization of local water services. I assess how factors determining privatization decision evolve as time goes by. A sample of 133 Spanish municipalities during the six terms of office taken place during the 1980-2002 period is analyzed. A dynamic neighboring effect is hypothesized and successfully tested. In a first stage, private water supply firms may try to expand to regions where there is no service privatized, in order to spread over this region after having being installed thanks to its scale advantages. Other factors influencing privatization decision evolve during the two decades under study, from the priority to fix old infrastructures to the concern about service efficiency. Some complementary results regarding political and budgetary factors are also obtained.
    Date: 2005
  36. By: Suarez, Jose L. (IESE Business School); Vassalo, Amparo (IESE Business School)
    Abstract: In Europe today, there are two main vehicles for indirect investment in real estate; real estate investment funds, on the one hand, and, on the other, listed real estate companies. With these instruments, not only does the investor take a position in the real estate market, he/she also acquires different risk/return structures which may vary according to the instrument being used. In some European countries, real estate companies have modified their financial structure and tax position by adopting a legal form based on REITs (Real Estate Investment Trusts), which originated in the US, which changes their position regarding real estate funds. In this document we shall compare real estate funds and listed real estate companies and analyse the appearance of REITs in Europe and their impact on the real estate industry.
    Keywords: real estate; real estate investment; real estate fund; real estate company;
    Date: 2005–07–25
  37. By: Hjertner Thorén, Katarina (Växjö University)
    Abstract: In the 1990s, many municipalities developed local activation programs for social assistance recipients as a response to increasing social assistance expenditures. This study investigates the practical implementation of municipal activation policies in two different activation programs, Jobbcentrum in Skärholmen and Källan in Osby. The purpose with the study is to highlight how the front-line workers systematically translate activation policy into practice in their interactions with the clients. The study utilizes a street-level bureaucracy perspective, which illuminates the role of bureaucratic and professional discretion and how institutional factors shape the practical responses of front-line staff. Coping behaviors at the ground influences the practical work with activation requirements. The staff develop such coping strategies to manage working conditions marked by ambiguous legislation, organizational pressures, limited resources, and little responsibility for program accountability. Findings from this study suggest that the implementation practices in Skärholmen and Osby frequently diverge from formal intentions of activation policy and the programs’ own goals and descriptions of their work.
    Keywords: Municipal activation policy; social assistance; street-level bureaucracy theory; front-line workers; implementation; Jobbcentrum; Källan
    JEL: J60
    Date: 2005–09–02
  38. By: Helmut Rainer; Thomas Siedler
    Abstract: In most industrialized countries, more people than ever are having to cope with the burden of caring for elderly parents. This paper formulates a model to explain how parental care responsibilities and family structure interact in affecting children’s mobility characteristics. A key insight we obtain is that the mobility of young adults crucially depends on the presence of a sibling. Our explanation is mainly, but not exclusively, based on a sibling power effect. Siblings compete in location and employment decisions so as to direct parental care decisions at later stages towards their preferred outcome. Only children are not exposed to this kind of competition. This causes an equilibrium in which siblings not only exhibit higher mobility than only children, but also have better labor market outcomes. Using data from the German Socio-Economic Panel Study (SOEP) and from the American National Survey of Families and Households (NSFH), we find strong evidence that confirms these patterns. The implications of our results are then discussed in the context of current population trends in Europe and the United States.
    Keywords: Geographic Mobility, Intergenerational Relationships, Care of the Elderly, Family Bargaining.
    JEL: D19 J14 C13
    Date: 2005–09
  39. By: Luis Diaz-Serrano (National University of Ireland, Maynooth, IZA Bonn, CREB Barcelona)
    Abstract: In this paper we test for the first time whether the driving force behind the negative effect of income uncertainty on owner-occupancy propensities is risk aversion or credit constraints. To disentangle this puzzle we estimate reduced form equations using Italian data. Consistent with the previous empirical evidence in the US, our results confirm that in Italy both labor income uncertainty and credit constraints exert a significant negative effect on the probability of homeownership. However, our main findings indicate that the negative relationship between labor income uncertainty and homeownership is driven by households’ risk aversion.
    Keywords: Homeownership,income uncertainty,credit constraints
    JEL: D1 R0 J0
    Date: 2005–01
  40. By: Jans, R.; Degraeve, Z. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: In this paper we give an overview of recent developments in the field of modeling single-level dynamic lot sizing problems. The focus of this paper is on the modeling various industrial extensions and not on the solution approaches. The timeliness of such a review stems from the growing industry need to solve more realistic and comprehensive production planning problems. First, several different basic lot sizing problems are defined. Many extensions of these problems have been proposed and the research basically expands in two opposite directions. The first line of research focuses on modeling the operational aspects in more detail. The discussion is organized around five aspects: the set ups, the characteristics of the production process, the inventory, demand side and rolling horizon. The second direction is towards more tactical and strategic models in which the lot sizing problem is a core substructure, such as integrated production-distribution planning or supplier selection. Recent advances in both directions are discussed. Finally, we give some concluding remarks and point out interesting areas for future research.
    Keywords: Lot Sizing;Production Planning;Modeling, Industrial Applications;
    Date: 2005–09–09
  41. By: Falko Fecht; Antoine Martin
    Abstract: In this paper, we address the question whether increasing households' financial market access improves welfare in a financial system in which there is intense competition among banks for private households' funds. Following earlier work by Diamond and by Fecht, we use a model in which the degree of liquidity insurance offered to households through banks' deposit contracts is restrained by households' financial market access. However, we also assume spatial monopolistic competition among banks. Because monopoly rents are assumed to bring about inefficiencies, improved financial market access that limits monopoly rents also entails a positive effect; however, this beneficial effect is only relevant if competition among banks does not sufficiently restrain monopoly rents already. ; Thus, our results suggest that in Germany's bank-dominated financial system, which is characterized by intense competition for households' deposits, improved financial market access might reduce welfare because it only reduces risk sharing. In contrast, in the U.S. banking system, where there is less competition for households' deposits, a high level of household financial market participation might be beneficial.
    Keywords: Households ; Bank competition ; Bank deposits
    Date: 2005
  42. By: Anne van den Nouweland (University of Oregon); Myrna H. Wooders (Vanderbilt University, Warwick University)
    Abstract: We define a concept of status equilibrium for local public good economies. A status equilibrium specifies one status index for each agent in an economy. These indices determine agents’ cost shares in any possible jurisdiction. We provide an axiomatic charaterization of status equilibrium using consistency properties.
    Keywords: Local Public Goods, Status Equilibrium, Axiomatic Characterization
    JEL: H41 D71 D51
    Date: 2005–09–25
  43. By: Besley, Timothy; Payne, A. Abigail
    Abstract: One of the most striking changes in labour market policy of the past 50 years has come in the form of legislation to limit discrimination in the workplace based on race, gender, disability and age. If such measures are to be effective in ending discrimination, they need to be enforced. The latter is dependent on state and federal agencies such as the Equal Employment Opportunities Commission and ultimately the willingness of courts to find in favour of plaintiffs. Courts also play an important role in the evolution of anti-discrimination policy since past decisions create future precedent. This paper asks whether the number of charges filed with government agencies depends on the method by which judges are selected. Popularly elected judges should be expected to have more pro-employee preferences (selection) and should move closer to employee preferences (incentives). This should result in fewer anti-discrimination charges being filed in states that appoint their judges. In line with this prediction, this paper uses data on the number of employment discrimination charges filed for the period 1973-2000 and finds that states that appoint their judges have fewer anti-discrimination charges being filed.
    Keywords: discrimination; judicial system
    JEL: J7 K4
    Date: 2005–09
  44. By: Tamara van der Hoek
    Abstract: Current research on child poverty in rich countries is most quantitative in nature and mainly concentrated on determining its extent and future outcomes. Notwithstanding the valuable results this kind of research has yielded, little is known about what poverty is experienced in the ‘world of children’, i.e., in their daily lives. To consider poverty from a child’s perspective is still rare (e.g. Ridge 2002). The current study of children growing up poor in an affluent Netherlands is an initial effort and adds to the focus on the children’s perspectives and their coping mechanisms. This way, it enables us to see children’s agency in their own environment.
    Keywords: Netherlands;
    JEL: I31
    Date: 2005

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