nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2005‒10‒04
eleven papers chosen by
Steve Ross
University of Connecticut

  1. Does Commuting Reduce Wage Disparities? By Mihails Hazans
  2. Who wins and who loses from school accountability? The distribution of educational gain in English secondary schools By Burgess, Simon; Propper, Carol; Slater, Helen; Wilson, Deborah
  3. Looking for Multiple Equilibria when Geography Matters: German City Growth and the WWII Shock By Maarten Bosker; Steven Brakman; Harry Garretsen; Marc Schramm
  4. Education Policy and Equality of Opportunity By Gabriela Schuetz; Heinrich Ursprung; Ludger Woessmann
  5. Does Education Pay in Urban China? Estimating Returns to Education Using Twins By Hongbin Li; Pak Wai Liu; Ning Ma; Junsen Zhang
  6. Geographic versus industry diversification - constraints matter By Paul Ehling; Sofia Brito Ramos
  7. Regional disparities in the spatial correlation of state income growth By Thomas A. Garrett; Gary A. Wagner; David C. Wheelock
  8. Growth and Convergence across the U.S: Evidence from County-Level Data By Matthew Higgins; Daniel Levy; Andrew Young
  9. Real wages and local unemployment in the euro area By Anna Sanz de Galdeano; Jarkko Turunen
  10. Fiscal federalism and public inputs provision - vertical externalities matter By Diego Martínez-López
  11. Operations Research in Passenger Railway Transportation By Huisman, D.; Kroon, L.G.; Lentink, R.M.; Vromans, M.J.C.M.

  1. By: Mihails Hazans (University of Latvia & BICEPS)
    Abstract: This paper shows that in the Baltic countries, commuting reduces urban- rural wage and employment disparities and increases national output. To quantify the effect of commuting on wage differentials, two sets of earnings functions are estimated (based on Estonian, Latvian, and Lithuanian Labor Force Surveys) with location variables (capital city, rural, etc.) measured at the workplace and at the place of residence. We find that the ceteris paribus wage gap between capital city and rural areas, as well as between capital and other cities is significantly narrowed by commuting in some cases but remains almost unchanged in other. Different outcomes are explained by country-specific spatial patterns of commuting, educational and occupational composition of commuting flows, and presence or absence of wage discrimination against rural residents in urban markets. A treatment effects model is used to estimate individual wage gains to rural—urban or inter-city commuting; these gains are substantial in most but not all cases. Wage effects of commuting distance, as well as impact of education, gender, ethnicity, and local labor market conditions on the commuting decision are also explored.
    Keywords: commuting, wage disparities, earnings functions, Baltic countries
    JEL: J31 J61 P52 R12 R23
    Date: 2005–09–29
  2. By: Burgess, Simon; Propper, Carol; Slater, Helen; Wilson, Deborah
    Abstract: In 1988 the UK government introduced greater accountability into the English state school sector. But the information that schools are required to make public on their pupil achievement is only partial. The paper examines whether accountability measures based on a partial summary of student achievement influence the distribution of student achievement. Since school ratings only incorporate test results via pass rates, schools have incentives to improve the performance of students who are on the margin of meeting these standards, to the detriment of very low achieving or high achieving pupils. Using pupil level data for a cohort of all students in secondary public sector schools in England, we find that this policy reduces the educational gains and exam performance in high stakes exams of very low ability students.
    Keywords: educational value added; high stakes exams; school accountability
    JEL: D23 I20 I28
    Date: 2005–09
  3. By: Maarten Bosker; Steven Brakman; Harry Garretsen; Marc Schramm
    Abstract: Many modern trade and growth models are characterized by multiple equilibria. In theory the analysis of multiple equilibria is possible, but in practice it is difficult to test for the presence of multiple equilibria. Based on the methodology developed by Davis and Weinstein (2004) for the case of Japanese cities and WWII, we look for multiple equilibria in a model of German city growth. The strategic bombing of Germany during WWII enables us to assess the empirical relevance of multiple equilibria in a model of city-growth. In doing so, and in addition to the Davis and Weinstein framework, we look at the spatial inter-dependencies between cities. The main findings are twofold. First, multiple equilibria seem to be present in German city growth. Our evidence supports a model with 2 stable equilibria. Second, the explicit inclusion of geography matters. Evidence for multiple equilibria is weaker when spatial interdependencies are not taken into account.
    JEL: F12 R11 R12
    Date: 2005
  4. By: Gabriela Schuetz; Heinrich Ursprung; Ludger Woessmann
    Abstract: We provide a measure of equality of educational opportunity in 54 countries, estimated as the effect of family background on student performance in two international TIMSS tests. We then show how organizational features of the education system affect equality of educational opportunity. Our model predicts that late tracking and a long pre-school cycle are beneficial for equality, while pre-school enrollment is detrimental at low levels of enrollment and beneficial at higher levels. Using cross-country variations in education policies and their interaction with family background at the student level, we provide empirical evidence supportive of these predictions.
    Keywords: equality of opportunity, educational production, family background, student performance, tracking, pre-school, efficiency-equity tradeoff
    JEL: H52 I21 J62
    Date: 2005
  5. By: Hongbin Li; Pak Wai Liu; Ning Ma; Junsen Zhang
    Abstract: This paper empirically estimates the returns to education using twins data that the authors collected from urban China. Our ordinary least-squares estimate shows that one year of schooling increases an individual¡¦s earnings by 8.4 percent. However, once we use the within-twin-pair fixed effects model, the return is reduced to 2.7 percent, which suggests that much of the estimated returns to education in China that have been found in previous studies are due to omitted ability or the family effect. This finding suggests that well-educated people are faring well in China mainly because of their superior ability or family background advantages, rather than because of knowledge that they acquired at school. We further investigate why the true return is low and the omitted ability bias high, and find evidence that it may be a consequence of the distinct education system in China, which is highly selective and exam oriented. More specifically, we find that high school education mainly serves as a mechanism to select college students, and has zero returns in terms of earnings. In contrast, both vocational school education and college education have a large return that is comparable to that found in rich Western countries.
    JEL: J31 O15 P20
    Date: 2005–09
  6. By: Paul Ehling (Pennsylvania State University); Sofia Brito Ramos (CEMAF/ISCTE-Business School Lisbon)
    Abstract: This research addresses whether geographic diversification provides benefits over industry diversification. In the absence of constraints, no empirical evidence is found to support the argument that country diversification is superior. With short-selling constraints, however, the geographic tangency portfolio is not attainable by industry portfolios. Results with upper and lower constraints on portfolio weights as well as an out-of-sample analysis show that geographic diversification almost consistently outperforms industry portfolios, although we cannot establish statistical significance.
    Keywords: Diversification gains, EMU, geographic diversification, industry diversification, block-bootstrap tests
    JEL: G11 G15
    Date: 2005–01
  7. By: Thomas A. Garrett; Gary A. Wagner; David C. Wheelock
    Abstract: This paper presents new evidence of spatial correlation in U.S. state income growth. We extend the basic spatial econometric model used in the growth literature by allowing spatial correlation in state income growth to vary across geographic regions. We find positive spatial correlation in income growth rates across neighboring states, but that the strength of this spatial correlation varies considerably by region. Spatial correlation in income growth is highest for states located in the Northeast and the South. Our findings have policy implications both at the state and national level, and also suggest that growth models may benefit from incorporating more complex forms of spatial correlation.
    Keywords: Regional economics ; Income distribution
    Date: 2005
  8. By: Matthew Higgins (Georgia Institute of Technology); Daniel Levy (Bar-Ilan University); Andrew Young (University of Mississippi)
    Abstract: We use U.S. county data (3,058 observations) and 41 conditioning variables to study growth and convergence. Using OLS and 3SLS-IV we report on the full sample and metro, non-metro, and 5 regional samples: (1) OLS yields convergence rates around 2 percent; 3SLS yields 6–8 percent; (2) convergence rates vary (e.g., the Southern rate is 2.5 times the Northeastern rate); (3) federal, state and local government negatively correlates with growth; (4) the relationship between educational attainment and growth is nonlinear; and (5) finance, insurance & real estate industry and entertainment industry positively correlates with growth while education employment negatively correlates.
    Keywords: Economic Growth, Conditional Convergence, County-Level Data
    JEL: O40 O11 O18 O51 R11 H50 H70
    Date: 2005–09–22
  9. By: Anna Sanz de Galdeano (CSEF, University of Salerno, 84084 Fisciano, Salerno, Italy); Jarkko Turunen (European Central Bank, Kaiserstraße 29, D-60311 Frankfurt am Main, Germany)
    Abstract: We present empirical evidence of the extent of wage rigidity in the euro area and European countries derived from longitudinal data on individuals. Wage rigidity is measured by the elasticity of individual real wages with respect to local unemployment. The results suggest that the elasticity is indeed negative, i.e. that real wages are lower in local labour markets with higher unemployment. The size of the elasticity for the euro area is similar to that found in previous studies for a number of countries, including the United States. Furthermore, there is some variation in the unemployment elasticity by worker groups and along the wage distribution. In particular, public sector wages are relatively rigid compared to wages in the private sector, contributing significantly to wage rigidity in the euro area. Country results show some heterogeneity in wage rigidity across European countries and suggest a tentative ranking of countries.
    Keywords: Real wages; local unemployment; wage curve; panel data.
    JEL: E24 J45 J64
    Date: 2005–04
  10. By: Diego Martínez-López (Centro de Estudios Andaluces. C/ Bailén, 50. 41001 Seville, Spain)
    Abstract: This paper studies the provision of public inputs in a federal system. A vertical tax externality is also considered in a simple general equilibrium model used to analyze the efficiency of equilibria under different scenarios. The results show that the state provision of public inputs may affect ambiguously federal tax revenues, depending on the vertical tax externality, amongst others issues. Moreover, it is proved that achieving a second best allocation is not straightforward for a federal government that plays as Stackelberg leader. At this point, the state’s reaction function becomes crucial when the design of vertical grants is restricted.
    Keywords: Fiscal federalism; vertical externality; productive public spending.
    JEL: H2 H4 H7
    Date: 2005–05
  11. By: Huisman, D.; Kroon, L.G.; Lentink, R.M.; Vromans, M.J.C.M. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: In this paper, we give an overview of state-of-the-art Operations Research models and techniques used in passenger railway transportation. For each planning phase (strategic, tactical and operational), we describe the planning problems arising there and discuss some models and algorithms to solve them. We do not only consider classical, well-known topics such as timetabling, rolling stock scheduling and crew scheduling, but we also discuss some recently developed topics as shunting and reliability of timetables. Finally, we focus on several practical aspects for each of these problems at the largest Dutch railway operator, NS Reizigers.
    Keywords: operations research;passenger railway transportation;planning;
    Date: 2005–04–28

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