nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2005‒10‒29
fifteen papers chosen by
Steve Ross
University of Connecticut

  1. Determinants of Recent Immigrants’ Location Choices: Quasi-Experimental Evidence By Anna Piil Damm
  2. Heterogeneity within Communities: A Stochastic Model with Tenure Choice By François Ortalo-Magné; Sven Rady
  3. Housing Market Dynamics: On the Contribution of Income Shocks and Credit Constraint By François Ortalo-Magné; Sven Rady
  4. Agglomeration and the Spatial Distribution of Creativity By Andersson, Roland; Quigley, John. M; Wilhelmsson, Mats
  5. The Effect of Home-ownership on Labor Mobility in The Netherlands By Michiel van Leuvensteijn; Pierre Koning
  6. Skills and Creativity in a Cross-section of Dutch Cities By Gerard Marlet; Clemens van Woerkens
  7. Social Networking and Individual Outcomes Beyond the Mean Field Case By Yannis M. Ioannides; Adriaan R. Soetevent
  8. Spatial externalities between Brazilian municipios and their neighbours By Philippe De Vreyer; Gilles Spielvogel
  9. The Location of Industry R&D and the Location of University R&D - How are They related? By Karlsson, Charlie; Andersson, Martin
  10. Who Cares about Mortgage Interest Deductibility? By Martin Gervais; Manish Pandey
  11. The Provision of Library Services by English Local Authorities By Philip Stevens
  12. Does Spatial Disaggregation Matter in Job Creation and Destruction Flows? By Elena Cefis; Roberto Gabriele
  13. Discrimination as a Competitive Device: The Case of Local Television News By Caitlin Knowles Myers
  14. Strategic Policy Competition with Public Infrastructure By Richard Nahuis; Paul J.G. Tang

  1. By: Anna Piil Damm (Department of Economics, University of Copenhagen)
    Abstract: This paper exploits a Danish spatial dispersal policy on refugees which can be regarded a natural experiment to investigate the influence of regional factors on recent immigrants’ location choices. The main push factors are lack of co-ethnics and presence of immigrants. Additional push factors are lack of access to jobs, education and housing which explain why recent immigrants are attracted to large cities. Finally, placed refugees are sensitive to regional unemployment and some evidence of welfare seeking is presented as well.
    Keywords: location choices; push factors; immigrants
    JEL: J15 R15 H0
    Date: 2005–10
  2. By: François Ortalo-Magné (Department of Real Estate and Urban Land Economics, University of Wisconsin-Madison, 975 University Avenue, Madison, WI 53706, USA); Sven Rady (Department of Economics, University of Munich, Kaulbachstr. 45, D-80539 Munich, Germany)
    Abstract: Standard explanations for the income heterogeneity within neighborhoods rely on differences of preferences across households and heterogeneity of the housing stock. We propose an alternative and complementary explanation. We construct a stochastic equilibrium sorting model where (1) income is the sole dimension of household heterogeneity, (2) households form state-contingent housing location plans that may involve moves over their lifetimes, (3) households choose whether to own or rent depending on the housing expenditure risk associated with each tenure mode, and (4) there is a probability that newcomer households move in and compete for homes with native households. Income mixing within neighborhood arises for two reasons. First, allowing natives to form state-contingent housing location plans breaks the indivisibility of housing consumption implicit in the literature where households choose their location once and for all. Second, natives can insure themselves against rent fluctuations by buying their home prior to the realization of the population shock; newcomers cannot. As a result, poorer natives stay in the more desirable communities and only richer newcomers move in these communities. Evidence from U.S. metropolitan areas supports the effects predicted by the model.
    Keywords: Equilibrium Sorting, Income Mixing, Housing Demand, Tenure Choice
    JEL: D31 R12 R21
    Date: 2005–05
  3. By: François Ortalo-Magné (Department of Real Estate and Urban Land Economics, University of Wisconsin-Madison, 975 University Avenue, Madison, WI 53706, USA); Sven Rady (Department of Economics, University of Munich, Kaulbachstr. 45, D-80539 Munich, Germany)
    Abstract: We propose a life-cycle model of the housing market with a property ladder and a credit constraint. We focus on equilibria which replicate the facts that credit constraints delay some households' first home purchase and force other households to buy a home smaller than they would like. The model helps us identify a powerful driver of the housing market: the ability of young households to afford the down payment on a starter home, and in particular their income. The model also highlights a channel whereby changes in income may yield housing price overshooting, with prices of trade-up homes displaying the most volatility, and a positive correlation between housing prices and transactions. This channel relies on the capital gains or losses on starter homes incurred by credit-constrained owners. We provide empirical support for our arguments with evidence from both the U.K. and the U.S.
    Keywords: Housing Demand, Income Fluctuations, Overlapping Generations, Collateral Constraint
    JEL: E32 G12 G21 R21
    Date: 2005–05
  4. By: Andersson, Roland (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Quigley, John. M (University of California Berkeley); Wilhelmsson, Mats (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper analyzes the spatial distribution of “creativity” -- the production of new knowledge. We analyze commercial patents granted in Sweden during 1994-2001 using a panel of one hundred labor market areas which encompass the entire country. We relate patent activity to measures of localization and urbanization, to the industrial composition and size distribution of firms, and to the regional distribution of human capital. Our analysis confirms the importance of human capital and research facilities in stimulating regional patent output. Importantly, our results document the importance of agglomeration and spatial factors in influencing creativity: Patent activity is increased in larger and more dense labor markets and in regions in which a larger fraction of the labor force is employed in medium-sized firms. Our results also indicate that creativity is greater in labor markets with more diverse employment bases and in those which contain a larger share of national employment in certain industries, confirming the importance of urbanization and localization economies in stimulating creativity. Our quantitative results suggest that the urbanization of Sweden during the 1990s had an important effect upon the aggregate level of patent activity in the country, leading to increases of up to five percent in aggregate patents.
    Keywords: Agglomeration; patent; spatial distribution; creativity
    JEL: N34 O31 R11
    Date: 2005–10–18
  5. By: Michiel van Leuvensteijn; Pierre Koning
    Abstract: In various macro-studies, home-ownership is found to hamper job mobility and to increase unemployment. This paper addresses similar issues, but uses a microeconometric framework where both individual job mobility, as well as the probability of being homeowner are modeled simultaneously. Using a panel of individual labor and housing market histories for the period 1989-1998, we estimate a nonparametric model of both job durations and home-ownership. We do not find homeowners to change less from jobs than tenants. Instead, our results suggest that the housing decision is driven by job commitment, and not the reverse. We do however find homeowners to be less vulnerable for unemployment.
    Keywords: Duration Models, Labor Mobility, Housing Market Analysis
    JEL: J6 R2
    Date: 2004–01
  6. By: Gerard Marlet; Clemens van Woerkens
    Abstract: In this paper we examine Richard Florida's Creative Capital theory in comparison with Human Capital theory, using a cross section of Dutch cities as our sample. Employment growth in Dutch cities can be predicted both from local education levels and from the presence of a large creative class, but especially from the latter. We conclude that in theory creativity is not very different from human capital. Nevertheless Florida's creative class is a better standard to measure human capital then education is.
    Keywords: human capital, creative class, urban growth.
    Date: 2004–10
  7. By: Yannis M. Ioannides; Adriaan R. Soetevent
    Abstract: This paper examines social interactions when social networking is endogenous. It employs a linear-quadratic model that accommodates contextual effects, and endogenous local inter- actions, that is where individuals react to the decisions of their neighbors, and endogenous global ones, where individuals react to the mean decision in the economy, both with a lag. Unlike the simple V AR(1) structural model of individual interactions, the planner's problem here involves intertemporal optimization and leads to a system of linear difference equations with expectations. It highlights an asset-like property of socially optimal outcomes in every period which helps characterize the shadow values of connections among agents. Endogenous networking is easiest to characterize when individuals choose weights of social attachment to other agents. It highlights a simultaneity between decisions and patterns of social at- tachment. The paper also poses the inverse social interactions problem, asking whether it is possible to design a social network whose agents' decisions will obey an arbitrarily specified variance covariance matrix.
    Keywords: Social Interactions, Social Networks, Neighborhood Effects, Endogenous Net- working, Social Intermediation, Econometric Identification, Strong versus Weak Ties, Value of Social Connections.
    JEL: D85 A14 J0
    Date: 2005
  8. By: Philippe De Vreyer (Université de Lille II, DIAL); Gilles Spielvogel (DIAL, IEP-Paris)
    Abstract: (english) Clustering of economic performance and growth in space has generated considerable research on the spillovers and linkages among geographical neighbours. In this paper, we study the growth process of a large sample of Brazilian municipalities for the period 1970-1996 and attempt to evaluate the spatial externalities at work among them. We estimate the convergence speed of per capita income among municipios and test whether spatial externalities are linked to local income growth. Conditionally on structural characteristics, we find evidence of convergence between municipios and of positive spatial dependence in growth. These two facts could help explain the persistent inequalities between municipios and the increasing clustering of poor localities in the Northeast region. _________________________________ (français) La concentration des revenus et de la croissance économique dans l'espace a suscité une littérature abondante sur les effets de débordements et les liens entre localités voisines. Dans ce papier, nous étudions le processus de croissance d'un large échantillon de municipalités brésiliennes durant la période 1970-1996 et tentons d'évaluer les externalités spatiales à l'oeuvre entre celles-ci. Nous estimons la vitesse de convergence du niveau de revenu par habitant des municipalités et testons la présence d'externalités spatiales liées à la croissance locale. Conditionnellement aux caractéristiques structurelles des municipalités, nos résultats indiquent la présence d'une convergence du revenu moyen par habitant ainsi que d'une dépendance spatiale positive de la croissance locale. Ces deux résultats permettent d'expliquer les inégalités persistantes entre les municipalités et la concentration croissante des localités pauvres dans la région Nord-Est.
    Keywords: Local growth, convergence, spatial externalities, spatial econometrics, Brazil, Croissance locale, convergence, externalités spatiales, économétrie spatiale, Brésil
    JEL: O40 R11 R12
    Date: 2005–10
  9. By: Karlsson, Charlie (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Andersson, Martin (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: During the years, a large number of formal studies have presented evidences of a positive impact of university R&D on firm performance in general and on the location of industrial R&D, in particular. The question is does it also work the other way around? Does industrial R&D function as an attractor for university R&D? What are the behavioural relationships between industrial R&D and university R&D and vice versa? The fact that knowledge flows seem to be spatially bounded implies that proximity matters for the relationships between industrial and university R&D. We argue that spatial proximity should be measured using accessibility measures. Furthermore, accessibility measures can be used to model interaction opportunities at different spatial scales: local, intra-regional and inter-regional. Against this background, the purpose of this paper is to analyse the locational relationship between industry R&D and university R&D in Sweden using a simultaneous equation approach. Our results indicate that the location of industrial R&D is quite sensitive to the location of university R&D, and that the location of university R&D is sensitive to the location of industrial R&D. However, the latter result is achieved only when we take away one outlier in the data.
    Keywords: R&D; Industry; University; Accessibility; Location
    JEL: C30 H50 L10 O30 R10
    Date: 2005–10–18
  10. By: Martin Gervais (University of Western Ontario); Manish Pandey (The University of Winnipeg)
    Abstract: We use the Survey of Consumer Finances to measure the change in federal tax liability that would result should mortgage interest no longer be deductible from taxable income. We argue that the elimination of this housing tax provision would lead households to reshuffle their balance sheet, thereby lowering the amount of interest income taxes collected. We find that the cost of this tax provision is between 35 and 65 percent of the estimates produced by the Office of Management and Budget, depending on the types of assets one assumes would be used to lower mortgage debt following the removal of the provision. Furthermore, since mostly rich households would be in a position to reshuffle their balance sheet following such a change in tax policy, the distributional effect of this program are much smaller than conventionally believed.
    Keywords: mortgage interest deductibility; housing; taxation; redistribution
    JEL: E62 G11 H24 H31
    Date: 2005
  11. By: Philip Stevens
    Abstract: In this paper we examine the cost and efficiency with which library services are provided by English local authorities using stochastic frontier analysis. We test our results using four commonly used assumptions regarding the distribution of the efficiency scores. We find that costs are higher for authorities operating in regions where a higher proportion of the population have low incomes or are of working age. The efficiency scores net of environmental factors, however, are affected by the choice of whether they are considered as quasi fixed factors in the cost frontier or as determinants of inefficiency.
    Date: 2005–07
  12. By: Elena Cefis; Roberto Gabriele
    Abstract: The paper investigates the changes in job creation and destruction flows considering a very disaggregate level of analysis. If institutional setup plays a more important role compared to other factors, than at lower levels of aggregation we should observe that job flows regularities are in line with national ones. We explore the issue using a unique database on the population of firms in Trentino (a NorthEastern Province of Italy) from 1991 to 2001. We find that: (a) job flows show a "fractal" nature, i.e. many regularities appear to be scale invariant (magnitude of flows and their persistence). In particular job flows magnitude is in line with the average values for Italy; (b) there are some qualifications to "fractality": entrant firms' contribution to job creation process is lower than the corresponding contribution at national level, whereas the job destruction share accounted for by exit firms is around 30%, in line with stylized facts; (c) size and age shape the job flows; (d) shifts of jobs between macro sectors are rare.
    Keywords: Labour reallocation, job flows, sample selection, two-stage Heckman estimator.
    JEL: C34 J23 L11
    Date: 2005–03
  13. By: Caitlin Knowles Myers (Middlebury College and IZA Bonn)
    Abstract: Local news offers a unique look not only at customer preferences but also at the strategic response of firms to these preferences. This paper uses a combination of ratings data and newly gathered information on television stations in 25 U.S. markets to examine the decisions of competing firms and how customers respond to the journalists who appear onair at the different stations in a market. The results indicate that there is a negative correlation between the racial, gender, and age composition of competing firms. Moreover, the ratings data suggest that the stations with relatively few blacks on-air are catering to the more discriminatory customers. While a similar result is found for age and gender, the reverse holds for other groups, suggesting possible tastes for diversity for Hispanics and Asians. Taken as a whole, the evidence supports a theoretical model in which firms differentiate via the characteristics of their employees in response to customer prejudice.
    Keywords: economics of gender and minorities, customer discrimination, product differentiation, Nielsen ratings
    JEL: J71
    Date: 2005–10
  14. By: Richard Nahuis; Paul J.G. Tang
    Abstract: Governments try to attract firms and jobs by investing in international infrastructure. We analyse this type of strategic policy competition in a three-country model of monopolistic competition. What governments compete for, is to obtain a so called `hub' position. A hub is a relatively well connected location in a transport network. A hub might thus be an attractive location for firms. However, for a small or backward country the hub position, due to infrastructure investment, is overwhelmed by the disadvantage of a small home-market. As investment to become a hub triggers an investment response from other countries, a backward country is unlikely to keep its relatively attractive position. An attractive location is only sustainable if investment applies to point infrastructure and builds upon a natural advantage (e.g. an harbour). The game of action and reaction delivers socially undesirably high levels of infrastructure investment if transport costs are already low and firm mobility is high.
    Keywords: Infrastructure, Industrial Location, Policy Competition, Monopolistic Competition, International Trade
    JEL: F12 H4 R12
    Date: 2004–08
  15. By: Sarbajit Chaudhuri (Dept. of Economics, Calcutta University, India); Ujjaini Mukhopadhyay (Dept. of Economics, Calcutta University, India)
    Abstract: The paper purports to examine the implications of a free education policy and trade liberalization on the child and adult labour markets in the set-up of a Harris-Todaro type general equilibrium model. It has been found that a hike in the education subsidy or inflow of foreign capital may produce counterproductive results on the supply of child labour in the urban area. Moreover, these policies mar raise the level of urban unemployment of adult labour even when two types of labour are not substitutes to each other. The average income of the urban poor families may also decrease as a consequence.
    Keywords: Child labour, urban unemployment of adult labour, general equilibrium, education subsidy, trade liberalization
    JEL: F10 J10 J13 I28
    Date: 2005–10–23

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