nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2005‒11‒12
twenty papers chosen by
Steve Ross
University of Connecticut

  1. Property Tax and Urban Sprawl: Theory and Implications for U.S. Cities By Song, Yan; Zenou, Yves
  2. The mechanisms of spatial mismatch By Laurent Gobillon; Harris Selod; Yves Zenou
  3. High school types, academic performance and early labour market outcomes By Lorenzo Cappellari
  4. Spatial externalities between Brazilian municipios and their neighbours By Philippe De Vreyer; Gilles Spielvogel
  5. On some fiscal effects on mortgage debt growth in the EU By Guido Wolswijk
  6. Race Discrimination or Inequality of Opportunities: The Brazilian Case By Philippe G. Leite
  7. Cournot competition in spatial markets. By Andrea Cosnita
  8. Oppositional Identities and the Labor Market By Battu, Harminder; Mwale, McDonald; Zenou, Yves
  9. Underground Gun Markets By Philip J. Cook; Jens Ludwig; Sudhir Venkatesh; Anthony A. Braga
  10. A Commuting Model of the Non-urban Residents: Case Study of Hiiumaa and Läänemaa By Karin Juurikas
  15. "Not So Footloose after All: Locational Behavior of Information Technology Establishments in the United States, 1989-1998" By William R. Latham; Simon Condliffe
  16. " Take Time to Smell the Flowers, Please! Public Gardens and Economic Development." By William R. Latham; Adrienne Donald
  17. Discrimination as a Competitive Device: The Case of Local Television News By Caitlin Knowles Myers
  18. "The War for the Fare": How Driver Compensation Affects Bus System Performance By Ryan M. Johnson; David H. Reiley; Juan Carlos Munoz
  19. Local Competition and Impact of Entry by a Dominant Retailer By Ting Zhu; Vishal Singh; Anthony J. Dukes
  20. Scale Economies, Unemployment, and Industry Agglomeration By Huan Zhao

  1. By: Song, Yan (Department of City and Regional Planning); Zenou, Yves (The Research Institute of Industrial Economics)
    Abstract: This article attempts a formal analysis of the connection between property tax and urban sprawl in U.S. cities. We develop a theoretical model that includes households (who are also landlords) and land developers in a regional land market. We then test the model empirically based on a national sample of urbanized areas. The results we obtained from both theoretical and empirical analyses indicate that increasing property tax rates reduces the size of urbanized areas.
    Keywords: Urban Sprawl; Full Closed City; Urban Economics; Property Tax; Instrumental Variables
    JEL: H30 H71 R14
    Date: 2005–10–24
  2. By: Laurent Gobillon; Harris Selod; Yves Zenou
    Abstract: The Spatial Mismatch Hypothesis (SMH) argues that low-skilled minorities residing in U.S. inner cities experience poor labor-market outcomes because they are disconnected from suburban job opportunities. This assumption gave rise to an abundant empirical literature which confirmed this hypothesis. Surprisingly, however, it is only recently that theoretical models have emerged, which probably explains why the mechanisms of spatial mismatch have long remained unclear and not properly tested. In this survey, we present relevant facts, review the theoretical models of spatial mismatch, confront their predictions with available empirical results, and indicate which mechanisms deserve further empirical tests.
    Keywords: ghettos, urban unemployment, segregation, discrimination
    JEL: J15 J41 R14
    Date: 2005–11
  3. By: Lorenzo Cappellari
    Abstract: Using microdata on the 1995 cohort of Italian high school graduates, this paper studies the relationship between the type of high school attended (general versus technical; private versus public) and indicators of subsequent performance. Simultaneity issues that potentially bias this type of exercise are tackled by instrumental variables. Results indicate that the type of high school attended greatly depends upon the family of origin and prior school performance. General high schools are found to increase the probability of transition to university and to improve performance once at university. On the other hand, private high schools appear to be associated with lower academic performance. Technical schools improve the quality of the school-to-work transition, both in terms of participation and employment probabilities.
    Keywords: high school types, academic and economic performance, endogeneity
    JEL: I21 J24 C35
    Date: 2004–03
  4. By: Philippe De Vreyer (DIAL, Paris); Gilles Spielvogel (DIAL, Paris)
    Abstract: 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.
    Keywords: Local growth, convergence, spatial externalities, spatial econometrics, Brazil
    JEL: O40 R11 R12
    Date: 2005–10–21
  5. By: Guido Wolswijk (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany)
    Abstract: This paper analyses some fiscal aspects of mortgage debt in the EU. It first describes the main fiscal instruments that governments use to affect mortgage-financed home-ownership. In the empirical part, real mortgage debt growth is analysed for 15 EU countries using pooled regressions. Fiscal effects are included via after-tax interest rates. Other factors shown to be relevant for mortgage debt growth are house prices, financial deregulation, and stock markets while the effects of household income and inflation are less evident. Finally, the role of structural fiscal measures in reducing housing market volatility is highlighted.
    Keywords: Mortgage credit; loans; tax policy; income tax; interest deductibility.
    JEL: E51 E62 G21 H31 R21
    Date: 2005–09
  6. By: Philippe G. Leite
    Abstract: Following the topics discussed by Campante et al (2004), this paper contributes to the literature of the Brazilian racial discrimination by isolating the effect of intergeneration transmission of schooling and the school’s quality in the race discrimination effect. Instead of modelling just one mincer-type equation like others papers, it was decided to use the Two Stage Least Square Model where the first step of modelling control the endogeneity of individual schooling instrumenting it by family background and ability tests while attending school. The paper also provide a comparative profile of urban racial discrimination in the Northeast and the Southeast recognizing the important differences across regions in Brazil both in terms of economic development and racial composition of the population. As found by Campante et al (2004), results reveal that part of the component of wage differentials ordinarily attributed to labor market discrimination is actually explained by persistent educational inequalities between races. However because they didn’t control the potential bias due to the endogeneity of some variables, their discrimination effect is 15 to 19 percentage points higher than it should be. The mechanism of intergeneration transmission is correlated with financial constraints and higher education of parents because blacks have lower elasticities of education with respect to parent’s education due to selection and causation. Even controlling the model using instruments, Private sector remains as the sector where race discrimination is really an issue. Moreover, the regional profile suggests that the labor market is a more important locus of the racial issue in the Southeast than in the Northeast, although the significant presence in both regions. However, we are not controlling for selection bias and consequently the results must be viewed with caution because it is not sure how precise the estimations are.
    Keywords: Racial discrimination, Intergeneration Mobility, Labour Market, Public Policy, Regional differences, Education
    JEL: J15 J24 J31 J71 J78 I21
    Date: 2005–10–21
  7. By: Andrea Cosnita (EUREQua)
    Abstract: We study location equilibria for Cournot oligopolies selling complementary goods. For a single-store triopoly, we prove that the circular market also yields partial diamentrical dispersion besides total agglomeration. We turn to multi-plant duopolies and in contrast to other contributions on the topic, we allow firms to sell more than one product. We confirm the intuition that total agglomeration of outlets is always an equilibrium, whatever the market shape. However, the circular case also exhibits intra-firm agglomeration and inter-firm equal distance dispersion. This is a pattern never before obtained, entirely due to the assumption of intra-firm product complementarity.
    Keywords: Complementary products, multi-store competition, spatial Cournot model.
    JEL: D43 L13 R32
    Date: 2005–10
  8. By: Battu, Harminder (Department o Economics); Mwale, McDonald (Health Economics Research Unit (HERU)); Zenou, Yves (The Research Institute of Industrial Economics)
    Abstract: We develop a model in which non-white individuals are defined with respect to their social environment (family, friends, neighbors) and their attachments to their culture of origin (religion, language), and in which jobs are mainly found through social networks. We find that, depending on how strong peer pressures are, non-whites choose to adopt "oppositional" identities since some individuals may identify with the dominant culture and others may reject that culture, even if it implies adverse labor market outcomes.
    Keywords: Ethnic Minorities; Identity; Social Networks; White's Norm; Multiple Equilibria
    JEL: A14 J15
    Date: 2005–10–19
  9. By: Philip J. Cook; Jens Ludwig; Sudhir Venkatesh; Anthony A. Braga
    Abstract: This paper provides an economic analysis of underground gun markets drawing on interviews with gang members, gun dealers, professional thieves, prostitutes, police, public school security guards and teens in the city of Chicago, complemented by results from government surveys of recent arrestees in 22 cities plus administrative data for suicides, homicides, robberies, arrests and confiscated crime guns. We find evidence of considerable frictions in the underground market for guns in Chicago. We argue that these frictions are due primarily to the fact that the underground gun market is both illegal and “thin” -- the number of buyers, sellers and total transactions is small and relevant information is scarce. Gangs can help overcome these market frictions, but the gang’s economic interests cause gang leaders to limit supply primarily to gang members, and even then transactions are usually loans or rentals with strings attached.
    JEL: K42 L1
    Date: 2005–11
  10. By: Karin Juurikas (Tallinn University of Technology)
    Abstract: Nowadays, increasing attention is paid to studying the circumstances of people`s migration. First of all, researchers are interested in the behavioural aspects and people´s choices of purpose and destination. The author’s interest was how the traffic models of travelling routes reflect the individual choices and movement trends. The research territory was Hiiumaa, one of the smallest counties of Estonia, which is the least affected by outside influence. As a control area, the coastal region of Läänemaa County was used. About Hiiumaa one can state that the shape of migration models depends on the network of roads; this, in its turn, depends on settlement patterns; this, however, depends on naturals and other features. People usually go to work near their home, but in the case of higher-paid and highly skilled jobs, the workplaces may be rather far away from home. Workplaces are mostly situated in larger settlements; therefore, the direction of migration from home to workplace is predominantly from a smaller to a larger settlement. In Hiiumaa, several forms of commuting to work are used and also expeditional migration. Comparison with Läänemaa shows that, under fairly similar conditions, the movement models are different. This difference is partly caused by the isolation of Hiiumaa, which is an island. Läänemaa, being situated on the mainland, has direct links with the capital city, Tallinn. In many cases, the people of Läänemaa commute to Tallinn every day, which would be impossible from an island.
  11. By: Allen J. Scott (UCLA)
    Abstract: Regional push derives from the geographic agglomeration of economic activities, and is expressed in increments to national productivity. Various pieces of statistical evidence in favor of the existence of regional push effects in low- and middle-income economies are marshalled. The origins of these effects in different sorts of externalities and increasing returns to agglomerative scale and scope are analyzed in theoretical terms. Further evidence for the existence of these effects is displayed in a brief review of published case studies of African, Asian, and Latin American regions. A number of observations are then offered on the possibilities of identifying viable developmental policies and practices directed to enhancing the productivity-boosting properties of regions in low- and middle-income economies.
    Keywords: Agglomeration, big push, regional development, developing countries, local economic development
    JEL: O P
    Date: 2005–11–07
  12. By: Titas Bandopadhyay (Bagnan College)
    Abstract: :- We consider a small open Harris-Todaro economy with a rural foreign enclave and urban informal sector. We introduce consumption- efficiency relation to explain the simultaneous existence of informal sector and urban unemployment. Different types of immobility and mobility of capital are assumed in different sections of this paper. We also analyse the effects of expansion of foreign enclave on urban unemployment and on domestic factor income. In many cases, we get the results opposite to that obtained in the young-Miyagiwa model.
    JEL: C6 D5 D9
    Date: 2005–11–05
  13. By: Titas Bandopadhyay (Bagnan College)
    Abstract: This paper incorporates informal sector and efficiency wage relation in a mobile capital H-T(1970) model. The simultaneous existence of the urban informal sector and the urban unemployment has been explained interms of such efficiency wage relation. Two different versions have been considered in this paper: first, urban informal sector has no global exposure and the urban formal wage rate is exogenous;second, urban informal sector produces internationally traded goods and the urban formal wage rate is endogenous. Our investigation shows that policy impacts of different trade and fiscal policies lead to different effects in the two different situations. Interestingly, urban subsidy policies reduces urban unemployment in both of the two cases, where as rural subsidy policy intensifies the problem of unemployment when urban informal sector is related to the international market and the urban formal wage rate is endogenous.Both of the two results are uncommon to the traditional H-T(1970) economy.These theoretical results may guide the policy makers to pursue the development policy in the small open economy.
    Keywords: Development policy,mobile capital,unemployment
    JEL: C6 D5 D9
    Date: 2005–11–05
  14. By: Allen J Scott (UCLA)
    Abstract: The paper opens with a brief definition of the cultural economy. A first generation of local economic development policy approaches based on place-marketing and associated initiatives is described. The possibilities of a more powerful second-generation approach are then sketched out with special emphasis on localized complexes of cultural- products industries. An extensive review and classification of these complexes is laid out, and their inward and outward relations to global markets are considered. On this basis, a critical discussion of local economic policy options focussed on cultural-products industries is offered. Contrasting examples of development initiatives in major global cities, in selected old manufacturing towns, and in the Multimedia Super Corridor of Malaysia are briefly presented. It is suggested that the growth and spread of localized production agglomerations based on cultural-products industries is leading not to cultural uniformity but to greatly increased diversity at the global level.
    JEL: R
    Date: 2005–11–08
  15. By: William R. Latham (Department of Economics,University of Delaware); Simon Condliffe
    Abstract: Among the benefits that technology can provide is greater connectivity among economic agents. Commerce now occurs across great geographic distances at nominal transaction costs. Technology, therefore, seems to have the potential to unshackle economic agents from their suppliers and customers, enabling them to seek out alternative locations without being at a comparative disadvantage to other businesses. This possibility has spawned the “death of distance” notion that distance no longer matters, that technology has made all locations equal. Such thinking has been encouraged by phenomena such as the widespread “outsourcing” of many back-office and service functions by U.S. firms and/or the location of many of these functions in India and other foreign countries.
    Keywords: industrial location, distance, footloose, information technology, establishments births, agglomeration economies
    JEL: R30 O33
    Date: 2005
  16. By: William R. Latham (Department of Economics,University of Delaware); Adrienne Donald
    Abstract: A model of economic impacts of public gardens on their communities is developed stressing the roles of visitors as well as staff and suppliers in creating impacts. The model is implemented for four different gardens using a combination of survey and normal business data from the gardens with a well-known impact model system.The gardens selected span the major types in terms of metropolitan-nonmetropolitan locations and walk-in vs. destination facilities as well as being located in different regions of the U.S. The results show significant direct and multiplier effects which vary systematically with the typed of facility. The model can be applied to other facilities using a workbook available from the authors.
    Keywords: Public Gardens, Economic Impact, Economic Development Policy
    JEL: O18 R11 R58
    Date: 2005
  17. By: Caitlin Knowles Myers
    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
  18. By: Ryan M. Johnson; David H. Reiley; Juan Carlos Munoz
    Abstract: Two systems of bus driver compensation exist in Santiago, Chile. Most drivers are paid per passenger transported, while a second system compensates other drivers with a fixed wage. Compared with fixed-wage drivers, per-passenger drivers have incentives to engage in "La Guerra por el Boleto" ("The War for the Fare"), in which drivers change their driving patterns to compete for passengers. This paper takes advantage of a natural experiment provided by the coexistence of these two compensation schemes on similar routes in the same city. Using data on intervals between bus arrivals, we find that the fixed-wage contract leads to more bunching of buses, and hence longer average passenger wait times. The per-passenger drivers are assisted by a group of independent information intermediaries called "sapos" who earn their living by standing at bus stops, recording arrival times, and selling the information to subsequent drivers who drive past. We find that a typical bus passenger in Santiago waits roughly 10% longer for a bus on a fixed-wage route relative to an incentive-contract route. However, the incentives also lead drivers to drive noticeably more aggressively, causing approximately 67% more accidents per kilometer driven. Our results have implications for the design of incentives in public transportation systems.
    JEL: D0 J3 L9
    Date: 2005–11
  19. By: Ting Zhu (Carnegie Mellon University); Vishal Singh (Carnegie Mellon University); Anthony J. Dukes (School of Economics and Management, University of Aarhus)
    Abstract: This paper analyzes the competition between two spatially differentiated multi-product retailers who encounter entry from a dominant discount retailer. Our primary objective is to determine how entry affects the pricing and relative profits of the incumbent stores and the role played by the location of the entrant. The new entrant has partial overlap in product assortment with the incumbents and is assumed to have lower procurement costs for the common goods. Consumers are heterogeneous in their location, economic status (shopping costs and valuations), as well as purchase basket or the types of products demanded. Results show that in the post entry equilibrium, the prices for the products not offered by the discounter are higher than the pre entry prices. More interestingly, contrary to the conventional wisdom we find that the store that is closer to the new entrant is better off compared to the incumbent located further away. The intuition for these results is that the discounter with its low price draws away the poor consumers – the price sensitive segment – out of the market for the items it carries. This in turn softens price competition between the incumbents for these items. Furthermore, the new entrant’s unique product offering attracts more consumers to visit the location it occupies, which introduces positive demand externalities to the neighboring retailer, leading to an increase in sales for the non-competing products. We provide empirical evidence for our results and discuss implications for retailers facing competition from large discount stores.
    Keywords: entry; retail competition; agglomeration
    JEL: L13 L81 M31
    Date: 2005–05
  20. By: Huan Zhao (Jinhe Center for Economic Research, Xi'an Jiaotong University)
    Abstract: This paper tries to resolve the paradox raised by Corden and Findlay (1975). In this paper, it is assumed that Manufacture sector has scale economies. Both factor prices and product prices can adjust in a general equilibrium system. In a closed economy, this paper concludes that, with the expansion of capital stock both the unemployment rate and the absolute amount of unemployment will decrease. In an open economy, this paper sets up an asymmetric model, of which only one region has fixed wage rate. It will help us to investigate how the trading cost would affect the unemployment and output of the region, which may give some helpful policy implications.
    Keywords: fixed wage rate, unemployment, agglomeration
    JEL: F1 F2
    Date: 2005–11–09

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