nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2005‒12‒01
forty-one papers chosen by
Steve Ross
University of Connecticut

  1. Housing, House Prices, and the Equity Premium Revisited By Morris Davis; Robert F. Martin
  2. Housing and the Macroeconomy: The Role of Implicit Guarantees for Government Sponsored Enterprises By Dirk Krueger; Karsten Jeske
  3. Crime, Location and the Housing Market By Zenou, Yves
  4. Agglomeration and the Adjustment of the Spatial Economy By Pierre-Philippe Combes; Gilles Duranton; Henry G. Overman
  5. Heterogeneity within Communities: A Stochastic Model with Tenure Choice By Sven Rady; Francois Ortalo-Magne
  6. Job creation and housing construction: constraints on metropolitan area employment growth By Raven E. Saks
  7. Neighborhood effects, public housing and unemployment in France By Florence Goffette-Nagot; Claire Dujardin
  8. Parental Preferences and School Competition: Evidence from a Public School Choice Program By Justine S. Hastings; Thomas J. Kane; Douglas O. Staiger
  9. Consumption Along the Life Cycle: How Different is Housing? By Fang Yang
  10. Outsourcing, Inequality, and Cities By Wen-Chi Liao
  11. Residential segregation and unemployment : the case of Brussels By Claire Dujardin; Harris Selod; Isabelle Thomas
  12. Choice and Competition in Local Education Markets By Patrick Bayer; Robert McMillan
  13. VULNERABILIDADES URBANAS: UMA ALTERNATIVA DE MENSURAÇÃO By Vladimir Fernandes Maciel; Mônica Yukie Kuwahara; Roseli da Silva; Kleber Oliveira
  14. INDUSTRIAL CORES AND PERIPHERIES IN BRAZIL By Ricardo Machado Ruiz; Edson Paulo Domingues; Sueli Moro
  15. Housing tenure and wealth distribution in life-cycle economies By Pedro Silos
  16. Cities in the Developing World By Henry G. Overman; Anthony J. Venables
  17. Does the Early Bird Catch the Worm? Instrumental Variable Estimates of Educational Effects of Age of School Entry in Germany By Patrick Puhani; Andrea Maria Weber
  18. Aggregate Shocks and the Volatility of House Prices By V. Sanchez-Marcos; J.V.Rios-Rull
  19. Why are Some Cities So Crowded? By Jordan Rappaport
  20. Does Hazardous Waste Matter? Evidence from the Housing Market and the Superfund Program By Michael Greenstone; Justin Gallagher
  21. Segregation in Networks By Giorgio Fagiolo; Marco Valente; Nicolaas J. Vriend
  23. Shared Legacies, Disparate Outcomes: Why American South Border Cities Turned the Tables on Crime and Their Mexican Sisters Did Not By Pedro H. Albuquerque
  24. Efficiency potential and efficiency variation in Norwegian lower secondary schools By Lars-Erik Borge; Linn Renée Naper, Department of Economics, Norwegian University of Science and Technology
  25. Performance Pay for Teachers: Linking Individual and Organisational Level Targets By Richard Belfield; David Marsden
  26. A Century of Housing Shelter Prices: Is There a Downward Bias in the CPI? By Robert J. Gordon; Todd vanGoethem
  27. Monetary policy and house prices: a cross-country study By Alan G. Ahearne; John Ammer; Brian M. Doyle; Linda S. Kole; Robert F. Martin
  28. Monetary policy and the house price boom across U.S. states By Marco Del Negro; Christopher Otrok
  29. Crime and Police Resources: The Street Crime Initiative By Stephen Machin; Olivier Marie
  30. Economic Outcomes and the Decision to Vote: The Effect of Randomized School Admissions on Voter Participation By Justine S. Hastings; Thomas J. Kane; Douglas O. Staiger; Jeffrey M. Weinstein
  31. The effects of mortgage prepayments on M2 By Yueh-Yun C. O'Brien
  32. The Todaro Paradox Revisited By Zenou, Yves
  33. The Effects of Wal-Mart on Local Labor Markets By David Neumark; Junfu Zhang; Stephen Ciccarella
  34. Empirical analysis of the average asset correlation for real estate investment trusts By Jose A. Lopez
  35. Social status and crime By Emrah Arbak
  36. The Impact of Wal-Mart on Local Fiscal Health: Evidence from a Panel of Ohio Counties By Michael J. Hicks
  37. Crime, punishment and social norms By Weibull, Jörgen; Villa, Edgar
  38. Childhood Family Structure and Schooling Outcomes: Evidence for Germany By Marco Francesconi; Stephen P. Jenkins; Thomas Siedler
  39. Like father, like son: Social networks, human capital investment, and social mobility By Calvo-Armengol, Antoni; Jackson, Matthew O.
  41. DINÂMICA AGROPECUÁRIA E URBANIZAÇÃO: UMA ANÁLISE MULTIVARIADA PARA MINAS GERAIS, 1995-2000 By Harley Silva; Anderson Resende; Carlos Rosa; Rodrigo Simões

  1. By: Morris Davis; Robert F. Martin (International Finance Federal Reserve Board)
    Keywords: House Prices, Equity Premium, Elasticity
    JEL: E1 G1
    Date: 2005
  2. By: Dirk Krueger; Karsten Jeske
    Keywords: Housing, Mortgage Market, Default Risk
    JEL: E21 G11 R21
    Date: 2005
  3. By: Zenou, Yves (The Research Institute of Industrial Economics)
    Abstract: We highlight the role of commuting cost, location and housing market in crime decision. By assuming that all crimes are committed in the central business district and that criminals create both positive and negative externalities to each other, we find that high wages or large levels of police resources are a natural way to reduce crime. We also find that bigger cities experience higher levels of crime because of the fiercer competition in the housing market. Finally, we show that reducing commuting costs can also reduce crime because the resulting decrease in housing prices is lower for workers than for criminals.
    Keywords: Localized Crime; Housing Market; Commuting Cost
    JEL: J15 K42 R14
    Date: 2005–11–09
  4. By: Pierre-Philippe Combes; Gilles Duranton; Henry G. Overman
    Abstract: We consider the literatures on urban systems and New Economic Geography to examinequestions concerning agglomeration and how areas respond to shocks to the economicenvironment. We first propose a diagrammatic framework to compare the two approaches.We then use this framework to study a number of extensions and to consider several policyrelevant issues.
    Keywords: Urban systems, New Economic Geography, Urban and regional policy, diagrammatic exposition
    JEL: R00 R58
    Date: 2005–05
  5. By: Sven Rady; Francois Ortalo-Magne
    Keywords: Housing Markets, Dynamic Sorting, Tenure Choice
    JEL: R23
    Date: 2005
  6. By: Raven E. Saks
    Abstract: Differences in the supply of housing generate substantial variation in housing prices across the United States. Because housing prices influence migration, the elasticity of housing supply also has an important impact on local labor markets. Specifically, an increase in labor demand will translate into less employment growth and higher wages in places where it is relatively difficult to build new houses. To identify metropolitan areas where the supply of housing is constrained, I assemble evidence on housing supply regulations from a variety of sources. In places with relatively few barriers to construction, an increase in housing demand leads to a large number of new housing units and only a moderate increase in housing prices. In contrast, for an equal demand shock, places with more regulation experience a 17 percent smaller expansion of the housing stock and almost double the increase in housing prices. Furthermore, I find that housing supply regulations have a significant effect on local labor market dynamics. Whereas a 1 percent increase in labor demand generally leads to a 1 percent increase in the long-run level of employment, the employment response is less than 0.8 percent in places where the housing supply is highly constrained.
    Date: 2005
  7. By: Florence Goffette-Nagot (GATE CNRS); Claire Dujardin
    Abstract: This paper is aimed to examine how individual unemployment is influenced both by location in a deprived neighborhood and public housing. Our identification strategy is twofold. First, because we estimate a simultaneous probit model of public housing accommodation, type of neighborhood, and unemployment, the formal identification of the model relies on non-linearities. Second, we take advantage of the location of the public housing sector in France, which allows us to use public housing accommodation as a powerful determinant of neighborhood choices. Our results show that public housing does not have any direct effect on unemployment. However, living within the 35% more deprived neighborhoods does increase the unemployment probability significantly. As expected, the effect of neighborhood substantially decreases when dealing with the endogeneity of neighborhood and when using public housing as a determinant of neighborhood choice.
    Keywords: Neighborhood effects, Public housing, Unemployment, Simultaneous probit models, Simulated maximum likehood
    JEL: J64 R2
    Date: 2005–11
  8. By: Justine S. Hastings; Thomas J. Kane; Douglas O. Staiger
    Abstract: This paper uses data from the implementation of a district-wide public school choice plan in Mecklenburg County, North Carolina to estimate preferences for school characteristics and examine their implications for the local educational market. We use parental rankings of their top three choices of schools matched with student demographic and test score data to estimate a mixed-logit discrete choice demand model for schools. We find that parents value proximity highly and the preference attached to a school's mean test score increases with student's income and own academic ability. We also find considerable heterogeneity in preferences even after controlling for income, academic achievement and race, with strong negative correlations between preferences for academics and school proximity. Simulations of parental responses to test score improvements at a school suggest that the demand response at high-performing schools would be larger than the response at low-performing schools, leading to disparate demand-side pressure to improve performance under school choice.
    JEL: I0 I20 I28
    Date: 2005–11
  9. By: Fang Yang (Department of Economics University of Minnesota)
    Keywords: Consumption, Housing, Portfolio
    JEL: H31 E21 E27 R21
    Date: 2005
  10. By: Wen-Chi Liao
    Keywords: Outsourcing; Inequality; Segregation;
    JEL: F0 R12 R13 R23
    Date: 2005
  11. By: Claire Dujardin; Harris Selod; Isabelle Thomas
    Abstract: This paper investigates the causal effects of the spatial organization of Brussels on unemployment propensities. Using 1991 Census data, we estimate the unemployment probability of young adults while taking into account personal, household and neighborhood characteristics. We solve the endogeneity of residential locations by restricting our sample to young adults residing with their parents, and evaluate the potential remaining bias by conducting a sensitivity analysis. Our results suggest that the neighborhood of residence significantly increases a youngster probability of being unemployed, a result which is quite robust to the presence of both observed and unobserved parental covariates.
    Keywords: Neighborhood effects, residential segregation, endogeneity bias,sensitivity analysis
    JEL: O18 R1 R12
    Date: 2005–11
  12. By: Patrick Bayer; Robert McMillan
    Abstract: Prompted by widespread concerns about public school quality, a growing empirical literature has measured the effects of greater choice on school performance. This paper contributes to that literature in three ways. First, it makes the observation that the overall effect of greater choice, which has been the focus of prior research, can be decomposed into demand and supply components: knowing the relative sizes of the two is very relevant for policy. Second, using rich data from a large metropolitan area, it provides a direct and intuitive measure of the competition each school faces. This takes the form of a school-specific elasticity that measures the extent to which reductions in school quality would lead to reductions in demand. Third, the paper provides evidence that these elasticity measures are strongly related to school performance: a one-standard deviation increase in the competitiveness of a school's local environment within the Bay Area leads to a 0.15 standard deviation increase in average test scores. This positive correlation is robust and is consistent with strong supply responsiveness on the part of public schools, of relevance to the broader school choice debate.
    JEL: I20 H41 R21
    Date: 2005–11
  13. By: Vladimir Fernandes Maciel; Mônica Yukie Kuwahara; Roseli da Silva; Kleber Oliveira
    Abstract: The main purpose of the present article is to reflect on the relations between urban infrastructure, housing and environment through the analysis of intracity indicators georefered according to districts of the city of São Paulo. The selected variables to identify these aspects of the quality of life of the city will be expressed in two synthetic pointers: one treating the Housing Vulnerability (IVH) and another one occupying of the Vulnerability of Infrastructure and Environment (IVIMA). The data source used was the 2000 sample research of the Demographic indicates the different conditions of housing, access to the urban infrastructure and exposition the environmental risks for the districts. The hypothesis is that the process of Brazilian economic development between the 1930's and 1980's, caused intense migratory movement country-city and the supply increase of urban infrastructure and housing was not given in the same magnitude, resulting in precarious nestings and with environmental and social impacts. The result of the research allows to identify the different necessities of the city of São Paulo in terms of environmental quality, identifying the factors (habitation and urban infrastructure) that can minimize the regional inequalities of the city. This article is divided in three parts, besides the introduction and the conclusion.
    JEL: O18
    Date: 2005
  14. By: Ricardo Machado Ruiz; Edson Paulo Domingues; Sueli Moro
    Abstract: The aim of this paper is to identify the Brazilian industrial cores and peripheries. The study is based on two sets of data: the first describes 35600 industrial firms, and the second has information on the economic, social and urban structure of 5507 cities (2000). The conclusions are: (1) 84% of the industrial value-added (IVA) is concentrated in some type of industrial cluster; (2) 75% is in 15 spatial industrial agglomerations, which are industrial clusters with industrialized peripheries; (3) the are other 23 industrial cluster (local industrial agglomerations and industrial enclaves) with 9% of IVA; (4) the remaining 16% is geographically dispersed. Our main conclusion is: the Brazilian economic space is a mixed case. It is not a set of disconnected or isolated industrial islands, but it is still behind a full regional economic integration.
    JEL: R11 R12 R23 R30 R58
    Date: 2005
  15. By: Pedro Silos
    Abstract: Common practice in the housing and wealth distribution literature has proceeded as if the modeling of housing rental markets was unnecessary due to renters’ relative low levels of wealth and the small fraction they represent in the total population. This paper shows, however, that their inclusion matters substantially when dealing with wealth concentration over the life cycle. Renters are concentrated in the poorer and younger groups. This concentration results in a pattern of housing wealth concentration over an agent’s life that is decreasing, with a slope as steep as that of nonhousing (or financial) wealth. The author constructs an overlapping-generations economy with a housing rental market that is consistent with this fact.
    Date: 2005
  16. By: Henry G. Overman; Anthony J. Venables
    Abstract: Rapid urbanisation is a major feature of developing countries. Some 2 billion more people arelikely to become city residents in the next 30 years, yet urbanisation has received littleattention in the modern development economics literature. This paper reviews theoretical andempirical work on the determinants and effects of urbanisation. This suggests that there aresubstantial productivity benefits from cities, although unregulated outcomes may well lead toexcessive primacy as externalities and coordination failures inhibit decentralisation ofeconomic activity. Policy should operate both by identifying and addressing these marketfailures, and by seeking to remove institutional obstacles to decentralisation.
    Keywords: Urbanisation, economic development
    JEL: O18 R0
    Date: 2005–07
  17. By: Patrick Puhani (Institut für Volkswirtschaftslehre (Department of Economics), Technische Universität Darmstadt (Darmstadt University of Technology)); Andrea Maria Weber (Institut für Volkswirtschaftslehre (Department of Economics), Technische Universität Darmstadt (Darmstadt University of Technology))
    Abstract: We estimate the effect of age of school entry on educational attainment using three different data sets for Germany, sampling pupils at the end of primary school, in the middle of secondary school and several years after secondary school. Results are obtained based on instrumental variable estimation exploiting the exogenous variation in month of birth. We find robust and significant positive effects on educational attainment for pupils who enter school at seven instead of six years of age: Test scores at the end of primary school increase by about 0.42 standard deviations and years of secondary schooling increase by almost half a year.
    Keywords: education, immigration, policy, identification
    JEL: I21 I28 J24
    Date: 2005–11
  18. By: V. Sanchez-Marcos; J.V.Rios-Rull (Economics Universidad de Cantabria)
    Keywords: housing prices, frictions,aggregate shocks
    JEL: E3
    Date: 2005
  19. By: Jordan Rappaport (Economic Research Federal Reserve Bank of Kansas City)
    Keywords: Population Density, Productivity, Quality-of-Life, Compensating Differentials, Economic Growth
    JEL: O40 O51 R11
    Date: 2005
  20. By: Michael Greenstone; Justin Gallagher
    Abstract: Approximately $30 billion (2000$) has been spent on Superfund clean-ups of hazardous waste sites, and remediation efforts are incomplete at roughly half of the 1,500 Superfund sites. This study estimates the effect of Superfund clean-ups on local housing price appreciation. We compare housing price growth in the areas surrounding the first 400 hazardous waste sites to be cleaned up through the Superfund program to the areas surrounding the 290 sites that narrowly missed qualifying for these clean-ups. We cannot reject that the clean-ups had no effect on local housing price growth, nearly two decades after these sites became eligible for them. This finding is robust to a series of specification checks, including the application of a quasi-experimental regression discontinuity design based on knowledge of the selection rule. Overall, the preferred estimates suggest that the benefits of Superfund clean-ups as measured through the housing market are substantially lower than the $43 million mean cost of Superfund clean-ups.
    JEL: H4 Q51 Q53 R5 R2 I18
    Date: 2005–11
  21. By: Giorgio Fagiolo; Marco Valente; Nicolaas J. Vriend
    Abstract: Schelling (1969, 1971, 1971, 1978) considered a simple model with individual agents who only care about the types of people living in their own local neighborhood. The spatial structure was represented by a one- or two-dimensional lattice. Schelling showed that an integrated society will generally unravel into a rather segregated one even though no individual agent strictly prefers this. We make a first step to generalize the spatial proximity model to a proximity model of segregation. That is, we examine models with individual agents who interact 'locally' in a range of network structures with topological properties that are different from those of regular lattices. Assuming mild preferences about with whom they interact, we study best-response dynamics in random and regular non-directed graphs as well as in small-world and scale-free networks. Our main result is that the system attains levels of segregation that are in line with those reached in the lattice-based spatial proximity model. In other words, mild proximity preferences can explain segregation not just in regular spatial networks but also in more general social networks. Furthermore, segregation levels do not dramatically vary across different network structures. That is, Schelling's original results seem to be robust also to the structural properties of the network.
    Keywords: Spatial proximity model, Social segregation, Schelling, Proximity preferences, Social networks, Undirected graphs, Best-response dynamics.
    Date: 2005–11–22
  22. By: Cristiano Aguiar de Oliveira
    Abstract: This paper investigates criminality causes in cities and their relationship with the city size. For this goal, a formal model is presented based on Glaeser and Sacerdote (1999), however it incorporates the contributions of the ecological approach proposed by Brofenbrenner (1979). In the model, the criminality in cities can be explained by local characteristics in that the context and the individual's history affect the criminality. An econometric model using panel data from Brazilian cities in the nineties tests the theoretical model. The findings confirm the relevance city size in the explanation of the criminality. The paper also confirms the role of the income inequality and of the poverty as factors that enforces the criminality in cities. In the paper is also discussed the importance of the family and of the school in the criminality explanation. The obtained results show that problems in the family structure and the inefficiency of the basic school in Brazil affect positively the criminality. In this paper, the benefits of the crime and the opportunity costs are divided, that allows concluding that the economic growth doesn't implicate directly in the criminality increase. Because, if there is an increase in the income of the more poor the criminality will decreases.
    JEL: O10 K42 C23
    Date: 2005
  23. By: Pedro H. Albuquerque (Texas A&M International University)
    Abstract: The article evaluates crime trends in south border sister cities. The region offers a unique assessment opportunity since cities are characterized by shared cultural and historical legacies, institutional heterogeneity, and disparate crime outcomes. Higher homicide rates on the Mexican side seem to result from institutional weaknesses aggravated by apathy towards crime and law enforcement (High Noon attitude). Cultural differences, on the other hand, have been decreasing, and appear to not play a substantial role. Higher population density in Mexican cities may also be a factor. The crime dynamics show opportunistic clustering of criminal activity in Mexican cities, while no clustering is found on the American side. Crime also appears to spill from Mexican cities into American cities. Homicide rates on both sides of the border have been falling faster than countrywide rates, leading, in the case of American cities, and against stereotypes, to rates below the countrywide rate in 2001.
    Keywords: Crime, Border, Law Enforcement, Justice, Immigration, Mexico
    JEL: K42 O18
    Date: 2005–11–22
  24. By: Lars-Erik Borge (Department of Economics, Norwegian University of Science and Technology); Linn Renée Naper, Department of Economics, Norwegian University of Science and Technology (Centre for Economic Research and Department of Economics, Norwegian University of Science and Technology)
    Abstract: The paper performs an efficiency analysis of the lower secondary school sector in Norway. The efficiency potential is calculated to 14 percent based on a DEA analysis with grades in core subjects (adjusted for student characteristics and family background) as outputs. The analysis of the determinants of efficiency indicates that a high level of municipal revenue, a high degree of party fragmentation, and a high share of socialists in the local council are associated with low educational efficiency. The negative effects of the share of socialists and party fragmentation seem to reflect both higher resource use and lower student performance.
    Keywords: educational efficiency; DEA analysis; determinants of efficiency; political and budgetary institutions
    JEL: I21
    Date: 2005–11–17
  25. By: Richard Belfield; David Marsden
    Abstract: The introduction of performance-related pay and performance management schemes in the maintained, state,school sector represents a considerable change in the school management system. This paper combines theresults of opinion surveys of classroom and head teachers with Department for Education and Skills schoolperformance data to consider the operation and impact of the new system in England since 2000. We find thatteachers' response to the new system closely resembles that of other groups of public service workers to similarschemes. In particular, teachers appear not to be greatly motivated by the financial-incentive element of thesystem. However, the goal-setting and appraisal aspect of the system is steadily establishing itself in schools,and seems to be giving rise to a better alignment of teacher and school objectives and with those of nationallevelpolicy objectives. We present tentative evidence that improvements in goal setting within schools arepositively related to rising pupil academic performance.
    Keywords: Education, teachers, performance related pay, public sector, compensation, industrial relations
    JEL: I2 J33 J45 M52
    Date: 2005–08
  26. By: Robert J. Gordon; Todd vanGoethem
    Abstract: Tenant rental shelter is by far the most important component of the CPI, because it is used as a proxy for owner-occupied housing. This paper develops a wide variety of current and historical evidence dating back to 1914 to demonstrate that the CPI rent index is biased downward for all of the last century. The CPI rises roughly 2 percent per year slower than quality-unadjusted indexes of gross rent, setting a challenge for this research of measuring the rate of quality change in rental apartments. If quality increased at a rate of 2 percent per year, the CPI was not biased downward at all, but if quality increased at a slower rate of 1 percent per year, then the CPI was biased downward at a rate of 1 percent. Our analysis of a rich set of data sources goes backward chronologically, starting with a hedonic regression analysis on a large set of panel data from the American Housing Survey (AHS) covering 1975-2003. Prior to 1975, we have large micro data files from the U. S. Census of Housing extending back to 1930. In addition to the hedonic regression data, we stitch together data on the diffusion of important quality attributes of rental units, including plumbing, heating, and electrification, over the period 1918-73. Our final piece of evidence is based on a study of quality-adjusted rents in a single local community, Evanston IL, covering the period 1925-99. Our overall conclusions are surprisingly consistent across sources and eras, that the CPI bias was roughly -1.0 percent prior to the methodological improvements in the CPI that date from the mid-1980s. Our reliance on a wide variety of methodologies and evidence on types of quality change and their importance, while leaving the outcome still uncertain, at least in our view substantially narrows the range of possibilities regarding the history of CPI bias for rental shelter over the twentieth century.
    JEL: C23 E22 L74 N12 N62
    Date: 2005–11
  27. By: Alan G. Ahearne; John Ammer; Brian M. Doyle; Linda S. Kole; Robert F. Martin
    Abstract: This paper examines periods of pronounced rises and falls of real house prices since 1970 in eighteen major industrial countries, with particular focus on the lessons for monetary policy. We find that real house prices are pro-cyclical—co-moving with real GDP, consumption, investment, CPI inflation, budget and current account balances, and output gaps. House price booms are typically preceded by a period of easing monetary policy, but then diminishing slack and rising inflation lead monetary authorities to begin tightening policy before house prices peak. In a careful reading of official reports, speeches, and minutes, we find little evidence that foreign central banks have reacted to past episodes of rising real house prices beyond taking into account their implications for inflation and output growth. However, central bankers have expressed a range of opinions in the more recent policy debate with some willing in certain cases to raise policy rates to try to stem current and future surges in asset prices while others favor moral suasion or a hands-off approach. Finally, we characterize the risks associated with house-price reversals. Although mortgage lenders in some countries have significant exposure to house prices, the balance of evidence suggests that this exposure does not, in and of itself, pose a significant risk to financial stability. Nevertheless, the co-movement of both property prices and default rates with the business cycle means that losses on mortgage lending are likely to be higher when banks’ other lines of business are also performing poorly.
    Keywords: Monetary policy ; Housing - Prices
    Date: 2005
  28. By: Marco Del Negro; Christopher Otrok
    Abstract: The authors use a dynamic factor model estimated via Bayesian methods to disentangle the relative importance of the common component in the Office of Federal Housing Enterprise Oversight’s house price movements from state- or region-specific shocks, estimated on quarterly state-level data from 1986 to 2004. The authors find that movements in house prices historically have mainly been driven by the local (state- or region-specific) component. The recent period (2001–04) has been different, however: “Local bubbles” have been important in some states, but overall the increase in house prices is a national phenomenon. The authors then use a VAR to investigate the extent to which expansionary monetary policy is responsible for the common component in house price movements. The authors find the impact of policy shocks on house prices to be very small.
    Date: 2005
  29. By: Stephen Machin; Olivier Marie
    Abstract: In this paper we look at links between police resources and crime in a different way to theexisting economics of crime work. To do so we focus on a policy intervention - the StreetCrime Initiative - that was introduced in England and Wales in 2002. This allocatedadditional resources to some police force areas to combat street crime, whereas other forcesdid not receive any additional funding. Estimates derived from several empirical strategiesshow that robberies did fall significantly in SCI police forces relative to non-SCI forces afterthe initiative was introduced. Moreover, the policy seems to have been a cost effective one.There is some heterogeneity in this positive net social benefit across different SCI policeforces, suggesting that some police forces may have made better use of the extra resourcesthan others. Overall, we reach the conclusion that increased police resources do in fact leadto lower crime, at least in the context of the SCI programme we study.
    Keywords: Street crime, Police resources, Cost effectiveness
    JEL: H00 H5 K42
    Date: 2005–03
  30. By: Justine S. Hastings; Thomas J. Kane; Douglas O. Staiger; Jeffrey M. Weinstein
    Abstract: We provide empirical evidence on the determinants of voter turnout using the random assignment of economic outcomes to potential voters generated by a school choice lottery. This is the first paper to use random assignment of real outcomes resulting from a policy experiment to understand the factors that influence voter turnout. We show that school lottery losers are significantly more likely to vote in the ensuing school board election than lottery winners. The asymmetric effect increases with income and past election participation. The results support a model of 'expressive' voting where negative economic outcomes increase the probability of voting. Such results may account for loss minimizing behavior by public officials, particularly for voters in middle and higher income neighborhoods.
    JEL: D72 I28
    Date: 2005–11
  31. By: Yueh-Yun C. O'Brien
    Abstract: Mortgage prepayments can contribute significantly to fluctuations in M2 growth rates. These mortgage prepayment effects are primarily driven by certain rules of mortgage-backed-security (MBS) insurers that require mortgage servicers to hold in M2-type deposits the prepayment proceeds due to MBS investors. This paper provides a methodology for estimating prepayment effects on M2. The effects are estimated separately for refinancing and home sales. The results indicate that excluding the mortgage prepayment effects from M2 produces smoother monthly growth rates. The stability of the relationship between money and GDP as measured by M2 velocity is also increased. Refinancing prepayments account for most of the prepayment effects on M2.
    Keywords: Mortgage loans ; Prepayment of debts ; Money supply
    Date: 2005
  32. By: Zenou, Yves (The Research Institute of Industrial Economics)
    Abstract: The Todaro Paradox states that policies aimed at reducing urban unemployment are bound to backfire: they will raise rather than reduce urban unemployment. The aim of this paper is to reexamine this paradox in the context of efficiency wage and search-matching models. For that, we study a policy that consists in decreasing the urban unemployment benefit. In an efficiency wage model, we find that there is no Todaro paradox while this is not always true in a search-matching model since a decrease in the urban unemployment benefit can increase both urban employment and unemployment.
    Keywords: Efficiency Wages; Search-Matching; Rural-Urban Migration; Policy
    JEL: D83 J41 J64 O15
    Date: 2005–11–09
  33. By: David Neumark; Junfu Zhang; Stephen Ciccarella
    Abstract: We estimate the effects of Wal-Mart stores on county-level employment and earnings, accounting for endogeneity of the location and timing of Wal-Mart openings that most likely biases the evidence against finding adverse effects of Wal-Mart stores. We address the endogeneity problem using a natural instrumental variable that arises from the geographic and time pattern of the opening of Wal-Mart stores, which slowly spread out from the first stores in Arkansas. In the retail sector, on average, Wal-Mart stores reduce employment by two to four percent. There is some evidence that payrolls per worker also decline, by about 3.5 percent, but this conclusion is less robust. Either way, though, retail earnings fall. Overall, there is some evidence that Wal-Mart stores increase total employment on the order of two percent, although not all of the evidence supports this conclusion. There is stronger evidence that total payrolls per person decline, by about five percent in the aggregate, implying that residents of local labor markets earn less following the opening of Wal-Mart stores. And in the South, where Wal-Mart stores are most prevalent and have been open the longest, the evidence indicates that Wal-Mart reduces retail employment, total employment, and total payrolls per person.
    JEL: J2 J3 R1
    Date: 2005–11
  34. By: Jose A. Lopez
    Abstract: The credit risk capital requirements within the current Basel II Accord are based on the asymptotic single risk factor (ASRF) approach. The asset correlation parameter, defined as an obligor's sensitivity to the ASRF, is a key driver within this approach, and its average values for different types of obligors are to be set by regulators. Specifically, for commercial real estate (CRE) lending, the average asset correlations are to be determined using formulas for either income-producing real estate or high-volatility commercial real estate. In this paper, the value of this parameter was empirically examined using portfolios of U.S. publicly traded real estate investment trusts (REITs) as a proxy for CRE lending more generally. CRE lending as a whole was found to have the same calibrated average asset correlation as corporate lending, providing support for the recent U.S. regulatory decision to treat these two lending categories similarly for regulatory capital purposes. However, the calibrated values for CRE categories, such as multifamily residential or office lending, varied in important ways. The comparison of calibrated and regulatory values of the average asset correlations for these categories suggest that the current regulatory formulas generate parameter values that may be too high in most cases.
    Date: 2005
  35. By: Emrah Arbak (GATE CNRS)
    Abstract: We consider a large population of agents choosing either to engage in a criminal activity or working. Individuals feel varying degrees of selfreproach if they commit criminal acts. In addition, they are concerned with their social status in society, based on others’ perceptions of their values. In making their decisions, individuals weigh both the material and social risks of being a criminal and a worker. We find that introducing social status concerns may induce multiple equilibria. We also consider the implications of intragroup and intergroup interactions in an economy with two classes of earning abilities. Typically, there is more crime in the low ability group and increasing punishment reduces crime, but the opposite may also be true.
    Keywords: Crime, Social identity, Asymmetric information, Behavioral game theory
    JEL: C72 D82 K42 Z13
    Date: 2005–11
  36. By: Michael J. Hicks (Air Force Institute of Technology)
    Abstract: This research analyzes selected fiscal impacts of Wal-Mart in Ohio from 1985 through 2003. Using a panel of counties, and accounting for spatial autocorrelation in an instrumental variable model I estimate impact of Wal-Mart and Super-Centers on selected revenues and transfer payments. On revenues I find that the presence of a Wal-Mart increases local commercial property tax assessments, resulting in collection increases of between $350,000 to roughly $1.3 million. Wal-Mart also is associated with higher levels of local labor force participation. On expenditures I also find that the presence of a Wal-Mart dramatically increases the per capita EITC claims in a county (between 18 and 43 percent), while the dollar value of these claims experiences mixed impacts between Wal-Mart and a Supercenter. Similarly, the impact of Wal-Mart on Foodstamps expenditures is mixed, but small in any case. There are no in-county impacts of Wal-Mart on expenditures on Temporary Assistance to Needy Families and its predecessor Aid to Families with Dependent Children. However, Medicaid expenditures experience growth which may amount to roughly 16 additional cases per county attributable to a single Wal- Mart. The per worker costs of Medicaid estimated in this study is consistent with reported levels in a number of states, and study estimates by Dube and Jacobs [2004], Carlson [2005] and Hicks [2005a]. The magnitude and statistical certainty of these findings, accompanied by a review of previous research suggests that local fiscal intervention, either through incentives or the much touted “Wal-Mart Tax” is unwarranted.
    JEL: D6 D7 H
    Date: 2005–11–21
  37. By: Weibull, Jörgen (Dept. of Economics, Stockholm School of Economics); Villa, Edgar (Boston University)
    Abstract: We analyze the interplay between economic incentives and social norms when individuals decide whether or not to engage in criminal activity. More specifically, we assume that there is a social norm against criminal activity and that deviations from the norm result in feelings of guilt or shame. The intensity of these feelings is here endogenous in the sense that they are stronger when the population fraction obeying the norm is larger. As a consequence, a gradual reduction of the sanctions against criminal activity, or of the taxation of legal incomes, may weaken the social norm against crime. Due to the potential multiplicity of equilibria in our model, such a gradual change may even induce a discontinuous increase in the crime rate. We show that law enforcement policies may have dramatic and permanent efects on the crime rate, and lead to hysteresis. We also define political equilibrium under majority rule and show how a majority of individuals, who feel no guilt or shame from violating the law, in political equilibrium can exploit a minority who do have such feelings.
    Keywords: crime; punishment; social norm; political equilibrium
    JEL: D11 D72
    Date: 2005–11–10
  38. By: Marco Francesconi (University of Essex and IZA Bonn); Stephen P. Jenkins (ISER, University of Essex, DIW Berlin and IZA Bonn); Thomas Siedler (ISER, University of Essex, DIW Berlin and IZA Bonn)
    Abstract: We analyze the impact on schooling outcomes of growing up in a family headed by a single mother. Growing up in a non-intact family in Germany is associated with worse outcomes in models that do not control for possible correlations between common unobserved determinants of family structure and educational performance. But once endogeneity is accounted for, whether by using sibling-difference estimators or two types of instrumental variable estimator, the evidence that family structure affects schooling outcomes is much less conclusive. Although almost all the point estimates indicate that non-intactness has an adverse effect on schooling outcomes, confidence intervals are large and span zero.
    Keywords: childhood family structure, lone parenthood, educational success, sibling differences, instrumental variables, treatment effects
    JEL: C23 D13 I21 J12 J13
    Date: 2005–11
  39. By: Calvo-Armengol, Antoni; Jackson, Matthew O.
    Abstract: We build a model where an individual sees higher returns to investments in human capital when their neighbors in a social network have higher levels of human capital. We show that the correlation of human capital across generations of a given family is directly related to the sensitivity of individual investment decisions to the state of the social network. Increasing the sensitivity leads to increased intergenerational correlation, as well as more costly investment decisions on average in the society. We calibrate a simple threshold version of the model to data from a variety of EU nations. We also show how directly analyzing sensitivity of decisions to social circumstances can lead to information that is not captured by intergenerational correlation.
    Date: 2005–11
  40. By: Frederico G. Jayme Jr; Marco Crocco
    Abstract: This paper aims at analyzing regional development in Brazil regarding its financial conditions. It departs from the features of the federalism and decentralization in Brazil, as well as the state and local expenditures. We intends to investigate the role of the federalism and decentralization after the recentralization of taxes and budget in the Brazilian economy. Conclusions highlight the importance of financial sector as one of the influential aspect of the regional disequilibrium in Brazil.
    JEL: R11 H70 H77
    Date: 2005
  41. By: Harley Silva; Anderson Resende; Carlos Rosa; Rodrigo Simões
    Abstract: This paper aims to describe and analyse the connection between urbanization processes of and the modernization of Agricultural and Cattle Raising in Minas Gerais - Brazil, during the second half of last decade. Furthermore, we use microregional database and apply multivariate analysis (PCA and Cluster Analysis) to identify the existent regional patterns for the State of Minas Gerais - Brazil.
    JEL: Q10 R11
    Date: 2005

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