nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2006‒01‒01
28 papers chosen by
Steve Ross
University of Connecticut

  1. Agglomeration economies and entrepreneurship: testing for spatial externalities in the Dutch ICT industry By Frank G. van Oort; Erik Stam
  2. Housing and the Household Wealth Portfolio: The Role of Location By Marion Kohler; Kylie Smith
  3. The Geography of Internet Adoption by Retailers By Jesse W.J. Weltevreden; Oedzge A.L.C. Atzema; Koen Frenken; Karlijn de Kruijf; Frank G. van Oort
  4. The evolution of the spatial digital divide: From internet adoption to internet use by french industrial firms By Danielle GALLIANO (LEREPS-GRES & INRA-ETIC ); Pascale ROUX (ADIS, Université Paris Sud )
  5. Remedying Education: Evidence from Two Randomized Experiments in India By Abhijit Banerjee; Shawn Cole; Esther Duflo; Leigh Linden
  6. The Analysis of Location, Co-location and Urbanisation Economics By Johansson, Börje; Forslund, Ulla
  7. B2c e-commerce adoption in inner cities: An evolutionary perspective By Ron A. Boschma; Jesse W.J. Weltevreden
  8. Evolutionary urban transportation planning? An exploration By Luca Bertolini
  9. Causality, causality, causality: the view of education inputs and outputs from economics By Lisa Barrow; Cecilia Elena Rouse
  10. Precio de la tierra con presión urbana: Un modelo para España. By Esther Decimavilla; Carlos San Juan Mesonada; Stefan Sperlich
  11. The baby boom: predictability in house prices and interest rates By Robert F. Martin
  12. Will I see you at work? Ethnic workplace segregation in Sweden 1985–2002* By Åslund, Olof; Nordström Skans, Oskar
  13. Do enclaves matter in immigrants’ self-employment decision? By Maude Toussaint-Comeau
  14. Clustering of auto supplier plants in the U.S.: GMM spatial logit for large samples By Thomas H. Klier; Dan McMillen
  15. A complex network approach to urban growth By Claes Andersson; Koen Frenken; Alexander Hellervik
  16. The effect of regional differences on the performance of software firms in the Netherlands By Ron A. Boschma; Anet B.R. Weterings
  17. Social capital, labour precariousness and the economic performance. An empirical assessment of the strength of weak ties in Italy By Fabio Sabatini
  18. Informational Complexity and the Flow of Knowledge across social boundaries By Olav Sorenson; Jan W. Rivkin; Lee Fleming
  19. Variety and regional economic growth in the Netherlands By Koen Frenken; Frank G. van Oort; Thijs Verburg; Ron A. Boschma
  20. Do Institutions of Direct Democracy Tame the Leviathan? Swiss Evidence on the Structure of Expenditure for Public Education. By Justina A.V. Fischer
  21. The spatial evolution of the British automobile industry By Ron A. Boschma; Rik Wenting
  22. A framework for evaluating alternate institutional arrangements for fiscal equalization transfers By Shah, Anwar
  23. Getting the Most Out of Public-Sector Decentralisation in Korea By Randall Jones; Tadashi Yokoyama
  24. Gender Differences in Educational Attainment: Evidence on the Role of the Tracking Age from a Finnish Quasi-Experiment By Tuomas Pekkarinen
  25. The Demand for Social Interaction By Henry Saffer
  26. Fiscal decentralization and fiscal performance By Shah, Anwar
  27. Localized Learning and Social Capital: The Geography Effect in Technological and Institutional Dynamics By Mark Lorenzen
  28. Community-campus partnerships for economic development: community perspectives By Anna Afshar

  1. By: Frank G. van Oort; Erik Stam
    Abstract: Although there is growing evidence on the role of agglomeration economies in the formation and growth of firms, both the concepts of agglomeration economies and entrepreneurship tend to be ambiguously defined and measured in the literature. In this study, we aim to improve the conceptualisations and measures of agglomeration economies and entrepreneurship. Indicators of agglomeration economies are analysed in clearly defined urban regimes on three spatial scales in the Netherlands – national zoning, labour market connectedness, and urban size. This is done in order to uncover their effect on two entrepreneurial phases in the firm life cycle - new firm formation and the growth of incumbent firms in the relatively new ICT industry in the Netherlands. In comparison with new firm formation, the growth of incumbent firms is not so much related to spatial clustering of the ICT industry and other localized sources of knowledge economies associated with urban density. Instead, knowledge as an input for growth of incumbent firms is associated with more endogenous (firm internal) learning aspects, reflected by a significant correlate with R&D-investments. Also the effect of local ICT firm competition differs between the two types of firms: a positive effect on new firm formation, but a negative effect on incumbent firm growth. In general, agglomeration economies have stronger effects on the formation of ICT firms than on the growth of ICT firms.
    Keywords: agglomeration economics, spatial externalities, entrepreneurship, location, urban regimes, ICT industry
    JEL: D21 L25 L63 L86 M13 O18 R12 R30
    Date: 2005–03
  2. By: Marion Kohler (Reserve Bank of Australia); Kylie Smith (Reserve Bank of Australia)
    Abstract: There is little doubt that cities can provide many benefits, such as greater employment and business opportunities, which tend to result in higher income and wealth for urban households. In addition, there may be a number of non-pecuniary benefits, including greater access to education, infrastructure and services. But these benefits are accompanied by an urban premium on house prices, thus possibly affecting the composition of the asset portfolios of households living in different locations. Using a recent cross-section of wealth data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey we test whether urbanisation, when controlling for other factors, has a significant effect on the share of assets that households hold in housing. For owner-occupiers, the effect is found to be significant and positive, suggesting that housing is more expensive in larger cities even once we allow for the higher incomes and asset holdings of these households. In fact, the effect is quite large with a 100 person per square kilometre increase in urbanisation increasing the share of assets held in the home by 0.4 percentage points, on average. Further, we find that this effect is not linear but declines at higher levels of urbanisation. Hence, for example, for an average owner-occupier household moving from Cairns to Brisbane city – an increase in urbanisation of around 2 000 persons per square kilometre – the increase in their housing share of total assets is estimated to be 5.6 percentage points.
    Keywords: HILDA; owner-occupiers; household survey; households; wealth shares
    JEL: D31 R12 R21 R23
    Date: 2005–12
  3. By: Jesse W.J. Weltevreden; Oedzge A.L.C. Atzema; Koen Frenken; Karlijn de Kruijf; Frank G. van Oort
    Abstract: Up till now, the literature on Internet adoption by retailers paid little attention to spatial variables. Using data on 27,000 retail outlets in the Netherlands, we investigate the geographical diffusion of Internet adoption by Dutch retailers. More precise, we examine to what extent retail Internet adoption differs between shopping centers, cities, and regions, while controlling for product and organizational variables. Results of the linear and multinomial logistic regressions suggest that shops at city centers are more likely to adopt the Internet than shops located at shopping centers at the bottom of the retail hierarchy. Furthermore, shops in large cities have a higher probability to adopt the Internet than shops in small cities. On the regional level, the likelihood of Internet adoption is higher for shops in core regions than for retail outlets in the periphery. In conclusion, geography seems to matter for retail Internet adoption.
    Keywords: evolutionary economics, internet adoption, retailing
    Date: 2005–09
  4. By: Danielle GALLIANO (LEREPS-GRES & INRA-ETIC ); Pascale ROUX (ADIS, Université Paris Sud )
    Abstract: In this paper, we concentrate on different aspects of the « spatial digital divide » and seek to answer three questions : Are there still spatial inequalities in the adoption of these technologies ? Is there a so-called “second level” geographical divide characterized by important differences in the intensity of Internet use between firms that have adopted these tools? Do the appropriation processes and logic of diffusion of ICT adopters vary according to the type of area in which they are located (urban vs. rural areas)? To answer these questions we have constructed an original model of technological diffusion (of the type developed by Battisti and Stoneman, 2005) that merges two types of models: those that concentrate on epidemic effects, and the so-called equilibrium models that model the decision to adopt new technologies as the result of an economic calculation by firms, which depends on their internal characteristics and those of their competitive, industrial and local environment. This model uses data drawn from a recent national survey (“ICT and e-commerce” 2002). One of the main results is that, for a given size and sector, although there no longer are spatial inequalities in terms of ICT adoption in France, there are still important inequalities in firms’ processes of ICT appropriation and use.
    Keywords: Internet, inter-firm and intra-firm diffusion, rank and epidemic effects, agglomeration effects, spatial inequalities
    JEL: L2 O3 O18
    Date: 2005
  5. By: Abhijit Banerjee; Shawn Cole; Esther Duflo; Leigh Linden
    Abstract: Many efforts to improve school quality by adding school resources have proven to be ineffective. This paper presents the results of two experiments conducted in Mumbai and Vadodara, India, designed to evaluate ways to improve the quality of education in urban slums. A remedial education program hired young women from the community to teach basic literacy and numeracy skills to children lagging behind in government schools. We find the program to be very effective: it increased average test scores of all children in treatment schools by 0.14 standard deviations in the first year, and 0.28 in the second year, relative to comparison schools. A computer-assisted learning program provided each child in the fourth grade with two hours of shared computer time per week, in which students played educational games that reinforced mathematics skills. The program was also very effective, increasing math scores by 0.35 standard deviations the first year, and 0.47 the second year. These results were not limited to the period in which students received assistance, but persisted for at least one year after leaving the program. Two instrumental variable strategies suggest that while remedial education benefited the children who attended the remedial classes, their classmates, who did not attend the remedial courses but did experience smaller classes, did not post gains, confirming that resources alone may not be sufficient to improve outcomes.
    JEL: O11 I21
    Date: 2005–12
  6. By: Johansson, Börje (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Forslund, Ulla (JIBS, Jönköping International Business School)
    Abstract: Using the taxonomy by Anselin (2003), this paper investigates how the inclusion of spatially discounted variables on the ‘right-hand-side’ (RHS) in empirical spatial models affects the extent of spatial autocorrelation. The basic proposition is that the inclusion of inputs external to the spatial observation in question as a separate variable reveals spatial dependence via the parameter estimate. One of the advantages of this method is that it allows for a direct interpretation. The paper also tests to what extent significance of the estimated parameters of the spatially discounted explanatory variables can be interpreted as evidence of spatial dependence. Additionally, the paper advocates the use of the accessibility concept for spatial weights. Accessibility is related to spatial interaction theory and can be motivated theoretically by adhering to the preference structure in random choice theory. Monte Carlo Simulations show that the coefficient estimates of the accessibility variables are significantly different from zero in the case of modelled effects. The rejection frequency of the three typical tests (Moran’s I, LM-lag and LM-err) is significantly reduced when these additional variables are included in the model. When the coefficient estimates of the accessibility variables are statistically significant, it suggests that problems of spatial autocorrelation are significantly reduced. Significance of the accessibility variables can be interpreted as spatial dependence
    Keywords: accessibility; spatial dependence; spatial econometrics; Monte Carlo Simulations; spatial spillovers
    JEL: C31 C51 R15
    Date: 2005–12–28
  7. By: Ron A. Boschma; Jesse W.J. Weltevreden
    Abstract: Internet makes it possible for consumers to shop without visiting a physical store. As online shopping is becoming more popular, this could have significant impact on in-store shopping. The extent to which consumers, producers and retailers make use of the Internet as a complementary channel or as a substitute for in-store shopping is fundamental for the way traditional retailing will be affected. It is only recently that geographers are becoming interested in the spatial consequences of this new form of commerce. From a traditional geographical perspective, one could expect that business-to-consumer (b2c) e-commerce could make physical shopping redundant, leading to a ‘death of distance’. There are, however, several factors that may limit this new form of commerce, such as logistical constraints (e.g., personal delivery of goods may be quite expensive), habits of people, and the need for social contact. The main goal of the paper is to draw some expectations concerning the relationship between b2c e-commerce and inner city retailing. Using new insights based on evolutionary economics, hypotheses will be developed concerning the impact of b2c e-commerce on consumers’ shopping behaviour, retailers’ store strategy, and the inner city retailing environment as a whole. We claim that habits may act as a constraint to change consumers’ shopping behaviour. In addition, routines can explain why retailers may be rather reluctant in exploiting this new channel of commerce, and why they are most likely to adopt rather conservative e-commerce strategies. We also explain how and why inner cities, as important retailing and consumption places, may affect the way actors deal with this new form of commerce. One may expect that especially in these localities, both stimulating and limiting factors of b2c e-commerce adoption are predominant, depending on the quality or the attractiveness of the inner cities, among other things.
    Keywords: evolutionary economics, e-commerce, urban economics
    Date: 2005–02
  8. By: Luca Bertolini
    Abstract: For urban transportation planners these are challenging times. Mounting practical concerns are mirrored by more fundamental critiques. The latter come together in the observation that conventional approaches do not adequately account for the irreducible uncertainty of future developments. The central aim of this paper is to explore if and how an evolutionary approach can help overcome this limit. Two core-hypotheses are formulated. The first is that the urban transportation system behaves in an evolutionary fashion. The second hypothesis is that because of this, urban transportation planning needs also to focus on enhancing the resilience and adaptability of the system. Changes in transport and land use development patterns and policies and in the broader context in the post-war period in the Amsterdam region are analysed in order to illustrate the two core-hypotheses. In the conclusions more general implications are drawn.
    Keywords: evolutionary economics, urban economics, transportation planning
    Date: 2005–09
  9. By: Lisa Barrow; Cecilia Elena Rouse
    Abstract: Educators and policy makers are increasingly intent on using scientifically-based evidence when making decisions about education policy. Thus, education research today must necessarily be focused on identifying the causal relationships between education inputs and student outcomes. In this paper we discuss methodologies for estimating the causal effect of resources on education outcomes; we also review what we believe to be the best evidence from economics on a few important inputs: spending, class size, teacher quality, the length of the school year, and technology. We conclude that while the number of papers using credible identification strategies is thin, the body of credible research on causal relationships is growing, and we have started to gather evidence that some school inputs matter while others do not.
    Keywords: Education - Economic aspects ; Technology - Economic aspects
    Date: 2005
  10. By: Esther Decimavilla (Universidad de Valladolid); Carlos San Juan Mesonada (Universidad Carlos III de Madrid); Stefan Sperlich (Universidad Carlos III de Madrid)
    Abstract: Land prices with urban sprawl: a model for Spain The paper describes the agricultural land price to identify the explanatory variables of the recent cycle in Spain. The key variables in our panel data model are location and expected farm rents as fundamentals and the housing prices and increases in the irrigated area as non fundamentals dependant variables. The demographic growth is also a relevant explanatory variable in the regions. The price cycle is also related with the specialization path of the regions and the impact of the integration in the CAP. The novelty of the paper relay on use of panel data models to identify fundamental factors related with agricultural productivity (expected agricultural rents) and location and no fundamental factors or speculative like (housing price, the irrigate area and the population) using regional data by type of land. The fundamental and non fundamental dependant variables are identify and the results are related with the regional and county specialization. RESUMEN La novedad de este trabajo consiste en identificar, mediante técnicas de datos de panel, factores no fundamentales (precios de la vivienda, creación de regadíos, cambio demográfico) que, además de los fundamentales, (ingresos esperados, costes de producción) determinan el valor de cada tipo de tierras y su productividad en cada región. En definitiva se trata de cuantificar que parte de la subida de precios observada se justifica por elementos “internos”, relacionados con la renta agraria esperada, y cual proviene de elementos externos o especulativos (cambio de uso del suelo). Palabras clave: Precios del suelo, competencia por la tierra, especulación urbana, datos de panel, precio de la vivienda, productividad agraria, regadíos, especialización regional. Estudiamos los precios de mercado de las tierras para uso agrario y elaboramos un modelo de datos de panel para identificar las variables que determinan la evolución de estos precios en España. La determinación del precio de la tierra es compleja, en nuestro modelo identificamos como variables fundamentales la evolución de los ingresos esperados por los agricultores y la localización geográfica, y como no fundamentales o especulativos la presión urbanizadora y el incremento del área de regadío, que tienen un impacto significativo. El crecimiento demográfico es otras de las variables significativas en el modelo. Además tratamos de describir los elementos del ciclo de precios que están más relacionados con el proceso de especialización productiva de las regiones, ya que el período estudiado coincide con la aceleración de la especialización en el ámbito regional y la integración en la PAC.
    Keywords: Land prices, land competing, urban pressure, panel data, agricultural productivity, irrigated land, regional specialization.
    JEL: R
    Date: 2005–12–23
  11. By: Robert F. Martin
    Abstract: This paper explores the baby boom's impact on U.S. house prices and interest rates in the post-war 20th century and beyond. Using a simple Lucas asset pricing model, I quantitatively account for the increase in real house prices, the path of real interest rates, and the timing of low-frequency fluctuations in real house prices. The model predicts that the primary force underlying the evolution of real house prices is the systematic and predictable changes in the working age population driven by the baby boom. The model is calibrated to U.S. data and tested on international data. One surprising success of the model is its ability to predict the boom and bust in Japanese real estate markets around 1974 and 1990.
    Date: 2005
  12. By: Åslund, Olof (IFAU - Institute for Labour Market Policy Evaluation); Nordström Skans, Oskar (IFAU - Institute for Labour Market Policy Evaluation)
    Abstract: We study ethnic workplace segregation in Sweden using linked employer-employee data covering the entire working-age Swedish population during 1985–2002. Segregation is measured as overexposure to a particular group, taking into account the distribution of human capital, industry and geography. We find considerable workplace segregation between immigrants and natives but the results differ substantially between ethnic groups. Segregation has increased during the period, mainly due to changes in the ethnic composition. Immigrants are particularly overexposed to workers from their own birth region but also to other immigrants. Children to immigrants are only overexposed to immigrants from their parents region of birth. Segregation—particularly in the immigrant-native dimension—is in general negatively correlated with economic status.
    Keywords: Workplace segregation; ethnic minorities; immigrant assimilation
    JEL: J15 J23 J42 J62
    Date: 2005–12–06
  13. By: Maude Toussaint-Comeau
    Abstract: This paper uses 2000 U.S. Census data to study the determinants of self- employment decisions among immigrants. It outlines a theoretical framework for analyzing the role of ethnic enclaves in the self- employment decision of immigrants that captures nuances involved in the interaction between ethnic enclaves and different ethnic groups. It assesses the effect of ethnic enclaves for different groups and explores explanations for differences. The results show that higher ethnic concentration in metropolitan areas is positively related to the probability of selfemployment of immigrants. However, the significance of ethnic concentration for selfemployment differs by the country or region of origin of immigrants. The relationship between location and self-employment probability of immigrants is reinforced by other metropolitan areaspecific characteristics that include labor market factors, such as the unemployment rate, the selfemployment rate, the monetary returns to self-employment relative to wage employment, and the success of self-employed co-ethnic members.
    Date: 2005
  14. By: Thomas H. Klier; Dan McMillen
    Abstract: A linearized version of Pinkse and Slade’s (1998) spatial probit estimator is used to account for the tendency of auto supplier plants to cluster together. By reducing estimation to two steps – standard probit or logit followed by two-stage least squares – linearization produces a model that can be estimated using large datasets. Our results imply significant clustering among older plants. Supplier plants are more likely to be in counties that are near assembly plants, that include interstate highways, and that are near other counties with supplier plants. New plants show no additional tendency toward clustering beyond that shown by older plants.
    Date: 2005
  15. By: Claes Andersson; Koen Frenken; Alexander Hellervik
    Abstract: The economic geography can be viewed as a large and growing network of interacting activities. This fundamental network structure and the large size of such systems makes complex networks an attractive model for its analysis. In this paper we propose the use of complex networks for geographical modeling and demonstrate how such an application can be combined with a cellular model to produce output that is consistent with large scale regularities such as power laws and fractality. Complex networks can provide a stringent framework for growth dynamic modeling where concepts from e.g. spatial interaction models and multiplicative growth models can be combined with the flexible representation of land and behavior found in cellular automata and agent-based models. In addition, there exists a large body of theory for the analysis of complex networks that have direct applications for urban geographic problems. The intended use of such models is twofold: i) to address the problem of how the empirically observed hierarchical structure of settlements can be explained as a stationary property of a stochastic evolutionary process rather than as equilibrium points in a dynamics, and, ii) to improve the prediction quality of applied urban modeling.
    Keywords: evolutionary economics, complex networks, urban growth
    Date: 2005–02
  16. By: Ron A. Boschma; Anet B.R. Weterings
    Abstract: This paper aims to explore the effect of regional differences on the performance of software firms in the Netherlands. Inspired by evolutionary economics, we account for the impact of (1) co-location and sharing a local knowledge base; (2) pre-entry experience in the same or related industries; (3) being connected; and, (4) having organisational capabilities to cope with change. The outcomes of the regression analyses on data gathered among 265 software firms suggest that firms located in regions specialised in ICT have a higher innovative productivity. Spin-offs and firms with organisational capabilities also perform better, while network relationships do not affect the performance of software firms.
    Keywords: evolutionary economics, agglomeration economies, innovative productivity, software industry, spin-offs
    Date: 2005–01
  17. By: Fabio Sabatini (University of Rome La Sapienza, Department of Public Economics)
    Abstract: This paper carries out an assessment of the influence that different kinds of social ties exert on labour precariousness, on the state of health of urban environments and on the economic performance in Italy. Overall, the empirical evidence shows that weak ties connecting members of voluntary organizations positively affect the economic performance and the quality of urban ecosystems, differently from strong ties connecting family members and close friends, which, on the other side, are proved to reduce labour precariousness.
    Keywords: Social capital, Social networks, Civil society, Economic development, Labour precariousness, Structural Equations Modelling
    JEL: J
    Date: 2005–12–22
  18. By: Olav Sorenson; Jan W. Rivkin; Lee Fleming
    Abstract: Scholars from a variety of backgrounds – economists, sociologists, strategists, and students of technology management – have sought a better understanding of why some knowledge disperses widely while other knowledge does not. In this quest, some researchers have focused on the characteristics of the knowledge itself (e.g., Polanyi, 1966; Reed and DeFillippi, 1990; Zander and Kogut, 1995) while others have emphasized the social networks that constrain and enable the flow of knowledge (e.g., Coleman et al., 1957; Davis and Greve, 1997). This chapter examines the interplay between these two factors. Specifically, we consider how the complexity of knowledge and the density of social relations jointly influence the movement of knowledge. Imagine a social network composed of patches of dense connections with sparse interstices between them. The dense patches might reflect firms, for instance, or geographic regions or technical communities. When does knowledge diffuse within these dense patches circumscribed by social boundaries but not beyond them? Synthesizing social network theory with a view of knowledge transfer as a search process, we argue that knowledge inequality across social boundaries should reach its peak when the underlying knowledge is of moderate complexity. To test this hypothesis, we analyze patent data and compare citation rates across three types of social boundaries: within versus outside the firm, geographically near to versus far from the inventor, and internal versus external to the technological class. In all three cases, the disparity in knowledge diffusion across these borders is greatest for knowledge of an intermediate level of complexity.
    Keywords: evolutionary economics, informational complexity, knowledge flow, social boundaries
    Date: 2005–09
  19. By: Koen Frenken; Frank G. van Oort; Thijs Verburg; Ron A. Boschma
    Abstract: In economic theory, one can distinguish between variety as a source of regional knowledge spillovers, called Jacobs externalities, and variety as a portfolio protecting a region from external shocks. We argue that Jacobs externalities are best measured by related variety (within sectors), while the portfolio argument is better captured by unrelated variety (between sectors). We introduce a methodology based on entropy measures to compute related variety and unrelated variety. Using data at the COROP level for the period 1996-2002, we find that Jacobs externalities enhance employment growth, while unrelated variety dampens unemployment growth. Productivity growth, by contrast, can be explained by traditional determinants including investments and R&D expenditures. Implications for regional policy in The Netherlands follow.
    Keywords: evolutionary economic geography, new economic geography, economic variety
    Date: 2004–12
  20. By: Justina A.V. Fischer
    Abstract: Identification of a deleterious impact of institutions of direct legislation on student performance by studies for both the U.S. and Switzerland has raised the question of the exact transmission channels for this impact. Studies for the U.S. that find an increase in the ratio of administrative to instructional spending and larger class sizes support the hypothesis of a Leviathan-like school administration. However, research for Switzerland using a time-series panel of sub-federal school expenditure and class size detects no such effect. These findings are in line with previous analyses that identify efficiency gains in the provision of public goods for Switzerland. Version: 7 Dec 2005
    JEL: H72 H41 I22
    Date: 2005–12
  21. By: Ron A. Boschma; Rik Wenting
    Abstract: This paper aims to describe and explain the spatial evolution of the automobile sector in Great Britain from an evolutionary perspective. This analysis is based on a unique database of all entries and exits in this sector during the period 1895-1968, collected by the authors. Cox regressions show that spinoff dynamics, localization economies and time of entry have had a significant effect on the survival rate of automobile firms during the period 1895-1968.
    Keywords: evolutionary economics, automobile industry, entry, exit
    Date: 2004–08
  22. By: Shah, Anwar
    Abstract: Fiscal equalization programs are fairly common features of intergovernmental fiscal relations in industrial countries. Some developing countries have also recently introduced these programs and still others are contemplating such programs. Institutional arrangements for fiscal equalization vary across countries with wide variations in the form and membership of the relevant decisionmaking bodies. This paper provides a simple neo-institutional economics framework for assessing alternative institutional arrangements for their impacts on simplicity, transparency, and objectivity of the equalization program, as well as transaction costs for various parties involved. Comparing institutional arrangements across different countries is a daunting task. The success of these arrangements depends on a multitude of factors. The success of governance structures for fiscal matters may depend not only on the incentives regime associated with their inner structures but also their interactions with other formal and informal institutions in the country. This paper presents a simple framework to understand these incentives and interactions and draw implications for their impacts on transactions costs for the society as a whole and achievement of societal objectives. An application of these concepts to the specific case of institutional arrangements for fiscal equalization transfers are carried out and the predictions based on the theory are compared with observed experiences in major federal countries. The paper demonstrates that the simple new institutional framework presented here has a significant power for predicting potential impacts. The paper concludes, both in theory and practice, that the case for independent grants commission to enhance the transparency, equity, and accountability of the intergovernmental finance system is vastly exaggerated.
    Keywords: Municipal Financial Management,Public Sector Management and Reform,Regional Governance,Urban Governance and Management,Urban Economics
    Date: 2005–12–01
  23. By: Randall Jones; Tadashi Yokoyama
    Abstract: This paper discusses policies to improve fiscal relations between levels of government to better meet the needs of citizens, an objective of the government’s “Roadmap for Decentralisation”. Although local government accounts for around half of total government spending, they have little autonomy and fiscal resources vary sharply between regions. The priority should be to enhance the independence of local authorities by establishing a clear division of responsibilities and transferring additional assignments to the local level. The general local governments should also have more influnence on education, while providing more support, through stronger linkages with the local education authorities, with a final aim of merger. The allocation of intergovernmental grants should be more transparent and the regulations attached to them should be relaxed to expand flexibility, while increasing reliance on block grants. Improving the fiscal federalism framework also requires more revenue raising power for local governments while simplifying the structure of local taxes. Greater accountability and rules are needed to ensure sound fiscal management by local governments. This Working Paper relates to the 2005 OECD Economic Survey of Korea ( <P>Tirer le maximum de la décentralisation du secteur public en Corée Ce papier examine les politiques qui visent à rationaliser les relations financières des différents niveaux d’administration pour mieux répondre aux besoins des habitants, comme le veut le plan de marche gouvernemental vers la décentralisation. Bien que les collectivités locales soient à l’origine de la moitié des dépenses publiques totales, elles n’ont guère d’autonomie et leurs ressources budgétaires varient fortement d’une région à l’autre. L’objectif prioritaire est de renforcer l’indépendance des autorités locales en clarifiant la répartition des compétences, en transférant d’autres tâches à l’échelon local et en fusionnant les autorités scolaires locales avec les autorités locales générales. L’affectation des transferts entre collectivités publiques doit être plus transparente et leur réglementation, assouplie, pour plus de flexibilité, avec en parallèle un recours élargi aux dotations globales. Pour rationaliser le fédéralisme budgétaire, il faut aussi que les collectivités locales puissent mobiliser davantage de recettes et, en même temps, simplifier la structure de la fiscalité locale. Ce chapitre recommande aussi un effort de responsabilité et des règles qui assurent une saine gestion budgétaire des autorités locales. Ce Document de travail se rapporte à l'Étude économique de l'OCDE de la Corée 2005 (
    Keywords: Korea, Corée, local government, fiscal discipline, discipline budgétaire, fiscal federalism, intergovernmental grants, fédéralisme financier, collectivités territoriales, transferts intergouvernementaux, decentralisation, property tax, décentralisation, impôt immobilier
    JEL: H1 H2 H7 R58
    Date: 2005–12–16
  24. By: Tuomas Pekkarinen (Nuffeld College, Oxford and IZA Bonn)
    Abstract: This paper studies the relationship between the timing of tracking of pupils into vocational and academic secondary education and gender differences in educational attainment and income. We argue that in a system that streams students into vocational and academic tracks relatively late (age 15-16), girls are more likely to choose the academic track than boys because of gender differences in the timing of puberty. We exploit the Finnish comprehensive school reform of the 1970’s to analyze this hypothesis. This reform postponed the tracking of students from the age of 10-11 to 15-16 and was adopted gradually by municipalities so that we can observe members of the same cohorts in both systems. We find that the postponement of the tracking age increased gender differences in the probability of choosing the academic secondary education and in the probability of continuing into academic tertiary education. The reform had particularily negative effects on boys from non-academic family backgrounds. Finally, the reform decreased the gender wage gap in adult income by four percentage points.
    Keywords: education, tracking, gender wage gap
    JEL: I20 J16
    Date: 2005–12
  25. By: Henry Saffer
    Abstract: In this paper social interaction is modeled as a consumer good. Social interaction may provide an externality in the form of social capital, but the primary reason that individuals engage in social interaction is that these activities directly yield utility. It is important to note that some measures of social interaction show declines while many do not. A model of household production is employed to derive the demand for social interaction. The model shows that the demand for social interaction is a function of its price, the price of other goods and income. The role of children and marriage in social interaction can also be explained in the model. The theory is tested with data from the General Social Survey (GSS) and the results show that social interaction can be explained as the consequence of utility maximizing behavior by individuals. Increases in education generally increase memberships but reduce visiting with relatives and friends. Increases in income generally increase memberships and some forms of visiting. The model predicts 70 percent, or more, of the time trends in social interaction. These results are in contrast to social capital theorists who have focused on the declines in social interaction and who have attributed these changes to factors such as increased community heterogeneity and increased television viewing.
    JEL: Z13
    Date: 2005–12
  26. By: Shah, Anwar
    Abstract: A resurgence of recent interest in fiscal federalism has been a source of concern among macroeconomic stabilization experts. They argue that a decentralized fiscal system poses a threat to macroeconomic stability as it is incompatible with prudent monetary and fiscal management. The author addresses these concerns by taking a simple neo-institutional economics with an econometric analysis perspective. His analysis concludes that, contrary to a common misconception, fiscal decentralization is associated with improved fiscal performance and better function ing of internal common markets. Fiscal policy coordination represents an important challenge for federal systems. In this context, fiscal rules and institutions provide a useful framework but not necessarily a solution to this challenge. Fiscal rules binding on all levels can help sustain political commitment in countries having coalitions or fragmented regimes in power. Coordinating institutions help in the use of moral suasion to encourage a coordinated response. Industrial countries ' experiences also show that unilaterally imposed federal controls and constraints on subnational governments typically do not work. Instead, societal norms based on fiscal conservatism such as the Swiss referenda and political activism of the electorate play important roles. Ultimately capital markets and bond-rating agencies provide more effective discipline on fiscal policy. In this context, it is important not to backstop state and local debt and not to allow ownership of the banks by any level of government. Transparency of the budgetary process and institutions, accountability to the electorate, and general availability of comparative data encourages fiscal discipline. Fiscal decentralization poses significant challenges for macroeconomic management. These challenges require careful design of monetary and fiscal institutions to overcome adverse incentives associated with the " common property " resource management problems or with rent seeking behavior. Experiences of federal countries indicate significant learning and adaptation of fiscal systems to create incentives compatible with fair play and to overcome incomplete contracts. This explains why that decentralized fiscal systems appear to do better than centralized fiscal systems on most aspects of monetary and fiscal policy management and transparent and accountable governance.
    Keywords: Banks & Banking Reform,Economic Stabilization,Public Sector Economics & Finance,Economic Theory & Research,Financial Intermediation
    Date: 2005–12–01
  27. By: Mark Lorenzen
    Abstract: Providing a concise working definition of social capital, this conceptual paper analyses why social capital is important for learning and economic development, why it has a regional dimension, and how it is created. It argues that with the rise of the Knowledge Economy, social capital is becoming valuable because it organizes markets, lowering business firms’ costs of coordinating and allowing them to flexibly connect and reconnect. Thus, it serves as a social framework for localized learning in both breadth and depth. The paper suggests that a range of social phenomena such as altruism, trust, participation, and inclusion, are created when a matrix of various social relations is combined with particular normative and cognitive social institutions that facilitate cooperation and reciprocity. Such a matrix of social relations, plus facilitating institutions, is what the paper defines as “social capital”. The paper further suggests that social capital is formed at the regional (rather than national or international) level, because it is at this level we find the densest matrices of social relations. The paper also offers a discussion of how regional policies may be suited for promoting social capital.
    Keywords: Social capital; knowledge economy; regional dimension
    JEL: D83 Z13
    Date: 2005
  28. By: Anna Afshar
    Abstract: Formal collaborations between community groups and academic institutions to promote economic development have increased substantially over the past 10 years. The bulk of research on community-campus partnerships has focused on the experiences of institutions of higher learning and the foundations that have funded the collaborations, leaving a gap in our understanding of community experiences. This report draws on a variety of sources, including first-person interviews and academic literature, to bring out community perspectives on what makes for successful partnerships. The conclusions are presented as practical suggestions for community groups and campuses seeking to optimize partnerships. Four case studies describe lessons learned by participating community groups.
    Keywords: Community development ; Universities and colleges
    Date: 2005

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