nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2006‒01‒24
58 papers chosen by
Steve Ross
University of Connecticut

  1. Crime, Location and the Housing Market By Zenou, Yves
  2. Monocentric Versus Polycentric Models in Urban Economics By Tomoya Mori
  3. Compensation of Regional Unemployment in Housing Markets By Wouter Vermeulen; Jos van Ommeren
  4. Who wins and who loses from school accountability? The distribution of educational gain in English secondary schools By Simon Burgess; Carol Propper; Helen Slater; Deborah Wilson
  5. Location Efficient Mortgages: Is the Rationale Sound? By Krupnick, Alan; Blackman, Allen
  6. A Neighborhood-Level View of Riots, Property Values, and Population Loss: Cleveland 1950-1980 By William J. Collins; Fred H. Smith
  7. Promoting Industrial Clusters: Evidence from Ireland By Frances Ruane; Anne Marie Gleeson; Julie Sutherland
  8. Neighborhoods and Academic Achievement: Results from the Moving to Opportunity Experiment By Lisa Sanbonmatsu; Jeffrey R. Kling; Greg J. Duncan; Jeanne Brooks-Gunn
  9. House Price Changes and Idiosyncratic Risk: The Impact of Property Characteristics By Steven C. BOURASSA; Donald R. HAURIN; Jessica L. HAURIN; Martin HOESLI; Jian SUN
  10. Does Educational Tracking Affect Performance and Inequality? Differences-in-Differences Evidence across Countries By Eric A. Hanushek; Ludger Woessmann
  11. Does Hazardous Waste Matter? Evidence from the Housing Market and the Superfund Program By Michael Greenstone; Justin Gallagher
  12. Spatial Activity and Labour Market Patterns By Giovanni Russo; Aura Reggiani; Peter Nijkamp
  13. The Dynamics of School Attainment of England’s Ethnic Minorities By Deborah Wilson; Simon Burgess; Adam Briggs
  14. Environmental Contamination and House Values By Katherine Kiel
  15. The Dynamics of Housing Allowance Claims in Sweden: A discrete-time hazard analysis By Chen, Jie
  16. What’s In a City?: Understanding the Micro-Level Employer Dynamics Underlying Urban Growth By R. Jason Faberman
  17. Factors influencing income inequality across urban Argentina (1998-2003) By María Emma Santos
  18. Fiscal Decentralization and Local Public Good Provision in China By Xin-Qiao; Jie Bai
  19. The Political Economy of Housing Supply By François Ortalo-Magné; Andrea Prat
  20. How Should Metropolitan Washington, D.C., Finance Its Transportation Deficit? By Parry, Ian
  21. Crime and Police Resources: The Street Crime Initiative By Machin, Steve; Marie, Olivier
  22. Do capital gains affect consumption? Estimates of wealth effects from Italian households’ behavior By Luigi Guiso; Monica Paiella; Ignazio Visco
  23. Zoning, TDRs, and the Density of Development By Walls, Margaret; McConnell, Virginia; Kopits, Elizabeth
  24. From 'territory' to 'city': the conceptualisation of space in Italy since 1950 By Antonio G. CALAFATI
  25. Is Britain Pulling Apart? Area Disparities in Employment, Education and Crime By Stephen Gibbons; Anne Green; Paul Gregg; Stephen Machin
  26. Measuring Marginal Congestion Costs of Urban Transportation: Do Networks Matter? By Safirova, Elena; Gillingham, Kenneth
  27. The Todaro Paradox Revisited By Zenou, Yves
  28. Evaluating the Impact of Performance-related Pay for Teachers in England. By Adele Atkinson; Simon Burgess; Bronwyn Croxson; Paul Gregg
  29. Meta Analysis in Model Implementation: Choice Sets and the Valuation of Air Quality Improvements By Smith, V. Kerry; Banzhaf, H. Spencer
  30. The Demand for Educational Quality: Comparing Estimates from a Median Voter Model with those from an Almost Ideal Demand System By David Brasington; Don Haurin
  31. Welfare and Distributional Effects of Road Pricing Schemes for Metropolitan Washington, DC By Parry, Ian; Harrington, Winston; Nelson, Per-Kristian; Safirova, Elena; Mason, Dave; Gillingham, Kenneth
  32. Do Home Computers Improve Educational Outcomes? Evidence from Matched Current Population Surveys and the National Longitudinal Survey of Youth 1997 By Daniel O. Beltran; Kuntal K. Das; Robert W. Fairlie
  33. Spatial Dispersion of Peering Clusters in the European Internet By Alessio D'Ignazio; Emanuele Giovannetti
  34. Identification of 'Wasteful Commuting' using Search Theory By Jos Van Ommeren; Willemijn Van der Straaten
  35. A Comparison between Latent Class Model and Mixed Logit Model for Transport Mode Choice: Evidences from Two Datasets of Japan By Junyi Shen; Yusuke Sakata; Yoshizo Hashimoto
  36. Telecommuting and Emissions Reductions: Evaluating Results from the ecommute Program By Walls, Margaret; Nelson, Per-Kristian
  37. Childhood Family Structure and Schooling Outcomes: Evidence for Germany By Francesconi, Marco; Jenkins, Stephen P; Siedler, Thomas
  38. General Equilibrium Benefit Transfers for Spatial Externalities: Revisiting EPA's Prospective Analysis By Smith, V. Kerry; Banzhaf, H. Spencer; Walsh, Randy
  39. Three-City Air Study By Powell, Mark
  40. Revenue Recycling and the Welfare Effects of Road Pricing By Parry, Ian; Bento, Antonio
  41. Changing the Boston School Choice Mechanism By Atila Abdulkadiroglu; Parag A. Pathak; Alvin E. Roth; Tayfun Sönmez
  42. General Geographical Economics Model with Congestion By Charles van Marrewijk
  43. Wages and Employment in a Random Social Network with Arbitrary Degree Distribution By Yannis Ioannides; Adriaan Soetevent
  44. The Ambivalent Role of Mimetic Behaviors in Proximity Dynamics: Evidences on the French “Silicon Sentier” By Jérome VICENTE (LEREPS-GRES); Yan Dalla PRIA (CSO – CNRS); Raphaël SUIRE (CREM – CNRS)
  45. Border Wars: Tax Revenues, Annexation, and Urban Growth in Phoenix By Carol E. Heim
  46. Fiscal responsibility legislation and fiscal adjustment : the case of Brazilian local governments By de Mello, Luiz
  47. Relaxing Tax Competition through Public Good Differentiation By Ben Zissimos; Myrna H. Wooders
  48. A Review of the Literature on Telecommuting and Its Implications for Vehicle Travel and Emissions By Walls, Margaret; Safirova, Elena
  49. Tax Rules, Land Development, and Open Space By Simpson, R. David
  50. Gun Prevalence, Homicide Rates and Causality: A GMM Approach to Endogeneity Bias By Kleck, Gary; Kovandzic, Tomislav; Schaffer, Mark E
  51. The Study of Competition Among Local Areas: A Functional Analysis Approach By Francesco CHELLI
  52. Estimating the Welfare Effect of Congestion Taxes: The Critical Importance of Other Distortions within the Transport System By Parry, Ian; Bento, Antonio
  53. Knowledge externalities and growth in peripheral regions: introductory notes By Fabiana Santos; Marco Crocco; Frederico G. Jayme Jr
  54. Quality Adjustment for Spatially-Delineated Public Goods: Theory and Application to Cost-of-Living Indices in Los Angeles By Banzhaf, H. Spencer
  55. Brownfields Redevelopment in Wisconsin: Program, Citywide, and Site-Level Studies By Wernstedt, Kris; Hersh, Robert
  56. How Large are the Welfare Costs of Tax Competition? By Parry, Ian
  58. The Value of "Value Pricing" of Roads: Second-Best Pricing and Product Differentiation By Small, Kenneth; Yan, Jia

  1. By: Zenou, Yves
    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: commuting cost; housing market; localized crime
    JEL: J15 K42 R14
    Date: 2005–12
  2. By: Tomoya Mori (Institute of Economic Research, Kyoto University)
    Abstract: This article overviews the development of the formal modelling framework for the urban spatial structure which started in 1960s and grew dramatically thereafter. Modelling in the 1970s focused on the endogenous formation of the central business district within a city. Then richer polycentric city models were developed in 1980s, where the number, location and spatial extent of the business districts are determined endogenously. The emergence of the new economic geography in 1990s provided a framework capable of explaining the spatial distribution of cities (rather than the business districts within a city) and their industrial structure in a general location-equilibrium model.
    Date: 2006–01
  3. By: Wouter Vermeulen (CPB Netherlands Bureau for Economic Policy Analysis, The Hague); Jos van Ommeren (Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam)
    Abstract: Why are regional unemployment differentials in Europe so persistent if, as the wage curve literature demonstrates, there is no compensation in labour markets? We hypothesize that workers in high-unemployment regions are compensated in housing markets. Modelling regional unemployment differentials as a consequence of centralized wage bargaining, we show that clearing of land markets may undo the incentive for workers to migrate to low-unemployment regions in general equilibrium. The compensating differentials hypothesis is tested on city-level data for several countries. Controlling for variation in income and amenities, housing is found to be about 3 percent less expensive on average in cities where unemployment is 10 percent up. An analysis of housing demand survey data, which takes account of housing heterogeneity, yields a similar negative relationship. The magnitude of the income effect generated by this compensating differential is consistent with a -0.10 wage curve elasticity. These findings weaken the case for regional support programs.
    Keywords: regional unemployment; housing markets; wage curve; compensating differentials; hedonic models; regional policy
    JEL: R23 R13 J64
    Date: 2005–10–13
  4. By: Simon Burgess; Carol Propper; Helen Slater; Deborah Wilson
    Abstract: In 1988 the UK government introduced greater accountability into the English state school sector. But the information that schools are required to make public on their pupil achievement is only partial. The paper examines whether accountability measures based on a partial summary of student achievement influence the distribution of student achievement. Since school ratings only incorporate test results via pass rates, schools have incentives to improve the performance of students who are on the margin of meeting these standards, to the detriment of very low achieving or high achieving pupils. Using pupil level data for a cohort of all students in secondary public sector schools in England, we find that this policy reduces the educational gains and exam performance in high stakes exams of very low ability students.
    Keywords: school accountability, high stakes exams, educational value added
    JEL: I20 I28 D23
    Date: 2005–07
  5. By: Krupnick, Alan (Resources For the Future); Blackman, Allen (Resources For the Future)
    Abstract: Location efficient mortgages (LEM) programs are an increasingly popular approach to combating urban sprawl. LEMs allow families who want to live in densely-populated, transit-rich communities to obtain larger mortgages with smaller downpayments than traditional underwriting guidelines allow. LEMs are premised on the proposition that homeowners in such "location efficient" areas can safely be allowed to breach underwriting guidelines designed to prevent mortgage default because they have lower than average automobile-related transportation expenses and more income available for mortgage payments. This paper employs records of over 8,000 FHA-insured mortgages matched with data on various measures of location efficiency to test this proposition. Our results suggest that it does not hold and that LEMs—like other low-downpayment mortgage programs—will raise mortgage default rates. This cost must be weighed against any potential anti-sprawl benefits LEMs may have.
    Keywords: urban sprawl, location efficiency, mortgage, default
  6. By: William J. Collins (Department of Economics, Vanderbilt University); Fred H. Smith (Department of Economics, Davidson College)
    Abstract: We undertake a case study of riots in the context of Cleveland's economic decline between 1950 and 1980. Our empirical perspective emphasizes differential changes in property values and population levels across census tracts depending on their proximity to the riots' epicenter. We find patterns that are consistent with concentrated, negative, and long-lasting effects from the 1960s riots. These estimates do not depend on whether we use a narrow or a broad categorization for "riot tracts", whether we use simple difference-in-difference measures or detailed information on the distance of each tract from the riot center, or whether we use ordinary least squares or matching estimation techniques. Moreover, the negative relationship between riots and property value trends is not merely a reflection of the pre-existing trend in value, the pre-riot racial composition of the neighborhoods, the pre-riot proportion of neighborhood residents holding manufacturing jobs, the neighborhood crime rate, nor changes in the observable characteristics of the housing stock. Cleveland¹s economic difficulties did not start with the riots. Rather, we suggest that the impact of the riots was compounded by long-run forces that were already eroding Cleveland¹s economic base.
    Keywords: Civil disturbance, race, housing
    JEL: R21 J15 N92
    Date: 2005–11
  7. By: Frances Ruane; Anne Marie Gleeson; Julie Sutherland
    Abstract: This paper analyses the spatial concentration and sectoral specialisation of local enterprises (LEs) and multinational enterprises (MNEs) in Ireland. Entropy indices are used as indicators of spatial and sectoral clustering in Irish manufacturing. Correlation coefficients are calculated to estimate the co-location patterns of LEs and MNEs, allowing an investigation of the overall impact of stated industrial and regional policy goals on the Irish manufacturing sector. The pattern of spatial changes found suggests that market forces were already driving enterprises out of more concentrated locations prior to the introduction of policies to promote greater spatial dispersion in the late 1990s. MNEs have become more sectorally specialised over the period, which is not surprising as policy is deliberately selective in attracting MNEs to key high tech manufacturing sectors. The less concentrated sectoral pattern amongst LEs enterprises is consistent with general restructuring in Irish manufacturing from lower- to higher-tech sectors, and the high sectoral correlation for high-tech MNEs and LEs suggests that LEs are following MNEs into the same sectors.
    Keywords: geographic concentration, sectoral specialisation, entropy indices, MNEs, LEs, public policy
    JEL: L60 R12 R58
    Date: 2005–12–15
  8. By: Lisa Sanbonmatsu; Jeffrey R. Kling; Greg J. Duncan; Jeanne Brooks-Gunn
    Abstract: Families originally living in public housing were assigned housing vouchers by lottery, encouraging moves to neighborhoods with lower poverty rates. Although we had hypothesized that reading and math test scores would be higher among children in families offered vouchers (with larger effects among younger children), the results show no significant effects on test scores for any age group among over 5000 children ages 6 to 20 in 2002 who were assessed four to seven years after randomization. Program impacts on school environments were considerably smaller than impacts on neighborhoods, suggesting that achievement-related benefits from improved neighborhood environments are alone small.
    JEL: I28 I38
    Date: 2006–01
  9. By: Steven C. BOURASSA (School of Urban and Public Affairs, University of Louisville); Donald R. HAURIN (Department of Economics Ohio State University); Jessica L. HAURIN (Center for Real Estate Massachusetts Institute of Technology); Martin HOESLI (HEC, University of Geneva, FAME and University of Aberdeen); Jian SUN (School of Urban and Public Affairs, University of Louisville)
    Abstract: While the average change in house prices is related to changes in fundamentals or perhaps market-wide bubbles, not all houses in a market appreciate at the same rate.The primary focus of our study is to investigate the reasons for these variations in price changes among houses within a market. We draw on two theories for guidance, one related to the optimal search strategy for sellers of atypical dwellings and the other focusing on the bargaining process between a seller and potential buyers. We hypothesize that houses will appreciate at different rates depending on the characteristics of the property and the change in the strength of the housing market. These hypotheses are supported using data from three New Zealand housing markets.
    Keywords: Atypicality; Bargaining; Housing Risk; House Price Appreciation; Search Models
    JEL: R31 R21 D83
    Date: 2005–11
  10. By: Eric A. Hanushek (Hoover Institution, Stanford University, CESifo and NBER); Ludger Woessmann (Ifo Institute, University of Munich, CESifo and IZA Bonn)
    Abstract: Even though some countries track students into differing-ability schools by age 10, others keep their entire secondary-school system comprehensive. To estimate the effects of such institutional differences in the face of country heterogeneity, we employ an international differences-in-differences approach. We identify tracking effects by comparing differences in outcome between primary and secondary school across tracked and non-tracked systems. Six international student assessments provide eight pairs of achievement contrasts for between 18 and 26 cross-country comparisons. The results suggest that early tracking increases educational inequality. While less clear, there is also a tendency for early tracking to reduce mean performance. Therefore, there does not appear to be any equity-efficiency trade-off.
    Keywords: tracking, streaming, ability grouping, selectivity, comprehensive school system, educational performance, inequality, international student achievement test, TIMSS, PISA, PIRLS
    JEL: I2
    Date: 2005–12
  11. By: Michael Greenstone (MIT); Justin Gallagher (UC Berkeley)
    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.
    Keywords: Valuation of environmental goods, Hazardous waste sites, Environmental regulation, Regression discontinuity, Superfound, Externalities
    JEL: H4 Q51 Q53 R5 R2 I18
    Date: 2005–12
  12. By: Giovanni Russo (IRES FvG, Trieste); Aura Reggiani (University of Bologna); Peter Nijkamp (Vrije Universiteit Amsterdam)
    Abstract: The spatial activity patterns of firms in a multi-regional system are closely connected with the structure and evolution of regional labour markets. Based on an extensive data set (cross-section) on commuting flows in Germany, this paper aims to identify the relationship between entrepreneurial activity and spatial labour markets, by employing in particular the concept of entrepreneurial city. A network connectivity model is adopted to assess connectivity patterns, using the power-law and exponential law as a statistical test framework, in order to detect the presence of economic activity hubs that may resemble the concept of entrepreneurial cities. Various results are presented and interpreted in the final part of the paper.
    Keywords: Network; Commuting; Entrepreneurship
    JEL: O
    Date: 2005–12–06
  13. By: Deborah Wilson; Simon Burgess; Adam Briggs
    Abstract: We exploit a universe dataset of state school students in England with linked test score records to document the evolution of attainment through school for different ethnic groups. The analysis yields a number of striking findings. First, we show that, controlling for personal characteristics, all minority groups make greater progress than white students over secondary schooling. Second, much of this improvement occurs in the high-stakes exams at the end of compulsory schooling. Third, we show that for most ethnic groups, this gain is pervasive, happening in almost all schools in which these students are found. We address some of the usual factors invoked to explain attainment gaps: poverty, language, school quality, and teacher influence. We conclude that our findings are more consistent with the importance of factors like aspirations and attitudes.
    Keywords: ethnic test score gap, school attainment, education
    JEL: I20 J15
    Date: 2005–10
  14. By: Katherine Kiel (Department of Economics, College of the Holy Cross)
    Abstract: A house is a bundle of many goods: The number of bedrooms, bathrooms, the quality of local public services, the tidiness of a neighbor’s yard, and the quality of the local environment. If transactions in the housing market reflect the interaction of informed buyers and sellers, then the price that the house sells for is the sum of the prices the buyer is willing to pay for each individual characteristic of the house. It is this notion that motivates environmental economists to study property values. If individuals consider the local environment as a component of the house they purchase, then information on the house and its sales price allows researchers to ‘tease out’ the price that individuals would be willing to pay for environmental goods. This approach relies on the use of the hedonic price model.
    Keywords: hedonic models, environmental prices, housing
    JEL: Q51 Q53 R2
    Date: 2006–01
  15. By: Chen, Jie (Department of Economics)
    Abstract: This paper analyses the dynamics of the duration of housing allowance claims in Sweden during the period 1991 to 2002. The central concern in this paper is whether the Swedish housing allowance system creates dependence on welfare. Using longitudinal data from Swedish micro database-LINDA, this paper found that there is no evidence of negative duration dependence arising from the duration of housing allowance claims. This finding is consistent across different model specifications and various controls of the heterogeneity issue. Hence we come to the conclusion that a recipient’s exit rate from the system does not decrease over the duration claim. This paper also shows that the demographic characteristics, educational background, labour market status and economic contextual conditions play important roles in determining recipients’ conditional probability of exiting from the housing allowance system. However, there are substantial variations in the factors’ impact across different household types.
    Keywords: housing allowance; discrete-time hazard; duration dependence
    JEL: H24 I38 R21
    Date: 2006–01–04
  16. By: R. Jason Faberman (U.S. Bureau of Labor Statistics)
    Abstract: This paper synthesizes the literatures on labor dynamics and urban growth and agglomeration by presenting new evidence on the micro-level establishment dynamics of metropolitan areas. I explore how the patterns of job reallocation and entry and exit affect the growth and composition of these areas. I find that high-growth metropolitan areas have high rates of job and establishment turnover, primarily though higher rates of gross job creation and establishment entry, and have a relatively young distribution of establishments. Variations in the age distribution and differences in the entry and exit patterns of young establishments account for a sizeable portion of regional differences in labor dynamics and growth, even after controlling for regional differences in industry composition. These results suggest that variations in the age distribution and the dynamics that lead to such variations are important factors in understanding urban growth and agglomeration.
    Keywords: Job Reallocation; Urban Growth and Agglomeration; Firm Dynamics
    JEL: E24 J63 R11
    Date: 2005–12
  17. By: María Emma Santos (Vanderbilt University, Nashville)
    Abstract: This paper tries to disentangle the most relevant determinants of spatial inequality in the urban areas of Argentina. The analysis is restricted to the period 1998-2003. The study is performed with a Panel Data approach using a random effects model. Results suggest that human capital, measured by rates of education completion, is an important contributor to spatial inequality. High rates of primary education appear to reduce inequality while higher rates of secondary education appear to increase it. Labor market characteristics also play a role: urban areas with higher unemployment rates, higher returns to education and a lower percentage of people employed in the secondary sector tend to have higher levels of inequality. Also, dependency and the percentage of people with unsatisfied basic needs have increasing-inequality effects. Finally, there seems to be a relationship between inequality and the level of development, though not with a clear inverted-U pattern as hypothesized by Kuznets. Results are robust to different measures of inequality and different income specifications.
    JEL: D31 I21
    Date: 2005–11–08
  18. By: Xin-Qiao (China Center of Economic Research, Peking University); Jie Bai (China Center of Economic Research, Peking University)
    Abstract: Fiscal incentive is closely related with the extra-budgetary revenues. Based on our definition of fiscal incentive, we explore the impacts of fiscal incentives under decentralization on responsiveness of public good provision to real local needs. There are also some problems in fiscal decentralization in China: first, with a huge basis of extra-budgetary revenue, the size of local government would be expanded, resulting in a heavier burden on the shoulder of local citizens and peasants; second, there exist some decreasing return to scale in local extra-budgetary expenditure; thirdly, ¡°urbanization¡± (measured as the ratio of rural population to the total population) is negatively correlated with the local extra-budgetary expenditure on urban maintenance, indicating that in China, the process of industrialization and urban construction are not consistent.
    Keywords: Fiscal Decentralization, Local Public Good Provision, Fiscal Incentives
    JEL: H61 H71 H72
    Date: 2005–06
  19. By: François Ortalo-Magné; Andrea Prat
    Date: 2005–12–31
  20. By: Parry, Ian (Resources For the Future)
    Abstract: It is widely perceived that projected public spending on transportation infrastructure in the metropolitan Washington, DC, area for the next 20 years will not be enough to halt, let alone reverse, the trend of increasing traffic congestion. Consequently, there has been much debate about how additional sources of local revenues might be raised to finance more transportation spending. This paper develops and implements an analytical framework for estimating the efficiency costs of raising $500 million per annum in local revenue from five possible sources. These sources are increasing labor taxes, property taxes, gasoline taxes, transit fares, and implementing congestion taxes. Our model incorporates congestion and pollution externalities, and it allows for interactions between the different policies. Under our central estimates, the efficiency cost of raising $500 million in additional revenue from labor taxes is $118 million; from transit fares is $136 million; from property taxes is $16 million; from gasoline taxes is $66 million; and from congestion taxes is $19 million. The higher costs of the labor tax and transit fares reflect their negative impact on employment, and on pollution and congestion, respectively. A case could be made on efficiency grounds for using congestion fees and gasoline taxes to raise the revenue, though it should not be overstated. For example, much of the pollution externality is already internalized through pre-existing gasoline taxes, and the inelastic demand for peak-period driving and for gasoline limits the pollution and congestion benefits per dollar of revenue raised. Moreover, the relative advantage of these policies is sensitive to alternative scenarios for external damages. The property tax has a relatively low cost because it reduces pre-existing distortions created by the favorable tax treatment of housing.
    Keywords: transportation, taxes, Washington, D.C., welfare cost
    JEL: R48 H21 H23
  21. By: Machin, Steve; Marie, Olivier
    Abstract: In this paper we look at links between police resources and crime in a different way to the existing economics of crime work. To do so we focus on a large-scale policy intervention - the Street Crime Initiative - that was introduced in England and Wales in 2002. This allocated additional resources to some police force areas to combat street crime, whereas other forces did not receive any additional funding. Estimates derived from several empirical strategies show that robberies fell significantly in SCI police forces relative to non-SCI forces after the initiative was introduced. Moreover, the policy seems to have been a cost effective one, even after allowing for possible displacement or diffusion effects onto other crimes and adjacent areas. There is some heterogeneity in this positive net social benefit across different SCI police forces, suggesting that some police forces may have made better use of the extra resources than others. Overall, we reach the conclusion that increased police resources do in fact lead to lower crime, at least in the context of the SCI programme we study.
    Keywords: cost effectiveness; police resources; street crime
    JEL: H00 H5 K42
    Date: 2005–12
  22. By: Luigi Guiso (Università degli Studi di Sassari); Monica Paiella (Bank of Italy); Ignazio Visco (Bank of Italy)
    Abstract: We use detailed data on housing prices in Italy available for a large number of years and with a fine geographical breakdown to compute capital gains and losses on the most widespread asset among consumers, housing, and inquire whether changes in housing values affect consumption. We find that consumer expenditures do react to capital gains, with a marginal propensity to consume out of real value changes of housing wealth of about 0.02. Reactions are different across types of consumers: while homeowners increase consumption when house prices increase, with a marginal propensity of about 0.035, the renters’ response to the higher house cost tends to be that of increased savings. For the owners of listed stocks the response to capital gains is difficult to estimate with statistical precision, even if, for the limited sample of owners of these assets, its negative sign may be indicative of prevailing substitution over income effects.
    Keywords: wealth effects, consumption, housing, stock ownership
    JEL: D12 E21 E44
    Date: 2005–06
  23. By: Walls, Margaret (Resources For the Future); McConnell, Virginia (Resources For the Future); Kopits, Elizabeth
    Abstract: Many communities on the urban fringe are implementing a range of policies to preserve farmland and open space, cluster residential development, and guide development to areas with existing infrastructure. These efforts are an attempt to control overall growth and the concomitant loss in open space and also to counter a trend toward the so-called large lot development that often takes place in these areas. Planners have argued that policies to manage density are the most important local policy focus for urban areas in the coming years. It is possible that large lot development and sprawl are themselves the result of government policy. Most local governments use zoning to establish minimum acreage requirements for each residential dwelling unit; in ex-urban localities, these limits are often quite high. Developers might build a subdivision with average lot sizes greater than the minimum but they cannot by law go below it. Some researchers have argued, however, that the spatial patterns of development are simply the natural result of household preferences and market forces. In this paper, we address the question of whether zoning limits are the primary cause of lowdensity, sprawling development or whether market forces tend to dictate this outcome. If zoning limits account for low-density development in at least some cases, how would development patterns be different if there had been no such rules? We begin by constructing a simple model of the developer decision about the density of new development. The subdivision is the unit of observation, and developers must weigh both demand and cost considerations in choosing density, in addition to complying with zoning restrictions that vary across parcels. We apply the model using parcel-level data from a region where zoning rules vary but are exogenous to the period under study. Calvert County, Maryland, near Washington, DC, is an historically rural county that has experienced rapid growth in recent years. The county has a transferable development rights (TDRs) program that has led to a great deal of variability in the intensity of development across properties. We are able to not only examine the extent to which zoning has contributed to large lot development but also to determine the economic forces that underlie density decisions. Finally, we are able to forecast how density would have been different in the absence of zoning rules by estimating a Tobit equation that is censored for the observations constrained by zoning.
    Keywords: housing density, zoning, transferable development rights
    JEL: R14 R15 R52
  24. By: Antonio G. CALAFATI (Universita' Politecnica delle Marche, Dipartimento di Economia)
    Abstract: The paper argues that the way in which social scientists and policy-makers have conceptualised the Italian territory has significantly changed since the 1950s as a consequence of methodological shifts and attempts to capture the changing territorial organisation of the economy brought about by the structural transformation of the production and consumption process. In retrospect, one can in fact discern a conceptual trajectory from the standard 'Northern Italy'/'Southern Italy' partition, which prevailed until the 1970s, to an interpretation of the Italian territory as a pattern of local systems which slowly emerged in the subsequent decades. The paper suggests that the concept of 'local system', if correctly interpreted, may finally lead to rediscover cities as the fundamental elements of the territorial organisation of the economic process in Italy. However difficult economists may find to insert 'the city' in the categorical and theoretical framework of economics, it seems necessary to assign to the features of urban organisation of the Italian society the economic importance they indeed have. By moving from a modern interpretation of the concept of city - for instance by giving adequate consideration to the fact that in Western economies practically all cities are 'dispersed cities' and functional rather than administrative borders are relevant - one can reach the conclusion that most local systems are in fact cities. This way of looking at the Italian territory has important consequences. For instance, it reinstates urban external economies and dis-economies in the position they deserve in determining the development trajectory of the Italian economy. This perspective, moreover, re-assigns to the main Italian urban systems the economic role that they have indeed played in recent decades with regard to the innovation and accumulation processes, and highlights the key position that large cities have in reacting to the external shocks that accompany the changing international division of labour. Moreover, if the economic importance of cities is not acknowledged, it is questionable whether effective regional and national development policies can be devised. The critical-historical analysis of the conceptualisation of the Italian territory since the 1950s conducted in this paper, highlighting the conceptual barriers which have impeded appreciation of the role of cities, may prove functional to a paradigmatic shift which puts cities at the centre of the stage - a shift which is also in line with the new orientation toward cities one finds in the EU territorial policies.
    JEL: O12 O18 R10 R11
    Date: 2005–09
  25. By: Stephen Gibbons; Anne Green; Paul Gregg; Stephen Machin
    Abstract: This paper explores the changing extent of concentration worklessness and deprivation in Britains communities over the last twenty years and seeks to identify what shapes patterns of relative affluence and deprivation. The paper goes on to explore the evidence that there are lasting consequences from concentrated deprivation for the residents, including children. The paper address issues of employment, educational outcomes and crime victimisation. Looking at the available evidence from the UK and abroad, the evidence suggests that concentrated deprivation has little effect on employment opportunities, (e.g. moving people to more affluent neighbourhoods would make little difference), has modest effects on childrens educational outcomes and propensity to get involved in deviant behaviours but substantial effects on crime victimisation. The paper then concludes on what policy agendas could be developed to address concentrated deprivation and above all its consequences on residents outcomes.
    Keywords: neighbourhoods, employment, education, crime
    JEL: R23 J61 I21
    Date: 2005–07
  26. By: Safirova, Elena (Resources For the Future); Gillingham, Kenneth
    Abstract: In determining the marginal cost of congestion, economists have traditionally relied upon directly measuring traffic congestion on network links, disregarding any “network effects,” since the latter are difficult to estimate. While for simple networks the comparison can be done within a theoretical framework, it is important to know whether such network effects in real large-scale networks are quantitatively significant. In this paper we use a strategic transportation planning model (START) to compare marginal congestion costs computed link-by-link with measures taking into account network effects. We find that while in aggregate network effects are not significant, congestion measured on a single link is a poor predictor of total congestion costs imposed by travel on that link. Also, we analyze the congestion proliferation effect on the network to see how congestion is distributed within an urban area.
    Keywords: marginal congestion costs, congestion pricing, urban networks
    JEL: R41 R48
  27. By: Zenou, Yves
    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 re-examine 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; policy; rural-urban migration; search-matching
    JEL: D83 J41 J64 O15
    Date: 2005–12
  28. By: Adele Atkinson; Simon Burgess; Bronwyn Croxson; Paul Gregg
    Abstract: This paper evaluates the impact of a performance-related pay scheme for teachers in England. Using teacher level data, matched with test scores and value-added, we test whether the introduction of a payment scheme based on pupil attainment increased teacher effort. Our evaluation design controls for pupil effects, school effects and teacher effects, and adopts a difference-in-difference methodology. We find that the scheme did improve test scores and value added, on average by about half a grade per pupil. We also find heterogeneity across subjects, with maths teachers showing no improvement.
    Keywords: Incentives, teachers pay, education reform, pupil attainment
    JEL: J33 J45 D23 I28
    Date: 2004–12
  29. By: Smith, V. Kerry; Banzhaf, H. Spencer (Resources For the Future)
    Abstract: We document the sensitivity of welfare estimates derived from discrete choice models to assumptions about the choice set. Such assumptions can affect welfare estimates through both the estimated parameters of the model and, conditional on the parameters, the substitution among alternatives. Our analysis involves estimates of the benefits of air quality improvements in Los Angeles based on discrete choices of neighborhood and housing. We further illustrate the use of meta analysis to document and summarize voluminous information derived from repeated sensitivity analyses.
    Keywords: Meta analysis, random utility model, choice set, air quality, housing
    JEL: C15 Q25 R21
  30. By: David Brasington; Don Haurin
    Abstract: Communities differ in both the bundle of amenities offered to residents and the implicit price of these amenities. Thus, households are faced with a choice of which bundle to select when they select their residence. This choice implies households make tradeoffs among the amenities; that is, the amenities are substitutes or complements. We focus on estimating the demand for public school quality. After generating the implicit prices of community amenities from a hedonic house price equation, we use the median voter model and the AIDS model framework for estimating price and income elasticities of demand. The two models yield very similar estimates. The own price elasticity of demand for schooling is about -0.6 with an income elasticity of demand of 0.5. Public safety and school quality are substitutes as are the community’s income level and school quality.
  31. By: Parry, Ian (Resources For the Future); Harrington, Winston (Resources For the Future); Nelson, Per-Kristian (Resources For the Future); Safirova, Elena (Resources For the Future); Mason, Dave; Gillingham, Kenneth
    Abstract: Economists have long advocated congestion pricing as an efficient way of allocating scarce roadway capacity. However, with a few exceptions, congestion tolls are rarely used in practice and strongly opposed by the public and elected officials. Although high implementation costs and privacy issues are alleviated as appropriate technologies are developed, the concerns that congestion pricing will adversely affect low-income travelers remain. In this paper, we use a strategic transportation planning model calibrated for the Washington, DC, metropolitan area to compare the welfare and distributional effects of three pricing schemes- value pricing (HOT lanes), limited congestion pricing, and comprehensive congestion pricing. We find that social welfare gains from HOT lanes amount to three-quarters of those from the comprehensive road pricing. At the same time, a HOT lanes policy turns out to be much more equitable than other road pricing schemes, with all income groups strictly benefiting even before the toll revenue is recycled.
    Keywords: traffic congestion, congestion pricing, value pricing, HOT lanes, HOV lanes
    JEL: R40 R41 R48 H23
  32. By: Daniel O. Beltran (University of California, Santa Cruz); Kuntal K. Das (University of California, Santa Cruz); Robert W. Fairlie (University of California, Santa Cruz, National Poverty Center and IZA Bonn)
    Abstract: Nearly twenty million children in the United States do not have computers in their homes. The role of home computers in the educational process, however, has drawn very little attention in the previous literature. We use panel data from the two main U.S. datasets that include recent information on computer ownership among children - the 2000-2003 CPS Computer and Internet Use Supplements (CIUS) matched to the CPS Basic Monthly Files and the National Longitudinal Survey of Youth 1997 - to explore the relationship between computer ownership and high school graduation and other educational outcomes. Teenagers who have access to home computers are 6 to 8 percentage points more likely to graduate from high school than teenagers who do not have home computers after controlling for individual, parental, and family characteristics. We generally find evidence of positive relationships between home computers and educational outcomes using several estimation strategies, including controlling for typically unobservable home environment and extracurricular activities in the NLSY97, fixed effects models, instrumental variables, future computer ownership and "pencil tests". Some of these estimation techniques, however, provide imprecise estimates. Home computers may increase high school graduation by reducing nonproductive activities, such as truancy and crime, among children in addition to making it easier to complete school assignments.
    Keywords: computers, educational outcomes, technology
    JEL: I2
    Date: 2006–01
  33. By: Alessio D'Ignazio; Emanuele Giovannetti
    Abstract: We study the role played by geographical distance in the peering decisions between Internet Service Providers. Firstly, we assess whether or not the Internet industry shows clustering in peering; we then concentrate on the dynamics of the agglomeration process by studying the effects of bilateral distance in changing the morphology of existing peering patterns. Our results show a dominance of random spatial patterns in peering agreements. The sign of the effect of distance on the peering decision, driving the agglomeration/dispersion process, depends, however, on the initial level of clustering. We show that clustered patterns will disperse in the long run.
    Keywords: Internet, Peering, clustering, agglomeration, Networks, IXP
    JEL: C21 C25 D85 L86 R12 Z13
    Date: 2006–01
  34. By: Jos Van Ommeren (Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam); Willemijn Van der Straaten (Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam)
    Abstract: In this paper, we employ search theory as a micro-economic foundation for the wasteful commuting hypothesis. It is argued that the commute of the self-employed is the result of a search process for vacant workplaces, whereas employees search for vacant jobs through space. Because the arrival rate of workplaces is much higher than the arrival rate of jobs, the self-employed essentially may minimise the commute, whereas employees accept jobs with a longer commute. In the empirical analysis, the extent of the ‘wasteful commuting’ is identified by estimating the difference in the commute of employees and self-employed individuals with fixed workplaces. Our estimates indicate that about 40 to 50% of the observed commute may be considered ‘wasteful’ due to job search imperfections. We reject alternative hypotheses why the self-employed have a shorter commute (self-selection of not working from home, different residence locations). In line with the theoretical model, the excess commute is shown to be less in areas with a higher urban density.
    Keywords: wasteful commuting; search; mobility; self-employed
    JEL: R20 J64
    Date: 2005–09–26
  35. By: Junyi Shen (Osaka School of Interna ional Public Policy, Osaka University); Yusuke Sakata (School of Economics, Kinki University); Yoshizo Hashimoto (Osaka School of Interna ional Public Policy, Osaka University)
    Abstract: This paper applies two recent stated choice survey datasets of Japan to investigate the difference between the latent class model (LCM) and the mixed logit model (MLM) for transport mode choice. A detailed comparison is carried out, focusing on comparing values of time savings, direct choice elasticities, predicted choice probabilities and prediction success indices. Furthermore, a test on non-nested model is also utilized to help determine which model is superior to another one. The results suggest that the LCM performs better than the MLM in both datasets.
    Keywords: latent class model (LCM), mixed logit model (MLM), transport mode choice, predicted choice probability, prediction success index
    JEL: C35 D12 R41
    Date: 2006–01
  36. By: Walls, Margaret (Resources For the Future); Nelson, Per-Kristian (Resources For the Future)
    Abstract: In 1999 Congress passed the National Air Quality and Telecommuting Act. This Act established pilot telecommuting programs in five major U.S. metropolitan areas with the express purpose of studying the feasibility of addressing air quality concerns through telecommuting. This study provides the first analysis of data from the “ecommute” program. Using two-and-one-half years of data, we look at telecommuting frequency, mode choice, and emissions reductions. We also look at reporting behavior, dropout rates, and other information to assess the program’s performance. We analyze results by city - Denver, Washington, D.C., Houston, Los Angeles, and Philadelphia are the five pilot cities. And finally, we use the program’s emissions reduction findings to calculate how much telecommuting would be needed to reach an annual volatile organic compounds emission reduction target in each city. This discussion paper is one in a series of four RFF papers on telecommuting published in December 2004. In addition to analysis of the ecommute data described in this paper, Safirova and Walls (discussion paper 04-43) similarly analyze data from a 2002 survey conducted by the Southern California Association of Governments (SCAG) of telecommuters and nontelecommuters. These same authors put these findings into context by providing a review of the empirical literature on telecommuting (discussion paper 04-44). Finally, Nelson presents an assessment of institutional and regulatory barriers to using telecommuting in a mobile source emissions trading program (04-45). The studies by RFF are part of a larger report on the ecommute program completed by the Global Environment and Technology Foundation (GETF) for the U.S. Environmental Protection Agency. More information about the overall project can be found on the ecommute/GETF website- http-//
    Keywords: telecommuting, mode choice, air quality, emissions
    JEL: R4 Q53 Q58
  37. By: Francesconi, Marco; Jenkins, Stephen P; Siedler, Thomas
    Abstract: We analyse 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; educational success; instrumental variables; lone parenthood; sibling differences; treatment effects
    JEL: C23 D13 I21 J12 J13
    Date: 2005–12
  38. By: Smith, V. Kerry; Banzhaf, H. Spencer (Resources For the Future); Walsh, Randy
    Abstract: Environmental policy analyses increasingly require the evaluation of benefits from large changes in spatially differentiated public goods. Such changes are likely to induce general equilibrium effects through changes in household expenditures and local migration, yet current practice "transfers" constant marginal values for even the largest changes. Moreover, it ignores important distributional effects of policy. This paper demonstrates that recently developed locational equilibrium models can provide transferable general equilibrium benefit measures. Our results suggest that taking account of the potential for adjustment and household heterogeneity is important. Applying benefits estimated from this method to the effect of the Clean Air Act amendments in Los Angeles, we find that the estimated annual general equilibrium benefits in 2000 and 2010 are dramatically different by income group and location. The gains range from $33 to about $2,400 per household. These differences arise from variations in the air quality conditions, income, and the effects of general equilibrium price adjustment.
    Keywords: air quality, clean air act, non-market valuation, Tiebout model
    JEL: H41 Q25 R13
  39. By: Powell, Mark
    Abstract: This study analyzes the local regulatory and non-regulatory determinants of ambient air quality in Allegheny, Baltimore, and Cuyahoga Counties over the period 1972-1992. Mandated pollution control investments appear to have often had a statistically significant effect in reducing maximum concentrations of suspended particulates and tropospheric ozone in these areas. The effects of regulatory air quality controls, however, generally have been overshadowed by the impacts of non-regulatory factors. In general, local regulatory and non-regulatory factors failed to account for a majority of the variation in local air quality. This underscores the importance of regional or national factors in determining local air quality.
  40. By: Parry, Ian (Resources For the Future); Bento, Antonio
    Abstract: This paper explores the interactions between taxes on work-related traffic congestion and pre-existing distortionary taxes in the labor market. A congestion tax raises the overall costs of commuting to work and discourages labor force participation at the margin, when revenues are returned in lump-sum transfers. The authors find that the resulting efficiency loss in the labor market can be larger than the Pigouvian efficiency gains from internalizing the congestion externality. In contrast, if congestion tax revenues are used to reduce labor taxes the net impact on labor supply is positive, and the efficiency gain in the labor market can raise the overall welfare gains of the congestion tax by as much as 100 percent. Recycling congestion tax revenues in public transit subsidies produces a positive, but smaller, impact on labor supply. In short, results indicate that the presence of pre-existing tax distortions, and the form of revenue recycling, can crucially affect the magnitude, and possibly even the sign, of the welfare effect of road-pricing schemes. The efficiency gains from recycling congestion tax revenues in other tax reductions can amount to several times the Pigouvian welfare gains from congestion reduction.
  41. By: Atila Abdulkadiroglu; Parag A. Pathak; Alvin E. Roth; Tayfun Sönmez
    Date: 2006–01–13
  42. By: Charles van Marrewijk (Faculty of Economics, Erasmus Universiteit Rotterdam)
    Abstract: We derive and discuss a general, but simple geographical economics model with congestion, allowing us to explain the economic viability of small and large locations. The model generalizes some previous work and lends itself to analyzing the impact of public policy in terms of infrastructure changes. We show analytically that scale effects (total size of the economy) and changes in the cost structure (fixed and marginal costs) are important from a welfare perspective, but largely irrelevant from an economic dynamics perspective.
    Keywords: Geographical economics; congestion; externalities
    JEL: F O R
    Date: 2005–10–31
  43. By: Yannis Ioannides; Adriaan Soetevent
    Keywords: job search, social networks, arbitrary degree distribution, wage inequality, incidence of unemployment
    JEL: D83 J31 J64
    Date: 2006
  44. By: Jérome VICENTE (LEREPS-GRES); Yan Dalla PRIA (CSO – CNRS); Raphaël SUIRE (CREM – CNRS)
    Abstract: This articles examines the peculiar role of mimetic behaviors in co-location processes. We start showing that geographical proximity between agents and/or firms is not a sufficient nor necessary condition for the collective performance of clusters. Other types of socio-economic proximities characterize clusters, and our purpose is to show that, among the several ways to analyze the complex links between proximities and clusters, the theoretical outlook on the role played by mimetic interactions in co-location processes are certainly one of the most promising. Mimetic behaviors of location (in economics and sociology) are introduced in order to demonstrate that co-location processes can be the result of sequentiality, uncertainty, legitimacy and non market interactions, rather than full rational and isolated decisions and pure strategic market interactions. According to the type of mimetic behavior at work in the clustering process, the nature of socio-economic proximity can differ and have a strong influence of the “evolutionary stability” of clusters. All these theoretical considerations are illustrated through the emblematic French case of “Silicon Sentier”, cluster which has gathered together three hundred firms of the French net-economy (the famous “dotcom”) during the Internet bubble swelling.
    Keywords: cluster, mimetic interactions, proximity, stability, Silicon Sentier
    JEL: D83 R12 R30
    Date: 2006
  45. By: Carol E. Heim (University of Massachusetts Amherst)
    Abstract: Phoenix and neighboring municipalities, like many in the South and West, pursued a growth strategy based on annexation in the decades after World War II. This paper explores the link between annexation and competition for tax revenues. After discussing arguments for annexation, it traces the history of annexation in the Phoenix metropolitan area. A long-running series of "border wars" entailed litigation, pre-emptive annexations, and considerable intergovernmental conflict. The paper argues that tax revenues have been a key motivation for annexation, particularly since the 1970s. It then considers several related policy issues and argues that while opportunities for annexation are becoming more limited, competition for tax revenues (particularly sales tax revenues) continues to be fierce and to create dilemmas for municipalities in the region. JEL Categories: H71, H77, N92, R51
    Keywords: annexation, municipal revenues, sales tax, Phoenix, urban growth, intergovernmental relations
    Date: 2006–01
  46. By: de Mello, Luiz
    Abstract: This paper discusses trends in fiscal adjustment in Brazil since the 1990s, with particular emphasis on the strengthening of institutions for fiscal policymaking, and its effect on local government finances and their ability to invest in infrastructure building and upgrading. Although fiscal adjustment, which is ongoing, has taken a toll on the government ' s ability to finance much-needed infrastructure investment, it is not the only culprit. A lack of budget flexibility, against a backdrop of increasing downward rigidities in current spending, also constrains the government ' s ability to invest. The paper argues that regulatory uncertainty in many sectors, particularly water and sanitation, in which the municipalities play a leading role, has discouraged private sector investment and that the financing of infrastructure building and upgrading goes beyond the municipal level of government. Higher-level jurisdictions are responsible for financing investment in energy and transport infrastructure, for example.
    Keywords: Public Sector Economics & Finance,Municipal Financial Management,Urban Economics,Public & Municipal Finance,Public Sector Management and Reform
    Date: 2006–01–01
  47. By: Ben Zissimos (Department of Economics, Vanderbilt University); Myrna H. Wooders (Department of Economics, Vanderbilt University)
    Abstract: This paper argues that, because governments are able to relax tax competition through public good differentiation, traditionally high-tax countries have continued to set taxes at a relatively high rate even as markets have become more integrated. The key assumption is that firms vary in the extent to which public good provision reduces costs. We show that Leviathan governments are able to use this fact to relax the forces of tax competition, reducing efficiency. When firms can `vote with their feet' tax competition leads firms to locate in `too many' jurisdictions. A `minimum tax' further relaxes tax competition, further reducing efficiency.
    Keywords: Asymmetric equilibrium, core-periphery, non-renegotiable minimum tax, tax competition, tax harmonization
    JEL: C72 H21 H42 H73 R50
    Date: 2006–01
  48. By: Walls, Margaret (Resources For the Future); Safirova, Elena (Resources For the Future)
    Abstract: In this paper, we review 20 relatively recent empirical studies of telecommuting, all of which focus on the trip reduction perspective. The studies include earlier ones with smaller datasets, such as some pilot studies of individual employers, and more recent studies based on broader surveys of both telecommuters and nontelecommuters. We focus on the results of the studies with respect to participation and frequency of telecommuting, the effects on vehicle-miles-traveled (VMT) and trips, and in some cases, the impacts on emissions and air quality. Although there does not seem to be a consensus, there is a predominant view that certain factors increase both the likelihood of telecommuting and the frequency of telecommuting. These factors are having children in the household, being female, having more education, having a longer commute trip, having worked longer for one’s current employer and/or in one’s current position, and having a job that does not require face-to-face contact with coworkers or clients. Most studies of VMT and trip reductions from telecommuting show that telecommuters significantly reduce both daily trips and VMT. Not only does commute VMT fall, but noncommute VMT appears to fall in some cases as well. The studies of VMT, however, tend to focus on the reductions for individual employees who choose to telecommute. Although an individual telecommuter may experience a sharp reduction in VMT, total benefits depend on how many people are telecommuting, how often they are doing so, and the duration of telecommuting. More research is needed with larger and more broadly based datasets across employers that include both individual employee characteristics and employer and job characteristics. This would allow a better analysis of telecommuting choice and frequency as well as more reliable estimates of VMT and emissions impacts. This discussion paper is one in a series of four RFF papers on telecommuting published in December 2004. Discussion papers 04-42 and 04-43 present analyses of two recent datasets on telecommuters. In 04-42, Nelson and Walls analyze data from five pilot cities enrolled in the "ecommute" program. In 04-43, Safirova and Walls analyze data from a broad survey conducted by the Southern California Association of Governments (SCAG) of telecommuters and nontelecommuters. Finally, in 04-45 Nelson presents an assessment of institutional and regulatory barriers to using telecommuting in a mobile source emissions trading program. The studies by RFF are part of a larger report on the ecommute program completed by the Global Environment and Technology Foundation (GETF) for the U.S. Environmental Protection Agency. More information about the overall project can be found on the ecommute/GETF website- http-//
    Keywords: telecommuting, mode choice, air quality, emissions
    JEL: R4 Q53 Q58
  49. By: Simpson, R. David
    Abstract: Concern about “open space” is growing. Conservation advocates worry that private land use decisionmakers preserve too little open space. Yet private land developers are deciding on their own to preserve open space in new developments because it provides amenities to purchasers of lots. Moreover, tax provisions provide incentives for preserving more open space than would be privately optimal. Many jurisdictions have adopted “use-value assessment” standards granting favorable tax treatment to lands maintained in open space. Also, donations of open space can be deducted from income in computing tax liabilities. Both factors may be empirically important, although tax deductibility may have larger conservation effects than does use-value assessment. These conclusions raise several unanswered questions- How important are tax incentives in practice? Do they motivate enough conservation of open space? Do tax incentives target the right conservation priorities?
    Keywords: income tax, property tax, tax deductions, use-value assessment, ecosystem services, open space, conservation, amenity value
    JEL: H23 H41 H71 R14
  50. By: Kleck, Gary; Kovandzic, Tomislav; Schaffer, Mark E
    Abstract: The positive correlation between gun prevalence and homicide rates has been widely documented. But does this correlation reflect a causal relationship? This study seeks to answer the question of whether more guns cause more crime, and unlike nearly all previous such studies, we properly account for the endogeneity of gun ownership levels. We discuss the three main sources of endogeneity bias - reverse causality (higher crime rates lead people to acquire guns for self-protection), mismeasurement of gun levels, and omitted/confounding variables - and show how the Generalized Method of Moments (GMM) can provide an empirical researcher with both a clear modeling framework and a set of estimation and specification testing procedures that can address these problems. A county level cross-sectional analysis was performed using data on every US county with a population of at least 25,000 in 1990; the sample covers over 90% of the US population in that year. Gun ownership levels were measured using the percent of suicides committed with guns, which recent research indicates is the best measure of gun levels for cross-sectional research. We apply our procedures to these data, and find strong evidence of the existence of endogeneity problems. When the problem is ignored, gun levels are associated with higher rates of gun homicide; when the problem is addressed, this association disappears or reverses. Our results indicate that gun prevalence has no significant net positive effect on homicide rates: ceteris paribus, more guns do not mean more crime.
    Keywords: counties; crime; endogeneity; GMM; gun levels; homicide
    JEL: C51 C52 K42
    Date: 2005–11
  51. By: Francesco CHELLI (Universita' Politecnica delle Marche, Dipartimento di Economia)
    Date: 2005–01
  52. By: Parry, Ian (Resources For the Future); Bento, Antonio
    Abstract: This paper uses analytical and numerical models to illustrate how the presence of other distortions within the transport system changes the overall welfare effect of a congestion tax. These other distortions include a transit fare subsidy, congestion on competing (unpriced) routes, accident externalities, gasoline taxes, and pollution externalities. Each of these pre-existing distortions can substantially alter the welfare effect of a congestion tax that would be predicted by a first-best analysis. If congestion taxes encourage travel on other congested routes, they can produce sizeable indirect welfare losses. In addition, induced reductions in the demand for gasoline can lead to substantial welfare losses when, as appears to be the case for European countries, gasoline taxes significantly exceed marginal pollution damages. On the other hand, congestion taxes may produce significant welfare gains by offsetting accident externalities, though these gains are partially offset by increased accidents on competing roadways. To the extent that congestion taxes increase the demand for transit, they can induce significant welfare gains or losses, depending on whether transit fares are above or below marginal supply costs. The importance of other distortions varies considerably across different transport systems and across different countries. Our generic analysis illustrates the proportionate change in the welfare effect of a congestion tax due to each of these distortions over a wide range of parameter scenarios.
  53. By: Fabiana Santos (Cedeplar-UFMG); Marco Crocco (Cedeplar-UFMG); Frederico G. Jayme Jr (Cedeplar-UFMG)
    Abstract: The aim of this paper is to discuss the idea that knowledge externalities, as discussed in the Endogenous Growth Theory, can be spread over any kind of space. Although this point has already been discussed by some scholars in the heterodox tradition (Nelson, 1998, Martin and Sunley, 1998, among others), we would like to bring into discussion a new perspective that analyses the validity of this assumption in peripheral regions/countries. It will be argued that there are some peripheral structural conditions that constrain the generation, transfer and absorption of knowledge externalities. Above of all, it will be argued that the construction of “space” in the periphery is determinant for the absence of widespread diffusion of this kind of externality. This conclusion implies that the generality of the New Growth Theory is very difficult to be assumed.
    JEL: O40 R11
    Date: 2005–12
  54. By: Banzhaf, H. Spencer (Resources For the Future)
    Abstract: This paper illustrates how public goods may be incorporated into a cost-of-living index. When public goods are weak complements to a market good, quality-adjusted prices for the market good capture all the welfare information required. They are also consistent with a Laspeyres index that maintains the bound on a true cost-of-living index. The paper recovers this information from a discrete-choice model, using a simulation routine to solve for the appropriate price adjustments. These concepts are applied to the case of housing, education, crime, and air quality in Los Angeles for 1989 to 1994. Over a period of time when they are improving, incorporating pubic goods into the index lowers the estimated change in the cost of living by 0.5 to 2.6 percentage points. In other years, when public goods diverge, the estimated annual adjustment differs by model, with a range of -0.2 to +1.3 percentage points.
    Keywords: air quality, discrete choice models, green accounting, nonmarket valuation, price inde
    JEL: C51 D12 D60 E31 H40 R10
  55. By: Wernstedt, Kris (Resources For the Future); Hersh, Robert
    Abstract: In this paper, the second installment of our three-part study on the development of brownfields policy in the state of Wisconsin, we use case studies to explore the implementation of the policy at three scales- 1) two statewide initiatives, the Voluntary Party Liability Exemption process and the Sustainable Urban Development Zone program; 2) the efforts of two Wisconsin cities, West Allis and Wausau, to promote brownfields redevelopment across their neighborhoods; and 3) project-specific uses of institutional, regulatory, and financial innovations to encourage the revitalization of specific areas. Throughout the paper, we focus on the role of economic incentives, regulatory flexibility, regulatory structure, and the behavioral culture of brownfields stakeholders. We base our work on interviews of nearly 70 individuals from public, private-for-profit, private-nonprofit, and tribal organizations.
    Keywords: Brownfields, contamination, hazardous waste, regulatory reform, Wisconsin
    JEL: Q24 Q28
  56. By: Parry, Ian (Resources For the Future)
    Abstract: Previous literature has shown that competition among regional governments may lead to inefficiently low levels of capital taxation, because governments do not take account of the external benefits of capital flight to other regions. However, the fiscal distortion is smaller the more elastic the supply of capital (for the region bloc), if governments are not perfectly competitive, or they behave in part as a revenue-maximizing Leviathan. There has been very little empirical work on the magnitude of the welfare effects of fiscal competition. This paper presents extensive calculations of the welfare effects using a model that incorporates the possibility of Leviathan behavior, strategic behavior by governments, monopsony power in factor markets, and a wide range of capital supply elasticities. The welfare costs of tax competition are generally fairly small, and even these costs can disappear fairly quickly when some weight is attached to the possibility of Leviathan behavior.
    Keywords: fiscal competition, tax harmonization, welfare costs, Leviathan, strategic behavior
    JEL: H73 H21 H23
  57. By: Titas Kumar Bandopadhyay (Bagnan College)
    Abstract: This paper incorporates informal sector and efficiency wage relation in a Harris-Todaro econmy under differential production structure. The simultaneous existence of the urban informal sector and the urban unemployment has been explained interms of such efficiency wage relation. Two different production structures have been considered in this paper: first, formal capital is specific to the urban formal sector, while informal capital is mobile between the rural sector and the urban informal sector ;second, formal capital is mobile between urban formal sector and the rural sector, while informal capital is specific to the urban informal sector . Our investigation shows that rural subsidization reduces unemployment and raises domestic factor income in both cases.However, such a policy may lower domestic factor income in the original models of Gupta(1997) and Grinols (1992).Subsidization to the urban formal sector raises unemployment and domestic factor income in the two different production structures. However, such a policy may produce ambiguous effect in the original model of Grinols(1991). Interestingly, subsidization to the urban informal sector leads to different effects in the two different cases. In the case of capital mobility between informal sector and rural sector, this raises unemployment and lowers domestic factor income and in the case of capital mobility between formal sector and rural sector this policy lowers unemployment and raises domestic factor income. However, such policy raises domestic factor income in the original model of Gupta (1997); and leads to ambiguous effect in the model of Grinols (1991).Thus, our results have shown that the impact of development policies on unemployment and domestic factor income depends on the nature of the production structures.These theoretical results may guide the policy makers to pursue the development policy in a small open economy.
    Keywords: Development policy, production structure,urban unemployment
    JEL: C O
    Date: 2005–12–29
  58. By: Small, Kenneth; Yan, Jia
    Abstract: Some road-pricing demonstrations use an approach called "value pr icing", in which travelers can choose between a free but congested roadway and a priced roadway. Recent research has uncovered a potentially serious problem for such demonstrations- in certain models, second-best tolls are far lower than those typically charged, and the welfare gains from profit maximization are small or even negative. That research, however , assumes that all travelers are identical, and it therefore neglects the benefits of product differentiation, by which people with different values of time can choose a suitable cost/quality combination. Using a model with two user groups, we find that accounting for heterogeneity in value of time is important in evaluating constrained policies, and improves the relative performance of policies that offer differential prices. Nevertheless, for most of the reasonable range of heterogeneity, second-best pricing produces far fewer benefits than pricing both roadways optimally, and profit-maximizing tolls are so high that over all welfare is reduced from the no-toll baseline.

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