nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2006‒01‒29
twelve papers chosen by
Steve Ross
University of Connecticut

  1. Is Housing Overvalued in the Helsinki Metropolitan Area? By Elias Oikarinen
  2. Universal Vouchers and White Flight By Eric Brunner; Jennifer Imazeki; Stephen L. Ross
  3. The Diffusion of Housing Price Movements from Centre to Surrounding Areas By Elias Oikarinen
  4. Spatial Externalities and Empirical Analysis: The case of Italy By Giuseppe De Arcangelis; Giordano Mion
  5. Does Immigration Affect the Long-Term Educational Outcomes of Natives? Quasi-Experimental Evidence By Gould, Eric D; Lavy, Victor; Paserman, Marco Daniele
  6. Accessibility and Industrial Location. Some Evidence from Spain By Angel Alañón; Josep Maria Arauzo Carod
  7. Hot and Cold Housing Markets: International Evidence By Ceron, Jose A.; Suarez, Javier
  8. Remedying Education: Evidence from Two Randomized Experiments in India By Banerjee, Abhijit; Cole, Shawn; Duflo, Esther; Linden, Leigh
  9. Fiscal federalism in big developing countries: China and India By Fraschini, Angela
  10. Strong and Weak Ties in Employment and Crime By Calvó-Armengol, Antoni; Verdier, Thierry; Zenou, Yves
  11. Incomplete contracts and investment : a study of land tenancy in Pakistan By Mansuri, Ghazala; Jacoby, Hanan G.
  12. Does it pay to be socially responsible? Evidence from Spanish retail banking sector By Callado-Muñoz, Francisco J; Utrero-González, Natalia

  1. By: Elias Oikarinen
    Keywords: housing prices, dynamics, cointegration, error-correction model, bubble
    Date: 2005–10–06
  2. By: Eric Brunner (Quinnipiac University); Jennifer Imazeki (San Diego State University); Stephen L. Ross (University of Connecticut)
    Abstract: Opponents of school vouchers often argue that school vouchers will lead to “white flight†from public schools that are disproportionately nonwhite, creating more racially segregated schools. However, recent studies that examine white flight from public schools into private schools have produced conflicting evidence on whether or not white flight actually exists. In this paper, we present new evidence on whether universal vouchers will lead to more racially segregated schools. Specifically, we use data on vote outcomes from a state-wide universal voucher initiative to estimate the likelihood that white households with children currently in public schools will use vouchers to switch out of more-integrated schools. Our results indicate that white households with children attending schools with large concentrations of nonwhite schoolchildren are significantly more likely to support school vouchers, an effect that is absent for non-white households with children and households without children. However, it also does not appear to be race, per se, that is the primary concern, but other school factors that are correlated with race, such as test scores and limited English proficiency.
    JEL: H3 I2 R2
    Date: 2006–01
  3. By: Elias Oikarinen
    Keywords: housing, dynamics Granger causality, cointegration, regions
    Date: 2005–04–29
  4. By: Giuseppe De Arcangelis (Dipartimento di Scienze Economiche, Universit`a degli Studi di Bari and CIDEI.); Giordano Mion (Dipartimento di Scienze Economiche, Universit`a degli Studi di Bari, and CORE and CERAS.)
    Abstract: In the last ten years the space issue, i.e. the study of the role played by space in economic phenomena, has attracted a lot of interest from many economic fields. Both the suitability of spatial economics to address questions posed by globalization, and improves in modeling techniques are at the basis of this revolution. The combination of increasing returns, market imperfections, and trade costs creates new forces that, together with factor endowments, determine the distribution of economic activities. These spatial externalities makes agents' location choice highly interdependent, thus allowing to understand the empirical spatial correlation between demand and production previously observed by the market potential literature. Despite their theoretical relevance, there is still little evidence, especially at large scale level, on the effective contribution of this new identified forces to agents' location decisions. The aim of this work is to directly estimate a model of economic geography on some Italian regional data in order to both test the empirical relevance of this theory and try to give a measure of the geographic extent of spatial externalities.
    Keywords: Economic Geography, Spatial Externalities, Market Potential
    JEL: F12 R12 R32
  5. By: Gould, Eric D; Lavy, Victor; Paserman, Marco Daniele
    Abstract: This paper uses the mass migration wave to Israel in the 1990s to examine the impact of immigrant concentration during elementary school on the long-term academic outcomes of native students in high school. To identify the causal effect of immigrant children on their native peers, the empirical strategy must address two sources of bias: the endogenous sorting of immigrants across schools, and the endogenous grade placement of immigrants within schools. We control for the endogeneity of immigrant placement across schools by conditioning on the total number of immigrants in a school and exploit random variation in the number of immigrants across grades within the same school. To address the endogenous grade placement of immigrants within schools, we use the immigrants' dates of birth as an instrument for their actual grade placement. The results suggest that the overall presence of immigrants in a grade had a significant and large adverse effect on two important outcomes for Israeli natives: the dropout rate and the chances of passing the high school matriculation exam which is necessary to attend college.
    Keywords: dropout rates; immigrant absorption; natural experiment; peer effects; school quality
    JEL: I20 J24
    Date: 2006–01
  6. By: Angel Alañón; Josep Maria Arauzo Carod
    Abstract: During the 1990s an intense programme of high capacity road construction was carried out in the Spanish road network. This considerably improved accessibility to municipalities. The aim of this paper is to determine whether this greater accessibility has had positive effects on the creation of industrial establishments. We analyze the location decisions of firms at a municipality level and in 2-digit manufacturing industries (11 industries). The main contributions of this paper are the variables and econometric techniques we use. As well as the usual variables, such as specialization or the diversification of the labour force, we use more innovative variables such as local added value, road accessibility, and the characteristics of firms in neighbouring municipalities. Our econometric techniques are space models with discrete dependent variables.
  7. By: Ceron, Jose A.; Suarez, Javier
    Abstract: This paper examines the experience of 14 developed countries for which there are about 30 years of quarterly inflation-adjusted housing price data. Price dynamics is modelled as a combination of a country-specific component and a cyclical component. The cyclical component is a two-state Markov switching process with parameters common to all countries. We find that the latent cyclical variable captures previously undocumented changes in the volatility of real housing price increases. These volatility phases are quite persistent (about six years, on average) and occur with about the same unconditional frequency over time. In line with previous studies, the mean of real housing price increases can be predicted to be larger when lagged values of those increases are large, real GDP growth is high, unemployment falls, and interest rates are low or have declined. Our findings have important implications for risk management in regard to residential property markets.
    Keywords: cycles; housing prices; Markov switching; volatility
    JEL: E32 G15 R31
    Date: 2006–01
  8. By: Banerjee, Abhijit; Cole, Shawn; Duflo, Esther; Linden, Leigh
    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.
    Keywords: computer aided education; India; program evaluation; remedial education
    JEL: I21 O11
    Date: 2006–01
  9. By: Fraschini, Angela
    Abstract: In South and East Asian countries a highly centralized government prevails, although recently some trends are moving toward a greater degree of decentralization. Also the two giants China and India, which cannot rely on a merely centralized Government, have experienced a greater or lesser degree of fiscal unionism. As to China the local government system provides four levels: provincial level; city level; county level; township level. Intergovernmental fiscal relations were revamped by the 1994 reform that established a new tax sharing system and gave local governments more control over the administration of local taxes but no significant degree of tax autonomy and no substantial expenditure assignments. The local financial revenue mainly derives from local taxes, shared taxes, and nontax revenue. As to India, the federal system is quite complex. The center-states relations are envisaged in the Constitution also for the financial aspects: two constitutional amendments adopted in 1992 made India one of the most politically decentralized countries among developing ones. However, the implementation of the decentralization program is still lagging: till now India seems to have considered decentralization mainly in terms of the local election system, without the transfer of all functions provided for devolution to local bodies. Only India set up a different system of local bodies in rural and urban areas with different expenditure responsibilities and financing powers. On the contrary, China has a unitary fiscal system. In India it is necessary to redesign the transfer system to improve accountability, incentives and equity, whereas in China, the fiscal revenue sharing schemes limit intergovernmental budget transfers. Finally, the rule of hard budget constraint in China is faced by all levels of government, while in India sub-national governments face soft budget constraint.
    Date: 2006–01
  10. By: Calvó-Armengol, Antoni; Verdier, Thierry; Zenou, Yves
    Abstract: This paper analyses the interplay between social structure and information exchange in two competing activities, crime and labour. We consider a dynamic model in which individuals belong to mutually exclusive two-person groups, referred to as dyads. There are multiple equilibria. If jobs are badly paid and/or crime is profitable, unemployment benefits have to be low enough to prevent workers for staying too long in the unemployment status because they are vulnerable to crime activities. If, instead, jobs are well paid and/or crime is not profitable, unemployment benefits have to be high enough to induce workers to stay unemployed rather to commit crime because they are less vulnerable to crime activities. Also, in segregated neighbourhoods characterized by high interactions between peers, a policy only based on punishment and arrest will not be efficient in reducing crime. It has to be accompanied by other types of policies that take into account social interactions.
    Keywords: crime; forward-looking agents; labour market; social interaction
    JEL: A14 J40 K42
    Date: 2006–01
  11. By: Mansuri, Ghazala; Jacoby, Hanan G.
    Abstract: When contracts are incomplete, relationship-specific investments may be underprovided due to the threat of opportunistic expropriation or holdup. The authors find evidence of such underinvestment on tenanted land in rural Pakistan. Using data from households cultivating multiple plots under different tenure arrangements, they show that land-specific investment is lower on leased plots. This result is robust to the possible effects of asymmetric information in the leasing market. Greater tenure security also increases land-specific investment on leased plots. Moreover, variation in tenure security appears to be driven largely by heterogeneity across landlords, suggesting that reputation may be important in mitigating the holdup problem.
    Keywords: Investment and Investment Climate,Municipal Housing and Land,Contract Law,Economic Theory & Research,Real Estate Development
    Date: 2006–02–01
  12. By: Callado-Muñoz, Francisco J; Utrero-González, Natalia
    Abstract: This paper presents a theoretical and empirical analysis of strategic competition in retail banking when some of the financial firms are non-profit organisations that invest in social activities. Banking literature about competition is fairly large, but the strategic interaction between profit maximizing and non profit maximizers has not been extensively analysed except for Purroy and Salas (1999). In this paper, a completely different approach is taken. An adaptation of Hotelling’s two stage model of spatial competition is developed to take into account consumer perceptions respect to the two different types of financial institutions. The empirical analysis confirms that consumers take into account other features different from the price, such as social contribution or closer service to make a deposit or mortgage decision. These conclusions are of interest in the debate about a firm’s social or ethical activities. It is shown that if consumers value social activities, firms can improve their results by behaving socially responsible.
    Keywords: Strategic competition; Hotelling´s model; Spanish banking; Corporate social responsibility
    JEL: D83 G21 D21
    Date: 2006–01

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