nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2006‒04‒01
seventeen papers chosen by
Steve Ross
University of Connecticut

  1. Do homeowners know their house values and mortgage terms? By Brian Bucks; Karen Pence
  2. School Choice and the Flight to Private Schools: To What Extent Are Public and Private Schools Substitutes? By David M. Brasington
  3. The Effects of Teacher Training on Teacher Value Added By Douglas Harris; Tim R. Sass
  4. School choice : income and peer effect differentiation By Saïd Hanchane; Tarek Mostafa
  5. Migration and Hedonic Valuation: The Case of Air Quality By Patrick Bayer; Nathaniel Keohane; Christopher Timmins
  6. A Process Model of Locational Change in Entrepreneurial Firms: An Evolutionary Perspective By Erik Stam
  7. Central versus Local Education Finance : A Political Economy Approach By Rainald Borck
  8. Airport Substitution by Travelers: Why do we have to drive to fly? By Gary M. Fournier; Monica E. Hartmann; Thomas Zuehlke
  9. Classroom Peer Effects and Student Achievement By Mary A. Burke; Tim R. Sass
  10. The Interaction Between Public and Private Governments: An Empirical Analysis By Ron Cheung
  11. TRIP CHAINING: WHO WINS WHO LOSES? By Andre de Palma; Dunkerley Fay
  12. Human Capital, R&D and Regional Export Performance By Gråsjö, Urban
  13. Legal knowledge and economic development : the case of land rights in Uganda By Yamano, Takashi; Ayalew, Daniel; Deininger, Klaus
  14. Regional Interaction & Economic Diversity - exploring the role of geographically overlapping markets for a municipality’s diversity in retail and durables By Andersson, Martin; Klaesson, Johan
  15. Fiscal Decentralisation and Economic Growth in the OECD By Phil Bodman; Kathryn Ford
  16. Regional Specialization and Universities: The New Verus the Old By Braunerhjelm, Pontus
  17. The Regionalization of Swedish Knowledge Society: Some preliminary consequences By Kaiserfeld, Thomas

  1. By: Brian Bucks; Karen Pence
    Abstract: To assess whether homeowners know their house values and mortgage terms, we compare the distributions of these variables in the household-reported 2001 Survey of Consumer Finances (SCF) to the distributions in lender-reported data. We also examine the share of SCF respondents who report not knowing these variables. We find that most homeowners appear to report their house values and broad mortgage terms reasonably accurately. Some adjustable-rate mortgage borrowers, though, and especially those with below-median income, appear to underestimate or not know how much their interest rates could change.
    Keywords: Housing - Prices ; Home ownership ; Mortgage loans
    Date: 2006
  2. By: David M. Brasington
    Abstract: Opponents of school choice sometimes charge that vouchers, charter schools, and tuition tax credits would strip funding and talented students from the public schools. Proponents say this is exactly what is needed to provide extra competition for public schools. Flight to private schools may happen if parents think private schools are good substitutes for public schools. For goods with explicit market prices, economists estimate substitutability by specifying a demand curve and finding a cross price elasticity, but the non-market nature of schooling has prevented this. The current study finds a way to estimate the demand for public schooling and calculate a cross price elasticity by exploiting Rosen’s (1974) two-stage hedonic technique. It estimates the cross price elasticity between public schooling and the price of private schooling to be 0.32: Americans view private schools as fairly weak substitutes for public schools. The use of spatial statistics accounts for potential spillovers and omitted variable bias in the house price hedonics and the demand curve estimation. In fact, the -1.72 price elasticity of demand is much larger than the -0.20 to -0.40 estimates generally found by non-spatial studies.
  3. By: Douglas Harris (Department of Educational Leadership and Policy Studies, Florida State University); Tim R. Sass (Department of Economics, Florida State University)
    Abstract: We study the effects of various types of education and training on teacherproductivity. Previous studies on the subject have been hampered by inadequatemeasures of teacher training and difficulties addressing the non-random selectionof teachers to students and of teachers to training. We address all of theselimitations by estimating models with student, teacher, and school fixed effectsusing an extensive database from the state of Florida. Our results suggest thatteacher training generally has little influence on productivity. One exception isthat content-focused teacher professional development is positively associatedwith productivity in middle and high school math. In addition, more experiencedteachers appear more effective in teaching elementary and middle school reading.There is no evidence that either pre-service (undergraduate) training or thescholastic aptitude of teachers influences their productivity. These results callinto question previous findings based on models that do not adequately control forthe various forms of selection bias.
    Keywords: Teacher Quality, Teacher Training, Teacher Productivity, Student Achievement
    JEL: I2 J24 J44
    Date: 2006–03
  4. By: Saïd Hanchane (LEST - Laboratoire d'économie et de sociologie du travail - - [CNRS : UMR6123] - [Université de Provence - Aix-Marseille I][Université de la Méditerranée - Aix-Marseille II] - []); Tarek Mostafa (LEST - Laboratoire d'économie et de sociologie du travail - - [CNRS : UMR6123] - [Université de Provence - Aix-Marseille I][Université de la Méditerranée - Aix-Marseille II] - [])
    Abstract: In this paper, we analyze the equilibrium on the market for schooling where both public and private schools coexist and where individuals are differentiated by income and ability. We study the distribution of students across sectors while examining the conditions for the existence of a majority voting equilibrium in the context of non single peaked preferences. Finally, we examine the existence of a hierarchy of school qualities, as a consequence of the discriminating pricing strategy used by private schools to internalize the effect of peer groups.
    Keywords: Education market; Majority voting equilibrium; Peer group effect; Pricing discrimination; Educational opportunity
    Date: 2006–03–28
  5. By: Patrick Bayer; Nathaniel Keohane; Christopher Timmins
    Abstract: Conventional hedonic techniques for estimating the value of local amenities rely on the assumption that households move freely among locations. We show that when moving is costly, the variation in housing prices and wages across locations may no longer reflect the value of differences in local amenities. We develop an alternative discrete-choice approach that models the household location decision directly, and we apply it to the case of air quality in U.S. metro areas in 1990 and 2000. Because air pollution is likely to be correlated with unobservable local characteristics such as economic activity, we instrument for air quality using the contribution of distant sources to local pollution – excluding emissions from local sources, which are most likely to be correlated with local conditions. Our model yields an estimated elasticity of willingness to pay with respect to air quality of 0.34 to 0.42. These estimates imply that the median household would pay $149 to $185 (in constant 1982-1984 dollars) for a one-unit reduction in average ambient concentrations of particulate matter. These estimates are three times greater than the marginal willingness to pay estimated by a conventional hedonic model using the same data. Our results are robust to a range of covariates, instrumenting strategies, and functional form assumptions. The findings also confirm the importance of instrumenting for local air pollution.
    JEL: H5 Q2 Q5 R1
    Date: 2006–03
  6. By: Erik Stam
    Abstract: How do changes in the spatial organization of entrepreneurial firms come about? This paper provides a conceptualisation of the process of locational change. A process model of locational change is constructed on the basis of an empirical study of 109 locational events during the life course of 25 young firms in knowledge intensive sectors (knowledge services and biomedicals). This process model of locational change maps both internal and external variation and selection processes. This model contributes to the development of a causal process theory of the spatial development of (new) firms.
    Keywords: location, entrepreneurial firms, evolutionary theory, decision-making, process models
    Date: 2006–03
  7. By: Rainald Borck
  8. By: Gary M. Fournier (Florida State University); Monica E. Hartmann (University of St. Thomas); Thomas Zuehlke (Florida State Unversity)
    Abstract: This paper explores aspects of the determination of airline faresin selected medium-sized U.S. markets subject to competition fromalternative airport hubs within driving distance. Passengers inthese markets often face substantial discounts at distantairports, in exchange for the time costs of driving there. Spatiallinkages in airport competition are not well studied. A panel of16 quarters is constructed in order to investigate models ofspatial error correlation and spatial autoregression in overallfare levels in adjacent airports. We find that fare differentialsbetween local and nearby alternative airports can lead to lowerload factors and other indicators of poor performance in smallerlocal airports. Fare differentials at nearby hub airports oftenprovide substantial incentives to travelers and are an importantdeterminant of poor performance at medium-sized airports.
    Keywords: airline economics, airport substitution, spatial competition
    JEL: L93
    Date: 2005–09
  9. By: Mary A. Burke (Research Department, Federal Reserve Bank of Boston); Tim R. Sass (Department of Economics, Florida State University)
    Abstract: In this paper we analyze a unique micro-level panel data set encompassing all publicschool students in grades 3-10 in the state of Florida for each of the years 1999/2000-2003/2004.We are able to directly link each student and teacher to a specific classroom and can thus identifyeach member of a student’s classroom peer group. The ability to track individual studentsthrough multiple classrooms over time and multiple classes for each teacher enables us to controlfor many sources of spurious peer effects such as fixed individual student characteristics andfixed teacher inputs, as well as to compare the strength of peer effects across different groupingsof peers, across grade levels, and to compare the effects of fixed versus time-varying peercharacteristics. We find mixed results on the importance of peers in the linear-in-means model,and resolve some of these apparent conflicts by considering non-linear specifications of peereffects. The results suggest that some grouping by ability may create Pareto improvements overuniformly mixed classrooms. In general we find that contemporaneous behavior wields strongerinfluence than peers’ fixed characteristics.
    Keywords: Peer Effects, Student Achievement
    JEL: I2 Z13
    Date: 2006–02
  10. By: Ron Cheung (Department of Economics, Florida State University)
    Abstract: Private governments, found in planned developments and condominiums, are increasingly common methods of local service delivery. This paper provides the first empirical study of their impact on local public finance. A novel dataset of homeowners' associations allows construction of a panel of private governments in California. Panel methods test whether public expenditures respond to private government membership. Estimates indicate that local governments lower spending in response to private government activity, consistent with strategic substitution. The paper then examines various mechanisms to explain this downloading and shows that substitutability between public and private providers is key to which services are downloaded.
    Keywords: private government, local expenditures, gated communities, planned developments, strategic downloading
    JEL: R00 H00 H70
    Date: 2004–11
  11. By: Andre de Palma (Université de Cergy-Pontoise, ENPC and Member of Institut Universitaire de France, THEMA, 33); Dunkerley Fay (K.U.Leuven-Center for Economic StudiesAuthor-Name: Proost Stef; K.U.Leuven-Center for Economic Studies; UCL - CORE)
    Abstract: In this paper we study how trip chaining affects the pricing and equilibrium number of firms. We use a monopolistic competition model where firms offer differentiated products as well as differentiated jobs to households who are all located at some distance from the firms. Trip chaining means that shopping and commuting can be combined in one trip. The symmetric equilibriums with and without the option of trip chaining are compared. We show analytically that introducing the trip chaining option can, in the short run, only decrease the profit margin of the firms and will increase welfare. The welfare gains are however smaller than the transport cost savings. In the long run, with free entry, the number of firms decreases but welfare with trip chaining possible is still higher than when it is excluded. A numerical illustration gives orders of magnitude of the different effects.
    Keywords: trip chaining, discrete choice model, general equilibrium model, imperfect competition, wage competition
    JEL: D43 L13 R3
    Date: 2006–03
  12. By: Gråsjö, Urban (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: The main purpose of the study in this paper is to establish to what extent accessibility to R&D and human capital can explain regional export. This is done by estimating knowledge production functions, with export value and high valued exports in Swedish municipalities from 1997 to 1999 as outputs. In order to account for geographical proximity, the explanatory variables are expressed as accessibilities to R&D and human capital. The total accessibility is divided into three geographical levels; local (within the municipality), intra-regional and inter-regional accessibility to R&D and human capital. R&D conducted at universities and in companies is measured in man years and the numbers of people with at least three years of university studies measures the amount of human capital. The estimations are conducted with quantile regressions since the distributions of the dependent variables are highly skewed with a few very influential outliers. Due to problems with multicollinearity it is not easy to tell if the variations in the municipalities’ exports are explained by human capital or company R&D. But the results in the paper indicate that accessibility to human capital has the greatest positive effects. The value of exported products is mainly affected by local accessibility to human capital (and company R&D). The intra- and inter-regional accessibilities play a more important roll when the number of high valued export products in Swedish municipalities is the output.
    Keywords: knowledge production; R&D; human capital; exports; quantile regression
    JEL: O18 R11
    Date: 2006–03–28
  13. By: Yamano, Takashi; Ayalew, Daniel; Deininger, Klaus
    Abstract: Mixed evidence on the impact of formal title in much of Africa is often used to question the relevance of dealing with land policy issues in this continent. The authors use data from Uganda to assess the impact of a disaggregated set of rights on investment, productivity, and land values, and to test the hypothesis that individuals ' lack of knowledge of the new law reduces their tenure security. Results point toward strong and positive effects of greater tenure security and transferability. Use of exogenous knowledge of its provisions as a proxy for the value of the land law suggests that this piece of legislation had major economic benefits that remain to be fully realized.
    Keywords: Municipal Housing and Land,Real Estate Development,Agricultural Knowledge & Information Systems,Rural Land Policies for Poverty Reduction,Land Use and Policies
    Date: 2006–03–01
  14. By: Andersson, Martin (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Klaesson, Johan (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper is devoted to the study of municipal diversity in retail and durables. Specifically, it analyzes how a region’s relative market-accessibility in a system (or hierarchy) of municipalities affects the extent of diversity. In the theoretical part of the paper a simple modelmunicipal diversity in retail and durables is introduced, which incorporates the municipality’s position in a system of municipalities. Using this model as a point of reference, the paper explores the relationship between market-size and diversity in Swedish regions from 1993 to 2001 by means of a panel data approach. Three types of market-sizes are considered: (i) intramunicipal,(ii) intra-regional and (iii) extra-regional. It is shown that the relationships between diversity and the three types of market-sizes differ between different types of municipalities in the hierarchy, implying that such a classification is warranted. One particular finding that corresponds to the agglomeration shadow-effects usually discussed in NEG-theories is that large municipalities gain from proximity to surrounding municipalities while small municipalities do not.
    Keywords: diversity; accessibility; retail; durables; market potential; market size; hierarch systems; management; technological change; trade unions.
    JEL: L10 O10
    Date: 2006–03–28
  15. By: Phil Bodman (MRG - School of Economics, The University of Queensland); Kathryn Ford
    Abstract: What impact, if any, does fiscal decentralisation have on economic growth? Further investigations of the inter-relationships between fiscal decentralisation and economic growth are timely given that government decentralisation remains at the forefront of many OECD policy agendas. The study incorporates new measures of fiscal decentralisation to better account for the impact of different levels of subnational fiscal autonomy on economic growth. The analysis also considers the impact of previously omitted public sector decentralisation variables that provide further indication of the extent to which subnational governments are ‘closer to the people’ and potentially better able to account for local preferences in fiscal decision-making. Whilst little evidence of a direct relationship between fiscal decentralisation and output growth is found, some evidence is found to support the hypothesis that a medium degree of fiscal decentralisation is positively related to growth in the capital stock and the level of human capital.
  16. By: Braunerhjelm, Pontus (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper analyzes the impact universities have on regional development and as to whether a difference can be detected between the influence of the old and new universities. To achieve this end a unique dataset on the researchers’ view regarding the universities role in commer-cialization, distinguishing between new universities (established around 1970) and old univer-sities (established in the 15th and 17th century), is initially utilized. In the subsequent stage spatially disaggregated data is implemented in a two-step Heckman regression analysis to ex-amine whether a relationship exists between the universities research specialization and re-gional production specialization 1975 to 1999. The results reveal that there are considerable differences across universities, albeit primarily unrelated to the age of the universities. Fi-nally, the impact of universities on regional productivity in knowledge-based industries is ex-amined.
    Keywords: Universities; norms; regional development; policies.
    JEL: J24 O31 O57
    Date: 2006–03–28
  17. By: Kaiserfeld, Thomas (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper reviews existing empirical findings for regionalization of the Swedish university system and its impact of regional and national innovation systems. The conclusion is that regionalization of the Swedish system for higher education and research has been driven by multitude of factors and interests, both external and internal to the system itself. The result is a system that seems to raise regional production due to direct and indirect causes, i.e. through the work and consumption of employees and students of universities, more than raising regional productivity through the exploitation of knowledge. In the wake of the developments, more recent universities and university colleges have developed two strategies for legitimisation, one traditional relying on the international academic system of peer-review (normal science) and one alternative relying on regional innovation systems (post-normal science). Conseqences of these stratggies for legimitation are discussed.
    Keywords: Higher education policy; regional policy; knowledge policy; regional innovation systems
    JEL: B00 I00
    Date: 2006–03–28

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