nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2006‒05‒20
twenty-one papers chosen by
Steve Ross
University of Connecticut

  1. Do Amenities and Diversity Encourage City Growth? A Link Through Skilled Labor By Steven Poelhekke
  2. Analysis of Environmental Costs of Mobility due to Urban Sprawl - A Modelling Study on Italian Cities By Chiara M. Travisi; Roberto Camagni; Peter Nijkamp
  3. R&D lab location. Evidence from the French case By Corinne Autant-Bernard
  4. Housing Prices in Australia - 1970 to 2003 By Peter Abelson; Demi Chung
  5. Endogenous Housing Market Cycles By Trond Borgersen, Dag Einar Sommervoll and Tom Wennemo
  6. Identifying Individual and Group Effects in the Presence of Sorting: A Neighborhood Effects Application By Patrick Bayer; Stephen L. Ross
  7. European Urban Growth: now for some problems of spaceless and weightless econometrics By Stefano Magrini; Paul Cheshire
  8. Etablissements publics de cooperation intercommunale et développement local en Basse-Normandie By Franck Bisson (CERESUR); Jean Bonnet (CREM – CNRS)
  9. All in the Extended Family: Grandparents, Aunts, and Uncles and Educational Attainment By Linda Loury
  11. Dry law and homicides: evidence from the São Paulo metropolitan area By Ciro Biderman; João Manoel Pinho de Mello; Alexandre A Schneider
  12. Home Ownership, Job Duration, and Wages By Jakob Roland Munch; Michael Rosholm; Michael Rosholm
  13. Understanding socio-economic inequalities in childhood respiratory health By Carol Propper; John A. Rigg
  14. Bangalore Cluster: Evolution, Growth and Challenges By Basant Rakesh
  15. "Soft-Budget Constraints and Local Expenditures" By Takero Doi; Toshihiro Ihori
  16. Internet Retail Demand: Taxes, Geography, and Online-Offline Competition By Glenn Ellison; Sara Fisher Ellison
  17. Disproportionality Measures of Concentration, Specialization, and Polarization By Frank Bickenbach; Eckhardt Bode
  18. Can Risk Aversion Explain Schooling Attainments? Evidence from Italy By Christian Belzil; Marco Leonardi
  19. Crime and Young Men: The Role of Arrest, Criminal Experience, and Heterogeneity By Susumu Imai; Hajime Katayama; Kala Krishna
  20. Assessing the impact of illness, caring and ethnicity on social activity By Lucinda Platt
  21. Tax Competition and Parasitic Tax Havens By Joel Slemrod; John D. Wilson

  1. By: Steven Poelhekke
    Abstract: The share of skilled workers in urban populations has steadily increased since 1970 in US metropolitan areas, but more in some cities than in others. A higher concentration of skills is a sought after asset for cities as it affects population growth positively, also when the initial share is instrumented for by using land-grant colleges. However, skilled cities may attract more skilled workers, but not because they are more skilled initially: increasing returns are rejected when controlling for fixed effects and bias due to inclusion of a lagged dependent variable. Several amenities such as a low-skilled personal service sector do affect the concentration of skills positively. Although firms seem to benefit from externalities, there is no convincing case for an effect on the concentration of college graduates in a city.
    Keywords: urban and city growth, human capital, skills, spillovers, externalities, concentration, diversity, amenities
    JEL: J24 R1 R30 O11 O18
    Date: 2006
  2. By: Chiara M. Travisi (DIG, Politecnico di Milano, and Fondazione Eni Enrico Mattei); Roberto Camagni (DIG, Politecnico di Milano, Milano, Italy); Peter Nijkamp (Vrije Universiteit Amsterdam, The Netherlands)
    Abstract: A sound empirical and quantitative analysis on the relationship between different patterns of urban expansion and the environmental or social costs of mobility is rare, and the few studies available provide at best a qualitative discussion of these issues. Some recent tentative studies on the metropolitan area of Milan have empirically explored whether different patterns of urban expansion generate different levels of land use and heterogeneous impacts of urban mobility. The results confirmed the expectation that a higher environmental impact of mobility may result from more extensive and sprawling urban development, from recent urbanisation processes and from residential specialisation. The present paper extends the previous empirical analysis to seven major Italian metropolitan areas (namely, Bari, Florence, Naples, Padua, Perugia, Potenza and Turin) in order to corroborate the previous tentative results for the Italian context. The novelty of the prese! nt paper is threefold. First, we are interested in exploring the changes that have occurred due to the increased intensity of mobility across a ten-year period, from 1981 to 1991, which corresponds to the Italian economic boom years. Secondly, using an econometric analysis of cross-section data, we consider several metropolitan areas simultaneously, and are therefore able to explore whether there are significant differences in the way the model explains variations in the mobility impact across various Italian urban areas. And finally, we offer a structural interpretation of the causal chain in the explanation of the mobility impact intensity by using Causal Path Analysis as a statistical test framework.
    Keywords: urban mobility; sprawl; environmental costs; self-containment capacity; causal path analysis
    JEL: Q56 R14 R41
    Date: 2006–05–01
  3. By: Corinne Autant-Bernard (CREUSET (EA 3724) - Centre de Recherche Economique de l'Université de Saint Etienne - [Université Jean Monnet - Saint-Etienne])
    Abstract: The purpose of this paper is to empirically investigate how regional advantages and firms characteristics influence the location of R&D. Looking at 2024 decisions of R&D lab location in France, we implement an extended conditional logit with spatially lagged explanatory variables to evaluate the importance of each factor and to test the spatial dimension of knowledge spillovers. The results indicate that large market size, large amount of ideas, and low level of competition in the target region increases the probability of setting up R&D labs while the diffusion of knowledge across regions induces a significant spatial dependence
    Keywords: Economic geography; Location choice; Knowledge spillovers; Spatial dependence; géographie économique; externalités de connaissance; choix de localisation; dépendance spatiale
    Date: 2006–04–21
  4. By: Peter Abelson (Department of Economics, Macquarie University); Demi Chung (Department of Economics, Macquarie University)
    Abstract: There have been few reliable published data for housing prices in Australia (as in many other countries). In this paper we attempt to provide an authoritative account of prices for houses and apartments (units) in Australia from 1970 to 2003. Where possible we draw directly on data from land title offices or on studies that draw on these data. The first part of the paper describes the main data sources. The main body of the paper provides best estimates of median house and unit prices and real price indices in the capital cities and in the rest of Australia. We also estimate how improvements in housing quality have influenced real house prices over time. In summary we find that there have been strong national trends, especially in recent years, and that house and unit prices have moved in similar ways. There were significant housing price booms from 1971 to 1974, from 1979 to 1981, from 1987 to 1989, and from 1996 through to 2003. After each of the first three booms, real prices tended to fall. However, in the long run real price rises outstripped falls. Consequently, real house prices rose by about 180 per cent between 1970 and 2003. Allowing for hous ing improvements, real prices rose by more like about 100 per cent over this period. However, both estimates give an exaggerated view of real price increases if, as we expect, there is a real house price downturn post 2003.
    JEL: R31
    Date: 2004–09
  5. By: Trond Borgersen, Dag Einar Sommervoll and Tom Wennemo (Statistics Norway)
    Abstract: Housing markets tend to display both positive serial correlation as well as a considerable volatility over time. We present a stochastic model illustrating the connection between adaptive expectations and market fluctuations. All macro economic and demographic variables stay fixed over time and price movements are driven by expectations only. In the case where agents face unconstrained mortgage financing, the housing market oscillations are regular and depend on mortgage to income ratios. When credit institutions are introduced, which view houses as mortgage collaterals, the dynamics get complex. Periods of mild oscillations are mixed with violent collapses in an unpredictable manner.
    Keywords: Heterogeneous agents; adaptive expectation; credit score models; house price cycles
    Date: 2006–05
  6. By: Patrick Bayer; Stephen L. Ross
    Abstract: Researchers have long recognized that the non-random sorting of individuals into groups generates correlation between individual and group attributes that is likely to bias naïve estimates of both individual and group effects. This paper proposes a non-parametric strategy for identifying these effects in a model that allows for both individual and group unobservables, applying this strategy to the estimation of neighborhood effects on labor market outcomes. The first part of this strategy is guided by a robust feature of the equilibrium in the canonical vertical sorting model of Epple and Platt (1998), that there is a monotonic relationship between neighborhood housing prices and neighborhood quality. This implies that under certain conditions a non-parametric function of neighborhood housing prices serves as a suitable control function for the neighborhood unobservable in the labor market outcome regression. The second part of the proposed strategy uses aggregation to develop suitable instruments for both exogenous and endogenous group attributes. Instrumenting for each individual’s observed neighborhood attributes with the average neighborhood attributes of a set of observationally identical individuals eliminates the portion of the variation in neighborhood attributes due to sorting on unobserved individual attributes. The neighborhood effects application is based on confidential microdata from the 1990 Decennial Census for the Boston MSA. The results imply that the direct effects of geographic proximity to jobs, neighborhood poverty rates, and average neighborhood education are substantially larger than the conditional correlations identified using OLS, although the net effect of neighborhood quality on labor market outcomes remains small. These findings are robust across a wide variety of specifications and robustness checks.
    JEL: J41 R14
    Date: 2006–05
  7. By: Stefano Magrini (Department of Economics, University Of Venice Cà Foscari); Paul Cheshire (Department of Geography and Environment, London School of Economics)
    Abstract: This paper investigates growth differences in the urban system of the EU12 for a data set relating to Functional Urban Regions comparing the results of ‘artisanal’ methods of model selection with those obtained using general to specific model selection with PcGets. The artisanal approach tests hypotheses relating to the role of human capital, EU integration and fragmentation of urban government. The paper also explores issues of spatial dependence and mechanisms of spatial interaction. Using PcGets as suggested by Hendry and Krolzig (2004) to optimise model selection we find that while PcGets provides a powerful tool for model selection when applied to cross sectional data, caution is necessary to ensure that variables relating to spatial adjustment processes are included and spatial dependence is avoided. More generally, not only do the results provide consistent estimates of parameters but they also support relevant theoretical insights. Finally careful testing for spatial dependence reveals that national borders are still significant barriers to adjustment within the EU.
    Keywords: Growth, Cities, Spatial Dependence, Local Public Goods, Human Capital; EU Integration
    JEL: H41 H73 O18 R11 R50
    Date: 2006
  8. By: Franck Bisson (CERESUR); Jean Bonnet (CREM – CNRS)
    Abstract: We investigate in this paper local development at the level of the french local entities called EPCI (Etablissement Public de Coopération Intercommunale), which gather different city councils of the French region Basse-Normandie. Sets of socio-economic and fiscal variables allow us to characterize with data analysis methods these EPCI. We show that the development of these entities since 1990 may be divided up thanks to a hierarchical classification into rural EPCI versus urban EPCI with, in the case of the Basse-Normandie Region, the specific class of touristic EPCI. In addition we show that the distance from the main urban poles is a disadvantage for the development of a large part of the south rural areas of the Manche Department and some contiguous EPCI from the southwest of the Orne Department. The growth at a sub regional level appears mainly driven by urbanisation and its induced effects that redistribute the growth in the rural neighbourhood.
    Keywords: local development, french cities, French region, data analysis methods.
    JEL: R1 C40 H70
    Date: 2006
  9. By: Linda Loury
    Abstract: Previous work on social interactions has analyzed the effects of nuclear family, peer, school, and neighborhood characteristics. This paper complements this research by first showing that individuals from similar nuclear families often differ in extended family member characteristics. It then demonstrates that older extended family members - aunts, uncles, and grandparents – independently affect college attendance probabilities and test score results of their younger relatives. In some cases, the sizes of the estimated effects are large enough to substantially narrow the achievement gap between disadvantaged and other youth.
    Date: 2006
  10. By: Jean-Paul Faguet; Fabio Sanchez
    Abstract: The effects of decentralization on public sector outputs is much debated but little agreed upon. This paper compares the remarkable case of Bolivia with the more complex case of Colombia to explore decentralization's effects on public education outcomes. In Colombia, decentralization of education finance improved enrollment rates in public schools. In Bolivia, decentralization made government more responsive by re-directing public investment to areas of greatest need. In both countries, investment shifted from infrastructure to primary social services. In both, it was the behavior of smaller, poorer, more rural municipalities that drove these changes.
    Keywords: decentralization, education, public investment, Bolivia, Colombia, local government
    Date: 2006–03
  11. By: Ciro Biderman (Escola de Economia de São Paulo, Fundação Getúlio Vargas.); João Manoel Pinho de Mello (Department of Economics PUC-Rio); Alexandre A Schneider (Secretary of Education,Mayorship of São Paulo.)
    Abstract: Over the last 15 years, several Latin American cities have adopted dry laws, which restrain the sale of alcohol in bars and restaurants during specific hours of the week. Bogotá, in 1991, was the first. Several more have followed suit, or are likely to do so in the near future. Policy makers and the general press have argued that these measures reduce crime. In this paper, we use a particular feature of the adoption of laws in the São Paulo Metropolitan Area (SPMA) to estimate the effect of dry laws on the ultimate form of violent crime: murder. Between March 2001 and August 2004, 16 out of the 39 municipalities of the SPMA have adopted, at different dates, dry laws. By comparing the dynamics of homicide between adopting and non-adopting cities, we estimate that dry laws reduce homicides by at least 10%, with an even higher effect in high crime cities. Results are robust to inclusion of a large set of controls, to propensity score matching, to outliers, and to correction possible spillover effects from adopting to non-adopting cities.
    Keywords: Dry Law, Alcohol, Crime, Difference-in-Difference
    Date: 2006–05
  12. By: Jakob Roland Munch (Department of Economics, University of Copenhagen); Michael Rosholm (Department of Economics, University of Aarhus); Michael Rosholm (Department of Economics, University of Aarhus)
    Abstract: We investigate the impact of home ownership on individual job mobility and wages in Denmark. We find that home ownership has a negative impact on job-to-job mobility both in terms of transition into new local jobs and new jobs outside the local labour market. In addition, there is a clear negative effect of home ownership on the unemployment risk and a positive impact on wages. These results are robust to different strategies for correcting for the possible endogeneity of the home owner variable.
    Keywords: home ownership; job mobility; duration model
    JEL: J6 R2
  13. By: Carol Propper; John A. Rigg
    Abstract: Asthma is the most common chronic disease of childhood. Recent evidence has shown a socio-economic gradient in its distribution. This paper examines whether a number of factors argued to have led to a rise in the incidence of asthma might also explain the social gradient. Several of these have been the object of policy intervention, though not necessarily with the aim of lowering childhood respiratory conditions. Using a large cohort study (the Avon Longitudinal Study of Parents and Children) we find significant inequalities in three respiratory conditions in middle childhood. We investigate eight potential mediating factors: exposure to other children in infancy, child's diet, poor housing conditions, maternal smoking, parental history of asthma, poor child health at birth, maternal age at child's birth and local deprivation. We find that each of these alone typically explains a relatively modest part of each respiratory inequality, with child's diet, local deprivation and maternal smoking generally the most important. But taken together, the mediating factors account for a substantial part of the respiratory inequalities. So the socio-economic gradient appears to operate through a number of inter-correlated pathways, some of which may be amenable to policy intervention.
    Keywords: Asthma, wheeze, socio-economic inequalities, mediating
    JEL: I1
    Date: 2006–03
  14. By: Basant Rakesh
    Abstract: The dynamism and persistence of competitiveness among industrial clusters, even in the wake of globalization and liberalization in the 1990s, has led researchers to explore the causes of dynamic efficiencies at the cluster level. Given its dynamism, the ICT cluster in Bangalore, India has attracted much research and media attention. It is often referred to as the Silicon Valley of India. While the IT sector has brought the city into limelight, it has a fairly diverse portfolio of activities with firms manufacturing machine tools, telecom equipment, electronics products and to some extent auto-components located here. In recent years, the city has also emerged as a premier bio-tech cluster in the country. This paper pools together evidence to explore reasons why Bangalore emerged as a high-tech cluster and the nature of advantages that has contributed to its growth.
    JEL: A1
    Date: 2006–05–10
  15. By: Takero Doi (Faculty of Economics, Keio University); Toshihiro Ihori (Faculty of Economics, University of Tokyo)
    Abstract: This paper investigates how the soft budget constraint with grants from the central government to local governments tends to exaggerate inefficient localexpenditures. We first develop a theoretical model, which explains soft budget problem in a multi-government setting. We then show that in Japan's case local governments implemented inefficient public investments and hence the bad outcome of soft budget problem occurred in the 1990s.
    Date: 2006–05
  16. By: Glenn Ellison; Sara Fisher Ellison
    Abstract: Data on sales of memory modules are used to explore several aspects of e-retail demand. There is a strong relationship between e-retail sales to a given state and sales tax rates that apply to purchases from online retailers. This suggests that there is substantial substitution between online and online retail, and tax avoidance may be an important contributor to e-retail activity. Geography matters in two ways: we find some evidence that consumers prefer purchasing from firms in nearby states to benefit from faster shipping times as well as evidence of a separate preference for buying from in-state firms. Consumers appear fairly rational in some ways, but boundedly rational in others.
    JEL: L8 D1 H2
    Date: 2006–05
  17. By: Frank Bickenbach; Eckhardt Bode
    Abstract: The paper extends the methodological toolbox of measures of industrial concentration and regional specialization. First, a taxonomy is proposed which gives rise to a modular construction system for disproportionality measures based on three characteristic features: the projection function, the reference distribution, and the weighting scheme. The taxonomy helps reduce the mismatch between research purpose, data and statistical measure which has been one of the major obstacles to reliable inferences in the literature. Second, the taxonomy is extended (i) to measures of polarization which evaluate specialization and concentration simultaneously and allow for a nested analysis at different spatial and industrial scales, and (ii) to spatial concentration measures which deal with the checkerboard problem and MAUP by taking into account information from neighboring regions.
    Keywords: statistical measures, regional specialization, industrial concentration, economic polarization, geographical weighting
    JEL: C43 F15 R12
    Date: 2006–05
  18. By: Christian Belzil (CNRS-GATE, CIRANO and IZA Bonn); Marco Leonardi (University of Milan and IZA Bonn)
    Abstract: Using unique Italian panel data, in which individual differences in behavior toward risk are measured from answers to a lottery question, we investigate if (and to what extent) risk aversion can explain differences in schooling attainments. We formulate the schooling decision process as a reduced-form dynamic discrete choice. The model is estimated with a degree of flexibility virtually compatible with semi-parametric likelihood techniques. We analyze how grade transition from one level to the next varies with preference heterogeneity (risk aversion), parental human capital, socioeconomic variables and persistent unobserved (to the econometrician) heterogeneity. We present evidence that schooling continuation probabilities decrease with risk aversion at low grade levels, but increase with risk aversion at the time when the decision to enter higher education is made. However, differences in attitudes toward risk account for a modest portion of the probability of entering higher education. Differences in parental human capital and ability(ies) are much more important.
    Keywords: risk aversion, education, human capital, dynamic discrete choices
    JEL: J24
    Date: 2006–05
  19. By: Susumu Imai; Hajime Katayama; Kala Krishna
    Abstract: Using National Youth Survey (NYS) data, we examine the relationship of current criminal activity and past arrests using an ordered probit model with unobserved heterogeneity. Past arrests raise current criminal activity only for the non-criminal type, while past criminal experience raises current criminal activity for both types. Also, the age crime profile peaks at age 18 for non-criminal type individuals, but for criminal type individuals, it continues to rise with age. Past research indicates that age arrest profiles rise till age 18 and then fall for both types, suggesting lower apprehension rates for criminal type individuals.
    JEL: K42 J24
    Date: 2006–05
  20. By: Lucinda Platt
    Abstract: It has long been accepted that lack of social participation in wider society is one aspect or one definition of poverty. Current concerns with the extent and distribution of social capital as both a measure of a good society and as means to upward mobility also emphasise the importance of social contacts and networks to the well-being of individuals and communities. While research has often focused on 'civic participation' and the measurement of trust, more informal social bonds are also a crucial part of individuals' social capital. Moreover, informal social capital or social participation might be particularly important for those whose circumstances make them already more vulnerable to marginalisation, exclusion or poverty. For example, social interaction has been argued to be conducive to better outcomes for those with health problems; and there is an extensive literature which aims to chart and explain the role of 'ethnic capital' in the life chances of minority ethnic groups. I use the British Home Office Citizenship Survey 2001 for England and Wales to explore the impact on four aspects of lack of social engagement of long-term illness, caring for someone with such an illness, and ethnicity. Controlling for a range of characteristics and examining the relationships separately for men and women there is evidence that between them, the four measures reveal an underlying propensity for reduced social contact. Other things being equal, illness has little association with reduced social participation, but caring does seem to affect opportunities for sociability. Members of some ethnic groups are less likely to engage in neighbourly social visiting than others, and these differences are little affected by income level. By contrast differences in 'going out' across groups can largely be explained by differences in income. Overall, social engagement among male Bangladeshis and to a lesser extent Pakistanis is high, whereas Black Africans and Black Caribbeans, especially women, are notable for their lack of opportunities for social engagement compared with their otherwise similar peers. They would appear to be particularly at risk of social isolation, with consequences for their current and future welfare.
    Keywords: long-term illness, caring, ethnic group, social engagement, social capital
    JEL: I31
    Date: 2006–03
  21. By: Joel Slemrod; John D. Wilson
    Abstract: We develop a tax competition framework in which some jurisdictions, called tax havens, are parasitic on the revenues of other countries. The havens use real resources to help companies camouflage their home-country tax avoidance, and countries use resources in an attempt to limit the transfer of tax revenues to the havens. The equilibrium price for this service depends on the demand and supply for such protection. Recognizing that taxes on wage income are also evaded, we solve for the equilibrium tax rates on mobile capital and immobile labor, and we demonstrate that the full or partial elimination of tax havens would improve welfare in non-haven countries, in part because countries would be induced to increase their tax rates, which they have set at inefficiently low levels in an attempt to attract mobile capital. We also demonstrate that the smaller countries choose to become tax havens, and we show that the abolishment of a sufficiently small number of the relatively large havens leaves all countries better off, including the remaining havens.
    JEL: H26 H87
    Date: 2006–05

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