|
on Urban and Real Estate Economics |
| By: | Jeffrey Zabel; Katherine Kiel |
| Abstract: | The immobility of houses means that their location affects their values. This explains the common belief that three things determine the price of a house: location, location, and location. We use this notion to develop the 3L Approach to house price determination. That is, prices are determined by the Metropolitan Statistical Area (MSA), town, and street where the house is located. This study creates a unique data set based on data from the American Housing Survey (AHS) consisting of small ‘clusters’ of housing units with information on their housing characteristics and resident characteristics that is merged with census tract-level attributes. We use this data to verify the 3L Approach: we find that all three levels of location are significant when estimating the house price hedonic equation. This indicates that individuals care about their local neighborhood, i.e. the general upkeep of their street and possibly their neighbors’ characteristics (cluster variables), a broader area such as the school district and/or the town (tract variables) that account for school quality and crime rates, and the particular amenities found in their MSA. |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:04-06&r=ure |
| By: | Shihe Fu |
| Abstract: | Urban amenities can be capitalized into land values or property values. However, little attention has been paid to the capitalization of social amenities. This paper classifies three types of social-interaction-based social amenities: human capital, social capital, and cultural capital at residential neighborhood levels. We use the restricted version of the 1990 Massachusetts Census data and estimate hedonic housing models with social amenities. The findings are as follows: (1) Human capital has significant positive effects on property values. This tests the Lucas conjecture. (2) Different types of social capital have different effects on property values: an increase in the percentage of new residents has significant positive effects on property values, probably due to the strength of weak ties. However, an increase in the percentage of single-parent households has negative effects on property values. An increase in the home ownership rate has positive effects at large geographic levels. (3) Cultural capital effects vary from high to low geographic levels, the effects of English proficiency and racial homogeneity are positive at and beyond the tract level, but insignificant at the block level. This may imply that cultural capital is more important in social interactions at large geographic scale. |
| Keywords: | Urban amenities, capitalization, property values, human capital, social capital, cultural capital, hedonic model, social interaction |
| JEL: | A14 C21 D62 H41 R31 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:05-25&r=ure |
| By: | Michael T. Owyang; Abbigail J Chiodo; Ruben Hernandez-Murillo |
| Abstract: | Since the pioneering work of Tiebout (1956), economists have recognized that the quality of public services, especially schools, influence house prices. Many empirical studies have attempted to discern the extent to which the quality of public education affects house prices. Initially, researchers estimated hedonic pricing equations (Rosen, 1974). In a simple hedonic pricing model, a house's value depends on its comparable neighborhood and school district characteristics. A house's comparable characteristics include aspects such as the number of bedrooms, square feet, etc. Neighborhood characteristics typically include the distance to the nearest major downtown area, racial composition, and median household income. Education quality may be proxied by variables such as per-pupil spending, pupil/teacher ratio, and property taxes, which are usually available at the school district level, or it may be measured directly by state or local standardized tests scores, which are usually available at the school level. In an influential study, Black (1999) argues that past research estimating hedonic pricing functions (see Rosen, 1974) may introduce an upward bias due to neighborhood quality effects that are unaccounted for in the data. Specifically, she notes that better schools may be associated with better neighborhoods, which could independently contribute to higher house prices. Black circumvents this problem by estimating a linear hedonic pricing function using data only from houses which border the school attendance zone boundaries. She rationalizes that, while test scores make a discrete jump at attendance boundaries, changes in neighborhoods are more smooth. Black's linear specification presupposes that the marginal valuation of worse-than-average schools is equal to the valuation of better-than-average schools and results in a constant premium on school quality. Moreover, if school quality is normalized (i.e., expressed in terms of deviations from the mean), the linear capitalization term implies a penalty (increasing as quality decreases) for houses in attendance zones of schools performing below average. Thus, a linear model implies there exists a substantive pecuniary penalty for a really bad school compared to just a bad school. In this paper, we formulate a simple housing search model that yields a theoretical nonlinear pricing function. The nonlinearity in our model reflects two aspects of the market for public education via housing. First, alternative schooling arrangements (e.g., private school, home schooling, magnet schools, etc) can provide home buyers with high quality education even if they choose to live in below average school districts. The existence of these options underlies our belief that an increasing penalty for below average quality school attendance zones may be theoretically unappealing. Second, if buyers have positive valuations for education, they may concentrate their efforts among the highest quality attendance zones, yielding an increasing market tightness as school quality increases. Thus, buyers may face incresed competition for the highest quality schools and a rapidly increasing premium for houses in those attendance zones. Motivated by our theoretical specification, we extend Black's analysis and examine the relationship between school quality and house prices in the St. Louis, Missouri metropolitan area. A previous study by Ridker and Henning (1967) found no evidence of education capitalization in St. Louis house prices. While their main concern was to determine the negative effect of air pollution on housing prices, they included a dummy variable which indicated residents' attitudes about the quality of the schools (above average, average, and below average). Our goal is to determine the degree of education capitalization in the St. Louis MSA. We first measure education capitalization employing Black's methodology of considering only houses near attendance zone boundaries to control for neighborhood quality. This allows us to determine the extent to which Black's results extend to the St. Louis metro area. Then, we advance Black's methodology by considering the possibility that education capitalization affects house prices nonlinearly, as indicated by our theoretical framework. Black, Sandra E. "Do Better Schools Matter? Parental Valuation of Elementary Education," Quarterly Journal of Economics, May 1999, 114(2), pp. 577-599. Ridker, Ronald G. and Henning, John A. "The Determinants of Residential Property Values with Special Reference to Air Pollution," Review of Economics and Statistics, May 1967, 49(2), pp. 246-257. Rosen, Sherwin. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, January-February 1974, 82(1), pp. 34-55. Tiebout, Charles M. "A Pure Theory of Local Expenditures," Journal of Political Economy, October 1956, 64(5), pp. 416-424. |
| Keywords: | education, captialization, hedonic pricing, search |
| JEL: | C21 I20 R21 |
| Date: | 2004–08–11 |
| URL: | http://d.repec.org/n?u=RePEc:ecm:nasm04:276&r=ure |
| By: | Boris A. Portnov |
| Abstract: | The present analysis of urban clusters (UCs) in Canada deals with two matters of immediate interest: a) investigating the spatial autocorrelation of development levels in towns within such clusters, and b) ascertaining the physical sizes of UCs in Canada (i.e. the spatial extent of the area of strong inter-town development association). The present analysis leads to three general conclusions: •First, development levels of neighbouring towns in UCs of Canada tend to be closely associated, though the intensity of such a development association generally tends to decline as inter-town distances increase. As argued, this spatial association of development rates may be due to the fact that both private investors and migrants consider UCs as integrated functional units, and make their location decisions hierarchically: first, among or between town clusters, and then among or between individual towns in a 'preferred' cluster. •Second, the effect of clustering on urban growth is not uniform. It is stronger in peripheral UCs (specifically in respect to unemployment and income variables), while in centrally-located ones the development levels of neighbouring towns are less interdependent. In general, distances within which inter-town development linkages are sufficiently strong to affect or promote clustering vary with the range practicable for daily commuting, that is, from 20-40 km in the country's core and 60-100 km in its periphery. •Third, the effect of spatial proximity of towns on their functional linkages differs in respect to different development measures. In particular, as found from our analysis of Canada's core areas, only population and housing variables exhibit strong spatial associations, while the effect of spatial factors on employment-related variables – average income and unemployment rate – is weaker. This dissimilarity represents fundamental differences between these two groups of variables. That is, while population and housing variables may be confidently associated with the clustering of residents in socially homogenous areas, the spatial association of employment-related variables may be influenced by inter-urban commuting. Thus, low unemployment in a town may reflect the availability of employment in the larger region rather in the town itself, which is an important caution about the care that needs to be taken in correctly selecting and interpreting indicators of urban functionality and growth potential. An important strategic finding of the present investigation is that local towns appear to follow the path of the central city over time, and local towns adjacent to a wealthy city are likely to perform better than those around a less-prosperous central locality. This result indicates that urban growth may spread across individual towns in both core and peripheral UCs, which has implications for urban and regional development policies and programs at the municipal, provincial and federal levels of government. In particular, the findings of the present analysis thus support the creation and stimulation of UCs in areas where further urban growth is desired. According to this strategy, development resources should be concentrated on selected UCs until they become sufficiently attractive to migrants and private developers. Support of the selected localities should, of course, include a balanced investment in both the housing development and employment-generating sectors. In addition to direct government intervention, various forms of indirect involvement, such as incentives for private investors and tax exemptions can be applied. Then, and based on evidence derived from the application of impact assessment procedures, as soon as the growth of the selected UCs becomes sustainable support may be redirected to other UCs. This hierarchical concentration of resources can then be shifted into more remote areas. |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa05p137&r=ure |
| By: | Shihe Fu |
| Abstract: | Existing studies have explored either only one or two of the mechanisms that human capital externalities percolate at only macrogeographic levels. This paper uses the 1990 Massachusetts Census data and tests four mechanisms at the microgeographic levels in the Boston metropolitan area labor market. We propose that individual workers can learn from their occupational and industrial peers in the same local labor market through four channels: depth of human capital stock, Marshallian labor market externalities, Jacobs labor market externalities, and thickness of the local labor market. We find that all types of human capital externalities are significant across Census blocks. Different types of externalities attenuate at different speeds over distances. For example, the effect of human capital depth decays rapidly beyond three miles away from block centroid. We conclude that knowledge spillovers are very localized within microgeographic scope in cities that we call Smart Café Cities. |
| Keywords: | Human capital externalities, Labor market agglomeration, Hedonic wage model, Marshallian externalities, Jacobs externalities, Spatial attenation |
| JEL: | C21 J24 J31 R23 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:05-24&r=ure |
| By: | Stephen L. Ross (University of Connecticut); George C. Galster (Wayne State University) |
| Abstract: | Using paired testing data from the 1989 and 2000 Housing Discrimination Studies (HDS) and data on fair housing enforcement activities during the 1990s in the corresponding metro areas, we investigate whether 1989-2000 changes in the metropolitan incidence of racial/ethnic discrimination correlate with fair housing enforcement activity during the 1990s. We found that higher amounts of state and local enforcement activity supported by HUD through its FHIP and FHAP programs (especially the amount of dollars awarded by the courts) were consistently associated with greater declines in discrimination against black apartment-seekers and home-seekers. The evidence does not support similar conclusions for housing market discrimination against Hispanics where the level of enforcement is much lower. |
| Keywords: | Housing Discrimination, Fair Housing Enforcement, and Paired Testing |
| JEL: | J15 K42 L85 R30 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2005-16&r=ure |
| By: | Lundberg, Mattias; Lall, Somik V. |
| Abstract: | The availability and quality of basic public services are important determinants of urban quality of life. In many cities, rapid population growth and fiscal constraints are limiting the extent to which urban governments can keep up with increasing demand for these services. It therefore becomes important to prioritize provision of those services to best reflect local demand. The authors present a strategy to estimate the demand for public services, which is sensitive to heterogeneity in preferences across types of households, and the nonparametric estimation addresses problems arising from functional form restrictions. Using data from Pune, India, they estimate the demand for public services, as represented by the marginal change in the self-assessed monthly rental price of dwellings from the services. The authors find that the value of publicly provided services accruing to the poor is greater than that going to wealthier households, and even untargeted across-the-board investment in specific services can be progressive. |
| Keywords: | Housing & Human Habitats,Public Sector Economics & Finance,Municipal Financial Management,Economic Theory & Research,Public Sector Management and Reform |
| Date: | 2006–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3924&r=ure |
| By: | Darcin Akin; Esra Demircioglu |
| Abstract: | Due to the dynamic nature of the urban development in developing countries in parallel to rapidly changing economic, social and technological environments, decisions based on master plans do usually fail. Therefore, spatial transformation is the number one prerequisite to create more livable cities in countries where land use and location decisions do greatly divert from master plans that ill-fully represent the nature of urban development in rapidly changing environment. It is very unfortunate that like many developing countries, central government as well as local governments in Turkey have adopted this approach which is totally inappropriate to their changing environment due to rapid urbanization. In middle and low income economies, urbanization has increased by an average of 3.5 and 3.7% per annum, respectively, compared with an average of 1.5% per annum in the industrialized countries (the rate in Turkey was 4.35% from 1965 to 1985). The percent of urban population in the largest city in Turkey, Istanbul, was 24% in 1980 compared to 18% in 1960. The population of Istanbul was 11.2 million in 2000 compared to 11.3 million of Paris and 11.1 million of Osaka, Kobe (World Development Report by World Bank, 1984). In the periphery of the metropolitan city of Istanbul, there are numerous neighborhoods and urban centers hat need spatial transformation or renewal for the betterment of urban space. Renewal was defined as clearance and redevelopment until the mid-1960s. This approach for the urban betterment was changed in the 1970s by establishing legal ground via improvement and development plans. In contrast to this, in parallel to the radical changes in economic policies in the 1980s, renewal policy for the problematic locations in large urban areas were again equaled regeneration, and spatial transformations were made for the capitalization of global interests in the name of urban rent by transformation projects (Dündar, 2001). The former— improvement and development plans— failed due to the reason said in the beginning. The latter— transformation projects— have found limited application (Portakal Çiçeði, Dikmen Vadisi, Zafer Plaza transformation projects and some others) due to two great limitations: finances and public acceptance towards transformation projects. To overcome these obstacles in general, some approaches are developed, such as ÝHT-ÝHTr-Real-estate planning tools, master plans for earthquakes and natural disasters (Istanbul Metropolitan City), KED Model (Çelikhan et al., 2004). However, these approaches have not found widespread application yet due to necessary legal changes they require and most importantly the finances needed for the transformations desired in urban areas. Under the economic and social conditions in developing countries, what expected from ideal transformation approaches are to create financial tools during the process and to offer the urban rent to land owners primarily in order to speed up the transformation process towards the desired direction by creating voluntarily participation at the utmost level and to reduce the legal problems due to the introduction of new developments and land use planned by the transformation projects to be applied. This study is originated from the idea that large urban developments attract new land uses and users to their proximity or repel current land uses and users around them. This process can be seen as a “voluntarily transformation” process. Since large shopping centers or malls are built in almost every largely populated urban area all over the world in the last 20-30 years due to new shopping habits and global capital investments, we studied the effects of large shopping malls on land use in their proximity as being large developments they create urban transformation process in their proximity, as a case study in Istanbul, Turkey. To support our approach, Dennis at al. (2002) interestingly reported in their study in Northern London that the fist step in urban renovation is to renovate retail shopping and shopping centers. In this context, we performed user surveys in residential and commercial areas as well as at real estate agents in the proximity two large shopping centers; namely, Akmerkez (Etiler, Beþiktaþ) and Tepe-Nautilus (Acýbadem, Kadýköy) in Istanbul. In addition, in the study areas the data on land use changes provided by State Statistics Institute of Turkey have been examined. It is concluded the shopping centers stimulated urban transformation on real estates in their close proximity, and in time they created transformations from residential to commercial within their primary influence boundaries, and beyond those up to a certain distance they became an attractive zone for residential use. |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa05p616&r=ure |
| By: | Anne Aguilera |
| Abstract: | The continuous increase in the average commuting distance that characterizes European and North-American metropolitan areas is mainly the consequence of two developments. On one hand, the number of people living in a metropolitan area but working in another is on the increase. On the other hand, people living and working within the same metropolitan area are increasingly living further and further from their place of work: the 1999 and 1990 French censuses emphasize that the average (intra-metropolitan) distance from home to work has grown by 16% over the last decade. In particular, the municipality of residence is becoming increasingly different from the municipality of work. Such changes in commuting patterns, especially in the development of inter-municipality commutes, are promoting increased regular car use. These findings explain the growing interest in the relationship between urban form and commuting patterns. Given that most metropolitan areas are becoming polycentric, a body of research investigates whether polycentric distribution of people and jobs would be likely to re-organize mobility patterns in a more sustainable way. A key question is whether the development of employment subcenters would be likely to favor the co-location of workers and jobs in the suburbs and then to counteract increasing home-to-work distances. Most polycentric urban models are indeed based on the premise that people tend to locate within or close to their employment subcenter. But empirical studies tend to be more contradictory. In France, although many recent studies have underlined the development of subcenters inside most metropolitan areas and especially the biggest, links between polycentrism and commuting patterns have not been widely discussed. Urban sprawl in general is felt to be responsible for the growth of the average commuting distance insofar as the further the people live from the central city, the longer they spend commuting. But the specific impact of polycentrism and in particular the co-location hypothesis, i.e. the place of residence of those working in a subcenter, have not been questioned. In this paper two specific questions are raised. Are the people who live in a subcenter also employed in this subcenter? And do the (other) people working in a subcenter live close to this subcenter? If we compare the answers to these two questions in 1990 and in 1999, we can assess whether the situation is better or worse (in terms of proximity to place of work) in 1999 than ten years previously. The empirical work focuses on Paris which is the largest French metropolitan areas. Our findings emphasize that, although there are more jobs than working residents in all the subcenters, most people living in a subcenter work outside their subcenter of residence. This situation was also more marked by 1999 than it previously was in 1990. As a result, average commuting distances have increased for people living in a subcenter. In addition to this, the majority of jobs located in subcenters are filled by non-residents who generally live quite far from their employment subcenter, and indeed further in 1999 than they did in 1990. In conclusion we suggest some guidelines for future research. |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa05p255&r=ure |
| By: | Mª Jesus Santa Maria Beneyto; Jose Miguel Giner Perez; Antonio Fuster Olivares |
| Abstract: | A range of quantitative techniques have been employed by researchers in economic geography and other social science disciplines to measure and, spatially, define agglomerations of industrial activity. However, the application of these techniques in the literature results in a low consistency level. Because of this, new quantitative techniques have introduced solutions to solve the problems founded in the location’s analysis. One of these problems is the discrimination between geographic concentration arising from individual plants locating near to each other and that due to the concentration in an industrial structure. A relevant limitation of traditional location indexes is the absence of data about the differences in the size distribution of firms between geographic units. Recent papers by Ellison and Glaeser (1997) and Maurel and Sédillot (1999) have proposed indexes designed to measure agglomerations or geographic concentrations in excess of that which would be expected given industrial concentrations. These measures are all based on the distribution of activity over discrete geographic units. Another problem is the use of arbitrary cut-off values for determining what level of industrial specialization defines an agglomeration. O’Donoghue and Gleave (2004) have proposed a new measure, the ‘standardized location quotient (SLQ)’, which recognizes agglomerations as being comprised of locations with statistically significant location quotient values for the industry/activity under analysis. Other questions that appear when constructing these measures are the specification of the regional division’s level and the suitable use of administrative territorial units. New quantitative techniques of spatial econometrics solve this question. The use of a spatial autocorrelation indexes will allow us to know if the location of a concrete economic activity in a municipality is influenced by the location of the same activity in other neighbouring municipalities. We use global spatial autocorrelation statistics as I Moran Index (Moran, 1948) and Local Measures of Spatial Autocorrelation (LISA). The cluster map (LISA map) shows the significant locations by type of association. With LISA map, we measure geographic concentration of employment in industry clusters by detecting spatial association patterns in administrative areas (in this case, municipalities). In the empirical analysis the municipality, the micro level of administrative regions (NUTS5) in Spain, will be used as territorial unit. The data will be provided by the Industrial Register (Ministry of Industry, 2000) that contains information about the population of production plants in Spain at two and/or three-digit industry level. This includes the location of the plant (given by municipality), the plant’s three-digit industrial classification and the number of employees. So, the objective of this work will be to identify spatial agglomerations within the Spanish industrial sectors using all these new contributions to the spatial analysis and, as a secondary objective, to compare the difference of the results obtained with each quantitative technique. The results will offer a wide view of the geographic concentration and agglomeration of industrial activity in Spain. |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa05p492&r=ure |
| By: | J. Vernon Henderson; Mohammad Arzaghi |
| Abstract: | This paper examines the effect on productivity of having more near advertising agency neighbors and hence better opportunities for meetings and exchange within Manhattan. We will show that there is extremely rapid spatial decay in the benefits of having more near neighbors even in the close quarters of southern Manhattan, a finding that is new to the empirical literature and indicates our understanding of scale externalities is still very limited. The finding indicates that having a high density of commercial establishments is important in enhancing local productivity, an issue in Lucas and Rossi-Hansberg (2002), where within business district spatial decay of spillovers plays a key role. We will argue also that in Manhattan advertising agencies trade-off the higher rent costs of being in bigger clusters nearer “centers of action”, against the lower rent costs of operating on the “fringes” away from high concentrations of other agencies. Introducing the idea of trade-offs immediately suggests heterogeneity is involved. We will show that higher quality agencies are the ones willing to pay more rent to locate in greater size clusters, specifically because they benefit more from networking. While all this is an exploration of neighborhood and networking externalities, the findings relate to the economic anatomy of large metro areas like New Yorkthe nature of their buzz. |
| Keywords: | Advertising, Agglomeration, Business Services, Discrete Choice, Knowledge Spillovers, Learning, Location Decision, Poisson Regression, Nested Logit |
| JEL: | D82 D83 D85 L25 L84 M37 R12 R30 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:05-15&r=ure |
| By: | Bernard L. Weinstein; Terry L. Clower |
| Abstract: | Homelessness has long been recognized as a serious problem in many American cities, and Dallas in no exception. What’s more, the homeless tend to congregate in the downtown districts (DD) since most service providers are also located in the urban core. Though homelessness is typically considered a social problem, it also has economic consequences. The latest homeless census for the city of Dallas totaled 6,000, and annual outlays by governmental, non-profit, charitable, and faith-based organizations to provide them with services probably exceed $50 million. This estimate doesn’t include thousands of volunteer hours. But the true economic cost of homelessness is much greater. A survey of downtown business owners found that the presence of homeless persons is having a negative affect on their operations and burdening many of them with additional costs for security and cleaning. A majority of retail respondents report that proximity to the homeless was scaring off customers and reducing their sales. An examination of downtown properties using Dallas County Appraisal District (DCAD) records reveals that average values in the southern sector, where most of the homeless are concentrated, are well below those in the northern half of downtown. Consequently, the City of Dallas, Dallas County, and the Dallas Independent School District are losing $2.4 million per year due to valuation disparities from a lack of development in the southern half of the DD. What’s more, we estimate the southern half of downtown can potentially support almost 2.2 million square feet of additional commercial, office and residential space. This development scenario would create more than 5,000 new jobs and generate about $6.6 million per year for local taxing entities. But the revitalization of Dallas’ DD, an avowed goal of the city’s political and business leaders, will not be fully realized until a comprehensive plan for improving homeless services is developed and implemented. Most importantly, the proposed central intake facility should be located away from—but close to—the downtown district. In this regard, the City of Miami can serve as a model. Miami has significantly reduced the visible homeless count and greatly improved the delivery of services. By creating an umbrella agency to oversee all homeless programs—whether provided by government, voluntary or faith-based institutions—the city has avoided duplication and overlap of services. Significantly, Miami has located both of its central intake facilities, known as Homeless Assistance Centers (HACs), away from their downtown district. Miami’s businesses community has recognized that reducing homelessness is a community and economic development issue as well as a social problem, and to that end they have contributed about $50 million over the past decade. The results are tangible, as evidenced by the construction boom currently underway in Miami’s downtown. As with Miami, an effective approach for dealing with Dallas’ homeless population must include greater participation and support by the region’s business leaders. Homelessness has significant economic as well as social consequences for the City of Dallas. While offering our compassion to the homeless, we should also acknowledge that the overwhelming presence of homeless persons on the streets of downtown has negative economic impacts on individual businesses, the prospects for redevelopment, and the city’s finances. |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa04p625&r=ure |
| By: | Giorgio Topa; Stephen Ross; Patrick Bayer |
| Abstract: | We use a novel dataset and research design to empirically detect the effect of social interactions among neighbors on labor market outcomes. Specifically, using Census data that characterize residential and employment locations down to the city block, we examine whether individuals residing in the same block are more likely to work together than those in nearby blocks. We find evidence of significant social interactions operating at the block level: residing on the same versus nearby blocks increases the probability of working together by over 33 percent. The results also indicate that this referral effect is stronger when individuals are similar in sociodemographic characteristics (e.g., both have children of similar ages) and when at least one individual is well attached to the labor market. These findings are robust across various specifications intended to address concerns related to sorting and reverse causation. Further, having determined the characteristics of a pair of individuals that lead to an especially strong referral effect, we provide evidence that the increased availability of neighborhood referrals has a significant impact on a wide range of labor market outcomes including employment and wages. |
| Keywords: | Neighborhood Effects, Job Referrals, Social Interactions, Informal Hiring Networks, Labor Market Outcomes |
| JEL: | J18 J22 J24 J31 R0 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:05-23&r=ure |
| By: | Anupam Nanda (University of Connecticut) |
| Abstract: | At the time when at least two-thirds of the US states have already mandated some form of seller's property condition disclosure statement and there is a movement in this direction nationally, this paper examines the impact of seller's property condition disclosure law on the residential real estate values, the information asymmetry in housing transactions and shift of risk from buyers and brokers to the sellers, and attempts to ascertain the factors that lead to adoption of the disclosur law. The analytical structure employs parametric panel data models, semi-parametric propensity score matching models, and an event study framework using a unique set of economic and institutional attributes for a quarterly panel of 291 US Metropolitan Statistical Areas (MSAs) and 50 US States spanning 21 years from 1984 to 2004. Exploiting the MSA level variation in house prices, the study finds that the average seller may be able to fetch a higher price (about three to four percent) for the house if she furnishes a state-mandated seller's property condition disclosure statement to the buyer. The proportional hazard analysis of law adoption reveals that the number of disciplinary actions taken against the real estate licensees, and other institutional attributes lead to adoption of the property condition disclosure law in a state. |
| Keywords: | Property Condition Disclosure, Housing Price Index, Propensity Score Matching Event Study |
| JEL: | C14 K11 L85 R21 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2005-47&r=ure |
| By: | David E. Wildasin (Martin School of Public Policy and Administration and Department of Economics, University of Kentucky); Thiess Buettner (ifo and Munich University) |
| Abstract: | The dynamic fiscal policy adjustment of local jurisdictions is investigated empirically using a panel of more than 1000 U.S. municipalities over a quarter of a century. Distinguishing own-source revenue, grants, expenditures, and debt service, the analysis is carried out using a vector error-correction model which takes account of the intertemporal budget constraint. The results indicate that a large part of the adjustment in response to fiscal imbalances takes place by offsetting changes in future expenditures. In addition, the results show that fiscal imbalances are financed to a significant extent by subsequent changes in grants. Decomposition of the sample according to average city population reveals that the basic pattern of fiscal adjustment is robust, although intergovernmental grants play a much more pronounced role in maintaining budget balance for large cities. |
| JEL: | H70 H72 H77 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:ifr:wpaper:2005-03&r=ure |
| By: | Edward Feser |
| Abstract: | In a cross-sectional establishment-level analysis using confidential secondary data, I evaluate the influence of commonly postulated sources of localized external economies–supplier access, labor pools, and knowledge spillovers–on the productivity of two U.S. manufacturing sectors (farm and garden machinery and measuring and controlling devices). Measures incorporating different distance decay specifications provide evidence of the spatial extent of the various externality sources. Chinitz’s (1961) hypothesis of the link between local industrial organization and agglomeration economies is also investigated. The results show evidence of labor pooling economies and university-linked knowledge spillovers in the case of the higher technology measuring and controlling devices sector, while access to input supplies and location near centers of applied innovation positively influence efficiency in the farm and garden machinery industry. Both sectors benefit from proximity to producer services, though primarily at a regional rather than highly localized scale. |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:04-13&r=ure |
| By: | Philippe De Vreyer; Sandrine Mesplé-Somps; Gilles Spielvogel |
| Abstract: | Economic growth certainly is not a uniform process over space, especially in a country as vast and diverse as Brazil. Among the determinants of local growth, the role of externalities has been much discussed in the recent literature (Glaeser et al., 1992). These externalities not only matter for growth within a given city or region but also for growth in neighbouring localities (Lopez-Baso et al., 2004). Our paper aims at providing a causal decomposition of spatial externalities occurring in the growth process of Brazilian municipios. Local growth may impact neighbours through a variety of externalities, and understanding how these externalities operate is crucial for the elaboration of public policies. Previous works on related topics include a recent paper by Lall and Shalizi (2003). Focusing on the Brazilian Northeast, the authors find that growth in municipios is negatively influenced by growth in their neighbourhood. Clearly, it seems worthwhile to extend this kind of analysis to the whole country to try and find if this phenomenon is a Northeastern specificity or a nationally valid result. Moreover, providing a more detailed account of the role of various sources of spatial externalities, and of their potential heterogeneities between regions, would be valuable. Spatial externalities Why may growth at a location affect growth at a neighbouring location? Several causes can be invoked. First, through technological externalities, a locality may benefit from improved economic conditions in another. For instance, if some firms in a locality have developed innovative processes, knowledge spillovers may favour the diffusion of new technologies to firms at neighbouring locations. Linkages between input suppliers and final producers may also be critical: if a final consumption good produced at a particular location benefits from a booming demand, upstream firms in the same region will thrive. Finally, proximity of an important economic centre may improve matching on the labour market, thus reducing costs and increasing labour productivity. Pecuniary externalities may also matter in spatial growth differentials: growth at a location may attract new firms and workers, thus increasing land rents. Transmission of this land market tension to nearby localities can reduce incentives for firms to locate there, and therefore attenuate growth prospects. Finally, local economic growth may foster immigration from less dynamic places. The impact of this migration on both the departure and arrival locations depends on various factors, notably the differences in education levels between the two localities, the substitutability between skilled and unskilled workers in production and the state of local labour markets. Empirical strategy: In order to disentangle which channels matter the most among the various kind of externalities, and to evaluate their spatial scope, we focus on the most rapidly growing Brazilian municipios. From a qualitative point of view, selecting a sample of fast growing localities permits to have a better understanding of the local growth process, since part of these localities are “polar cases” owing their rapid growth to a restricted combination of factors. Moreover, the strength of spatial externalities is likely to be greater in these locations.We evaluate the effects of these externalities on the performance of neighbouring municipios using spatial econometrics methods (Anselin, 2003), and controlling for various local characteristics of the neighbourhood (economic specializations, education, density, public infrastructures, etc.). Using different neighbours’ sets permits to measure the geographical scope of these externalities: some types of externalities only operate at short distance, while others may impact more distant locations. (Neighbours’ sets can be geographically defined, but also sets designed following other similarity or complementarity criterions.) Policy implications: poverty traps and land market issues Understanding how local growth may spread to neighbours or may hinder their economic performance is critical for policy design. Many Brazilian regions are characterized by important spatial inequalities between municipios, which seem to be very persistent over time. These poverty traps result from disparities in growth among neighbours and reducing them requires a better understanding of their formation. Moreover, local policies aiming at fostering growth may have adverse effects on nearby localities, certainly not a desirable outcome. Knowing which are the “bad” channels may help designing more efficient policies. Land and transportation policies are also a closely related issue: some spatial externalities are driven by the functioning of the land market. When rising rents in a growing locality are transmitted to adjacent locations, for instance, public policies may be needed to reduce market tensions through the development of new land plots or the improvement of transportation networks. In this case again, evaluating the strength and spatial scope of pecuniary externalities can help improving these policies. |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa05p573&r=ure |
| By: | Karlsson, Carlie (Department of Economics, Jönlöping International Business School, Jönköping University); Gråsjö, Urban (Department of Economics, Jönlöping International Business School, Jönköping University); Andersson, Martin (Department of Economics, Jönlöping International Business School, Jönköping University) |
| Abstract: | Knowledge is maintained as a core variable for growth in a large set of contemporary theories. In this paper, we analyze the relationship between knowledge accessibility and regional growth. The knowledge resource used in our model R&D conducted at universities and in companies. A precise definition of accessibility was introduced and calculations were based on actual travel time distances. Using data at the municipality level in Sweden, the hypothesis that knowledge accessibility has a positive effect on growth cannot be rejected. The knowledge accessibility in a given period has a statistically significant effect on the growth in value-added per employee in subsequent periods. The total accessibility of a municipality was divided into three types, (i) intra-municipal accessibility, (ii) intra-regional accessibility and (iii) extra-regional accessibility. The paper has shown that this division gives a clear indication of that there is spatial dependence in the sense that the knowledge resources in a given municipality tend to have a positive effect on the growth of another municipality, conditional on that the municipalities belongs to the same functional region. Thus, the results of the analysis indicate that knowledge flows transcend municipal borders, but that they tend to be bounded within functional regions. The findings in the paper provide support for the theories that emphasize the role of knowledge for growth. However, the paper demonstrates that spatial proximity to knowledge resources is important to materialize the positive effect of such resources. Accessibility to knowledge in space is thus imperativ |
| Keywords: | knowledge; R&D; economic growth; accessibility; spatial; region; spillovers |
| JEL: | O30 O40 O52 R11 |
| Date: | 2006–05–31 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0066&r=ure |
| By: | David Cutler; Edward Glaeser; Jacob Vigdor |
| Abstract: | This paper uses decennial Census data to examine trends in immigrant segregation in the United States between 1910 and 2000. Immigrant segregation declined in the first half of the century, but has been rising steadily over the past three decades. Analysis of restricted access 1990 Census microdata suggests that this rise would be even more striking if the native-born children of immigrants could be consistently excluded from the analysis. We analyze panel and cross-sectional variation in immigrant segregation, as well as housing price patterns across metropolitan areas, to test four hypotheses of immigrant segregation. Immigration itself has surged in recent decades, but the tendency for newly arrived immigrants to be younger and of lower socioeconomic status explains very little of the recent rise in immigrant segregation. We also find no evidence of increased nativism in the housing market. Evidence instead points to changes in urban form, particularly the tendency for ethnic enclaves to form as suburbanizing households leave older neighborhoods, as a central explanation for the new immigrant segregation. |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:04-10&r=ure |
| By: | Mohammad Arzaghi |
| Abstract: | This paper provides a model of knowledge sharing and networking among single unit advertising agencies and investigates the implications of this model in the presence of heterogeneity in agencies’ quality. In a stylized screening model, we show that, under a modest set of assumptions, the separation outcome is a Pareto-undominated Nash equilibrium. That is, high quality agencies locate themselves in a high wage and rent area to sift out low quality agencies and guarantee their network quality. We identify a necessary condition for the separating equilibrium to exist and to reject the pooling equilibrium even in the presence of agglomeration economies from networking. We derive the maximum profit of an agency and show the condition has a directly testable implication in the empirical specification of the agency’s profit function. We use a sample of movers—existing agencies that relocate among urban areas—in order to extract a predetermined measure of their quality prior to relocation. We estimate the parameters of the profit function, using the Census confidential establishment-level data, and show that the necessary condition for separation is met and that there is strong separation and sorting on quality among agencies in their location decisions. |
| Keywords: | Advertising, Agglomeration, Industrial Concentration, Business Services, Discrete Choice, Knowledge Spillovers, Learning, Location Decision, Poisson Regression, Nested Logit, Screening, Separating Equilibrium, Sorting |
| JEL: | D82 D83 D85 L25 L84 M37 R12 R30 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:05-16&r=ure |
| By: | Patrick Bayer (Yale University); Stephen L. Ross (University of Connecticut) |
| 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 naive 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 individualâs 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. |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2006-13&r=ure |
| By: | Johansson, Börje (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Forslund, Ulla (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology) |
| Abstract: | This paper provides an overview and critical assessment of co-location and clustering in space. Basic location conditions include accessibility to customers, input suppliers including knowledge providers, and regional endowments. A distinction is made between slow and fast location adjustments. In a basic model, it is shown how distance sensitivity and scale economies generate self-reinforcing location externalities. Variations of the same model are employed to illuminate how urbanisation economies can stimulate co-location and clustering. One model variant is designed to examine how innovation activities also can be influenced by urbanisation economies. The paper concludes that a set of basic principals form the basis for localisation and urbanisation economies. However, there remains a challenging gap between model predictions and empirical observations. |
| Keywords: | Location; co-location economies; agglomeration economies; urbanisation economies |
| JEL: | L14 L29 O30 R30 |
| Date: | 2006–05–31 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0067&r=ure |
| By: | André De Palma; Kiarash Motamedi; Nathalie Picard; Dany Nguyen Luong |
| Abstract: | There is a new growing interest in the development and in the use of integrated land use and transport planning models in France. In this paper, we describe the steps of a current project which aims to integrate UrbanSim, a flexible land use model, and METROPOLIS, a dynamic traffic model, and to apply this integrated model to Paris region. We shortly present the two models and the common architecture then we describe the fastidious but crucial step of collecting input data and calibration data for the study area. Paris region is one of the most important metropolises in the world: 12,000 km2, 11 millions inhabitants and 5 millions jobs. Most interactions between the land use dynamics and the transportation dynamics are taken into account in the short, middle and long term. All of this consists in a pioneering and innovative work, for a region where urban planning and fiscal policies are very important. UrbanSim is a land use model developed at the University of Washington (USA). It is based mainly on three logit models (households and jobs localization choices and development type choice models) and a hedonic regression model (land price model). The data structure is based on a large grid which partitions the whole Paris region with 50 000 square cells by 500 meters. This high level of spatial resolution is really original in France but requires a huge amount of data and spatial analysis that we have performed thanks to the GIS tool. METROPOLIS is a dynamic transportation model developed at the University of Cergy-Pontoise (FRANCE). It provides the user surplus as the measure of accessibility. This measure takes into account the time-dependent congestion situation of the transportation system. On the other hand METROPOLIS can differentiate the users by their value of time and desired arrival time and some other behavioral parameters. The roads network contains more than 16,000 links, the transit network contains about 4,000 links. An architecture bas been designed to integrate these two models within a coherent framework. A prototype of interface has been developed which allows input and output data to be exchanged in an automatic feedback process. We use different sources to build the input database: general census, numerical land use database (cover of 400,000 parcels classified into 83 different types), regional travel survey, the notary database of real-estate transactions, local land use plans, commercial and offices surfaces data, income tax files, … Since none of these sources is perfect, we had to develop innovative methods to realize data fusion and mixed databases. For example, we localize the 11,000 households of the travel survey in the grid, or we associate the attribute of income from the tax files to the attributes of household in the general census. The second database concerns the calibration data. For each of the four models of UrbanSim, we have developed a significant sample of individual observations from four sources: the general census, the travel survey, the land use evolution database and the notary database of real-estate transactions. These files will be used to estimate the models thanks to an econometric software. We choose as period of calibration 1990 – 1999. We plan to achieve our project in the end of 2005. |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa05p421&r=ure |
| By: | Daniel Weinberg |
| Abstract: | This paper first describes some historical poverty trends, overall and for demographic groups and broad locations within the U.S. from an ongoing household survey, and then presents some specific information on poverty for localities by size, from the most recent decennial census (2000). Rural poverty exceeded urban poverty in 1969 and 1979, but urban poverty in 1999 was higher than rural poverty. Non-metropolitan area poverty exceeded metropolitan area poverty in each of the four censuses, but within each of those areas, rural poverty is now less than urban poverty. Within metropolitan areas, poverty is highest for those in central cities. For urbanized areas (50,000 or more population), the poverty rate is lower as the area gets larger, with the exception of the very largest-sized areas. This higher poverty for the largest places is accounted for entirely by the higher poverty rate for the central city or cities in those urban agglomerations, as the poverty rates for the parts of the urbanized areas not in the central place continue to fall as the area itself gets larger. Some of the critical relationships affecting the poverty rate of places appear to be the location of certain types of people - female householders, non-citizens, people of color, and college graduates. |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:05-12&r=ure |
| By: | Chris Ryan; Louise Watson |
| Abstract: | Government subsidies have provided a major source of funds to private schools in Australia for three decades. The increasing level of private school subsidies since the mid-1970s has contributed to a steady increase in the proportion of students enrolled in private schools. This growth in the private school share of enrolments was not inevitable, but has been the outcome of government policies. We use an economic framework that focuses jointly on the price and quality of schooling and find that private schools have used government subsidies to increase the quality of their services (ie. to reduce staff: student ratios) rather than to reduce their fees. This strategy has ensured that the 10 percentage point increase in the enrolment share of private schools since 1975 has not substantially altered the socio-economic composition of their student body. One consequence is that a higher proportion of government school students now come from low socio-economic status (SES) backgrounds than 30 years ago. Therefore, schools in the government sector now educate more students from lower SES backgrounds than in 1975. The implications for public policy of these phenomena are discussed and directions for future research identified. |
| Keywords: | private schooling, choice, government subsidies, student background |
| JEL: | I21 I28 H52 |
| Date: | 2004–09 |
| URL: | http://d.repec.org/n?u=RePEc:auu:dpaper:479&r=ure |
| By: | Sukkoo Kim |
| Abstract: | Industrial revolution in the United States first took hold in rural New England as factories arose and grew in a handful of industries such as textiles and shoes. However, as factory scale economies rose and factory production techniques were adopted by an ever growing number of industries, industrialization became concentrated in cities throughout the Northeastern region which came to be known as the manufacturing belt. While it is extremely difficult to rule out other types of agglomeration economies such as spillovers, this paper suggests that these geographic developments associated with industrial revolution in the U.S. are most consistent with explanations based on division of labor, job search and matching costs. |
| JEL: | N6 N9 R3 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12246&r=ure |
| By: | William Hoyt (Gatton School of Business and Economics and Martin School of Public Policy and Administration, University of Kentucky); |
| Abstract: | The existence of either "horizontal" fiscal externalities, in which changes in one jurisdiction's policies affect the government budget of other jurisdictions and therefore the utility of its residents or "vertical" externalities, in which changes in one level of government's policies affect the budget of another level of government, may lead to non-optimal government policies. These fiscal externalities, then, suggest the possibility of corrective policies. The focus here is on vertical externalities. In a growing literature, these externalities are associated with the extent that tax bases are shared or "co-occupied" by two different levels of government. Given that co-occupancy is the cause of or at least exacerbates the externality, I consider, the optimal "assignment" of the tax base and, more specifically, whether the co-occupancy of tax bases is desirable. Specifically, I examine the optimal extent of the tax base of a lower level of government (local) and a higher level (state) in a hierarchical system of governments. The co-occupancy of the tax base influences the magnitude and possible the direction of "vertical" fiscal externalities associated with the taxes of one or both of the levels of government. Using a model in which there is a continuum of commodities, each with the same demand characteristics, I formally consider whether, as has been asserted in a number of studies, whether it is optimal to eliminate all co-occupancy between the tax bases of the two levels of government. While I find that it is indeed not optimal to have co-occupancy in the tax base in the absence of other corrective policies for the fiscal externality, eliminating co-occupancy does not, in general, eliminate fiscal externalities, meaning that tax rates can still be above or now below the socially-optimal level. Thus elimination of co-occupancy in the tax base is not a substitute for a policy such as intergovernmental matching grants which directly eliminates fiscal externalities. If alternative policies are available such as matching grants that do eliminate fiscal externalities and governments are restricted to set the same tax rate on all commodities in their base, the optimal division of the tax base changes dramatically -- optimality requires both governments tax the entire base. (JEL H77 - Intergovernmental Relations; Federalism) |
| JEL: | H77 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:ifr:wpaper:2005-07&r=ure |
| By: | Pablo Sanguinetti; Martin Besfamille |
| Abstract: | In many countries fiscal decentralization characterizes the relationship among different levels of government. In those countries, local authorities have the prerogative to tax their constituencies. However, fiscal decentralization is seldom balanced in terms of tax and expenditure assignments. In order to equalize tax capacities, to internalize spillovers or to achieve national policy objectives, central governments often provide transfers to lower levels of government. These transfers may affect the incentives to manage or to improve fiscal performance. Specifically, according to Litvack, Ahmad and Bird (1998), such transfers may induce low `tax effort' in the regions. The purpose of this paper is to investigate theoretically and empirically this relationship between intergovernmental transfers and local tax effort. An initial problem to deal with is the definition of `tax effort' in itself. First, one can associate tax effort to high tax rates. Smart (1998) asserted that such association is inadequate. Second, one can measure tax effort using actual tax revenues or the difference between actual the predicted value of tax revenues. This approach has been mainly adopted by the empirical literature on the relationship between intergovernmental transfers and local tax effort [Baretti, Huber and Lichtblau (2000), Von Hagen and Hepp (2000), Jha, Mohanty, Chattergee and Chitkara (1999), Sagbas (2001)]. Although tax revenue is an accurate and observable variable, still one can hardly say that it is a good estimate of tax effort. The reason is for a given region in a given time period tax revenue is affected by many potential variables outside the control of local governments (like idiosyncratic shocks to some specific tax bases) which are seldom well controlled for in estimates of tax capacity. In practice local tax effort encompasses a broad set of actions. One of them is clearly the battle against tax evasion. In spite of its importance, this problem has been only recently addressed by the local public finance literature. Bordignon, Manasse and Tabellini (1996), presented a model where a local government exerts costless effort to catch tax evader workers and they showed how intergovernmental transfers affect tax enforcement. The drawback of this model is that, in reality, tax enforcement is not costless and the cost depends upon other variables chosen by local authorities, like the efficiency of the local tax administration. Although Prud'homme (1995) and Tanzi (1996) have informally signaled the possible inefficiencies of the local tax administrations, this feature has not been raised by the theoretical or the empirical literature. The purpose of this paper is precisely to incorporate such dimension in the assessment of the relationship between intergovernmental transfers and local tax effort. The theoretical framework assumes that in each region there is one representative habitant and a local government. The habitant posses a low or a high-valued property. The local government maximizes tax revenues. In a first period, the local government invests resources to improve the efficiency of the tax administration or to lobby the central government in order to obtain discretionary transfers. This decision is affected by the political cost of reforming the tax administration and on the ability of the local government to negotiate with the central government. Thus, in our model, intergovernmental transfers are endogenous and simultaneously determined with the reform of the local tax system. In a second period, the local government sets the property tax schedule. But, as the local government is unable to observe the value of the property, it has to rely on the habitant announcing this value. Finally, in the third period, the local government decides to enforce the tax law by randomly auditing such announcement. If the habitant is discovered having misreported, the local government sets the corresponding property tax and imposes a penalty. We assume that audit is perfect but costly; the cost depending on the efficiency of the local tax administration. We solve the model backwards. As the local government cannot commit to the auditing probability when it designs its tax policy, the equilibrium of the audit-report game is in mixed strategies, with auditing and tax evasion. Then we find the optimal tax schedule. In order to reduce the stake for tax evasion, the local government distorts downwardly the high-valued property tax. Finally, we solve for the decision of the local government regarding how much resources to invest for improving the efficiency of the tax administration. We find that this decision is negatively associated with the domestic political costs and positively with the ability to negotiate with the Federal Government. The predictions of the model are empirically tested using data for Argentina. The theory suggests a two-step approach. In a first stage we run a probit estimation where the probability of a certain province to reform its tax system (or receiving discretionary transfers) in a given year will be correlated with domestic political variables (e.g. divided government) and also with variables describing its bargaining power vis a vis the federal authorities (e.g. political representation at the National Congress, political party of the President vis a vis that of the Governor). In a second stage, we include this exogenous instrument of tax reform in a regression where the evolution of actual provincial tax receipts are regressed against this variable plus other controls like population, density, provincial income distribution and production structure. Notice that this two stage empirical approach allow us to deal with a frequent problem encountered in the empirical literature given by the endogeneity bias affecting some of the variables of interest, like federal transfers (e.g. Jha, Mohanty, Chattergee and Chitkara (1999), Sagbas (2001)). |
| Keywords: | local tax effort - discretionary transfers - tax enforcement |
| JEL: | H26 |
| Date: | 2004–08–11 |
| URL: | http://d.repec.org/n?u=RePEc:ecm:latm04:249&r=ure |
| By: | Brett Anitra Gilbert; Mika Tatum Kusar |
| Abstract: | Geographic clusters have an impressive track record for producing innovative firms. In this research, we examine whether a geographic cluster location and the knowledge spillovers new ventures assimilate influence both their explorative and exploitative innovation activities. We hypothesize a stronger relationship of industry clustering on exploitative innovations but a stronger relationship of knowledge spillovers on explorative innovations. We expect the interaction will result in more exploitative innovations than explorative innovations. The data support most hypotheses. |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:esi:egpdis:2006-16&r=ure |
| By: | Reinhold Kosfeld; Christian Dreger |
| Abstract: | Changes in production and employment are closely related over the course of the business cycle. However, as exemplified by the laws of Verdoorn (1949, 1993) and Okun (1962, 1970), thresholds seem to be present in the relationship. Due to capacity reserves of the firms, output growth must exceed certain levels for the creation of new jobs or a fall in the unemployment rate. While Verdoorn's law focuses on the growth rate of output sufficient for an increase in employment, in Okun's law, the fall in the unemployment rate becomes the focus of attention. In order to assess the future development of employment and unemployment, these thresholds have to be taken into account. They serve as important guidelines for policymakers. In contrast to previous studies, we present joint estimates for both the employment and unemployment threshold. Due to demographic patterns and institutional settings on the labour market, the two thresholds can differ, implying that minimum output growth needed for a rise in employment may not be sufficient for a simultaneous drop in the unemployment rate. Second, regional information is considered to a large extent. In particular, the analysis is carried out using a sample of 180 German regional labour markets, see Eckey (2001). Since the cross-sections are separated by the flows of job commuters, they correspond to travel-to-work areas. Labour mobility is high within a market, but low among the entities. As the sectoral decomposition of economic activities varies across the regions, the thresholds are founded on a heterogeneous experience, leading to more reliable estimates.The contribution to the literature is twofold. First, to the best of our knowledge, no previous paper has investigated a similar broad regional dataset for the German economy as a whole before. By using a panel dataset, information on the regional distributions around the regression lines as well as theirs positional changes is provided for each year. Second, the methods applied are of new type. They involve a mixture of pooled and spatial econometric techniques. Dependencies across the regions may result from common or idiosyncratic (region specific) shocks. In particular, the eigenfunction decomposition approach suggested by Griffith (1996, 2000) is used to identify spatial and non-spatial components in regression analysis. As the spatial pattern may vary over time, inference is conducted on the base of a spatial SUR model. Due to this setting, efficient estimates of the thresholds are obtained. With the aid of a geographic information system (GIS) variation of the spatial components can be made transparent. With Verdoorn’s and Okun’s law the figures show some significant patterns become obvious over time. In respect to Verdoorn’s law, for instance, a stripe of high values in the north-western part from Schleswig-Holstein via Lower Saxony and North Rhine Westfalia to Rhineland Palatinate is striking in all years but 1994 and 1995. In most periods the spatial component is likewise concentrated in Saxony. Clusters of low values can be found in northern Bavaria and, in some periods, in Thüringen and Mecklenburg-Vorpommern. Other parts of Germany appear to be more fragmented consisting of relative small clusters of low, medium and high values of the spatial component. With Okun’s law some changing spatial patterns arise. In all, spatially filtering provides valuable insights into the spatial dimensions of the laws of Verdoorn and Okun. Threshold employment and unemployment, regional labour markets, spatial filtering techniques, spatial SUR analysis |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa05p39&r=ure |
| By: | Robin Boadway (Queen's University); Jean-Francois Tremblay (University of Ottawa) |
| Abstract: | This paper examines how sequential decision-making by two levels of government can result in vertical fiscal imbalances (VFI). Federal-regional transfers serve to equalize the marginal cost of public funds between regions hit by different shocks. The optimal vertical fiscal gap minimizes the efficiency cost of taxation in the federation as a whole. The analysis shows how the existence of vertical fiscal externalities, leading regional governments to overprovide public goods, can induce the federal government to create a VFI by selecting transfers that differ from the optimal fiscal gap. When the federal government can commit to its policies before regional governments select their level of expenditures, the VFI will generally be negative. In the absence of commitment, the equilibrium transfer is unambiguously larger than the optimal fiscal gap, resulting in a positive VFI. In an intertemporal setting, the VFI has implications for the sharing of debt between the federal and regional governments. |
| Keywords: | vertical fiscal imbalance, federal-regional transfers, commitment, fiscal externalities |
| JEL: | H72 H73 H77 |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:qed:wpaper:1072&r=ure |
| By: | Andersson, Martin (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Gråsjö, Urban (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Karlsson, Charlie (http://www.infra.kth.se/cesis/cesis/index2.htm) |
| Abstract: | The rapid globalization in recent years has created a radically new competitive situation for the rich industrialized countries. Newly industrialized countries and not least China have become more and more successful in penetrating the markets in the rich industrialized countries with increasingly more advanced export products. This has generated a discussion in the rich industrialized countries on how to meet this increased international competition. In some countries demands for various protective measures have been raised while in others the discussion has mainly focused on how to develop a competitive strategy mainly concentrating on making the own products more sophisticated by increasing their knowledge content. This is by no means since the direct product development is controlled to a high extent by multinational firms, which to an increasing degree are foreign owned. Governments mainly have to rely on indirect measures, such as increasing the volume of higher education and public, mainly university R&D. This raises the question: how responsive is private industry to these kinds of indirect measures. Against this background, the purpose of this paper is to analyze to what extent that the location and the extent of higher education and university R&D, respectively, influence the location and the extent of industry R&D in Sweden using an accessibility approach. After an extensive literature survey, we develop a simple theoretical model for the location of R&D from the perspective of a multinational enterprise. From this theoretical model, we then deduce our empirical model, which we then estimate in the form of a Tobit model using data from Swedish labour market regions and municipalities. We show that the location of industry R&D in Sweden can be partly explained by the intra-municipal accessibility to students in higher education, while the accessibility to university R&D turned out to be insignificant |
| Keywords: | industry R&D; university R&D; higher education; region; municipality; location; accessibility; Tobit model; Sweden |
| JEL: | O30 O38 O52 R11 R12 R32 |
| Date: | 2006–05–31 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0068&r=ure |
| By: | Julia Darby; Muscatelli Anton; Graeme Roy |
| Abstract: | This paper contributes to a developing literature that examines financial interactions between different levels of government. More specifically, we investigate the use of grants, shared tax revenues, and their impact on fiscal outcomes, including decentralized service provision. Most existing empirical evidence has focused on individual country studies, and has predominantly been US based. However, it is difficult to generalize the conclusions obtained for the US to countries where the position and remit of lower tiers of government has recently been evolving or is less clear constitutionally. We use a panel dataset covering 15 OECD countries to investigate how central and sub-central expenditures, taxation, and intergovernmental grants change in response to central governments' attempts to correct their fiscal positions. We adopt an event study methodology to examine the timing of expenditure, taxation and intergovernmental grant shifts around the periods of fiscal consolidation. In addition to highlighting issues regarding the interaction between central and sub-central tiers of government, our analysis also sheds light into the extent to which sub-central tiers of government participate in fiscal consolidations, and hence to macroeconomic adjustment. Our key results can be summarized as follows. First, successful fiscal consolidations are generally driven by similar, and sustained, falls in expenditure at both central and sub-central tiers. Moreover, our evidence counters that identified by Gramlich (1987) for the USA, in that when central governments cut intergovernmental grants sub-central tiers do not take redress through offsetting increases in other forms of revenues. Second, unsuccessful consolidations tend to be characterized by increased central government taxation, with no fall back in grants and no tendency for sub-central taxation to change. It does appear that there is strong correlation between success in consolidating central fiscal deficits and similar actions from lower tiers of government. Third, we find that where consolidations are successful sub-central tiers of government are typically forced to cut back on capital expenditure. This suggests that in this regard the burden of adjustment falls onto lower tiers of government and central governments worry less about the long-term (i.e. public investment) consequences of consolidation if these decisions are taken at local level. We also find that when faced with cuts in intergovernmental grants, sub-central governments tend to maintain expenditures on wages at the expense of capital expenditure, reflecting a definite compositional switch towards public consumption. This might be interpreted as a variant of the effect identified by Gramlich (1987): sub-central governments seeking to defend current services rather than spending on infrastructure or raising taxation. This may reflect the greater constraints on sub-central tiers’ tax raising powers in many of the OECD countries in our sample, relative to those in the USA. Finally, our results shed some light, at least indirectly, on the ‘Fly-paper Effect’, by showing that it operates in reverse. Successful consolidations are characterized by cut-backs in grants that are more than offset by cut-backs in sub-central expenditures. In contrast, periods of unsuccessful consolidation are characterized by increases in central taxation, no change in grants, and small, temporary reductions in sub-central expenditure. |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa04p366&r=ure |
| By: | Edward Feser |
| Abstract: | This paper uses the inverse input demand function framework of Kim (1992) to test for economies of industry and urban size in two U.S. manufacturing sectors of differing technology intensity: farm and garden machinery (SIC 352) and measuring and controlling devices (SIC 382). The inverse input demand framework permits the estimation of the production function jointly with a set of cost shares without the imposition of prior economic restrictions. Tests using plant-level data suggest the presence of population scale (urbanization) economies in the moderate- to low-technology farm and garden machinery sector and industry scale (localization) economies in the higher technology measuring and controlling devices sector. The efficiency and generality of the inverse input demand approach are particularly appropriate for micro-level studies of agglomeration economies where prior assumptions regarding homogeneity and homotheticity are less appropriate. |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:04-14&r=ure |
| By: | Ethan Lewis |
| Abstract: | Using detailed plant- level data from the 1988 and 1993 Surveys of Manufacturing Technology, this paper examines the impact of skill mix in U.S. local labor markets on the use and adoption of automation technologies in manufacturing. The level of automation differs widely across U.S. metropolitan areas. In both 1988 and 1993, in markets with a higher relative availability of lessskilled labor, comparable plants – even plants in the same narrow (4-digit SIC) industries – used systematically less automation. Moreover, between 1988 and 1993 plants in areas experiencing faster less-skilled relative labor supply growth adopted automation technology more slowly, both overall and relative to expectations, and even de-adoption was not uncommon. This relationship is stronger when examining an arguably exogenous component of local less-skilled labor supply derived from historical regional settlement patterns of immigrants from different parts of the world. These results have implications for two long-standing puzzles in economics. First, they potentially explain why research has repeatedly found that immigration has little impact on the wages of competing native-born workers at the local level. It might be that the technologies of local firms—rather than the wages that they offer—respond to changes in local skill mix associated with immigration. A modified two-sector model demonstrates this theoretical possibility. Second, the results raise doubts about the extent to which the spread of new technologies have raised demand for skills, one frequently forwarded hypothesis for the cause of rising wage inequality in the United States. Causality appears to at least partly run in the opposite direction, where skill supply drive s the spread of skill-complementary technology. |
| Keywords: | Technological change, immigration, local labor market |
| JEL: | J2 F1 O3 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:05-04&r=ure |
| By: | Chad Syverson |
| Abstract: | In markets where spatial competition is important, many models predict that average prices are lower in denser markets (i.e., those with more producers per unit area). Homogeneous-producer models attribute this effect solely to lower optimal markups. However, when producers instead differ in their production costs, a second mechanism also acts to lower equilibrium prices: competition-driven selection on costs. Consumers’ greater substitution possibilities in denser markets make it more difficult for high-cost firms to profitably operate, truncating the equilibrium cost (and price) distributions from above. This selection process can be empirically distinguished from the homogenous-producer case because it implies that not only do average prices fall as density rises, but that upper-bound prices and price dispersion should also decline as well. I find empirical support for this process using a rich set of price data from U.S. ready-mixed concrete plants. Features of the industry offer an arguably exogenous source of producer density variation with which to identify these effects. I also show that the findings do not simply result from lower factor prices in dense markets, but rather because dense-market producers are low-cost because they are more efficient. |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:04-16&r=ure |
| By: | Australian Prudential Regulation Authority (Australian Prudential Regulation Authority) |
| Date: | 2005–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:apr:aprpdp:dp0015&r=ure |
| By: | Robin Boadway (Department of Economics, Queen’s University); Jean-Francois Tremblay (Department of Economics, University of Ottawa) |
| Abstract: | This paper examines how sequential decision-making by two levels of government can result in vertical fiscal imbalances (VFI). Federal-regional transfers serve to equalize the marginal cost of public funds between regions hit by different shocks. The optimal vertical fiscal gap minimizes the efficiency cost of taxation in the federation as a whole. The analysis shows how the existence of vertical fiscal externalities, leading regional governments to overprovide public goods, can induce the federal government to create a VFI by selecting transfers that differ from the optimal fiscal gap. When the federal government can commit to its policies before regional governments select their level of expenditures, the VFI will generally be negative. In the absence of commitment, the equilibrium transfer is unambiguously larger than the optimal fiscal gap, resulting in a positive VFI. In an intertemporal setting, the VFI has implications for the sharing of debt between the federal and regional governments. |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:ifr:wpaper:2006-04&r=ure |
| By: | Duc Hong Vo (Department of Economics, The University of Western Australia) |
| Abstract: | Fiscal decentralisation is a complex theoretical and practical issue. The literature is currently divided on whether there is a positive or negative relationship between fiscal decentralisation and economic growth, and it appears that this is in large part due to inconsistent measures of fiscal decentralisation. In this paper, fiscal decentralisation in Vietnam will be examined, with a view to developing a fiscal decentralisation index that accounts for both the fiscal autonomy and fiscal importance of subnational governments to compare the degree of fiscal decentralisation in Vietnam with that of a range of other countries. This will facilitate subsequent (and hopefully definitive) investigations of the relationship between fiscal decentralisation and economic growth. |
| Keywords: | Fiscal Decentralisation, Economic Growth, Fiscal Autonomy, Fiscal Importance, Vietnam |
| JEL: | H77 |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:uwa:wpaper:05-16&r=ure |
| By: | Bruce Chapman; Ric Simes |
| Abstract: | There is an increasing recognition that economically disadvantaged areas do not have an inherent capacity to regenerate economic activity or to deliver automatically socially propitious outcomes. In such circumstances, there might be a strong case for public sector intervention of various types. In what follows we a case for the provision of financial resources for the establishment or consolidation of community social, and other, regional enterprises. The circumstances underlying the impotence of markets to solve financing issues are explored, and some attention is given to historical attempts to address the problem. Most importantly, we outline a potential new approach for the public sector in this area. An important and novel aspect of the exercise involves the government providing some proportion of the required finance in the form of a loan to be repaid by the enterprise only when and if the project becomes economically successful. This form of government intervention, known as income related loans, is designed to limit the extent of economic risks faced by the relevant enterprise, and has the desirable equity characteristic of repaying to taxpayers some return to their investment. Through reference to the Higher Education Contribution Scheme it is explained that the essential bases of this form of public sector approach to financing investment is well established, both conceptually and in administrative terms. |
| Keywords: | community investment; income related loans |
| JEL: | G18 G24 G38 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:auu:dpaper:481&r=ure |
| By: | Patrizia Riganti; Peter Nijkamp |
| Abstract: | This paper discusses the role that cultural heritage has in shaping social capital in contemporary cities, and the available valuation methodologies capable of measuring its impacts on cities’ economic growth. First, the economic nature of cultural goods and the role played by their valuation in regional planning is discussed. Then a critical review of the current available valuation methodologies is presented. Finally, the potential of meta-analysis is debated. Cultural heritage represents the record of mankind achievements and relationships with the world. Therefore, it has always a local dimension, though sometimes it embeds universally shared values. The concept of heritage is not given, but created by a community, by people who attach values to some objects, rites, languages, contexts, lifestyles, historic sites and monumental buildings. Labelling something as heritage represents a value judgment, which distinguishes that particular object from others, adding new meaning to it. Cultural heritage summarises people’s identities, shapes communities’ ones, and to this extent contributes to the creation of social capital. Heritage is a social, economic, and cultural resource. Heritage valuation becomes a tool to better understand the significance of heritage to different sections of society. The valuation process aims to assess existing values as attached by the relevant population. However, the ultimate aim in the context of policy analysis is to value in order to achieve the valorisation of our heritage, in order words, to add new values to the existing ones. Therefore, valuation represents a crucial step in the management of cultural heritage and in regional development. Cultural heritage ownership rests with society which may also decide on the access conditions; in principle, no citizen can be excluded from its use. Clearly, the specific nature of cultural heritage as a collective good also implies that the investment and maintenance costs have to be covered by all citizens. Free ridership is not a meaningful option under such circumstances, so that usually taxation schemes – sometimes accompanied by private transaction schemes (such as entry tickets) or even subsidisation schemes – are put in place to ensure financial viability of maintaining the stock of cultural heritage. Consequently, valuation issues of cultural heritage deserve a prominent place in the socio-economic analysis of these assets. Cultural heritage has another feature which gives it a specific characteristic: it is usually unique in nature and hence not substitutable. Consequently, the social value of cultural heritage cannot be assessed by means of normal market transactions, as the usual conditions for market transactions are lacking. In conclusion, the evaluation of cultural heritage is fraught with many complex problems of both an economic and socio-cultural nature. There is not an unambiguous approach that has a universal validity. Rather, there are classes of assessment and evaluation methods that may be helpful in specific cases. . In the history of evaluation a wide variety of different methods has been developed, such as social cost-benefit analysis, planning balance sheet analysis, community impact assessment, multicriteria analysis, participatory group decision analysis, shadow project evaluation, and so forth. There is not a single best method, as the valuation of non-traded goods cannot be solved in a straightforward manner. The present paper aims to offer a concise introduction to the problems at hand and to discuss various classes of evaluation techniques that have been developed and employed in the past years. Despite the appreciation of the role played by cultural heritage in the development of the city, research efforts have not been sufficiently integrated to tackle the complex issues related to its conservation and the need to develop comprehensive approaches and methodologies for its management. Valuation methods play a strategic role in this context. They represent an essential tool to assess the value of urban heritage per se, the potential economic benefits of its transformation, the damage caused to it by environmental hazards, and the benefits of alternative management options for its exploitation. However, evaluation of cultural heritage cannot be based on generic assessment techniques, but has to be performed by tailor-made methods that address the specifications of cultural assets. This paper discusses a way forward. |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa04p314&r=ure |
| By: | Alejandro Diaz-Bautista (COLEF) |
| Abstract: | The present study of regional economic growth in Mexico is based on the new economic geography, where distance plays an important role in explaining urban regional economic growth. The results show that distance to the northern border of Mexico and labor migration between states of Mexico, after the passage of NAFTA are important factors that explain the regional state growth and agglomerations in Mexico between 1994 and 2000. The results also indicate that job growth and FDI are not significant for the period of study. Resumen. El presente estudio sobre el crecimiento económico regional en México se basa en la nueva geografía económica, donde la distancia juega un papel importante para explicar el crecimiento económico urbano regional. Los resultados muestran que la distancia a la frontera norte de México y la migración en México, después de la puesta en marcha del TLCAN, son factores importantes que explican el crecimiento regional estatal y las aglomeraciones para el periodo 1994 a 2000. Los resultados también indican que el crecimiento del numero de empleos por sector y la Inversión Extranjera directa no son significativos para el periodo de estudio. |
| Keywords: | Economic Growth, FDI, Agglomerations, Regional Convergence, Mexico. |
| JEL: | C3 O40 R00 |
| Date: | 2005–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpur:0508001&r=ure |
| By: | J. Vernon Henderson; Yukako Ono |
| Abstract: | Firms’ headquarters [HQ] support their production activity, by gathering information and outsourcing business services, as well as, managing, evaluating, and coordinating internal firm activities. In search of locations for these functions, firms often separate the HQ function physically from their production facilities and construct stand-alone HQs. By locating its HQ in a large, service oriented metro area away from its production facilities, a firm may be better able to out-source service functions in that local metro market and also to gather information about market conditions for their products. However if the firm locates the HQ away from its production activity, that increases the coordination costs in managing plant activities. In this paper we empirically analyze the trade-off of these two considerations. |
| Keywords: | headquarters, coordination, location decision, manufacturing |
| JEL: | L60 R0 R12 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:05-17&r=ure |
| By: | Zeynep Hansen; Hideo Owan; Jie Pan |
| Abstract: | An important yet under-explored question in the teamwork literature concerns how group characteristics affect productivity. Within a given teamwork setting, it is not obvious how group member diversity affects the performance of the individual and the group. The group may gain from knowledge transfer and sharing while it may be crippled by communication and coordination problems that are prevalent in heterogeneous groups. In this study, we combine class performance data from an undergraduate management class with students’ personal records to explore diversity and knowledge spillover effects. A major advantage of our dataset is the exogenous assignment of groups, which rules out the troublesome yet common self-selection issue in team literature. Our results indicate that male-dominant groups performed worse both in group work and in individually taken exams than female-dominant and equally-mixed gender groups after controlling for other group characteristics. Individual members from a group with more diversity in age and gender scored higher in exams. However, we did not find any significance of a group’s racial composition over group and individual performances. Another novel aspect of this natural experiment is that each group chooses their own group contract form – members of “autonomous” groups receive equal grade for their group work while those in "democratic" groups can adopt differentiated point allocation, thus, providing a proper mechanism to punish free riders. Our estimation results show a significant correlation between the choice of a democratic contract and the group and individual performance. To address the endogeneity problem in groups’ contract choices, we use a maximum likelihood treatment effect model and found that the democratic group contract has a positive and significant effect on group performance. |
| JEL: | D2 I2 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12251&r=ure |
| By: | Edward Feser |
| Abstract: | Much research on agglomeration economies, and particularly recent work that builds on Marshall’s concept of the industrial district, postulates that benefits derived from proximity between businesses are strongest for small enterprises (Humphrey 1995, Sweeney and Feser 1998). With internal economies a function of the shape of the average cost curve and level of production, and external economies in shifts of that curve, a small firm enjoying external economies characteristic of industrial districts (or complexes or simply urbanized areas) may face the same average costs as the larger firm producing a higher volume of output (Oughton and Whittam 1997; Carlsson 1996; Humphrey 1995). Thus we observe the seeming paradox of large firms that enjoy internal economies of scale co-existing with smaller enterprises that should, by all accounts, be operating below minimum efficient scale. With the Birch-inspired debate on the relative job- and innovation-generating capacity of small and large firms abating (Ettlinger 1997), research on the small firm sector has shifted to an examination of the business strategies and sources of competitiveness of small enterprises (e.g., Pratten 1991, Nooteboom 1993). Technological external scale economies are a key feature of this research (Oughton and Whittam 1997). |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:04-15&r=ure |
| By: | Andrew Daly; Stephane Hess; Geoff Hyman; John Polak; Charlene Rohr |
| Abstract: | As a result of increasing road congestion and road pricing, modelling the temporal response of travellers to transport policy interventions has rapidly emerged as a major issue in many practical transport planning studies. A substantial body of research is therefore being carried out to understand the complexities involved in modelling time of day choice. These models are contributing substantially to our understanding of how travellers make time-of-day decisions (Hess et al, 2004; de Jong et al, 2003). These models, however, tend to be far too complex and far too data intensive to be of use for application in large-scale modelling forecasting systems, where socio-economic detail is limited and detailed scheduling information is rarely available. Moreover, model systems making use of the some of the latest analytical structures, such as Mixed Logit, are generally inapplicable in practical planning, since they rely on computer-intensive simulation in application just as well as in estimation. The aim of this paper, therefore, is to describe the development of time-period choice models which are suitable for application in large-scale modelling forecasting systems. Large-scale practical planning models often rely on systems of nested logit models, which can incorporate many of the most important interactions that are present in the complex models but which have low enough run-times to allow them to be used for practical planning. In these systems, temporal choice is represented as the choice between a finite set of discrete alternatives, represented by mutually exclusive time-periods that are obtained by aggregation of the actual observed continuous time values. The issues that face modellers are then: -how should the time periods be defined, and in particular how long should they be? -how should the choices of time periods be related to each other, e.g. is the elasticity for shorter shifts greater than for longer shifts? -how should time period choice be placed in the model system relative to other choices, such as that of the mode of travel? These questions cannot be answered on a purely theoretical basis but require the analysis of empirical data. However, there is not a great deal of data available on the relevant choices. The time period models described in the paper are developed from three related stated preference (SP) studies undertaken over the past decade in the United Kingdom and the Netherlands. Because of the complications involved with using advanced models in large-scale modelling forecasting systems, the model structures are limited to nested logit models. Two different tree structures are explored in the analysis, nesting mode above time period choice or time period choice above mode. The analysis examines how these structures differ by data set, purpose of travel and time period specification. Three time period specifications were tested, dividing the 24-hour day into: -twenty-four 1-hour periods; -five coarse time-periods; -sixteen 15-minute morning-peak periods, and two coarse pre-peak and post-peak periods. In each case, the time periods are used to define both the outbound and the return trip timings. The analysis shows that, with a few exceptions, the nested models outperform the basic Multinomial Logit structures, which operate under the assumption of equal substitution patterns across alternatives. With a single exception, the nested models in turn show higher substitution between alternative time periods than between alternative modes, showing that, for all the time period lengths studied, travellers are more sensitive to transport levels of service in their choice of departure time than in choice of mode. The advantages of the nesting structures are especially pronounced in the 1-hour and 15-minute models, while, in the coarse time-period models, the MNL model often remains the preferred structure; this is a clear effect of the broader time-periods, and the consequently lower substitution between time-periods. |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa05p688&r=ure |