nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2006‒06‒17
nineteen papers chosen by
Steve Ross
University of Connecticut

  1. Spatial agglomeration and product market competition By Christoph Alsleben
  2. New culture-oriented economic development trajectories: the case study of four Dutch cities By Antonio Russo; Jan van der Borg
  3. Does crime affect economic decisions? An empirical investigation of savings in a high-crime environment By João Manoel Pinho de Mello; Eduardo Zilberman
  4. How important is geography for agglomeration? By Michael Roos
  5. Specialized consumer services cause agglomeration - A theoretical model and some implications for regional policy By Michael Roos
  6. Local economic structure and industry development in Germany, 1993-2001 By Blien, Uwe; Suedekum, Jens
  7. Empirics of Social Interactions By Yannis Ioannides
  8. The Downside of Knowledge Spillovers: An Explanation for the Dispersion of High-tech Industries By Christoph Alsleben
  9. Tinkering Toward Accolades: School Gaming Under a Performance Accountability System By Julie Berry Cullen; Randall Reback
  10. Structural change and regional employment dynamics By Blien, Uwe; Sanner, Helge
  11. Evidence on the Geographic Concentration of German Industries: Do High-Tech Clusters Really Matter? By Björn Alecke; Christoph Alsleben; Frank Scharr; Gerhard Untiedt
  12. Would Higher Salaries Keep Teachers in High-Poverty Schools? Evidence from a Policy Intervention in North Carolina By Charles Clotfelter; Elizabeth Glennie; Helen Ladd; Jacob Vigdor
  13. Wages and Market Potential in Germany By Michael Roos
  14. Knowledge flows and the geography of networks. A strategic model of small worlds formation. By Nicolas Carayol; Pascale Roux
  15. Geographic and technological spillovers within the triad: micro evidence from US patents By Luigi Aldieri; Michele Cincera
  16. The social multiplier and labour market participation of mothers. By Eric Maurin; Julie Moschion
  18. Are House Prices Nearing a Peak?: A Probit Analysis for 17 OECD Countries By OECD
  19. Regional patterns and determinants of new firm formation and survival in western Germany By Brixy, Udo; Grotz, Reinhold

  1. By: Christoph Alsleben
    Abstract: This paper tests the hypothesis that product market competition has a negative impact on spatial agglomeration. This hypothesis emerges as an interpetation of the models by Combes and Duranton (2001) and Alsleben (2005) which are about firms' location choice in the presence of knowledge spillovers. Using data for German manufacturing industries, the result is that, while controlling for other agglomeration forces, higher industrial concentration, measured by the Herfindahl index of concentration of sales, implies stronger spatial agglomeration, as measured by Ellison and Glaeser's (1997) index of concentration.
  2. By: Antonio Russo (School of tourism and leisure, University Rovira i Virgili, Tarragona); Jan van der Borg (Department of Economics, University Of Venice Cà Foscari)
    Abstract: Culture is a key ingredient of post-industrial, information-intensive economic activity. Culture-oriented economic development (COED) is emerging as a dominant paradigm, integrating the symbolic and creative elements into any aspect of the urban economy, pursuing distinction, innovativeness, and a higher level of interaction between localised individual and collective knowledge and globalising markets. This article presents a dynamic analysis of the effects of culture on the economic development trajectories of European cities. It may contribute to shed more light on the relevance of cultural industries for spatial development, addressing issues such as: cultural endowment, identity and urban competitiveness; dispersed vs. concentration; cultural participation and social inclusion. The analysis uses data collected within the ESPON project 1.3.3 and other information of qualitative and quantitative nature collected by EURICUR in occasion of a study of a sample of European cities . In this paper we present the investigation conducted in the three largest Dutch cities, Amsterdam, Rotterdam and the Hague, which are part of the city-region of the Randstand, and the fifth largest Dutch city, Eindhoven, one the most important economic and educational centres in the Netherlands.
    Keywords: Cultural industry, urban economy, creativity, sustainable development, The Netherlands
    JEL: R11 Z10
    Date: 2006
  3. By: João Manoel Pinho de Mello (Department of Economics PUC-Rio.); Eduardo Zilberman (Department of Economics, New York University)
    Abstract: While most economic studies of crime have focused on its determinants, we study the reverse question: does crime affect economic behavior? Being such an important social phenomenon, one would expect crime to affect economic decisions. Using local data on crime rates and savings per capita in a high-crime environment, we document a striking empirical relationship: crime induces savings. Our paper is one of the first to successfully relate crime to an economic outcome. This result is robust to an extensive sensitivity analysis, which include: 1) controlling to a large set of demographic covariates; 2) accounting for the fact that crime and savings may be determined jointly; 3) measuring savings in different ways; 4) accounting for the presence of possible outliers; 5) weighting the data according to population; 6) accounting for spatial correlation; and, finally, 7) estimating the model for different sub-samples of cities. Our estimates indicate that only property, not violent, crime induces savings, which is consistent with the theoretical explanations on why crime would increase thriftiness
    Keywords: Crime, Economic Behavior, Savings
    JEL: D00 D91 R11 Z19
    Date: 2006–05
  4. By: Michael Roos
    Abstract: The economic geography literature distinguishes between two types of reasons for economic agglomeration. Regional concentration of economic activity can be attributed to ''first nature'' meaning geographic advantages and disadvantages given by nature or to ''second nature'' meaning agglomeration economies by the interaction of economic agents. Several recent studies tried to estimate the relative importance of the two types of explanation. Most of these studies seem to exaggerate the importance of natural advantages because of loose definitions of geography. We describe geography by a small set of non-economic variables and estimate their importance for agglomeration in Germany. We find that about one third of the agglomeration of economic activity can be attributed to geography.
  5. By: Michael Roos
    Abstract: This paper presents a regional economic model in which increasing returns to scale in the production of non-traded consumer services cause the agglomeration of high-skilled workers in one region. The residential choice of high-skilled individuals exerts a pecuniary externality on immobile low-skilled individuals. Therefore, the low-skilled in the periphery reach a lower utility level than those in the core. We analyze minimum wages, training, and redistributive taxation as policy instruments to promote the low-skilled in the periphery. Even if they affect one region only, all these instruments alter the interregional equilibrium and have complexly interacting effects.
  6. By: Blien, Uwe (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Suedekum, Jens
    Abstract: "This paper analyses the impact of dynamic MAR- and Jacobs-externalities on local employment growth in Germany between 1993 and 2001. In order to facilitate a comparison between the neighbouring countries we firstly replicate the study of Combes (2000) on local employment growth in France and find very similar results for Germany. Afterwards we formulate an alternative empirical model that is based on a weighted regression approach. With this model we find that Jacobs-externalities matter in manufacturing, whereas MAR-externalities are present in advanced service sectors." (author's abstract, IAB-Doku) ((en))
    Keywords: Wirtschaftswachstum - Auswirkungen, Beschäftigungsentwicklung, regionale Disparität, Regionalentwicklung, regionale Faktoren
    JEL: R11 O40
    Date: 2005–01–13
  7. By: Yannis Ioannides
    Abstract: Empirical studies of social interactions address a multitude of definitional, econometric and measurement issues associated with role of interpersonal and social group influences in economic decisions. Applications range from studies of crime patterns, neighborhood influences on upbringing and conformist behavior, mutual influences among classmates and keeping up with roommates in colleges regarding academic and social activities, to herding and to learning about social services. The entry reviews several instances of successful identification of effects emanating from others' behavior as distinct from characteristics of others. Data sets with increasingly rich contextual information will allow estimation of complex models of economic decisions.
    Keywords: Social interactions, peer effects, contextual effects, neighborhood choice, neighbors, neighborhoods, neighborhood effects, laboratory experiments, field experiments, self selection, social networks.
    JEL: C25 I30 R00
    Date: 2006
  8. By: Christoph Alsleben
    Abstract: Both theoretical work on knowledge spillovers and regional policy initiatives often assume that there exists a general and unanimous advantage for firms to cluster. But opposed to the benefit is the disadvantage of sharing knowledge with other (rival) firms. This paper highlights the "downside" associated with knowledge spillovers and presents a four-stage game of location choice where spillovers result from labour poaching and where the strategic interaction between firms may make them avoid colocation with spillovers. The model follows Combes and Duranton (2001) and provides an explanation for the dispersion of German high-tech industries we found in a companion paper.
  9. By: Julie Berry Cullen; Randall Reback
    Abstract: We explore the extent to which schools manipulate the composition of students in the test-taking pool in order to maximize ratings under Texas' accountability system in the 1990s. We first derive predictions from a static model of administrators' incentives given the structure of the ratings criteria, and then test these predictions by comparing differential changes in exemption rates across student subgroups within campuses and across campuses and regimes. Our analyses uncover evidence of a moderate degree of strategic behavior, so that there is some tension between designing systems that account for heterogeneity in student populations and that are manipulation-free.
    JEL: D82 H39 I28
    Date: 2006–06
  10. By: Blien, Uwe (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Sanner, Helge
    Abstract: "A casual look at regional unemployment rates reveals that there are vast differences which cannot be explained by different institutional settings. Our paper attempts to trace these differences in the regions' labour market performance back to the regions' specialisation in products that are more or less advanced in their product cycle. The model we develop shows how individual profit and utility maximisation endogenously leads to decreasing employment in the presence of process innovation. Things deteriorate even further if the region under observation is less innovative than others. Our model suggests that the only way to escape from this vicious circle is to specialize in products that are at the beginning of their economic life." (author's abstract, IAB-Doku) ((en))
    Keywords: Arbeitslosenquote, regionale Disparität, regionaler Arbeitsmarkt, Produktinnovation, Wirtschaftsstrukturwandel, Beschäftigungsentwicklung
    JEL: O41 D91 J23 R23
    Date: 2006–04–19
  11. By: Björn Alecke; Christoph Alsleben; Frank Scharr; Gerhard Untiedt
    Abstract: The agglomeration of industries has received much interest both in empirical and theoretical work in recent time. Especially in Germany politicians became inspired by the notion of high-technology industry clusters and German regional policy has seen a wave of initiatives aiming at the formation of such clusters. This papers explorers in a systematic w ay the geographic concentration of German manufacturing industries and relates it to industry characteristics and agglomeration forces proposed by theory. The main finding is that there is no general relationship between agglomeration and R&D or high-technology related business which suggests that hope put in the fast and effective development of "high-tech" clusters might be disappointed.
  12. By: Charles Clotfelter; Elizabeth Glennie; Helen Ladd; Jacob Vigdor
    Abstract: For a three-year time period beginning in 2001, North Carolina awarded an annual bonus of $1,800 to certified math, science and special education teachers working in high poverty or academically failing public secondary schools. Using longitudinal data on teachers, we estimate hazard models that identify the impact of this differential pay by comparing turnover patterns before and after the program’s implementation, across eligible and ineligible categories of teachers, and across eligible and barely-ineligible schools. Results suggest that this bonus payment was sufficient to reduce mean turnover rates of the targeted teachers by 12%. Experienced teachers exhibited the strongest response to the program. Finally, the effect of the program may have been at least partly undermined by the state’s failure to fully educate teachers regarding the eligibility criteria. Our estimates most likely underpredict the potential outcome of a program of permanent salary differentials operating under complete information.
    JEL: I2 J33 J45
    Date: 2006–06
  13. By: Michael Roos
    Abstract: Using a market potential function, we examine the spatial correlation of wages and consumer purchasing power across regions in West Germany. The market potential function can be regarded as a reduced form of several new economic geography models. Thus, the estimation results provide some first evidence on the validity of these models for European regions. We find that the wage in one region is indeed positively related to purchasing power in other regions. However, this relationship only holds for skilled wokers' salaries and wages, whereas it does not for the wages of untrained workers.
  14. By: Nicolas Carayol; Pascale Roux
    Abstract: This paper aims to demonstrate that the strategic approach of network formation can generate networks that share the main structural properties of most real social networks. We introduce a spatialized variation of the Connections model (Jackson and Wolinski, 1996) in which agents balance the benefits of forming links resulting from imperfect knowledge flows through bonds against their costs which increase with geographic distance. We show that, for intermediary levels of knowledge transferability, our time-inhomogeneous process selects networks which exhibit high clustering, short average distances and, when the costs of link formation are normally distributed across agents, skewed degree distributions.
    Keywords: Strategic network formation ; Time-inhomogeneous process ; Knowledge flows ; Small worlds ; Monte Carlo simulations.
    JEL: D85 C63 Z13
    Date: 2006
  15. By: Luigi Aldieri (Università degli Studi di Napoli "Parthenope", Naples & DULBEA-CERT, Université libre de Bruxelles, Brussels.); Michele Cincera (DULBEA-CERT, Université libre de Bruxelles, Brussels, and CEPR)
    Abstract: This paper aims at assessing the magnitude of R&D spillover effects on large international R&D companies’ productivity growth. In particular, we investigate the extent to which R&D spillover effects are intensified by both geographic and technological proximities between spillover generating and receiving firms. We also control for the firm’s ability to identify, assimilate and absorb the external knowledge stock. The results estimated by means of panel data econometric methods (system GMM) indicate a positive and significant impact of both types of R&D spillovers and of absorptive capacity on productivity performance.
    Keywords: Geographic and technological R&D spillovers, absorptive capacity, firms’ productivity growth.
    JEL: O33 O47
    Date: 2006–05
  16. By: Eric Maurin (Paris-Jourdan Sciences Economiques (PSE) - CEE - CEPR - CREST et IZA); Julie Moschion (Centre d'Economie de la Sorbonne)
    Abstract: In France as in the US, the participation of a mother in the labour market is influenced by the sex of her oldest siblings. Same-sex mothers tend to have more children and to work significantly less than the other mothers. In contrast, the sex of the oldest siblings does not have any perceptible influence on neighbourhood choices. There is no correlation between the sex of the siblings of a mother and the sex of the siblings of the other mothers living in the same close neighbourhood. Given these facts, the distribution of the sex of the siblings of the other mothers provides us with a plausible instrumental variable to identify the influence of other mothers' participation on a mother's participation in the labour market. Reduced-form analysis reveals that a mother's participation in the labour market is significantly affected by the sex of the oldest siblings of the other mothers living in the same neighbourhood. IV estimates suggest a strong impact of close neighbours' participation in the labour market on individual participation. We compare this result to estimates produced using the distribution of children's quarters of birth to generate instruments. Mothers whose children were born at the end of the year cannot send their children to pre-elementary school as early as the other mothers and participate less in the labour market. Interestingly enough, estimates using the distribution of quarters of birth in the neighbourhood as instruments are as strong as estimates using the sex-mix instruments.
    Keywords: Female participation in the labour market, neighbourhood effects, social multiplier.
    JEL: J22
    Date: 2006–05
  17. By: Friederike Mengel (Universidad de Alicante)
    Abstract: I present and study an evolutionary model of immigration and culturaltransmission of social norms in a set-up where agents are repeatedly matchedto play a one-shot interaction prisoner´s dilemma. Matching can be non-randomdue to limited integration (or population viscosity). The latter refers to atendency of individuals to have a higher rate of interaction with individuals oftheir type than with similar numbers of other agents. I derive a culturaltransmission mechanism in order to examine the influence of viscosity and ofother institutional characteristics of society on the evolutionary selection of prosocialnorms. The main findings are that strict norms, sustained by stronginternal punishment, need either viscosity or strong institutional pressures topersist, while norms of intermediate strength persist under a variety ofinstitutional characteristics. Endogenizing norm strength allows to identify twoscenarios in which pro-social norms survive: One of rigidity in whichseparation (high viscosity) leads to monomorphic equilibria with strict normsfor cooperation. And one of integration (low viscosity) where intermediatenorms persist in polymorphic equilibria. Furthermore, with endogenous norms,viscosity and cooperation are not linked in a monotone way.
    Keywords: Cultural Evolution, Game Theory, Social Norms, Cooperation, Population Viscosity.
    JEL: C70 C73 Z13
    Date: 2006–06
  18. By: OECD
    Abstract: House prices have been moving up strongly in real terms since the mid-1990s in the majority of OECD countries, with the ongoing upswing the longest of its kind in the OECD area since the 1970s. If interest rates were to rise significantly, real house prices may be at risk of nearing a peak. The historical record suggests that the subsequent drops in prices in real terms might be large and that the process could be protracted. To quantify the probability that a peak is nearing in the current situation a probit model was estimated for the period 1970-2005 on a restricted set of what are generally agreed to be the main explanatory variables. Aside from interest rates, these include measures of overheating, such as the gap between real house prices and their long-run trend and the rate of change in real house prices in the recent past. The main finding is that an increase in interest rates by about 1 to 2 percentage points would result in probabilities of a peak nearing of 50% or more in the United States, France, Denmark, Ireland, New Zealand, Spain and Sweden. <P>La hausse des prix des logements touche-t-elle à son terme ? Les prix des logements ont fortement augmenté en termes réels depuis le milieu des années 90 dans la majorité des pays de l'OCDE, et leur augmentation actuelle est la plus longue que la zone OCDE ait connue depuis les années 70. Si les taux d.intérêt venaient à augmenter ensiblement, la progression des prix réels des logements pourrait toucher à sa fin. Les évolutions passées donnent à penser que les baisses de prix qui s'ensuivraient pourraient être importantes en termes réels et que le processus d'ajustement pourrait durer un certain temps. Pour mesurer la probabilité que les prix cessent d'augmenter dans la situation actuelle, un modèle probit a été estimé sur la période 1970-2005 pour un ensemble restreint de ce que l'on considère en général comme les principales variables explicatives. En plus des taux d'intérêt, ces variables comprennent des indicateurs de surchauffe, comme l'écart entre les prix réels des logements et leur tendance de long terme, ainsi que le taux de variation des prix réels des logements au cours de la période récente. L'analyse démontre qu.une hausse de 1 ou 2 points des taux d.intérêt ferait passer à 50 % ou plus la probabilité d'un retournement du marché aux États-Unis, en France, au Danemark, en Irlande, en Nouvelle-Zélande, en Espagne et en Suède.
    Keywords: financial markets, marchés financiers, house prices, prix des logements, business cycles, cycles conjoncturels
    JEL: E32 E52 F42
    Date: 2006–06–01
  19. By: Brixy, Udo (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Grotz, Reinhold
    Abstract: "There is a large body of literature on the determinants of regional variation in new firm formation. In contrast there are few articles on the spatial differences in new firm survival. Using panel data we analyse both items for 74 western German regions over a ten-year period. The positive relationship between entry and exit which is often stated suggests a negative correlation between entry and survival. On the other hand, however, it seems convincing that regions with high birth rates should also have high survival rates, because a favourable environment for the founding of new firms should also be encouraging for the development of these firms. However, an analysis of both rates for 74 western German regions over a ten-year period reveals the existence of a negative relationship in general. This means that the survival rates are below average in regions with high birth rates. Despite this overall correlation, however, it is shown that the spatial pattern of a combination of both rates is complex, and all types of possible relationships exist. With a multivariate panel analysis we study the factors that influence regional birth and survival rates using the same set of independent variables. It is shown that in the service sector most variables literally work in opposite directions in the birth and survival rates models. But this does not hold for the manufacturing sector. This can be rated as evidence for the 'supportive environment thesis'. The reason for this is a completely different outcome of the estimated birth rates models for both industry sectors, whereas there are only minor differences in the estimated survival rate models. We can therefore deduce firstly that the two industries have different requirements for their 'seed bed' but not for their further successful development; and secondly, that the spatial structures which increase the number of newly founded businesses in the service sector are detrimental to the survival rates of newly founded firms." (author's abstract, IAB-Doku) ((en))
    Keywords: Unternehmensgründung, regionale Disparität, Unternehmenserfolg, Wirtschaftszweige, Westdeutschland, Bundesrepublik Deutschland
    JEL: R11 J23 L25 M13
    Date: 2006–04–27

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