nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2006‒07‒21
sixteen papers chosen by
Steve Ross
University of Connecticut

  1. Migration in Search of Good Government By Amihai Glazer; Hiroki Kondo
  2. Friendship Ties and Geographical Mobility: Evidence from the BHPS By Michèle Belot; John Ermisch
  3. Urban Extremism By Jan K. Brueckner; Amihai Glazer
  4. Urban Growth Boundaries: An Effective Second-Best Remedy for Unpriced Traffic Congestion? By Jan K. Brueckner
  5. Education Policy and Intergenerational Income Mobility: Evidence from the Finnish Comprehensive School Reform By Tuomas Pekkarinen; Roope Uusitalo; Sari Pekkala
  6. Measuring the Economic Impacts of Buy Local Campaigns in Iowa By Swenson, David A.
  7. Does Diversity Drive Down Trust? By Eric M. Uslaner
  8. European Integration and Regional Specialization Patterns in Turkey's Manufacturing Industry By Sedef Akgüngör; Pinar Falcioglu
  9. How (not) to Choose Peers in Studying Groups By Thomas Gall; Roland Amann
  10. Information Technologies (IT) Adoption and Localized Knowledge Diffusion: an Empirical Study By Rachel BOCQUET (IREGE, IUT-University of Savoie); Olivier BROSSARD (LEREPS-GRES)
  11. Visibility & Invisibility of Communities in Urban Systems By Paula Mota Santos; João Borges de Sousa
  12. Fiscal Federalism and Economic Growth By Jan K. Brueckner
  13. A Limit Theorem for Systems of Social Interactions By Ulrich Horst; Jos´e A. Scheinkman
  14. On the Cause of Increased Longevity and Urban Sprawl: A Macroeconomic Approach By Richard M.H. Suen
  15. Air Travel Choices in Multi-Airport Markets By Jun Ishii; Sunyoung Jun; Kurt Van Dender
  16. On the Economic and Fiscal Effects of Investment in Road Infrastructure in Portugal By Alfredo M. Pereira; Jorge M. Andraz

  1. By: Amihai Glazer (Department of Economics, University of California-Irvine); Hiroki Kondo (Departament of Economics, Shinshu University)
    Abstract: Residents both enjoy the policies adopted in their cities, and choose those policies. If some people can better evaluate policies than can others, then the most perceptive people will be the most willing to move to the city with better policies, thereby making that city more likely to adopt good policies in the future. Such migration can cause agglomeration, with some cities prospering and others failing.
    Date: 2005–11
  2. By: Michèle Belot (University of Essex and ISER); John Ermisch (ISER, University of Essex and IZA Bonn)
    Abstract: A common finding in analyses of geographic mobility is a strong association between past movement and current mobility, a phenomenon that has given rise to the so called ‘moverstayer model’. We argue in this paper that one of the driving forces behind this heterogeneity is the strength of local social ties. We use data from the BHPS on the location of the three closest friends and the frequency of contacts. We estimate the processes of friendship formation and residential mobility jointly, allowing for correlation between the two processes. Our results show that the location of the closest friends matters substantially in the mobility decision, and matters more than the frequency of contacts.
    Keywords: geographical mobility, social ties, friendship formation
    JEL: J61 Z13
    Date: 2006–07
  3. By: Jan K. Brueckner (Department of Economics, University of California-Irvine); Amihai Glazer (Department of Economics, University of California-Irvine)
    Abstract: Consider two types of residents, who prefer two different values of a policy. A current majority in some city, seeking to increase the probability that it will set policy in the following period, may adopt current policies that are particularly unattractive to the minority, leading some members of the minority to emigrate. Such behavior can lead to extremist policies, to wasteful taxes, and to similar inefficiencies.
    Date: 2006–01
  4. By: Jan K. Brueckner (Department of Economics, University of California-Irvine)
    Abstract: This paper evaluates the efficacy of the urban growth boundary (UGB) as a second-best substitute for a first-best toll regime in a congested city. Numerical results show that, while a UGB is welfare improving, validating previous theoretical results, the utility gain it generates is a very small fraction of that achieved under a toll regime. Thus, the UGB is not a useful instrument for attacking the distortions caused by unpriced traffic congestion.
    Date: 2005–07
  5. By: Tuomas Pekkarinen (Uppsala University and IZA Bonn); Roope Uusitalo (Labour Institute for Economic Research, Helsinki); Sari Pekkala (Government Institute for Economic Research, Helsinki)
    Abstract: Many authors have recently suggested that the heterogeneity in the quality of early education may be one of the key mechanisms underlying the intergenerational persistence of earnings. This paper estimates the effect of a major educational reform on the intergenerational income mobility in Finland. The Finnish comprehensive school reform of 1972-1977 significantly reduced the degree of heterogeneity in the Finnish primary and secondary education. The reform shifted the tracking age in secondary education from age 10 to 16 and imposed a uniform academic curriculum on entire cohorts until the end of lower secondary school. We estimate the effect of the reform on the correlation between son’s earnings in 2000 and father’s average earnings during 1970-1990 using a representative sample of males born during 1960-1966. The identification strategy relies on a difference-in-differences approach and exploits the fact that the reform was implemented gradually across municipalities during a six-year period. The results indicate that the reform reduced the intergenerational income correlation by seven percentage points.
    Keywords: generational mobility, education, comprehensive school reform
    JEL: D31 J62 I20
    Date: 2006–07
  6. By: Swenson, David A.
    Abstract: In Iowa, both in urban areas and more rural territories, there is a general awareness of sales leakages. These leakages take the forms of out-of-region intermediate input purchases, overall household and institutional imports, and the normal regional competitive losses in small communities to neighboring trade centers. As an economic development service extension, we have developed a useful prototype for measuring regional import substitute opportunities and identifying the potential regional gains from such a campaign. This paper will describe the basics of the approach using IMPLAN along with an example of a recent buy local report.
    JEL: C5
    Date: 2006–07–13
  7. By: Eric M. Uslaner (University of Maryland)
    Abstract: Some researchers claim that diverse populations lead to less trust. Generalized trust is a core value that leads to positive outcomes in societies--from greater tolerance of minority groups and immigrants and willingness to do good deeds, to less corruption, more social welfare and education spending, more open markets, and better functioning government. Generalized trust fundamentally rests upon a foundation of respect for diversity, but at the same time arguing that societies have a common culture. It is the idea that people have a shared fate. Generalized trust rests upon a foundation of economic equality. Yet some claim that diversity leads to less trust rather than more trust. Trusting people who are different from yourself is atypical of most people, they claim. I dispute this--arguing that generalized trust is largely unrelated to population diversity. It is not diversity that matters--it is how populations are distributed. I show that trust is lower not in diverse societies, but rather in societies with large minority groups that are segregated from the majority groups. Minority residential segregation leads to less trust because it leads to less interaction across different groups in society--and leads minorities to associate only with each other, to form their own political organizations, and to see their fate as less dependent upon majority groups. I then discuss how economic inequality and the rule of law shape the relationship between trust and minority residential segregation.
    Keywords: Trust, Diversity, Corruption
    JEL: Z13 O57 D73
    Date: 2006–04
  8. By: Sedef Akgüngör (Department of Economics, Faculty of Business, Dokuz Eylül University); Pinar Falcioglu (Department of Management, Isik University)
    Abstract: The dynamics of industrial agglomeration across the regions and the reasons for such agglomeration have been the focus of interest particularly in exploring the effects of economic integration of regions on the spatial distribution of economic activity. In this context, following the predictions of the literature on economic geography, Turkey’s integration with the European Union as a candidate member is a likely cause of changes in economic dispersion of the economic activity over the years. The major objective of the study is to complement the findings of the studies on industrial agglomeration in Turkey’s manufacturing industry by exploring whether specialization and concentration patterns have changed over time and to expose the driving forces of geographic concentration in Turkey’s manufacturing industry, particularly during Turkey’s economic integration process with the European Union under the customs union established in 1996. Industrial concentration and regional specialization are measured by GINI index for NUTS 2 regions at the 2-digit level for the years between 1992 and 2001. To investigate which variables determine industry concentration, the systematic relation between the characteristics of the industry and geographical concentration is tested. A regression equation is estimated, where the dependent variable is GINI concentration index and the independent variables are the variables that represent the characteristics of the sectors. The major finding of the study is that Turkey’s manufacturing industry has a tendency for regional specialization. Increase in the average value for regional specialization supports the prediction developed by Krugman that regions become more specialized with regional integration. But there is no evidence for increased industrial concentration in Turkish manufacturing industry, contrary to the expectations. As for the answer to which variables determine industry concentration, the analysis supports the hypothesis that the firms tend to cluster in regions where there are economies of scale and there are significant linkages between firms, supporting the predictions of new trade theory and economic geography.
    Keywords: Regional specialization, geographical concentration, economic integration, geographical economics
    JEL: L60 R10 R11 R12 R15
    Date: 2005–11–23
  9. By: Thomas Gall (University of Bonn); Roland Amann (University of Konstanz)
    Abstract: This paper analyzes social group formation when agents are subject to peer effects within groups increasing human capital and instantaneous utility. When agents are heterogeneous on two dimensions, ability and social skills, and monetary payments are not feasible the model predicts segregation at the top and at the bottom of the attribute space and bunching for heterogeneous intermediate types. Groups may be heterogeneous in taste types and more heterogeneous types are more likely to participate. The equilibrium allocation does not induce cost-efficient human capital accumulation. Introducing ability tracking may produce beneficial results despite decreasing differences in human capital production.
    Keywords: Education, Peer-effects, Matching, Group Formation
    JEL: I21 C78 D51
    Date: 2006–05
  10. By: Rachel BOCQUET (IREGE, IUT-University of Savoie); Olivier BROSSARD (LEREPS-GRES)
    Abstract: We use a specially designed survey on French firms located in Haute-Savoie to provide empirical evidence suggesting that IT adoption is not only influenced by the traditional factors of technology diffusion (rank, stock-order, epidemic effects and complementary organizational practices) but also by local diffusion of knowledge effects. The data collected permit us to make several advances. Firstly, we study the adoption of several authentic Information and Communication Technologies while the recent empirical literature has mainly focused on computer capital stocks or automation tools. Secondly, we construct measures to replace the traditional epidemic effect by different proximity variables. Thirdly, we assess the real impact of proximity on the IT adoption process by examining different channels of knowledge transmission among nearby firms, from knowledge spillovers to well-regulated arrangements. Our econometric methodology is designed to deal with potential biases that are encountered when implementing technology adoption equations and testing practice complementarities. In particular, we explicitly deal with the problem of simultaneous technological choices, using bivariate adoption equations.
    Keywords: Localized knowledge spillovers. Proximity.Technology diffusion. IT adoption. Complementary organizational practices
    JEL: L2
    Date: 2006
  11. By: Paula Mota Santos (University Fernando Pessoa); João Borges de Sousa (Porto University)
    Abstract: Information on the presence of Chinese and Ukrainian communities in Portugal, and namely in Greater Porto (northern Portugal) will be presented to then investigate how recent work on evolving networks might be a helpful tool in analysing the integration of migrant communities in urban systems, namely in helping to understand if the differential relationships between ‘nodes’ and ‘vertices’ might help to account for the higher and lesser visibility of these two communities within Greater Porto.
    Keywords: Chinese, Ukrainian, Migrant Communities, Self Evolving Networks
    JEL: O15 O18 Z13
    Date: 2006–04
  12. By: Jan K. Brueckner (Department of Economics, University of California-Irvine)
    Abstract: This paper uses an endogenous-growth model with overlapping generations to explore the connection between fiscal federalism and economic growth. The analysis shows that federalism, which allows public-good levels to be tailored to suit the differing demands of young and old consumers, who live in different jurisdictions, increases the incentive to save. This stronger incentive in turn leads to an increase in investment in human capital, and a byproduct of this higher investment is faster economic growth.
    Date: 2005–10
  13. By: Ulrich Horst; Jos´e A. Scheinkman
    Date: 2006–07–15
  14. By: Richard M.H. Suen (University of Rochester)
    Abstract: This dissertation can be divided into two parts. The first part is motivated by two trends that occurred during the second half of the twentieth century. First, there was a persistent rising trend in medical spending. Second, there was a significant increase in longevity. Chapter 1 presents a model in which a combination of technological progress in medical treatment and rising incomes can explain these two. The main theme of this chapter is that the rapid growth in health care spending was not driven by factors associated with market structures or insurance opportunities, but by factors underlying the production and accumulation of health, namely improvements in medical treatment and rising incomes. According to this model, these two factors can explain all of the increase in health care spending and more than 60% of the increase in life expectancy at age 25 during the period 1950-2001. The next question considered is whether or not it is efficient to allocate so many resources to the health care sector. To answer this question, a benchmark for welfare analysis is constructed in Chapter 2. This is then compared to the model presented in Chapter 1. An equivalent variation measure is used to quantify the welfare differences between the two. One major finding of the second chapter is that, with improvements in medical treatment and rising incomes, a large increase in medical spending can be obtained even in the first-best scenario. The second part of this dissertation is motivated by two other phenomena that happened over the period 1910-1970. First, a rising fraction of the urban population chose to live far away from the city center. Second, there was a significant increase in car-ownership. he objective of Chapter 3 is to assess quantitatively the relationship between the two. To achieve this, a simple model is constructed in which people can choose where to live and whether or not to purchase a car. The calibrated version of the model is able to explain about 86% of car-ownership in 1970 and about 77% of the suburbanization trend during the period 1910-1970.
    Keywords: Technological Progress, Life Expectancy,Medical Spending, Automobiles, Suburbanization
    Date: 2006–07
  15. By: Jun Ishii (Department of Economics, University of California-Irvine); Sunyoung Jun (Department of Economics, University of California-Irvine); Kurt Van Dender (Department of Economics, University of California-Irvine)
    Abstract: We estimate a conditional logit model to measure the impact of airport and airline supply characteristics on the air travel choices of passengers departing from one of three San Francisco Bay area airports and arriving at one of four airports in greater Los Angeles in October 1995. Non-price characteristics like airport access time, airport delay, flight frequency, the availability of particular airport-airline combinations, and early arrival times are found to strongly affect choice probabilities. Marginal effects and counterfactual scenarios suggest that changes access in times affect travel choices more than changes in travel delays, and that the preferred airport differs by passenger type. In order to examine the robustness of the conditional logit model, we estimate a mixed logit model, and find that the results are similar. We attribute the similarity to our strictly defined travel market and to our distinction between leisure and business travelers, thus controlling for two important sources of consumer heterogeneity.
    Keywords: Airports; Airlines; Air travel demand; Discrete choice
    JEL: L11 L15 L93 R41
    Date: 2006–02
  16. By: Alfredo M. Pereira (Department of Economics, College of William and Mary); Jorge M. Andraz (Faculdade de Economia, Universidade do Algarve)
    Abstract: The objective of this paper is to investigate the economic and fiscal impact of road infrastructure investment in Portugal, focusing on the effects for each region of both local investments and investments in other regions. We estimate VAR models for the national economy as well as for each of the five administrative regions in the country. Empirical results suggest that investment in road infrastructures has been a powerful instrument to increase private investment, new permanent jobs and to promote long-term growth in all regions. More importantly, investment in road infrastructure, both at the aggregate level and for each one of the five administrative regions, generates fiscal effects that largely exceed the initial investment itself. Accordingly, there is no trade off in the long-term between the potentially positive economic effects and the potentially negative budgetary effects of such investments, i.e., both economic and budgetary effects are positive. As a corollary, policies that would reduce current road investment as a response to the current budgetary concerns will result in lower long-term growth as well as worse future budgetary conditions.
    Keywords: public invesetment, road transportation infrastructure, regional spillovers, Portugal
    JEL: C32 H54 R53
    Date: 2006–07–13

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