nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2006‒08‒05
thirty-six papers chosen by
Steve Ross
University of Connecticut

  1. Is Crime Contagious? By Jens Ludwig; Jeffrey R. Kling
  2. Choice, Competition and Pupil Achievement By Stephen Gibbons; Stephen Machin; Olmo Silva
  3. Quality Investment and Price Formation in the Performing Arts Sector: A Spatial Analysis By Traub, Stefan
  4. The determinants of urban public transport: an international comparison and econometric analysis By Iragaël Joly; Sophie Masson; Romain Petiot
  5. Supply Constraints and Housing Prices By Saku Aura; Thomas Davidoff
  6. The link between travel Time Budget and Speed: a Key relationship for urban space-time dynamics By Iragaël Joly
  7. Asymmetric Spatial Competition By Sougata Poddar; Ruby Toh
  8. Housing: An Analysis of Ownership and Investment Based on the Household Savings Survey By Mark van Zijll de Jong; Grant M. Scobie
  9. Who Saves in Ireland? The Micro Evidence By Marialuz Moreno-Badia
  10. Linear and Threshold Forecasts of Output and Inflation with Stock and Housing Prices By Greg Tkacz; Carolyn Wilkins
  11. A duration model for the TTB of Lyon By Iragaël Joly
  12. Towards Sustainable Mobility Indicators: Application to the Lyons Conurbation By Jean-Pierre Nicolas; Pascal Pochet; Hélène Poimboeuf
  13. A Century of Shocks: The Evolution of the German City Size Distribution 1925 – 1999 By Maarten Bosker; Steven Brakman; Harry Garretsen; Marc Schramm
  14. Quality of schooling and quality of schools for indigenous students in Guatemala, Mexico, and Peru By Hernandez-Zavala, Martha; Patrinos, Harry Anthony; Sakellariou, Chris; Shapiro, Joseph
  15. The Provision of Local Public Services in a Risky Environment: An Application to Crime By Traub, Stefan
  16. The Effect of Court-Ordered Hiring Quotas on the Composition and Quality of Police By Justin McCrary
  17. Assessing the effects of local taxation using microgeographic data By Gilles Duranton; Laurent Gobillon; Henry G Overman
  18. Canada's Global Cities: Socio-economic Conditions in Montréal, Toronto and Vancouver By Heisz, Andrew
  19. Exploring the Detailed Location Patterns of UK Manufacturing Industries using Microgeographic Data By Gilles Duranton; Henry G Overman
  20. Measurement and Spatial Effects of the Immigrant Created Cultural Diversity in Sydney By Walter F. Lalich
  21. The termination of subprime hybrid and fixed rate mortgages By Anthony Pennington-Cross; Giang Ho
  22. Fiscal Decentralization and Public Subnational Financial Management in Peru By Mercedes Garcia-Escribano; Ehtisham Ahmad
  23. The impact of local and national economic conditions on legislative election results By Linda Gonçalves Veiga; Francisco José Veiga
  24. Status-Seeking in Criminal Subcultures and the Double Dividend of Zero-Tolerance By Robert Dur
  25. Broadening Access to Primary Education: Contract Teacher Programs and Their Impact on Education Outcomes in Africa – An Econometric Evaluation for Niger By Jean Bourdon; Markus Frölich; Katharina Michaelowa
  26. Is Housing Wealth an 'ATM'? The Relationship Between Household Wealth, Home Equity Withdrawal, and Saving Rates By Vladimir Klyuev; Paul Mills
  27. Location choice and employment decisions : a comparison of German and Swedish multinationals By Becker, Sascha O.; Ekholm, Karolina; Jäckle, Robert; Mündler, Marc-Andreas
  28. School Choice and Information An Experimental Study on Matching Mechanisms By Joana Pais; Ágnes Pintér
  29. The ‘de-territorialisation of closeness’ - a typology of international successful R&D projects involving cultural and geographic proximity By Paulo Santos; Aurora A.C. Teixeira; Ana Brochado
  30. Interjurisdictional Competition for Higher Education and Firms By Marcel Gérard; Fernando Ruiz
  31. Investment and credit effects of land titling and registration: By de Laiglesia, Juan R.
  32. Airline Schedule Competition: Product-Quality Choice in a Duopoly Model By Jan K. Brueckner; Ricardo Flores-Fillol
  33. Agglomeration and Aid By Steven Brakman; Harry Garretsen; Charles van Marrewijk
  34. A Model of Social Interactions and Endogenous Poverty Traps By Roland G. Fryer, Jr.
  35. Fifty Million Voters Can't Be Wrong: Economic Self-Interest and Redistributive Politics By Jacob L. Vigdor
  36. Intentions and Social Interactions By J. Atsu Amegashie

  1. By: Jens Ludwig (Georgetown University, NBER and IZA Bonn); Jeffrey R. Kling (Brookings Institution and NBER)
    Abstract: Understanding whether criminal behavior is "contagious" is important for law enforcement and for policies that affect how people are sorted across social settings. We test the hypothesis that criminal behavior is contagious by using data from the Moving to Opportunity (MTO) randomized housing-mobility experiment to examine the extent to which lower localarea crime rates decrease arrest rates among individuals. Our analysis exploits the fact that the effect of treatment group assignment yields different types of neighborhood changes across the five MTO demonstration sites. We use treatment-site interactions to instrument for measures of neighborhood crime rates, poverty and racial segregation in our analysis of individual arrest outcomes. We are unable to detect evidence in support of the contagion hypothesis. Neighborhood racial segregation appears to be the most important explanation for across-neighborhood variation in arrests for violent crimes in our sample, perhaps because drug market activity is more common in high-minority neighborhoods.
    Keywords: endogenous effects, social multiplier, arrests, social experiment
    JEL: H43 I18 J23
    Date: 2006–07
  2. By: Stephen Gibbons (London School of Economics); Stephen Machin (University College London, London School of Economics and IZA Bonn); Olmo Silva (London School of Economics, European University Institute and IZA Bonn)
    Abstract: Choice and competition in education have found growing support from both policy makers and academics in the recent past. Yet, evidence on the actual benefits of market-oriented reforms is at best mixed. Moreover, while the economic rationale for choice and competition is clear, in existing work there is rarely an attempt to distinguish between the two concepts. In this paper, we study whether pupils in Primary schools in England with a wider range of school choices achieve better academic outcomes than those whose choice is more limited; and whether Primary schools facing more competition perform better than those in a more monopolistic situation. In simple least squares regression models, we find little evidence of a link between choice and achievement, but uncover a small positive association between competition and school performance. Yet, this could be related to endogenous school location or pupil sorting. In fact, an instrumental variable strategy based on discontinuities generated by admissions district boundaries suggests that the performance gains from greater school competition are limited. Only when we restrict our attention to Faith autonomous schools, which have more freedom in managing their admission practices and governance, do we find evidence of a positive causal link between competition and pupil achievement.
    Keywords: choice, competition, primary schools, pupil achievement
    JEL: I20 H70 R5
    Date: 2006–07
  3. By: Traub, Stefan
    Abstract: In this paper, we present a spatial model of the public provision of the performing arts. Agents behave boundedly rational. Art directors set performance quality according to their aspiration levels. While taking into account the spatial distribution of the population, administrative directors in calculating ticket prices ignore that they compete with neighboring performing arts organization (PAOs) for audience. The model is tested empirically using a spatial autoregressive (SAR) model with a complete data set of German PAOs and cities. Our data support the model and help to explain the size and distribution of losses in the public performing arts sector.
    Keywords: Performing Arts, Local Public Goods, Quality, Spatial Competition, Bounded Rationality
    JEL: H41 R59 Z10
    Date: 2005
  4. By: Iragaël Joly (LET - Laboratoire d'économie des transports - [CNRS : UMR5593] - [Université Lumière - Lyon II] - [Ecole Nationale des Travaux Publics de l'Etat]); Sophie Masson (OMI - Organisations Marchandes et Institutions - [Université de Reims - Champagne Ardenne]); Romain Petiot (GEREM - Groupe d'Étude et de Recherche en Économie Mathématique - [Université de Perpignan])
    Abstract: The analysis presented in this paper is based on the database created by the UITP (International Association of Public Transport), "The Millennium Cities Database", which covers the public transport systems in 100 of the world's cities. It contains data on demography, urban structure, transport networks, daily mobility, environmental impacts, etc. Our analysis demonstrates the contrasts between European and American travel practices. It explores possible links between public transport market share and geographical and economic conditions on the one hand and the characteristics and performances of public transport systems on the other. Our research has generated an explanatory econometric model for public transport market share. To end with, a consideration of the levers that can be used to influence the public transport system leads into a discussion about the future of cities with ''European urban mobility'' and the danger of a slide towards ''American urban mobility'' taking place.
    Keywords: Transport systems ; Urban mobility ; Transport policy ; Public transport
    Date: 2006–07–25
  5. By: Saku Aura; Thomas Davidoff
    Abstract: This paper analyzes the effects of land use constraints on housing prices. We provide a new framework for evaluating policy when mobility across regions is allowed but limited. A key result is that loosening regulatory constraints within individual regions would have little effect on prices for plausible parameterizations. For example, we show reasonable conditions under which, even if every building in Manhattan were 100 stories tall, prices would fall by less than 15 percent.
    Keywords: housing supply and markets, regulatory policies, land use patterns
    JEL: R14 R21 R38
    Date: 2006
  6. By: Iragaël Joly (LET - Laboratoire d'économie des transports - [CNRS : UMR5593] - [Université Lumière - Lyon II] - [Ecole Nationale des Travaux Publics de l'Etat])
    Abstract: The relationship between travel time budget (TTB) and speed is central to transport economics and allows us to analyze travel behaviour, urban structure and the transport system. Together, this relationship and Zahavi's hypothesis provide a straightforward mechanism that explains the increase in daily travel distances and urban sprawl. However, quantitative analysis (Regression Analysis and Principal Component Analysis) shows that TTBs are only stable at an aggregate level, and the potential of urban speed restriction policies is severely limited at local level.
    Keywords: Travel Time Budget (TTB) ; Travel Behaviour ; Transport Policy ; Urban speed restriction policies
    Date: 2006–07–25
  7. By: Sougata Poddar (Department of Economics, National University of Singapore); Ruby Toh
    Abstract: This paper considers price and location decisions of competing duopolists through an approach that integrates the traditional inside location and outside location model. One firm locates inside a linear city along with consumers while the other locates outside it. We analyze a location-price simultaneous game as well as a location-then price sequential game and characterize the equilibria in pure strategies. The transport cost are assumed to be linear-quadratic and borne by the consumers. We find the results are contrasting to the traditional inside and outside location models and the stability of the proposed model is intermediate between the two.
    Keywords: Inside-outside location model, spatial competition, product differentiation, transportation costs, cross-border shopping
    JEL: C72 D43 L13
  8. By: Mark van Zijll de Jong; Grant M. Scobie (The Treasury)
    Abstract: In 2001, Statistics New Zealand conducted a major survey of the assets and liabilities of New Zealanders called the Household Savings Survey (HSS). This paper presents the results of an analysis of ownership and investment in housing based on the results of that survey. International comparisons suggest that the rates of home ownership, investment in property and housing debt levels in New Zealand are broadly comparable with those in Australia and the United States and with a wider set of countries. An exception is that younger age groups in New Zealand hold more investment property than their counterparts in the USA and Australia. In New Zealand almost one in ten couples owned rental property in 2001, while one in five owned some form of investment property. We examine the factors that govern tenure choice and gearing. Of note is the fact that 44% of couples and 56% of individual home owners have debt free residential properties. Households' balance sheets reflect the importance of housing for both assets and liabilities. We complement the analysis of the cross-sectional unit record data from the HSS with an analysis of housing taken from the households' aggregate balance sheets from 1978 to 2004 from the Reserve Bank of New Zealand. We use these data to form a measure of household saving based on the stock of net equity. We then adjust this measure of savings for changes in house prices, and find that this adjustment explains almost two thirds of the difference between the stock and flow measure of household savings, the latter taken from the Household Income and Outlay Accounts. Furthermore we find that from 1980 to 2005 the annual average rate of household saving based on these estimates from household balance sheets was 12.4% of personal disposable income, after removing the effect of changes in house price. Arguably this is a preferable measure of household saving to the widely cited negative rates of household saving based on national income accounts. We further use the balance sheet data to estimate the extent to which households have apparently withdrawn equity from their housing assets for investment in other forms or consumption. We find that on average a rise of one dollar in housing net equity is associated with 10 cents of apparent equity withdrawal.
    Keywords: Housing; New Zealand; Portfolio; Wealth; Ownership; Equity; Gearing; Equity withdrawal; Measures of saving
    JEL: R20
    Date: 2006–07
  9. By: Marialuz Moreno-Badia
    Abstract: This paper provides detailed empirical evidence on the saving behavior of Irish households using micro data from the 1994/95 and 1999/2000 Household Budget Surveys. I employ synthetic cohort techniques to characterize the life cycle profile of saving rates and to examine the response of household saving to house price appreciation. The analysis suggests that households at the peak of their working lives have relatively low savings though there is no evidence of a generational savings gap. Also, despite housing being a major component of Irish households, wealth, there is no strong relationship between savings and housing capital gains.
    Keywords: Savings , Ireland , Consumption , Asset prices ,
    Date: 2006–05–31
  10. By: Greg Tkacz; Carolyn Wilkins
    Abstract: The authors examine whether simple measures of Canadian equity and housing price misalignments contain leading information about output growth and inflation. Previous authors have found that the information content of asset prices in general, and equity and housing prices in particular, are unreliable in that they do not systematically predict future economic activity or inflation. However, earlier studies relied on simple linear relationships that would fail to pick up the potential non-linear effects of asset-price misalignments. The authors' results suggest that housing prices are useful for predicting GDP growth, even within a linear context. Moreover, both stock and housing prices can improve inflation forecasts, especially when using a threshold specification. These improvements in forecast performance are relative to the information contained in Phillips-curve type indicators for inflation and IS-curve type indicators for GDP growth.
    Keywords: Inflation and prices; Business fluctuations and cycles
    JEL: C53 E4
    Date: 2006
  11. By: Iragaël Joly (LET - Laboratoire d'économie des transports - [CNRS : UMR5593] - [Université Lumière - Lyon II] - [Ecole Nationale des Travaux Publics de l'Etat])
    Abstract: The paper concerns the travel activities and more specifically the urban travel time during a day. The daily TTB has been hypothesized by Zahavi (1980) as constant amount of time. First, the cities sprawl can easily be interpreted as a consequence of the increase in available speeds. And recently, Schafer and Victor (2000) have used the constant TTB concept to predict the future mobility of the world population. However, numerous critiques exist. The temporal and spatial dimensions of the stability are questioned and the apparent stability observed at aggregate levels may mask considerable variations at finer scale.<br />Escaping unidimensional analysis limits and linear regression irrelevancy, the duration model incorporates impacts of covariates on the duration variable and permits to test the dependence of TTB on elapsed time. We apply the duration model to the TTB of Lyons (France), in the perspective of a discussion of Zahavi's hypothesis. The duration dependence estimation illustrates covariates effect on TTB and suggests a non-monotone hazard for their distribution, which conflicts with the TTB stability hypothesis and more generally with the classic travel time minimisation problem.
    Keywords: TTB ; Zahavi's hypothesis ; duration model ; non-parametric / semi-parametric / parametric approaches
    Date: 2006–07–25
  12. By: Jean-Pierre Nicolas (LET - Laboratoire d'économie des transports - [CNRS : UMR5593] - [Université Lumière - Lyon II] - [Ecole Nationale des Travaux Publics de l'Etat]); Pascal Pochet (LET - Laboratoire d'économie des transports - [CNRS : UMR5593] - [Université Lumière - Lyon II] - [Ecole Nationale des Travaux Publics de l'Etat]); Hélène Poimboeuf
    Abstract: This paper applies the theme of sustainable development to the case of urban transport and daily mobility of the inhabitants of a city. A set of indicators which simultaneously takes the three dimensions of sustainability––environmental, economic, and social––into account is suggested. We present here the results of exploratory research funded by Renault Automobile Manufacturers, carried out to verify the feasibility and the usefulness of elaborating such sustainable mobility indicators. Values of the economics, environmental and social indicators are presented for the Lyons case. These estimations are mainly based on the household travel survey held in this city in 1994–1995. In the end, this set of indicators should allow the comparison of different urban transport strategies within an urban area, but also between different urban contexts, and through time. The conditions of generalization of these measurements of indicators are then discussed.
    Keywords: Trip distance ; Daily mobility ; Sustainability indicators ; Household travel survey ; Methodology ; Pollutant emissions ; Expenditures ; Global costs
    Date: 2006–07–24
  13. By: Maarten Bosker; Steven Brakman; Harry Garretsen; Marc Schramm
    Abstract: The empirical literature on city size distributions has mainly focused on the USA. The first major contribution of this paper is to provide empirical evidence on the evolution and structure of the West-German city size distribution. Using a unique annual data set that covers most of the 20th century for 62 of West-Germany's largest cities, we look at the evolution of both the city size distribution as a whole and each city separately. The West-German case is of particular interest as it has undergone major shocks, most notably WWII. Our data set allows us to identify these shocks and provide evidence on the effects of these `quasi-natural experiments' on the city size distribution. The second major contribution of this paper is that we perform unit-root tests on individual German city sizes using a substantial number of observations to analyze the evolution of the individual cities that make up the German city size distribution. Our main findings are twofold. First, WWII has had a major and lasting impact on the city size distribution. Second, the overall city size distribution does not adhere to Zipf's Law. This second finding is largely based on the results of unit root tests for individual cities to test for Gibrat's Law, the latter being a requirement for Zipf's Law to hold for the overall city-size distribution. Together these two findings are consistent with theories emphasizing increasing returns to scale in city growth.
    JEL: O18 R12
    Date: 2006
  14. By: Hernandez-Zavala, Martha; Patrinos, Harry Anthony; Sakellariou, Chris; Shapiro, Joseph
    Abstract: A substantial gap in test scores exists between indigenous and non-indigenous students in Latin America. Using test score data for 3rd and 4th year primary school pupils in Guatemala and Peru, and 5th grade pupils in Mexico, the authors assess the magnitude of the indigenous and non-indigenous test score gap and identify the main family and school inputs contributing to the gap. A decomposition of the gap into its constituent components suggests that the proportion that is explained by family and school characteristics is between 41 and 75 percent of the overall test-score gap. Furthermore, family variables contribute more than school variables to the overall explained component.
    Keywords: Tertiary Education,Secondary Education,Primary Education,Teaching and Learning,Education For All
    Date: 2006–08–01
  15. By: Traub, Stefan
    Abstract: We state efficiency conditions for the provision of congestable local public goods that diminish individual-specific proprietary risks. The optimum level of such a public service is determined by equating the sum of the reductions of the expected property losses due to a better service level with the marginal costs of the service. The optimum size of the providing local authority in terms of population is obtained where the increase in proprietary risks due to congestion meets the decrease in contributions for the original citizens. As an empirical example, we employ Germany’s crime statistic in order to assess the efficiency of the provision of police services at the state level.
    Keywords: Local Public Goods, Congestion, Risk, Crime, Police
    JEL: D61 H41 R50
    Date: 2006
  16. By: Justin McCrary
    Abstract: Arguably the most aggressive affirmative action program ever implemented in the United States was a series of court-ordered racial hiring quotas imposed on municipal police departments. My best estimate of the effect of court-ordered affirmative action on workforce composition is a 14 percentage point gain in the fraction African American among newly hired officers. Evidence on police performance is mixed. Despite substantial black-white test score differences on police department entrance examinations, city crime rates appear unaffected by litigation. However, litigation lowers slightly both arrests per crime and the fraction black among serious arrestees.
    JEL: H4 H7 J1 J4 J7 K3 K4
    Date: 2006–07
  17. By: Gilles Duranton; Laurent Gobillon; Henry G Overman
    Abstract: We study the impact of local taxation on the location and growth of firms. Our empiricalmethodology pairs establishments across jurisdictional boundaries to estimate the impact of taxation. Our approach improves on existing work as it corrects for unobserved establishment heterogeneity, for unobserved time-varying site specific effects, and for the endogeneity of local taxation. Applied to data for English manufacturing establishments we find that local taxation has a negative impact on employment growth, but no effect on entry.
    Keywords: Local taxation, spatial differencing, borders, regression discontinuity
    JEL: H22 H71 R38
    Date: 2006–07–24
  18. By: Heisz, Andrew
    Abstract: This report paints a statistical portrait of socio-economic conditions in the Census Metropolitan Areas (CMAs) of Toronto, Montréal and Vancouver. It highlights trends in population growth, suburban growth, commuting, employment, unemployment, immigration, income and low-income and socio-economic conditions among immigrants, Aboriginal People, and others. It uses data from the 1981 to 2001 Censuses of Canada, the 2005 Labour Force Historical Review, and Income in Canada, 2004.
    Keywords: Population and demography, Personal finance and household finance, Ethnic origin, Income, Population characteristics
    Date: 2006–07–20
  19. By: Gilles Duranton; Henry G Overman
    Abstract: Using a point-patternmethodology, we explore a range of issues regarding the detailed location patterns of UKmanufacturing industries. In particular, we focus on the location of entrants and exiters vs. continuing establishments, domestic- vs. foreign-owned, large vs. small, and affiliated vs. independent. We also examine co-localisation between vertically-linked industries. Our analysis provides a set of new stylised facts and confirmation for others.
    Keywords: Localisation, Clusters, K-density, Spatial Statistics.
    JEL: C19 R12 L70
    Date: 2006–07–24
  20. By: Walter F. Lalich (Macquarie University)
    Abstract: This paper analyses the contribution to the creation of a culturally diverse Sydney landscape by ethnic communities following the arrival of over a million and half non-English speaking settlers since 1948. Through fragmented collective actions, around 450 communal places were established to satisfy collectively perceived needs: places of worship, social and sports clubs, schools, childcare and aged care. Immigrants organised to overcome problems of social deprivation and scarcity of public places. They created needed collective goods on their own, through mutuality and compensated for their own meagre material resources with engendered social capital, time and energy. The diversity and intensity of development reflects differences in the perception of the settlement needs, urgency and aims within diverse ethnic groups. Immigrants enhanced the quality of life and developed a liveable city. Collected data inform on the outcome, developed capacities, investment patterns, annual income and expenditure, usage, management and employment patterns, gender and youth participation, functions and generated activities.
    Keywords: Settlement, Ethnic, Collective Goods, Communal Places, Spatial Clusters
    JEL: D71 E22 F22 I31 J15 J17 L31 Z13
    Date: 2006–04
  21. By: Anthony Pennington-Cross; Giang Ho
    Abstract: Adjustable rate and hybrid loans have been a large and important component of subprime lending in the mortgage market. While maintaining the familiar 30-year term the typical adjustable rate loan in subprime is designed as a hybrid of fixed and adjustable characteristics. In its most prevalent form, the first two years are typically fixed and the remaining 28 years adjustable. Perhaps not surprisingly, using a competing risks proportional hazard framework that also accounts for unobserved heterogeneity, hybrid loans are sensitive to rising interest rates and tend to temporarily terminate at much higher rates when the loan transforms into an adjustable rate. However, these terminations are dominated by prepayments not defaults.
    Keywords: Mortgages ; Adjustable rate mortgages
    Date: 2006
  22. By: Mercedes Garcia-Escribano; Ehtisham Ahmad
    Abstract: There is increasing interest in fiscal decentralization in Peru as a mechanism to generate more involved decision-making at the subnational level. This is tempered with a continuing emphasis on overall fiscal stability. However, considerable work needs to be undertaken to define more clearly expenditure responsibilities and financing mechanisms that increase local accountability. In addition, a more transparent fiscal transfer system is needed, together with clarity in expenditure management at all levels of government. The paper suggests that a substantial work agenda is needed to extend the decentralization process with greater transparency.
    Keywords: Fiscal policy , Peru , Intergovernmental fiscal relations , Public finance , Fiscal transparency ,
    Date: 2006–05–17
  23. By: Linda Gonçalves Veiga (Universidade do Minho - NIPE); Francisco José Veiga (Universidade do Minho - NIPE)
    Abstract: Using data for 278 Portuguese mainland municipalities, we estimate the impact of national and local economic conditions on legislative electoral outcomes over the period from the reestablishment of democracy in 1974 to the present. Empirical results indicate that the performance of the national economy is important but that the municipal situation also conditions electoral outcomes.
    Keywords: Voting functions, opportunism, local governments, elections, Portugal.
    JEL: H72 D72 D78
    Date: 2006
  24. By: Robert Dur
    Abstract: This paper offers a new argument for why a more aggressive enforcement of minor offenses (‘zero-tolerance’) may yield a double dividend in that it reduces both minor offenses and more severe crime. We develop a model of criminal subcultures in which people gain social status among their peers for being ‘tough’ by committing criminal acts. As zero-tolerance keeps relatively ‘gutless’ people from committing a minor offense, the signaling value of that action increases, which makes it attractive for some people who would otherwise commit more severe crime. If social status is sufficiently important in criminal subcultures, zero-tolerance reduces crime across the board.
    Keywords: status concerns, street crime, subcultures, penalties, zero-tolerance, broken windows policing
    JEL: K14 K42
    Date: 2006
  25. By: Jean Bourdon (IREDU - Institut de recherche sur l'éducation : Sociologie et Economie de l'Education - [CNRS : FRE5211] - [Université de Bourgogne]); Markus Frölich (UCL - University College London - [London's Global University]); Katharina Michaelowa (HWWA - Hamburg Institute of International Economics - [Hamburgisches Welts-Wirtschafts Archiv])
    Abstract: For Sub-Saharan Africa as a whole, but particularly for countries in the Sahel zone, full primary enrolment and completion at acceptable quality as codified in the Millennium Development Goals and the Education for All objectives still remains a major challenge. In order to enhance education supply, many of these countries have launched large scale teacher recruitment programs in recent years, whereby the teachers are no longer engaged in civil servant positions, but on the basis of fixed-term contracts typically implying considerably lower salaries and a sharply reduced duration of professional training. While this policy has led to a boost of primary enrolment, stakeholders in the education system generally fear an important loss in the quality of education. Using data from the "Program on the Analysis of Education Systems" (PASEC) for Niger in 2000/2001, we show that once confounding factors are controlled for, the performance of contract teachers is not generally worse than the performance of other teachers. Matching students taught by contract teachers to those taught by civil servants provides no significant evidence of an advantage of the latter in grade 5. In grade 2, there is evidence for a sizeable advantage of traditional teachers - but only as long as job experience is not appropriately taken into account. Given the strong impact on enrolment and the generally insignificant effect on education quality, the overall assessment of the program remains clearly positive.
    Keywords: Enseignant enseignement primaire ; Recrutement des enseignants ; Statut ; Contrat de travail ; Efficacité des enseignants ; Analyse économétrique ; Niger ; Afrique ; Enseignement primaire
    Date: 2006–07–17
  26. By: Vladimir Klyuev; Paul Mills
    Abstract: This paper examines the role increasing personal wealth and home equity withdrawal (HEW) have had in the decline in the personal saving rate in the United States. It does so by comparing the U.S. experience with those of Australia, Canada, and the United Kingdom. Mortgage market liberalization and innovation should reduce household cash flow and collateral constraints while making housing wealth more liquid as HEW becomes easier over time. Regression analysis indicates the expected negative relationship between U.S. saving and net worth, with a somewhat smaller coefficient than in previous studies. HEW is estimated to have a temporary negative impact on saving of the order of 20 cents on the dollar.
    Date: 2006–07–12
  27. By: Becker, Sascha O.; Ekholm, Karolina; Jäckle, Robert; Mündler, Marc-Andreas
    Abstract: Using data for German and Swedish multinational enterprises (MNEs), this paper assesses international employment patterns. It analyzes determinants of location choice and the degree of substitutability of labor across locations. Countries with highly skilled labor forces attract German MNEs, but we nd no such evidence for Swedish MNEs. This is consistent with the hypothesis that German MNEs locate production stages intensive in high-skilled labor abroad. In MNEs from either country, af liate employment tends to substitute for employment at the parent rm. At the margin, substitutability is the strongest with respect to af liate employment in Western Europe. A one percent larger wage gap between Germany and locations in Central and Eastern Europe (CEE) is estimated to be associated with 900 fewer jobs in German parents and 5,000 more jobs in af liates located in CEE. A one percent larger wage gap between Sweden and CEE is estimated to be associated with 140 fewer jobs in Swedish parents and 260 more jobs in af liates located in CEE.
    Keywords: Multinational enterprises, location choice, multinomial choice, labor demand, translog cost function
    JEL: F21 F23 J21 J23
    Date: 2005
  28. By: Joana Pais; Ágnes Pintér
    Abstract: We present an experimental study where we analyze three well- known matching mechanisms - the Boston, the Gale-Shapley, and the Top Trading Cycles mechanisms - in three different informational set- tings. Our experimental results are consistent with the theory, sug- gesting that the TTC mechanism outperforms both the Boston and the Gale-Shapley mechanisms in terms of efficiency and it is as suc- cessful as the Gale-Shapley mechanism regarding the proportion of truthful preference revelation, whereas manipulation is stronger un- der the Boston mechanism. In addition, even though agents are much more likely to revert to truthtelling in lack of information about the others' payooffs - ignorance may be beneficial in this context - , the TTC mechanism results less sensitive to the amount of information that participants hold. These results therefore suggest that the use of the TTC mechanism in practice is more desirable than of the others.
  29. By: Paulo Santos (MIETE, Faculdade de Engenharia, Universidade do Porto); Aurora A.C. Teixeira (CEMPRE, Faculdade de Economia, Universidade do Porto); Ana Brochado (Faculdade de Economia, Universidade do Porto)
    Abstract: Although there is a considerable amount of empirical evidence on inter-firm collaborations within technology-based industries, there are only a few works concerned with R&D cooperation by low-tech firms, especially SMEs. Providing further and new evidence based on a recently built database of CRAFT projects, this study analyzes the relationship between technology and proximity in international R&D networks using Homogeneity Analysis by Means of Alternating Least Squares (HOMALS) and statistical cluster techniques. The resulting typology of international cooperative R&D projects highlights that successful international cooperative R&D projects are both culturally/geographically closer and distant. Moreover, and quite interestingly, geographically distant projects are technologically more advanced whereas those located near each other are essentially low tech. Such evidence is likely to reflect the tacit-codified knowledge debate boosted recently by the ICT “revolution” emphasized by the prophets of the “Death of Distance” and the “End of Geography”.
    Keywords: Research and Development (R&D); proximity; SMEs
    JEL: O32 R12 R58
    Date: 2006–07
  30. By: Marcel Gérard; Fernando Ruiz
    Abstract: In this paper we consider two regions competing for the larger part of the investment by a mobile firm whose decision is based on the quality of human capital in each region. This in turn depends on the initial skill level and the amount of higher education in the region, with a possible spillover to the other region. Therefore each region, through subsidies, tries to attract a larger part of the academic community. Moreover a central government or agency helps the poorer region by providing it with an extra budgetary allocation. The game is nested in a series of settings which are compared, especially from the point of view of their redistributive efficiency. From a policy point of view, the paper, in line with the subsidiarity principle, first provides an argument for allocating a significant amount of the competence in matters of human capital formation, to the central authorities. It also set forth difficulties which can arise from centralizing such an amount of competence and pleas for clear rules governing the federation, especially ruling out discretionary and opportunistic behaviors of public authorities. Finally, it shows the importance of the central government being correctly informed, including being allowed to gather information by itself.
    Keywords: higher education, interjurisdictional competition, fiscal federalism, public infrastructure
    JEL: H41 H77 I20
    Date: 2006
  31. By: de Laiglesia, Juan R.
    Abstract: This paper analyzes the importance of legal property documents in providing tenure security, enhancing agricultural investment incentives and easing access to credit. While theory predicts that better property rights on land can increase investment through increased security, enhanced trade opportunities and increased collateral value of land, the presence and size of these effects depend crucially on whether those rights are properly enforced. In Nicaragua, a troubled history of land expropriation and invasion has undermined the credibility of the legal property regime. The variation in legal ownership status due to a land titling and regularization programme is studied to identify the effects of legal ownership documents. Possession of a registered document is found to increase the probability of carrying out land-attached investments by 35%. No difference is found in the effect of public deeds and agrarian reform titles provided they are both registered and we find no strong evidence of a credit supply link, thus suggesting security of tenure as the channel through which formal land ownership has an effect on investment.
    Keywords: Property rights, investment, land reform, Nicaragua, land ownership
    JEL: D23 K11 O13 Q15
    Date: 2005
  32. By: Jan K. Brueckner; Ricardo Flores-Fillol
    Abstract: This paper presents a simple model of airline schedule competition that circumvents the complexities of the spatial approach used in earlier papers. Consumers choose between two duopoly carriers, each of which has evenly spaced flights, by comparing the combinations of fare and expected schedule delay that they offer. In contrast to the spatial approach, the particular departure times of individual flights are thus not relevant. The model generates a number of useful comparative-static predictions, while welfare analysis shows that equilibrium flight frequencies tend to be inefficiently low.
    JEL: L00 L90
    Date: 2006
  33. By: Steven Brakman; Harry Garretsen; Charles van Marrewijk
    Abstract: A key issue in development economics is the explanation of core-periphery patterns around the world. Combining this issue with that of analyzing unilateral transfers (e.g. foreign aid) points in the direction of the use of New Economic Geography (NEG) models which, so far, has not been done explicitly. This paper tries to fill this gap in the literature by studying the (possibly ‘catastrophic’) effects of aid around the so-called break-points and sustain-points in a NEG model. We also analyze the effects of a “bystander”, that is a country which is not directly involved in the transfer. In the traditional transfer literature a bystander is known to potentially cause transfer paradoxes. Our findings in this NEG setting are as follows. First, direct transfer paradoxes are not possible in a symmetric setting even if a bystander is present. Second, the effects of foreign aid depend on the level of economic integration between donor and recipient. Third, if the equilibrium from which aid is given is stable, aid only has a temporary effect (even if there is a bystander present). Fourth, if the donor is relatively large, not only the recipient but also the bystander benefits from foreign aid.
    JEL: F12 F35
    Date: 2006
  34. By: Roland G. Fryer, Jr.
    Abstract: This paper develops a model of social interactions and endogenous poverty traps. The key idea is captured in a framework in which the likelihood of future social interactions with members of one’s group is partly determined by group-specific investments made by individuals. I prove three main results. First, some individuals expected to make group-specific capital investments are worse off because their observed decision is used as a litmus test of group loyalty — creating a tradeoff between human capital and cooperation among the group. Second, there exist equilibria which exhibit bi-polar human capital investment behavior by individuals of similar ability. Third, as social mobility increases this bi-polarization increases. The models predictions are consistent with the bifurcation of distinctively black names in the mid-1960s, the erosion of black neighborhoods in the 1970s, accusations of ‘acting white,’ and the efficacy of certain programs designed to encourage human capital acquisition.
    JEL: J0
    Date: 2006–07
  35. By: Jacob L. Vigdor
    Abstract: Why do voters at the lower end of the socioeconomic spectrum support political candidates who generally disfavor redistributive policies? Existing explanations often presume that voters are explicitly acting in opposition to their economic self-interest, or that they hold persistently optimistic expectations regarding the probability of moving into the upper ranks of the income distribution. This paper provides an alternative economic explanation. When voters evaluate their well-being by making relative utility comparisons, support for redistribution depends not only on absolute income but on one's status relative to a reference group. When reference groups are defined geographically, support depends on exposure to higher-income neighbors. The predictions of the model are supported by empirical evidence drawn from county-level election returns in 1980 and 2000, and by individual-level polling data following the 2000 election.
    JEL: D31 D72 H31
    Date: 2006–07
  36. By: J. Atsu Amegashie
    Abstract: In psychological games, higher-order beliefs, emotions, and motives - in addition to actions - affect players’ payoffs. Suppose you are tolerated as opposed to being genuinely accepted by your peers and “friends”. In particular, suppose you are invited to a party, movie, dinner, etc not because your company is desired but because the inviter would feel guilty if she did not invite you. In all of these cases, it is conceivable that the intention behind the action will matter and hence will affect your payoffs. I model intentions in a dynamic psychological game under incomplete information. I find a complex social interaction in this game. In particular, a player may stick to a strategy of accepting every invitation with the goal of discouraging insincere invitations. This may lead one to erroneously infer that this player is eagerly waiting for an invitation, when indeed his behavior is driven more by strategic considerations than by an excessive desire for social acceptance. I discuss how being tolerated but not being truly accepted can explain the rejection of mutually beneficial trades, the choice of identity, social exclusion, marital divorce, and its implication for political correctness and affirmative action.
    Keywords: guilt, intentions, psychological game, second-order beliefs, social interaction
    JEL: C73 J16 Z13
    Date: 2006

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