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on Urban and Real Estate Economics |
| By: | Theodore M. Crone |
| Abstract: | The expansion of state-mandated tests in the 1990s and the testing requirements of the No Child Left Behind Act have supplied researchers with an abundance of data on test scores that can be used as measures of school quality. This paper uses the state-mandated test scores for 5th grade and 11th grade in Montgomery County, Pennsylvania, to examine three issues about the capitalization of school quality into house prices: (1) At what level do prospective home buyers evaluate the quality of local public education—at the district level or the level of the neighborhood school? (2) After accounting for student achievement as reflected in test scores, are other aspects of the local public school system, such as class size or expenditures, capitalized into the value of a house? (3) Are the positive results we get for the capitalization of school quality into house prices due simply to the correlation between high test scores and other desirable neighborhood characteristics? The results of our investigation suggest that to home buyers some test-score averages are significantly better indicators of the quality of the local public school system than others. In particular, home buyers seem to evaluate the quality of public education at the district level rather than at the level of the local school. Class size at the high-school level has some independent effect on house prices, but not class size at the elementary school level. And once we account for student achievement, expenditures per pupil have no further effect on house prices. Finally, restricting our sample to similar neighborhoods along school district boundaries confirms our earlier results for high school test scores but not for elementary school scores. |
| Keywords: | Education ; School choice |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:06-15&r=ure |
| By: | Antonia Diaz; Maria J. Luengo-Prado |
| Abstract: | This paper studies the determinants of housing tenure choice and the differences in the cost of housing services across households in an overlapping generations model with household-specific uninsurable earnings risk and housing prices that vary over time. We model houses as illiquid assets that provide collateral for loans. To analyze the impact of preferential housing taxation on the tenure choice, we consider a tax system that mimics that of the U.S. economy in a stylized way. We find that a mixture of idiosyncratic earnings uncertainty, house price risk, down payments and transaction costs are needed for the model to deliver life cycle patterns of homeownership and portfolio composition similar to those found in the data. Through simulations, we also show that a rental equivalence approach (relative to a user cost approach) overestimates the mean unit cost of housing by approximately 3 percent. |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:cte:werepe:we065421&r=ure |
| By: | Jordan Rappaport |
| Abstract: | Crowdedness varies widely among U.S. cities. A simple, static general equilibrium model suggests that plausible differences in metro areas’ consumption amenities can account for much of the observed variation. Under a baseline calibration, differences in amenities valued at 30 percent of average consumption expenditures suffice to support a twenty-fold difference in population density. Empirical results confirm that amenities help support crowdedness and suggest that they are becoming a more important determinant of where people choose to live. But for the moment, local productivity appears to be the more important cause of local crowdedness. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedkrw:rwp06-10&r=ure |
| By: | Gerald Carlino; Satyajit Chatterjee; Robert Hunt |
| Abstract: | Economists, beginning with Alfred Marshall, have studied the significance of cities in the production and exploitation of information externalities that, today, we call knowledge spillovers. This paper presents robust evidence of those effects. We show that patent intensity—the per capita invention rate—is positively related to the density of employment in the highly urbanized portion of MAs. All else equal, a city with twice the employment density (jobs per square mile) of another city will exhibit a patent intensity (patents per capita) that is 20 percent higher. Patent intensity is maximized at an employment density of about 2,200 jobs per square mile. A city with a more competitive market structure or one that is not too large (a population less than 1 million) will also have a higher patent intensity. These findings confirm the widely held view that the nation’s densest locations play an important role in creating the flow of ideas that generate innovation and growth. ; Supersedes Working Paper No. 04-16 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:06-14&r=ure |
| By: | Sean D. Campbell; Morris A. Davis; Joshua Gallin; Robert F. Martin |
| Abstract: | We use the dynamic Gordon-growth model to decompose the rent-price ratio for owner-occupied housing in the U.S., four Census regions, and twenty-three metropolitan areas into three components: The expected present value of real rental growth, real interest rates, and future housing premia. We use these components to decompose the trend and variance in rent-price ratios for 1975-2005, for an early sub-sample (1975-1996), and for the recent housing boom (1997-2005). We have three main findings. First, variation in expected future real rents accounts for a small share of variation in our sample rent-price ratios; variation in real interest rates and housing premia account for most of the variability. Second, expected future real rates and housing premia were so strongly negatively correlated prior to 1997 that changes to real interest rates did not affect the rent-price ratio. After 1997, rates and premia have been positively correlated, and the decline in the rent-price ratio that has occurred in almost every geographic area in our sample since 1997 reflects both declining real rates and declining premia. Third, we show that in the recent housing boom, 65 percent of the decline in the aggregate rent-price ratio is due to a declining housing premium. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2006-29&r=ure |
| By: | Philip J. Cook; Robert MacCoun; Clara Muschkin; Jacob Vigdor |
| Abstract: | Using administrative data on public school students in North Carolina, we find that sixth grade students attending middle schools are much more likely to be cited for discipline problems than those attending elementary school. That difference remains after adjusting for the socioeconomic and demographic characteristics of the students and their schools. Furthermore, the higher infraction rates recorded by sixth graders who are placed in middle school persist at least through ninth grade. A plausible explanation is that sixth graders are at an especially impressionable age; in middle school, the exposure to older peers and the relative freedom from supervision have deleterious consequences. |
| JEL: | H52 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12471&r=ure |
| By: | Priyanka Anand; Alejandra Mizala; Andrea Repetto |
| Abstract: | This paper estimates the impact of private education on low-income students in Chile. We attempt to reduce selection bias by using reduced-tuition paying, low-income students in private schools as the treatment group, based on our finding that these students were, to some extent, randomly selected out of the public school control group. Propensity score matching is then used to calculate the difference in academic achievement of students in the treatment group versus their counterpart in the control group. Our results reveal that students in private voucher schools with tuition score slightly higher than students in public schools. The difference in standardized test scores is approximately 8 points, a test score gain of almost 0.15 standard deviations. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:edj:ceauch:220&r=ure |
| By: | Kristopher Gerardi; Harvey S. Rosen; Paul Willen |
| Abstract: | The U.S. mortgage market has experienced phenomenal change over the last 35 years. Most observers believe that the deregulation of the banking industry and financial markets generally has played an important part in this transformation. One issue that has received particular attention is the role that the housing Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, have played in the development of a secondary market in mortgages. This paper develops and implements a technique for assessing the impact of changes in the mortgage market on individuals and households. ; Our analysis is based on an implication of the permanent income hypothesis: that the higher a household’s future income, the more it desires to spend and consume, ceteris paribus. If we have perfect credit markets, then desired consumption matches actual consumption and current spending on housing should forecast future income. Since credit market imperfections mute this effect, we can view the strength of the relationship between housing spending and future income as a measure of the “imperfectness” of mortgage markets. Thus, a natural way to determine whether mortgage market developments have actually helped households by decreasing market imperfections is to see whether this link has strengthened over time. ; We implement this framework using panel data going back to 1969. We find that over the past several decades, housing markets have become less imperfect in the sense that households are now more able to buy homes whose values are consistent with their long-term income prospects. However, we find no evidence that the GSEs’ activities have contributed to this phenomenon. This is true whether we look at all homebuyers, or at subsamples of the population whom we might expect to benefit particularly from GSE activity, such as low-income households and first-time homebuyers. |
| Keywords: | Mortgage loans |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbpp:06-6&r=ure |
| By: | Mark Ellis (University of Washington, Seattle); Jamie Goodwin-White (University of Southampton and IZA Bonn) |
| Abstract: | The issue of immigrant spatial concentration and the possibilities for immigrant dispersion through migration features in at least three interrelated debates about immigration. First, the ethnic enclave literature centers on the question of whether spatial concentration improves or harms the economic well-being of immigrants. Second, spatial assimilation theory links immigrant relocation away from residential enclaves to socioeconomic gains. Although framed at an intra-urban scale, we suggest that similar assimilation logics infuse thinking and expectations about immigrant settlement and spatial mobility at other scales. And third, immigrant clustering links to anxieties about the threats posed by non-European origin newcomers to the traditional cultural fabric of the nation. In the current wave of immigration, research on questions of settlement geography and spatial mobility has so far been restricted to the first generation. But as the current wave of immigration matures there is a growing population of adults who are the children of immigrants. This paper investigates the migration behavior of these adult children, specifically the 1.5 generation, seeking to answer the question of whether they will remain in the states in which their parent’s generation settled or move on. It also assesses whether the out-migration response of the 1.5 generation in states of immigrant concentration is similar to that of their parent’s generation or the US-born population. |
| Keywords: | 1.5 generation, internal migration, immigrant concentrations, spatial assimilation |
| JEL: | J61 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2274&r=ure |
| By: | Thomas A. Garrett; Gary A. Wagner |
| Abstract: | There is anecdotal evidence that local governments use traffic tickets to generate revenue. Using panel data for North Carolina counties, we examine whether changes in local government revenue influence the number of traffic tickets issued. We find strong evidence of an asymmetric response by local governments. Specifically, positive changes in revenue have no effect on traffic tickets, but negative revenue changes increase the number of traffic tickets issued. A one percentage point decrease in revenue yields a 0.38 percentage point increase in traffic tickets. We calculate that traffic ticket revenue supplements a low percentage of local revenue losses. |
| Keywords: | Local government |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2006-048&r=ure |
| By: | Alejandra Mizala; Pilar Romaguera; Miguel Urquiola |
| Abstract: | This paper calculates a time series of simple, standard measures of schools’ relative performance. These are drawn from a 1997-2004 panel of Chilean schools, using individual-level information on test scores and student characteristics for each year. The results suggest there is a stark tradeoff in the extent to which rankings generated using these measures: i) can be shown to be very similar to rankings based purely on students’ socioeconomic status, and ii) are very volatile from year to year. At least in Chile, therefore, producing a meaningful ranking of schools that may inform parents and policymakers may be harder than is commonly assumed. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:edj:ceauch:225&r=ure |
| By: | Hilary Sigman (Rutgers University) |
| Abstract: | Many communities are concerned about the reuse of potentially contaminated land ("brownfields") and believe that environmental liability is a hindrance to redevelopment. However, with land price adjustments, liability might not impede the reuse of this land. Existing literature has found price reductions in response to liability, but few studies have looked for an effect on vacancies. This paper studies variations in state liability rules --- specifically, strict liability and joint and several liability --- that affect the level and distribution of expected private cleanup costs. It explores the effects of this variation on industrial land prices and vacancy rates and on reported brownfields in a panel of cities across the United States. In the estimated equations, joint and several liability reduces land prices and increases vacancy rates in central cities. Neither a price nor quantity effect is estimated from strict liability. The results suggest that liability is at least partly capitalized, but does still deter redevelopment. |
| Keywords: | Environmental policy, Tort reform, Real estate, Brownfields |
| JEL: | Q5 K32 R33 |
| Date: | 2006–08–18 |
| URL: | http://d.repec.org/n?u=RePEc:rut:rutres:200609&r=ure |
| By: | Jamie Goodwin-White (University of Southampton and IZA Bonn) |
| Abstract: | This paper examines determinants of inter-metropolitan destination choice for foreign-born and 1.5 generation adult children of immigrants in the US. An immigrant concentrationweighted accessibility parameter is included to assess the spatial structure of destination choice. A comparative origin-destination immigrant-native wage gap measure is also a strong determinant of destination choice, indicating the significance of relative labor market position. Although spatial assimilation perspectives would suggest that intergenerational social mobility should be connected with spatial dispersion, these models reveal the continuing importance of immigrant concentration for the 1.5 generation. When the destination concentration variable is added to reduced-form models, the positive effect of employment growth declines significantly, indicating that ethnic concentration may continue to be more important for the children of immigrants than more simply-framed economic conditions. Further, the increased model strength and parameter estimates associated with immigrant concentration and the accessibility measure suggest the spatial structure of destination choice depends on immigrant concentration at multiple scales – both to metro areas and to immigrant states or regions. The paper thus presents evidence for and suggests more attention to theorizing the geographic contexts of intergenerational immigrant incorporation. |
| Keywords: | 1.5 generation, internal migration, immigrant economic incorporation, spatial assimilation |
| JEL: | J61 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2269&r=ure |
| By: | James Habyarimana (Georgetown University and IZA Bonn); Macartan Humphreys (Columbia University); Daniel N. Posner (University of California, Los Angeles); Jeremy Weinstein (Stanford University) |
| Abstract: | A large and growing literature links high levels of ethnic diversity to low levels of public goods provision. Yet while the empirical connection between ethnic heterogeneity and the underprovision of public goods is widely accepted, there is little consensus on the specific mechanisms through which this relationship operates. To gain analytic leverage on the question of why ethnicity matters, we identify three families of mechanisms – what we term preference, technology, and strategy mechanisms. Our empirical strategy is to identify and run a series of experimental games that permit us to examine these mechanisms in isolation and then to compare the importance of ethnicity in each. Results from experimental games conducted with a random sample of 300 subjects in Kampala’s slums reveal that successful collective action among homogenous ethnic communities in urban Uganda is attributable to the existence of norms and institutions that facilitate the sanctioning of non-contributors. We find no evidence for a commonality of tastes within ethnic groups, for greater degrees of altruism toward co-ethnics, or for an impact of shared ethnicity on the productivity of teams. |
| Keywords: | ethnic diversity, collective action, public goods, field experiments |
| JEL: | D71 H41 J15 O10 Z13 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2272&r=ure |
| By: | Gene Amromin; Jennifer Huang; Clemens Sialm |
| Abstract: | We show that a significant number of households can perform a tax arbitrage by cutting back on their additional mortgage payments and increasing their contributions to tax- deferred accounts (TDA). Using data from the Survey of Consumer Finances, we show that about 38% of U.S. households that are accelerating their mortgage payments instead of saving in tax-deferred accounts are making the wrong choice. For these households, reallocating their savings can yield a mean benefit of 11 to 17 cents per dollar, depending on the choice of investment assets in the TDA. In the aggregate, these misallocated savings are costing U.S. households as much as 1.5 billion dollars per year. Finally, we show empirically that this inefficient behavior is unlikely to be driven by liquidity considerations or other constraints, and that self-reported debt aversion and risk aversion variables explain to some extent the preference for paying off debt obligations early and hence the propensity to forgo our proposed tax arbitrage. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-06-05&r=ure |
| By: | Degryse,Hans; Laeven,Luc; Ongena,Steven (Tilburg University, Center for Economic Research) |
| Abstract: | Recent theoretical models argue that a bank's organizational structure reflects its lending technology. A hierarchically organized bank will employ mainly hard information, whereas a decentralized bank will rely more on soft information. We investigate theoretically and empirically how bank organization shapes banking competition. Our theoretical model illustrates how a bank's geographical reach and loan pricing strategy is determined not only by its own organizational structure but also by organizational choices made by its rivals. We take our model to the data by estimating the impact of the rival banks' organization on the geographical reach and loan pricing of a singular, large bank in Belgium. We employ detailed contract information from more than 15,000 bank loans granted to small firms, comprising the entire loan portfolio of this large bank, and information on the organizational structure of all rival banks located in the vicinity of the borrower. We find that the organizational structure of the close rival banks matters for both branch reach and loan pricing. The geographical footprint of the lending bank is smaller when the close rival banks are large, hierarchically organized, and technologically advanced. Such rival banks may rely more on hard information. Large rival banks in the vicinity also lower the degree of spatial pricing. We also find that the effects on spatial pricing are more pronounced for firms that generate less hard information, such as small firms. In short, size and hierarchy of rival banks in the vicinity influences both branch reach and loan pricing of the lender. |
| Keywords: | banking sector;bank size;competition;mode of organization |
| JEL: | G21 L11 L14 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:200667&r=ure |
| By: | Pietro ALESSANDRINI (Universita' Politecnica delle Marche, Dipartimento di Economia); Alberto ZAZZARO (Universita' Politecnica delle Marche, Dipartimento di Economia); Andrea PRESBITERO ([n.a.]) |
| Abstract: | The wave of bank mergers and acquisitions experienced in European and U.S. credit markets during the Nineties has deeply changed the geography of banking industry. While the number of bank branches has increased in almost every country, reducing the operational distance between banks and borrowers, bank decisional centres and strategic functions have been concentrated in only a few places within each nation, increasing the functional distance between banks and local communities. In this paper, we carry out a multivariate analysis to assess the correlation of functional and operational distances with local borrowers' financing constraints. We apply our analysis on Italian data at the local market level defined as provinces. Our findings consistently show that increased functional distance makes financing constraints more binding, it being positively associated with the probability of firms being rationed, investment-cash flow sensitivity, and the ratio of credit lines utilized by borrowers to credit lines make available by banks. These adverse effects are particularly evident for small firms and for firms located in southern Italian provinces. Furthermore, our findings suggest that the negative impact on financing constraints following the actual increased functional distance over the period 1996-2003 has substantially offset (and sometimes exceeded) the beneficial effects of the increased diffusion of bank branches occurring during the same period. |
| Keywords: | financing constraints, funtional distance, local banking system, operational proximity |
| JEL: | G21 G34 R51 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wpaper:266&r=ure |
| By: | Phillip Granberry, Michael Landon and David Terkla |
| Abstract: | The rapid evolution in the Boston MPO transportation planning process is discussed as well as its particular application to the suburban-suburban transportation needs of low income individuals. The results of two experiments designed to improve access to transportation for low income suburban individuals are discussed and policy suggestions are made for improving such access. |
| Keywords: | Massachusetts, Transportation Demand,Congestion, Regional Development |
| JEL: | Q42 L99 R58 |
| URL: | http://d.repec.org/n?u=RePEc:mab:wpaper:5&r=ure |
| By: | Gong, Y.; Yucesan, E. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University) |
| Abstract: | Transshipments, monitored movements of material at the same echelon of a supply chain, represent an effective pooling mechanism. With a single exception, research on transshipments overlooks replenishment lead times. The only approach for two-location inventory systems with non-negligible lead times could not be generalized to a multi-location setting, and the proposed heuristic method cannot guarantee to provide optimal solutions. This paper uses simulation optimization by combining an LP/network flow formulation with infinitesimal perturbation analysis to examine the multi-location transshipment problem with positive replenishment lead times, and demonstrates the computation of the optimal base stock quantities through sample path optimization. From a methodological perspective, this paper deploys an elegant duality-based gradient computation method to improve computational efficiency. In test problems, our algorithm was also able to achieve better objective values than an existing algorithm. |
| Keywords: | Transshipment;Simulation Optimization;Infinitesimal Perturbation Analysis (IPA); |
| Date: | 2006–09–07 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:eureri:30008852&r=ure |