nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2006‒12‒22
thirteen papers chosen by
Steve Ross
University of Connecticut

  1. Owners of Developed Land versus Owners of Undeveloped Land: Why Land Use is More Constrained in the Bay Area than in Pittsburgh By Christian Hilber; Frédéric Robert-Nicoud
  2. School choice and student achievement – new evidence on open-enrolment By Söderström, Martin
  3. Stratification and Public Utility Services in Colombia: Subsidies to Households or Distortions on Housing Prices? By Carlos Medina; Leonardo Morales
  4. Exploring the Detailed Location Patterns of UK Manufacturing Industries Using Microgeographic Data By Gilles Duranton; Henry G. Overman
  5. Fat City: The Relationship Between Urban Sprawl and Obesity By Jean Eid; Henry G. Overman; Diego Puga; Matthew Turner
  6. Employment Effects of Spatial Dispersal of Refugees By Anna Piil Damm; Michael Rosholm
  7. Assessing the Effects of Local Taxation Using Microgeographic Data By Gilles Duranton; Laurent Gobillon; Henry G. Overman
  8. No Place Like Home: Older Adults And Their Housing By David S. Johnson; Barbara Boyle Torrey; Jonathan Fisher; Timothy Smeeding
  9. How Large Is the Housing Wealth Effect? A New Approach By Christopher D. Carroll; Misuzu Otsuka; Jirka Slacalek
  10. The Diffusion of Mexican Immigrants During the 1990s: Explanations and Impacts By David Card; Ethan G.Lewis
  11. Can Housing Collateral Explain Long-Run Swings in Asset Returns? By Hanno Lustig; Stijn Van Nieuwerburgh
  12. Ethnic Enclaves and Immigrant Labour Market Outcomes: Quasi-Experimental Evidence By Anna Piil Damm
  13. Pay for Performance Where Output is Hard to Measure: the Case of Performance Pay for School Teachers By Richard Belfield; David Marsden

  1. By: Christian Hilber; Frédéric Robert-Nicoud
    Abstract: We model residential land use constraints as the outcome of a political economy game between owners of developed and owners of undeveloped land. Land use constraints are interpreted as shadow taxes that increase the land rent of already developed plots and reduce the amount of new housing developments. In general equilibrium, locations with nicer amenities are more developed and, as a consequence, more regulated. We test our model predictions by geographically matching amenity, land use, and historical Census data to metropolitan area level survey data on regulatory restrictiveness. Following the predictions of the model, we use amenities as instrumental variables and demonstrate that metropolitan areas with better amenities are more developed and more tightly regulated than other areas. Consistent with theory, metropolitan areas that are more regulated also grow more slowly.
    Keywords: Land use regulations, zoning, land ownership, housing supply
    JEL: H7 Q15 R52
    Date: 2006–11
  2. By: Söderström, Martin (Uppsala University, Department of Economics)
    Abstract: This paper studies the effects of open-enrolment on student performance in the context of an admission reform in Stockholm. Before 2000, students had priority to the public upper secondary school situated closest to where they lived, but from the fall of 2000 and onwards, admission is based on grades only. The reform imposed strong incentives for school competition: all students can apply to all schools, there is no targeting of students to schools, and funding follows the students. It is shown that the students in Stockholm perform no better with increased choice availability. In fact, high ability students seem to perform worse after the reform.
    Keywords: School choice; open-enrolment
    JEL: I21
    Date: 2006–12–04
  3. By: Carlos Medina; Leonardo Morales
    Abstract: Domiciliary public utility services in Colombia have a cross subsidy system which charges subsidized rates to the households who live in houses located in strata associated to low wealth levels, and taxed rates to the better off. We assesses the hypothesis that the flow of subsidies that potentially come from a particular house, are discounted by housing market agents so that most of them are transferred to the prices of the houses that generate the subsidies. By estimating a hedonic prices model applying a regression discontinuity approach, we find that the increment in house value estimated because of subsidies is similar in magnitude to the present value of the flow of subsidies. Likely effects are found on the rent amount. We conclude that subsidies to the poor population through public spending in domiciliary public utility services in Colombia is being achieved, if anything, in a very limited way. Most of the financial effort on this subject ends up distorting housing relative prices according to socioeconomic strata, with an annual cost of up to 0.7% of GDP in supposed gross subsidies to domiciliary public utility services.
    Keywords: targeting of subsidies, Incidence, stratification, segregation, hedonic price models, regression discontinuity design. Classification JEL: C0; D31; H4; H22; H24; I3
  4. By: Gilles Duranton; Henry G. Overman
    Abstract: We use a point-pattern methodology to explore the detailed location patterns of UKmanufacturing industries. In particular, we consider the location of entrants and exitersvs. continuing establishments, domestic- vs. foreign-owned, large vs. small, and affiliatedvs. 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, Location patterns, clusters, K-density, spatial statistics
    JEL: C19 R12 L70
    Date: 2006–10
  5. By: Jean Eid; Henry G. Overman; Diego Puga; Matthew Turner
    Abstract: We study the relationship between urban sprawl and obesity. Using data that tracks individuals over time, we find no evidence that urban sprawl causes obesity. We show that previous findings of a positive relationship most likely reflect a failure to properly control for the fact the individuals who are more likely to be obese choose to live in more sprawling neighborhoods. Our results indicate that current interest in changing the built environment to counter the rise in obesity is misguided.
    Keywords: Urban sprawl, obesity, selection effects
    JEL: I12 R14
    Date: 2006–11
  6. By: Anna Piil Damm (CAM and Department of Economics, Aarhus School of Business); Michael Rosholm (Department of Economics, Aarhus School of Business)
    Abstract: We argue that spatial dispersal policies on refugees and asylum seekers influence labour market assimilation of refugees through two mechanisms: first, the local job offer arrival rate and, second, place utility. Our partial search model with simultaneous job and residential location search predicts that the reservation wage for local jobs decreases with place utility. We argue that spatial dispersal decreases average place utility of refugees which decreases the transition rate into first job due to large local reservation wages. We investigate both mechanisms empirically and test the predictions of the theoretical model by evaluating the employment effects of the Danish spatial dispersal policy carried out 1986-1998.
    Keywords: Migration,
    Date: 2006–06
  7. By: Gilles Duranton; Laurent Gobillon; Henry G. Overman
    Abstract: We study the impact of local taxation on the location and growth of firms. Our empirical methodology 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 unobservedtime-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 onemployment growth, but no effect on entry.
    Keywords: Local taxation, spatial differencing, borders
    JEL: H22 H71 R38
    Date: 2006–08
  8. By: David S. Johnson; Barbara Boyle Torrey; Jonathan Fisher; Timothy Smeeding
    Abstract: Objectives: This paper employs new data on the consumption and assets of older Americans to investigate recent research findings that older adults do not convert their home equity into income that can be used for current consumption, as the life-cycle hypothesis predicts. Methods: We use data over twenty years from the Consumer Expenditure Survey to examine the asset and consumption trends of older adults, buttressed with additional findings from the Survey of Consumer Finances and the American Housing Survey. Results: Older American's homeownership rates are stable until age 80 and after 80 tend to decline slowly. The homes are increasingly mortgage-free; home equity increases with age, and few older adults take out home equity loans or reverse annuity mortgages. Housing consumption-flows increase with age; non-housing consumption-flows decline after age 60 at a rate of approximately 1.4% a year. Discussion: The results suggest that most older Americans are not converting their housing assets into consumption despite the life-cycle hypothesis predictions. This is also inconsistent with international trends where homeownership rates fall substantially with age. One reason may be because older Americans may be holding onto their homes to finance long-term care. If this is the case, their economic behavior may be more consistent with the life-cycle hypothesis than previous research suggests.
    Keywords: housing, aging, retirement, homeownership, mortgage
    Date: 2006–08–17
  9. By: Christopher D. Carroll; Misuzu Otsuka; Jirka Slacalek
    Abstract: This paper presents a simple new method for estimating the size of 'wealth effects' on aggregate consumption. The method exploits the well-documented sluggishness of consumption growth (often interpreted as 'habits' in the asset pricing literature) to distinguish between short-run and long-run wealth effects. In U.S. data, we estimate that the immediate (next-quarter) marginal propensity to consume from a $1 change in housing wealth is about 2 cents, with a final long-run effect around 9 cents. Consistent with several recent studies, we find a housing wealth effect that is substantially larger than the stock wealth effect. We believe that our approach is preferable to the currently popular cointegration- based estimation methods, because neither theory nor evidence justifies faith in the existence of a stable cointegrating vector.
    JEL: C22 E21 E32
    Date: 2006–12
  10. By: David Card (Department of Economics, UC Berkeley and NBER); Ethan G.Lewis (Federal Reserve Bank of Philadelphia)
    Abstract: Mexican immigrants were historically clustered in a few cities, mainly in California and Texas. During the past 15 years, however, arrivals from Mexico established sizeable immigrant communities in many “new” cities. We explore the causes and consequences of the widening geographic diffusion of Mexican immigrants. A combination of demand-pull and supply push factors explains most of the inter-city variation in inflows of Mexican immigrants over the 1990s, and also illuminates the most important trend in the destination choices of new Mexican immigrants – the move away from Los Angeles. Mexican inflows raise the relative supply of low-education labor in a city, leading to the question of how cities adapt to these shifts. One mechanism, suggested by the Hecksher Olin model, is shifting industry composition. We find limited evidence of this mechanism: most of the increases in the relative supply of loweducation labor are absorbed by changes in skill intensity within narrowly defined industries. Such adjustments could be readily explained if Mexican immigrant inflows had large effects on the relative wage structures of different cities. As has been found in previous studies of the local impacts of immigration, however, our analysis suggests that relative wage adjustments are small.
    Date: 2005–07
  11. By: Hanno Lustig; Stijn Van Nieuwerburgh
    Abstract: To explain the low-frequency variation in US equity and debt returns in the 20th century, we solve an equilibrium model in which households face housing collateral constraints. An increase in the ratio of housing to human wealth loosens these borrowing constraintsthus allowing for more risk sharing. The rate of return that households require for holding equity decreases as a result. Feeding the historical time series of US housing collateral into the model replicates four features of long-run asset returns. (1) It produces a fifteen percent equity premium during the 1930s and a slow decline of the equity premium from eleven percent in the 1960s to four percent in 2003. (2) It generates large unexpected capital gains for equity holders, especially in the 1990s. (3) The risk-free rate and the housing collateral ratio are strongly positively correlated at low frequencies. (4) The model mimics the slow decline in the volatility of stock returns and the riskless interest rate.
    JEL: G12
    Date: 2006–12
  12. By: Anna Piil Damm (CAM and Department of Economics, Aarhus School of Business)
    Abstract: This study investigates empirically how residence in ethnic enclaves affects labour market outcomes of refugees. Self-selection into ethnic enclaves in terms of unobservable characteristics is taken into account by exploitation of a Danish spatial dispersal policy which randomly disperses new refugees across locations conditional on six individual-specific characteristics. The results show that refugees with unfavourable unobserved characteristics are found to self-select into ethnic enclaves. Furthermore, taking account of negative self-selection, a relative standard deviation increase in ethnic group size on average increases the employment probability of refugees by 4 percentage points and earnings by 21 percent. I argue that in case of heterogenous treatment effects, the estimated effects are local average treatment effects.
    Keywords: Migration,
    Date: 2006–08
  13. By: Richard Belfield; David Marsden
    Abstract: The introduction of performance-related pay with Performance Management in the state school sector of England and Wales represents a considerable change in the school management system. After 2000, all teachers were subject to annual goal setting performance reviews. Experienced teachers were offered an extended pay scale based on performance instead of seniority, and to gain access to the new upper pay scale, teachers had to go through a 'threshold assessment' based on their professional skills and performance. This paper reports the results of a panel survey of classroom and head teachers which started in 2000 just before implementation of the new system, and then after one and after four years of operation. We find that both classroom and head teacher views have changed considerably over time, from initial general skepticism and opposition towards a more positive view, especially among head teachers by 2004. We argue that the adoption of an integrative bargaining approach to performance reviews explains why a growing minority of schools have achieved improved goal setting, and improved pupil attainments as they have implemented performancemanagement. Pay for performance has been one of the measures of organizational support that headteachers could bring to induce changes in teachers' classroom priorities. We argue that the teachers' case shows that a wider range of performance incentives than previously thought can be offered to employees in such occupations, provided that goal setting and performance measurement are approached as a form of negotiation instead of top-down.
    Keywords: Education, teachers, performance related pay, public sector, compensation, industrial relations
    JEL: I2 J33 J45 M52
    Date: 2006–08

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