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on Urban and Real Estate Economics |
| By: | Jason Allen; Robert Amano; David P. Byrne; Allen W. Gregory |
| Abstract: | The authors provide a detailed empirical analysis of Canadian city housing prices. They examine the long-run relationship between city house prices in Canada from 1981 to 2005 as well as idiosyncratic relations between city prices and city-specific variables. The results suggest that city house prices are only weakly correlated in the long run, and that there is a disconnect between house prices and interest rates. City-specific variables such as union wage levels, new-housing prices, and the issuance of building permits tend to be positively related to city existing-house prices. Surprisingly, there is mixed evidence with respect to standard measures of economic activity, such as labour force and per capita GDP. |
| Keywords: | Regional economic developments |
| JEL: | C22 C32 R2 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:06-49&r=ure |
| By: | Albert Saiz; Susan Wachter |
| Abstract: | What impact does immigration have on neighborhood dynamics? Within metropolitan areas, the authors find that housing values have grown relatively more slowly in neighborhoods of immigrant settlement. They propose three nonexclusive explanations: changes in housing quality, reverse causality, or the hypothesis that natives find immigrant neighbors relatively less attractive (native flight). To instrument for the actual number of new immigrants, the authors deploy a geographic diffusion model that predicts the number of new immigrants in a neighborhood using lagged densities of the foreign-born in surrounding neighborhoods. Subject to the validity of their instruments, the evidence is consistent with a causal interpretation of an impact from growing immigration density to native flight and relatively slower housing price appreciation. Further evidence indicates that these results may be driven more by the demand for residential segregation based on race and education than by foreignness per se. |
| Keywords: | Immigrants |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:06-22&r=ure |
| By: | Matz Dahlberg; Eva Mörk; Jørn Rattsø; Hanna Ågren |
| Abstract: | When investigating the effects of federal grants on the behavior of lower-level governments, it is hard to defend the handling of grants as an exogenous factor affecting local governments; federal governments often set grants based on characteristics and performance of local governments. In this paper we make use of a discontinuity in the Swedish grant system in order to estimate the causal effects of general intergovernmental grants on local spending and local tax rates. The formula for the distribution of funds is used as an exclusion restriction in an IV-estimation. We find evidence of crowding-in, where federal grants are shifted to more local spending, but not to reduced local tax rates. Our results thus confirm a flypaper effect for Sweden. |
| Keywords: | fiscal federalism, grants, flypaper effect, local taxation, local government expenditure, causal effects |
| JEL: | H21 H71 H77 R51 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1857&r=ure |
| By: | Claudio Agostini (ILADES-Georgetown University, Universidad Alberto Hurtado); Gastón Palmucci (Tribunal de Defensa de la Libre Competencia (Chile)) |
| Abstract: | Housing units with closer access to public transportation enjoy a higher market value than those with similar characteristics but poorer access. This difference can be explained by the less expensive cost of transport to the main workplaces and shopping areas in town. For this reason, investments in public transport infrastructure, for example, building a new metro line, are capitalized totally or partially on land property and housing prices. This work analyzes empirically the degree of capitalization on housing prices when the new Line 4 of the Santiago de Chile Metro System was built. In particular, and given that the new line started operating in December 2005, the degree of anticipated capitalization on housing prices at the moment of announcing construction of Line 4 and at the moment of informing on the basic engineering to determine the location of the stations has been estimated. A unique data base has been used, containing all home buying and selling operations in the Greater Santiago between December 2000 and March 2004. The results show that the average apartment price rose between 3.3% and 4.4% as a consequence of having announced the construction, and between 4.5% and 5.7% after information on the location of the stations was made known. This increase was not distributed evenly but depended on the distance to the closest station. An indirect effect of this kind of capitalization is that property tax collection increases if landed property is reassessed according to the price rise. This effect is not negligible in magnitude and could stand for a minimum between 14% and 20% of investment in the new metro line, which gives way to an interesting discussion with respect to the form of financing the metro network extension. |
| Keywords: | Metro, Apartment Prices, Anticipated Capitalization |
| JEL: | H54 R21 R53 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:ila:ilades:inv176&r=ure |
| By: | Edward L. Glaeser; Joseph Gyourko |
| Abstract: | The key stylized facts of the housing market are positive serial correlation of price changes at one year frequencies and mean reversion over longer periods, strong persistence in construction, and highly volatile prices and construction levels within markets. We calibrate a dynamic model of housing in the spatial equilibrium tradition of Rosen and Roback to see whether such a model can generate these facts. With reasonable parameter values, this model readily explains the mean reversion of prices over five year periods, but cannot explain the observed positive serial correlation at higher frequencies. The model predicts the positive serial correlation of new construction that we see in the data and the volatility of both prices and quantities in the typical market, but not the volatility of the nation's more extreme markets. The strong serial correlation in annual house price changes and the high volatility of prices in coastal markets are the two biggest housing market puzzles. More research is needed to determine whether measurement error-related data smoothing or market inefficiency can best account for the persistence of high frequency price changes. The best rational explanations of the volatility in high cost markets are shocks to interest rates and unobserved income shocks. |
| JEL: | A1 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12787&r=ure |
| By: | Enström Öst, Cecilia (Institute for Futures Studies) |
| Abstract: | One major goal of the Swedish housing allowance system is to prevent families with children from living overcrowded. The share of children living overcrowded among the Swedish recipient households, however, has increased between 1994 and 2002 by almost 15 percent. At the same time, a number of studies have reported that families with children have become increasingly unsatisfied with their housing situation and it seems as if the housing situation for families with children is becoming more tensed. <p> The purpose of this report is to examine whether the Swedish housing allowance reform in 1997 has had an effect on the share of households with children living overcrowded. That is, have the households adjusted their housing consumption and moved into crowded housing as a result of the decreased amount of housing allowance? <p> Data for this study is extracted from the Swedish National Insurance Board’s databank on housing allowance recipients and the analysis is focused on families with children. The result from this study suggests that the constraint on dwelling size lead to a 40 percent increase of moving into cramped housing. The conclusion is that the Swedish housing allowance reform has had a checking effect on households’ housing consumption and eventually a negative effect on children’s housing situation. |
| Keywords: | housing allowance reform; children's housing situation |
| JEL: | D10 I38 J13 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifswps:2006_013&r=ure |
| By: | Nicole Schneeweis (Department of Economics, Johannes Kepler University Linz, Austria) |
| Abstract: | Educational integration of children with migration background is an important issue in the social sciences. Few studies exist that quantify the disadvantage of immigrant children in education and there has not been any attempt to identify institutional conditions of the education system that contribute to educational integration. Using data from five international student assessments, this study tries to fill that gap. First, Blinder-Oaxaca decompositions are used to allow for a comparison of (dis)integration of students with migration background across countries and time. In a second step, (dis)integration is related to institutional characteristics of the schooling system. The study shows that early education, time in school and central exams furthers integration, while social segregation of students among schools is detrimental to educational integration. |
| Keywords: | Institution; Integration; Immigrant; Pisa; Timss; Education |
| JEL: | I21 I28 J15 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2006_20&r=ure |
| By: | Iwan Barankay (University of Warwick, CEPR and IZA Bonn); Ben Lockwood (University of Warwick and CEPR) |
| Abstract: | Advocates of fiscal decentralization argue that amongst other benefits, it can increase the efficiency of delivery of government services. This paper is one of the first to evaluate this claim empirically by looking at the association between expenditure decentralization and the productive efficiency of government using a data-set of Swiss cantons. We first provide careful evidence that expenditure decentralization is a powerful proxy for legal local autonomy. Further panel regressions of Swiss cantons provide robust evidence that more decentralization is associated with higher educational attainment. We also show that these gains lead to no adverse effects across education types but that male students benefited more from educational decentralization closing, for the Swiss case, the gender education gap. |
| Keywords: | decentralization, productive efficiency, local public goods |
| JEL: | H40 H52 H70 I20 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2477&r=ure |
| By: | Ernesto Crivelli; Klaas Staal |
| Abstract: | There is much evidence against the so-called "too big to fail" hypothesis in the case of bailouts to sub-national governments. We look at a model where districts of different size provide local public goods with positive spillovers. Matching grants of a central government can induce socially-efficient provision, but districts can still exploit the intervening central government by inducing direct financing. We show that the ability of a district to induce a bailout from the central government and district size are negatively correlated. |
| Keywords: | bailouts, soft-budget constraints, jurisdictional size, public goods, spillovers |
| JEL: | H40 H70 R10 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1858&r=ure |
| By: | Sabrina Di Addario (Bank of Italy) |
| Abstract: | I analyze empirically the effects of both urban and industrial agglomeration on men’s and women’s search behavior and on the efficiency of matching. The analysis is based on a unique panel data set from the Italian Labor Force Survey micro-data, which covers 520 randomly drawn Local Labor Market Areas (66 percent of the total) over the four quarters of 2002. I compute transition probabilities from non-employment to employment by jointly estimating the probability of searching and the probability of finding a job conditional on having searched, and I test whether these are affected by urbanization and/or industry localization. The main results indicate that both urbanization and industry localization raise job seekers’ chances of finding employment (conditional on having searched), but neither of them affects non-employed individuals’ search behavior. |
| Keywords: | Labor market transitions, search intensity, urbanization, industry localization. |
| JEL: | J64 R00 J60 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_605_06&r=ure |
| By: | Christos Kotsogiannis; Robert Schwager |
| Abstract: | A multi-jurisdictional system is thought to improve, through yardstick competition, accountability. At the same time equalization programs, a common feature of multi-jurisdictional systems, are thought to be a prerequisite for both efficiency of the internal market and the equity objective of the equal treatment of equals. This paper shows that such programs, by reducing the information context of comparisons across jurisdictions, introduce perverse fiscal incentives and thus reduce accountability. The consequence of this is that equilibrium rent-taking increases with the intensity of equalization transfers. |
| Keywords: | equalization transfer programs, fiscal capacity, rent-seeking, fiscal federalism |
| JEL: | D72 H77 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1865&r=ure |
| By: | Albert Solé-Ollé; Pilar Sorribas-Navarro |
| Abstract: | In this paper we test the hypothesis that municipalities aligned with upper-tier grantor governments (i.e., controlled by the same party) will receive more grants than those that are unaligned. We use a rich Spanish database, which provides information on grants received by nearly 900 municipalities during the period 1993-2003 from three different upper-tier governments (i.e., Central, Regional and Upper-local). Since three elections were held at each tier during this period, we have enough within-municipality variation in partisan alignment to provide differences-in-differences estimates of the effects of alignment on the amount of grants coming from each source. Moreover, the fact that a municipality may simultaneously receive grants from aligned and unaligned grantors allows us to use a triple-differences estimator, which consists of estimating the effects of changing alignment status on the change in grants coming from the aligned grantors relative to the change in grants coming from the unaligned ones. The results suggest that partisan alignment has a sizeable positive effect on the amount of grants received by municipalities. |
| Keywords: | grant allocation, alignment, electoral competition |
| JEL: | C72 D72 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1855&r=ure |
| By: | Thomas H. Klier; Daniel McMillen |
| Abstract: | Using nonparametric descriptive tools developed by Duranton and Overman (2005), we show that both new and old auto supplier plants are highly concentrated in the eastern United States. Conditional logit models imply that much of this concentration can be explained parametrically by distance from Detroit, proximity to assembly plants, and access to the interstate highway system. New plants are more likely to be located in zip codes that are close to existing supplier plants. However, the degree of clustering observed is still greater than implied by the logit estimates. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-06-20&r=ure |
| By: | O. Emre Ergungor |
| Abstract: | Banks specialize in lending to informationally opaque borrowers by collecting soft information about them. Some researchers claim that this process requires a physical presence in the market to lower information collection costs. The author provides evidence in support of this argument in the mortgage market for low-income borrowers. Mortgage originations increase and interest spreads decline when there is a bank branch located in a low-to-moderate income neighborhood. |
| Keywords: | Mortgage loans ; Branch banks |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwp:0616&r=ure |
| By: | Pedro Martins (Queen Mary, University of London, CEG-IST Lisbon and IZA Bonn); Ian Walker (University of Warwick, Princeton University and IZA Bonn) |
| Abstract: | We examine the empirical determinants of student achievement in higher education, focusing our attention on its small-group teaching component (classes or seminars) and on the role of attendance, number of students per class, peers, and tutors. The empirical analysis is based on longitudinal administrative data from a major undergraduate program where students are allocated to class groups in a systematic way, but one which is plausibly uncorrelated with ability. Although, in simple specifications, we find positive returns to attendance and sizeable differences in the effectiveness of teaching assistants, most effects are not significant in specifications that include student fixed effects. We conclude that unobserved heterogeneity amongst students, even in an institution that imposes rigorous admission criteria and so has little observable heterogeneity, is apparently much more important than observable variation in inputs in explaining student outcomes. |
| Keywords: | education production functions, attendance, class size, peer effects |
| JEL: | I2 J2 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2490&r=ure |
| By: | Joshua Angrist; Daniel Lang; Philip Oreopoulos |
| Abstract: | High attrition rates, delayed completion, and poor achievement are growing concerns at colleges and universities in North America. This paper reports on a randomized field experiment involving two strategies designed to improve these outcomes among first-year undergraduates at a large Canadian university. One treatment group was offered peer advising and tutorial services. Another was offered substantial merit-scholarships for solid, but not necessarily top, first year grades. A third treatment group combined both interventions. Service take-up rates were much higher for students offered both services and scholarships than for those offered services alone. Females also used services more than males. No program had an effect on grades for males. However, first-term grades were significantly higher for females in the two scholarship treatment groups. These effects faded somewhat by year's end, but remain significant for females who planned to take enough courses to qualify for a scholarship. There also appears to have been an effect on retention for females offered both scholarships and services. This effect is large enough to generate an overall increase in retention. On balance, the results suggest that a combination of services and incentives is more promising than either alone. |
| JEL: | I22 I28 J24 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12790&r=ure |
| By: | Diana Hancock; Andreas Lehnert; Wayne Passmore; Shane M. Sherlund |
| Abstract: | Basel II bank capital regulations are designed to be substantially more risk sensitive than the current regulations. In the United States, only the largest banks would be required to adopt Basel II; other depositories could choose to adopt such standards or to remain under the Basel I capital standards. We consider possible effects of this two-pronged or "bifurcated" approach on the market for residential mortgages. Specifically, we analyze whether those institutions that adopt Basel II will enjoy lower costs than nonadopters and whether they have an incentive to retain mortgages in their own portfolios. We find that (1) despite the large differences in regulatory capital requirements between adopters and nonadopters, it is unlikely that there will be any measurable effect of Basel II implementation on most mortgage rates and, consequently, any direct impact on the competition between adopters and nonadopters for originating or holding residential mortgages; (2) the most significant competitive impact may be felt among mortgage securitizers; and (3) adopters might have increased profits from some mortgages relative to nonadopters because they will capture some of the deadweight losses that occur under the current regulatory regime, but nonadopters would likely retain their market shares. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2006-46&r=ure |
| By: | Korpi, Martin (Institute for Futures Studies) |
| Abstract: | The question addressed in this paper is twofold: (i) does wage inequality increase with local population size, and if so, (ii) what are possible factors behind this increase? In a cross-section analysis of Swedish local labour markets using full population data, the paper shows that urban scale, i.e. size of local population, has significant positive effects on wage inequality. Testing for potential explanations, labour market diversification, human capital and population size are shown to be significantly associated with inequality. Given these effects, the paper raises the question of how to understand and incorporate scale effects into models of long-term change in wage inequality. |
| Keywords: | Wage inequality; local labour markets; urban size; business diversification |
| JEL: | D63 J31 J40 R12 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifswps:2006_011&r=ure |
| By: | Volodymyr Bilotkach; Yuriy Gorodnichenko; Oleksandr Talavera; Igor Zubenko |
| Abstract: | Using a sample of fare quotes for non-stop travel from New York to London, this paper investigates the dynamics of offered fares as the departure date nears. We find that the general trend is toward fare increase at an accelerated rate as the departure date approaches. Clear differences in price-setting strategies among the carriers competing on a particular route are documented. |
| Keywords: | airline industry, price dynamics |
| JEL: | L93 D21 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp645&r=ure |
| By: | Xavier Calsamiglia; Teresa Garcia-Milà; Therese J. McGuire |
| Abstract: | Differences in the degree of fiscal decentralization observed between the U.S. and many countries in Europe cannot be explained within the standard theory of fiscal decentralization. By introducing preferences for solidarity – equality in the provision of public goods and services across regions – we show that different decentralization schemes can coexist as efficient choices. We develop a model of fiscal decentralization that incorporates tastes for solidarity, multiple levels of government, and various tax and transfer instruments. We find that when solidarity is added to the traditional fiscal-federalism framework, the choice along the decentralized-to-centralized spectrum shifts toward a more centralized system. |
| JEL: | H20 H40 H70 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1877&r=ure |
| By: | Robert S. Chirinko; Daniel J. Wilson |
| Abstract: | Though the U.S. federal investment tax credit (ITC) was permanently repealed in 1986, state-level ITCs have proliferated over the last few decades. The proliferation of state ITCs and other investment tax incentives raises two important questions: (1) Are these tax incentives effective in achieving their stated objective, to increase investment within the state?; and (2) To the extent these incentives raise investment within the state, how much of this increase is due to investment drawn away from other states? To begin to answer these questions, we construct a detailed panel data set for 50 states for 20+ years (depending on the series). The data set contains series on output and capital, their relative prices, and the number of establishments. The effects of tax parameters on capital formation and establishments are measured by the Jorgensonian user cost of capital that depends in a nonlinear manner on federal and state tax parameters. Cross-jurisdiction differences in state investment tax credits and state corporate tax rates entering the user cost, combined with a panel that is long in the time dimension, are key to identifying the effectiveness of state investment incentives. Three models are estimated: (1) a Capital Demand Model motivated by the first-order condition for profit-maximization; (2) a Spatial Discontinuity Model developed by Holmes (1998) that exploits the spatial discontinuity in tax policies that occurs at state borders; and (3) a Twin-Counties Model that matches counties to a cross-border "twin" and relates between county differentials in manufacturing activity to between-county differentials in tax policy. The first model relies on state-level data, while the latter two use county-level data. On balance, the models find a significant channel for state tax incentives on own-state economic activity and document the importance of interstate capital flows, a necessary element for meaningful tax competition. Whether state investment incentives are a zero-sum game among the states is less certain and depends on the definition of the set of competitive states. |
| Keywords: | Tax incentives ; Taxation ; State finance |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:2006-47&r=ure |
| By: | Jeffrey R. Campbell; Zvi Hercowitz |
| Abstract: | Aggressive deregulation of the mortgage market in the early 1980s triggered innovations that greatly reduced the required home equity of U.S. households. This allowed households to cash-out a large part of accumulated equity, which equaled 71 percent of GDP in 1982. A borrowing surge followed: Household debt increased from 43 to 62 percent of GDP in the 1982- 2000 period. What are the welfare implications of such a reform for borrowers and savers? This paper uses a calibrated general equilibrium model of lending from the wealthy to the middle class to evaluate these effects quantitatively. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-06-27&r=ure |
| By: | Panu Poutvaara; Mikael Priks |
| Abstract: | This paper isolates the causal effect of policing on group violence, using unique panel data on self-reported crime by soccer and ice hockey hooligans. The problem of reverse causality from violence to policing is solved by two drastic reallocations of the Stockholm Supporter Police unit to other activities following the 9/11 terrorist attack in September 2001 and the Tsunami catastrophe in December 2004. Difference-in-difference analysis reveals that Stockholm-related hooligan violence increased dramatically during these periods. |
| Keywords: | police, violence, hooliganism, natural experiments |
| JEL: | K10 K42 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1882&r=ure |
| By: | Kene Boun My; Laurent Denant-Boèmont; Frédéric Koessler; Marc Willinger; Anthony Ziegelmeyer |
| Abstract: | This paper reports two laboratory studies designed to study the impact of public information about past departure rates on congestion levels and travel costs. Our experimental design is based on a discrete version of Arnott, de Palma, and Lindsey’s (1990) bottleneck model where subjects have to choose their departure time in order to reach a common destination. Experimental treatments in our first study differ in terms of the level of public information on past departure rates and the relative cost of delay. In all treatments, congestion occurs and the observed total travel costs match the predicted ones. In other words, subjects' capacity to coordinate is neither affected by the availability of public information on past departure rates nor by the relative cost of delay. This absence of treatment effects is confirmed by our finding that a parameter-free reinforcement learning model best characterizes individual behavior. The number of experimental subjects taking the role of drivers is four times larger in our second study than in our first study. We observe that subjects’ capacity to coordinate is not affected by the size of the population. |
| Keywords: | Travel behavior; Congestion; Information in intelligent transportation systems; Laboratory experiments |
| JEL: | C91 C92 D83 R40 R41 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:esi:discus:2006-20&r=ure |