nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2007‒02‒24
twenty-six papers chosen by
Steve Ross
University of Connecticut

  1. Ethnicity and Spatial Externalities in Crime By Patacchini, Eleonora; Zenou, Yves
  2. Social Interactions and Labour Market Outcomes in Cities By Zenou, Yves
  3. Identifying Individual and Group Effects in the Presence of Sorting: A Neighborhood Effects Application By Patrick Bayer; Stephen Ross
  4. Down, Set, Hike: The Economic Impact of College Football Games on Local Economies By Robert Baade; Robert Baumann; Victor Matheson
  5. Urban Unemployment in England By David Metcalf
  6. Geographical distribution of unemployment: an analysis of provincial differences in Italy By Cracolici, M. Francesca; Cuffaro, Miranda; Nijkamp, Peter
  7. Are Shirking and Leisure Substitutable? An Empirical Test of Efficiency Wages based on Urban Economic Theory By Ross, Stephen; Zenou, Yves
  8. Metropolitan Statistical Area Designation: Aggregate and Industry Growth Impacts By George W. Hammond; Brian J. Osoba
  9. Educational Effects of Widening Access to the Academic Track: A Natural Experiment By Eric Maurin; Sandra McNally
  10. Race and School Quality Since Brown vs. Board of Education. By Michael A. Boozer; Alan B. Krueger; Shari Wolkon
  12. Commuters’ valuation of travel time variability in Barcelona By Anna Matas; Javier Asensio
  13. Workplace Segregation in the United States: Race, Ethnicity, and Skill By Judith Hellerstein; David Neumark
  14. Does limited access to mortgage debt explain why young adults live with their parents? By Nuno Martins; Ernesto Villanueva
  15. The Effects of Public Capital on Regional Convergence in Turkey By Özlem Önder; Metin Karadag; Ertugrul Deliktas
  16. Travail en cours d'études, échec et insertion professionnelle : le cas des DEUG non diplômés. By Pauline Domingo
  17. Immigration, Industrial Revolution and Urban Growth in the United States, 1820-1920: Factor Endowments, Technology and Geography By Sukkoo Kim
  18. Local Government Control and Efficiency of the Water Industry: An Empirical Analysis of Water Suppliers in East Germany By Peter Haug
  19. Male-Female Wage Differentials in Urban Labor Markets. By Ronald Oaxaca
  20. Does Competition Increase Economic Efficiency in Swedish County Councils? By Rudholm, Niklas; Nordmark, Arvid; Marklund, Per-Olov
  21. University research and the location of business R&D By Laura Abramovsky; Rupert Harrison; Helen Simpson
  22. The Spillover Effects of Public Capital Formation on the Manufacturing Industry in the Turkish Geographical Regions By Ertugrul Deliktas; Özlem Önder; Metin Karadag
  23. The Reform of Equalization Payments By Dan Usher
  24. "Land Rental and Sales Markets in Paraguay" By Thomas Masterson
  25. Revisiting the Enclave Hypothesis: Miami Twenty-Five Years Later By Alejandro Portes; Steven Shafer
  26. Hedonic price functions By Lars Nesheim

  1. By: Patacchini, Eleonora; Zenou, Yves
    Abstract: We develop a model where the decision to commit a crime in a neighboring area is a positive function of the percentage of same-race individuals residing in that area since they can provide crucial information on crime possibilities. The model then predicts a positive spatial correlation in crime between different contiguous areas; this correlation is higher the closer the distance between the areas. We empirically investigate these relationships using data from the crime statistics that are recorded by the police in Britain. We find results that are consistent with the model. In particular, the agglomeration of a given ethnic minority group is positively related to its crime activity and this effect declines quite sharply with distance between areas.
    Keywords: crime; ethnic minorities; social interactions
    JEL: C23 K42 R12
    Date: 2007–02
  2. By: Zenou, Yves
    Abstract: We develop a model where information about jobs is essentially obtained through friends and relatives, i.e. strong and weak ties. Workers commute to a business centre to work and to interact with other people. We find that housing prices increase with the level of social interactions in the city because information about jobs is transmitted more rapidly and, as a result, individuals are more likely to be employed and to be able to pay higher land rents. We extend this framework to incorporate black and white workers. Because whites obtain a higher wage than blacks, they reside closer to jobs to save on commuting time costs. As a result, black workers experience a higher unemployment rate than white workers because they have little contact with weak ties (especially whites) and thus have limited access to job information, relying mainly on their strong ties, who are themselves likely to be unemployed. The lack of ties that act as diverse sources of information is therefore the main cause of blacks' unemployment.
    Keywords: labour market; land rent; social networks; spatial mismatch; weak ties
    JEL: A14 J15 R14
    Date: 2007–02
  3. By: Patrick Bayer; Stephen Ross
    Abstract: Researchers have long recognized that the non-random sorting of individuals into groups generates correlation between individual and group attributes that is likely to bias naive estimates of both individual and group effects. This paper proposes a non-parametric strategy for identifying these effects in a model that allows for both individual and group unobservables, applying this strategy to the estimation of neighborhood effects on labor market outcomes. The first part of this strategy is guided by a robust feature of the equilibrium in the canonical vertical sorting model of Epple and Platt (1998), that there is a monotonic relationship between neighborhood housing prices and neighborhood quality. This implies that under certain conditions a non-parametric function of neighborhood housing prices serves as a suitable control function for the neighborhood unobservable in the labor market outcome regression. This control function converts the problem to a model with one unobservable so that traditional instrumental variables solutions may be applied. In our application, we instrument for each individual.s observed neighborhood attributes with the average neighborhood attributes of a set of observationally identical individuals. The neighborhood effects model is estimated using confidential microdata from the 1990 Decennial Census for the Boston MSA. The results imply that the direct effects of geographic proximity to jobs, neighborhood poverty rates, and average neighborhood education are substantially larger than the conditional correlations identified using OLS, although the net effect of neighborhood quality on labor market outcomes remains small. These findings are robust across a wide variety of specifications and robustness checks.
    Date: 2007–01
  4. By: Robert Baade (Department of Economics and Business, Lake Forest College); Robert Baumann (Department of Economics, College of the Holy Cross); Victor Matheson (Department of Economics, College of the Holy Cross)
    Abstract: This paper provides an empirical examination of the economic impact of spectator sports on local economies. Confirming the results of other ex post analyses of sports in general, this paper finds no statistically significant evidence that college football games in particular contribute positively to a host’s economy. Our analysis from 1970-2004 of 63 metropolitan areas that play host to big-time college football programs finds that neither the number of home games played, the winning percentage of the local team, nor winning a national championship has a discernable impact on either employment or personal income in the cities where the teams play. While successful college football teams may bring fame to their alma mater, fortune appears to be a bit more elusive.
    Keywords: sports, football, college sports, impact analysis, mega-event
    JEL: L83 I20 O18 R11
    Date: 2007–02
  5. By: David Metcalf
  6. By: Cracolici, M. Francesca (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics); Cuffaro, Miranda; Nijkamp, Peter
    Abstract: Unemployment rates appear to vary widely at the subregional (e.g. local or provincial) level. Using spatial econometric models for spatial autocorrelation, this paper focuses attention on the spatial structure of regional unemployment disparities of Italian provinces. On the basis of findings from the economic literature and of the available socio-economic data, various model specifications including different explanatory variables are tested to investigate the geographical distribution of unemployment in the 103 provinces of Italy for the year 2003. The results suggest that there is a significant degree of spatial dependence among labour markets at the provincial level in Italy. Provinces marked by high unemployment, as well as those characterized by low unemployment, tend to be spatially clustered, demonstrating the presence of spatial persistency.
    Keywords: Regional unemployment; ESDA; Spatial lag model; Italian provinces
    JEL: C21 J60 J64 R12 R23
    Date: 2007
  7. By: Ross, Stephen; Zenou, Yves
    Abstract: Recent theoretical work has examined the spatial distribution of unemployment using the efficiency wage model as the mechanism by which unemployment arises in the urban economy. This paper extends the standard efficiency wage model in order to allow for behavioural substitution between leisure time at home and effort at work. In equilibrium, residing at a location with a long commute affects the time available for leisure at home and therefore affects the trade-off between effort at work and risk of unemployment. This model implies an empirical relationship between expected commutes and labour market outcomes, which is tested using the Public Use Microdata sample of the 2000 U.S. Decennial Census. The empirical results suggest that efficiency wages operate primarily for blue collar workers, i.e. workers who tend to be in occupations that face higher levels of supervision. For this subset of workers, longer commutes imply higher levels of unemployment and higher wages, which are both consistent with shirking and leisure being substitutable.
    Keywords: efficiency wage; leisure; urban unemployment
    JEL: J41 R14
    Date: 2007–02
  8. By: George W. Hammond (Bureau of Business and Economic Research, West Virginia University); Brian J. Osoba (Institute for Policy & Economic Development, University of Texas at El Paso)
    Abstract: The federal Office of Management and Budget’s (OMB) periodic release of updated metropolitan statistical area (MSA) definitions frequently garners significant attention from local economic development professionals and policymakers. The interest is grounded, in part, in the common belief that the designation of a region as a new MSA will spur its subsequent growth. The purpose of this paper is to test the hypothesis that the MSA designation influences local growth, using Office of Management and Budget (OMB) designations released since 1980 and data on per capita personal income, population, and employment. Based on results from several methods, including quasiexperimental matching, we find little evidence that the MSA designation has a significant impact on long-term employment or per capita income growth. However, we do find some evidence in favor of a short-run impact on aggregate employment growth and more significant impacts on population growth. We disaggregate employment and find significant short-run impacts on transportation and utilities; retail trade; and government. We find longer-term impacts on services and finance, insurance, and real estate employment growth.
    Keywords: metropolitan statistical area, MSA designation, economic impact; industry employment
    Date: 2007
  9. By: Eric Maurin (PSE, CEPR, CEE and IZA); Sandra McNally (CEP, CEE, LSE and IZA)
    Abstract: It is difficult to know whether widening access to schools which provide a more academically oriented general education makes a difference to average educational achievement. We make use of reforms affecting admission to the ‘high ability’ track in Northern Ireland, but not England. The comparison of educational outcomes between Northern Ireland and England before and after the reform identifies the net effect of expanding the academic track to accommodate more students. This is composed of the direct effect of the more academic track on individual performance and the indirect effect arising on account of the change in peer group composition. Our paper is relevant to debate on the consequences of ability tracking and of expanding access to the academic track.
    Keywords: education, tracking, selection
    JEL: I2
    Date: 2007–02
  10. By: Michael A. Boozer; Alan B. Krueger; Shari Wolkon
  11. By: A. Rodriguez-Pose; Riccardo Crescenzi
    Abstract: Research on the impact of innovation on regional economic performance in Europe has fundamentally followed three approaches: a) the analysis of the link between investment in R&D, patents, and economic growth; b) the study of the existence and efficiency of regional innovation systems; and c) the examination of geographical diffusion of regional knowledge spillovers. These complementary approaches have, however, rarely been combined. Important operational and methodological barriers have thwarted any potential crossfertilization. In this paper, we try to fill this gap in the literature by combining in one model R&D, spillovers, and innovation systems approaches. A multiple regression analysis is conducted for all regions of the EU-25, including measures of R&D investment, proxies for regional innovation systems, and knowledge and socio-economic spillovers. This approach allows us to discriminate between the influence of internal factors and external knowledge and institutional flows on regional economic growth. The empirical results highlight how the interaction between local and external research with local and external socio-economic and institutional conditions determines the potential of every region in order to maximise its innovation capacity. They also indicate the importance of proximity for the transmission of economically productive knowledge, as spillovers show strong distance decay effects. In the EU-25 context, only the innovative efforts pursued within a 180 minute travel radius have a positive and significant impact on regional growth performance.
    Keywords: Economic growth, innovation, R&D, knowledge, spillovers,
    JEL: R11 R12 R58
    Date: 2006–01
  12. By: Anna Matas (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona); Javier Asensio (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)
    Abstract: The value given by commuters to the variability of travel times is empirically analysed using stated preference data from Barcelona (Spain). Respondents are asked to choose between alternatives that differ in terms of cost, average travel time, variability of travel times and departure time. Different specifications of a scheduling choice model are used to measure the influence of various socioeconomic characteristics. Our results show that travel time variability.
    Keywords: travel time variability, value of time, commuting, stated preference
    JEL: D12 R41
    Date: 2007–01
  13. By: Judith Hellerstein; David Neumark
    Abstract: We study workplace segregation in the United States using a unique matched employer employee data set that we have created. We present measures of workplace segregation by education and language, and by race and ethnicity, and . since skill is often correlated with race and ethnicity we assess the role of education- and language-related skill differentials in generating workplace segregation by race and ethnicity. We define segregation based on the extent to which workers are more or less likely to be in workplaces with members of the same group, and we measure segregation as the observed percentage relative to maximum segregation. Our results indicate that there is considerable segregation by education and language in the workplace. Among whites, for example, observed segregation by education is 17% (of the maximum), and for Hispanics, observed segregation by language ability is 29%. Racial (blackwhite) segregation in the workplace is of a similar magnitude to education segregation (14%), and ethnic (Hispanic-white) segregation is somewhat higher (20%). Only a tiny portion (3%) of racial segregation in the workplace is driven by education differences between blacks and whites, but a substantial fraction of ethnic segregation in the workplace (32%) can be attributed to differences in language proficiency. Finally, additional evidence suggests that segregation by language likely reflects complementarity among workers speaking the same language.
    Date: 2007–01
  14. By: Nuno Martins (Universidade Nova de Lisboa); Ernesto Villanueva (Banco de España)
    Abstract: Young adults leave their parents' home at a higher rate in Northern Europe and the United States than in Southern Europe, with broad implications on labor mobility, intergenerational sharing of resources and on fertility. This paper assesses if differences in household structure can be traced back to restricted access to credit for the young. To study the causal impact of getting a loan on the probability of "leaving the nest", we exploit two reforms of a Portuguese program that subsidized interest rate on mortgages signed by low- and medium- income young adults. Using a unique dataset that merges a Labor Force Survey with administrative debt records, we estimate that getting a mortgage loan increases the rate of leaving home by between 31 and 54 percentage points. We combine those estimates with an European household panel to document that if our preferred estimates held for all countries, differential use of credit markets would explain between 16% and 20% of the North-South differences in home leaving.
    Keywords: living arrangements, family structure, credit markets
    JEL: D91 J12 H53
    Date: 2006–10
  15. By: Özlem Önder; Metin Karadag; Ertugrul Deliktas (Department of Economics, Ege University)
    Abstract: In recent years there have been many studies that explore the impact of public capital formation on economic growth at regional level, because public capital might give rise to reducing regional disparities across regions. Regarding Turkey, investigating the effects of public capital on economic convergence at the regional level gains importance since significant regional disparities exist between the regions. This study attempts to explore the dynamic effects of public capital on output per capita in terms of convergence in the Turkish regions. A conditional convergence model based on per capita GDP and public capital is estimated using the panel data set of Turkish regions at NUTS 1 level for the time period 1980-2001. The spatial effects are also investigated. The results show that there exists conditional convergence. The results also reveal that in some of the models public capital has a positive and significant effect on output per capita. However, in the models with spatial effects the public capital does not have a significant effect on regional convergence.
    Keywords: Regional development, public capital, convergence, Turkish regions, spatial effects
    JEL: H54 R11
    Date: 2007–01
  16. By: Pauline Domingo (Centre d'Economie de la Sorbonne)
    Abstract: This study examines the how in-school work experiences produce effects on educational achievement and school-to-work transition. More precisely, using Generation 98 data (gathered by CEREQ), we assess the impact of working while in higher education on the probability of graduation and labour market entry. The main results can be summarized as follows. In-school work experiences are not correlated with higher education dropout prior to graduation. On the other hand, it enhances noncompleters access to jobs. However, only regular jobs increase the probability of accessing to permanent contract jobs.
    Keywords: School-to-work transition, in-school work experiences, dropout, higher education.
    JEL: I23 J24
    Date: 2007–01
  17. By: Sukkoo Kim
    Abstract: Industrial revolution is fundamentally linked with the rise of factories and the decline of skilled artisans in manufacturing. Most scholars agree that factories as compared to artisan shops were intensive in unskilled labor. Indeed, the hallmark of the early factories is the utilization of division of labor of relatively unskilled workers. This paper explores whether the massive influx of unskilled immigrants between 1840 and 1920, by significantly increasing the ratio of unskilled to skilled labor endowment, contributed to the growth and spread of factory manufacturing in the United States. The data indicate that immigration not only contributed to the growth and spread of factories but it also contributed to the growth of cities.
    JEL: F2 J2 N3 N6 O30
    Date: 2007–02
  18. By: Peter Haug
    Abstract: The paper deals with the effects of local governments’ interference with business affairs of publicly owned utilities. A partial model is presented to illustrate the consequences of “democratic control” for the public managers’ effort and the efficiency of local public production. To check the theoretical results empirically, a two-stage data envelopment analysis (DEA) is carried out for a sample of East German water suppliers. The organisational form is used as a measure for the degree of municipal control. The results of the OLS- and Tobit regression indicate an efficiency-enhancing effect of organisational forms with less distinctive control options for local politicians.
    Keywords: efficiency, water industry, local governments, data envelopment analysis
    JEL: L95 L32 D73
    Date: 2007–02
  19. By: Ronald Oaxaca
  20. By: Rudholm, Niklas (Department of Economics, University of Gävle); Nordmark, Arvid (Norrtälje Municipality); Marklund, Per-Olov (Department of Economics, Umeå University)
    Abstract: The Swedish health care system is to a large extent publicly managed by 21 local county councils. During recent years there has been a movement were local county councils have opted to allow more of the production to be performed by alternative producers (i.e. private firms, cooperatives etc.). The purpose of this paper is thus to study if local county councils who has a large proportion of health care performed by alternative producers are more economically efficient than other county councils. The results indicate that county councils with more alternative caregivers are supplying their services more efficiently.
    Keywords: Economic efficiency in health care; Data Envelopment Analysis; Tobit regression
    JEL: H40 I11 I12
    Date: 2007–02–20
  21. By: Laura Abramovsky (Institute for Fiscal Studies); Rupert Harrison (Institute for Fiscal Studies and University College London); Helen Simpson (Institute for Fiscal Studies)
    Abstract: <p>We investigate the relationship between the location of private sector R&D labs and university research departments in Great Britain. We combine establishment-level data on R&D activity with information on levels and changes in research quality from the Research Assessment Exercise. The strongest evidence for co-location is for pharmaceuticals R&D, which is disproportionately located near to relevant university research, particularly 5 or 5* rated chemistry departments. This relationship is stronger for foreign-owned labs, consistent with multinationals sourcing technology internationally. We also find some evidence for co-location with lower rated research departments in industries such as machinery and communications equipment.</p>
    JEL: O3 R11 R13 I23
    Date: 2007–01
  22. By: Ertugrul Deliktas; Özlem Önder; Metin Karadag (Department of Economics, Ege University)
    Abstract: This paper investigates the spillover effects of public capital formation on the Turkish private manufacturing industry at the regional level over the period 1980-2000. The aggregate effects of public capital cannot be captured entirely from the direct effects of public capital installed in the region itself. Therefore, we estimate vector autoregression (VAR) models for the seven geographical regions of Turkey by including capital formation installed outside of the region. The results show that public capital affects private sector performance positively in all regions apart from Central Anatolia. Positive spillover effects of public capital can be seen in some regions, like Marmara.
    Keywords: Regional development, public capital, spillover effects, vector autoregression, Turkish manufacturing industry.
    JEL: C32 L60 R00
    Date: 2007–02
  23. By: Dan Usher (Queen's University)
    Abstract: A reasonable and fair interpretation of the mandate for equalization payments in Section 36(2) of the Canadian Constitution differs from the present equalization formula in these respects: Transfers to the poorer provinces would be financed by transfers from the richer provinces rather than from the Federal government. Entitlement to equalization payments would depend on provincial income rather than upon a tax-by-tax comparison of the provinces’ many tax bases. For this comparison, provincial income would include revenue accruing directly to the provincial governments as well as private income of the residents of the province. Compensation would be made for the exemption of provincial resource revenue from Federal income tax. The most pronounced effect of these proposals would be to transfer the greater burden of equalization payments from Ontario to Alberta which is now, by far, the richest province.
    Keywords: Equilization, Federal-provincial transfers
    JEL: H77 H72
    Date: 2007–02
  24. By: Thomas Masterson
    Abstract: This paper examines the claim that the land rental market can be an effective means of redistributing access to, if not ownership of, land to the rural poor, using Paraguay as our model. The land sales market is also examined. The land rental market in ParaguayÕs rural areas is found to be very thin, due at least in part to a lack of available credit for inputs. Renting-in substantial amounts of land is found to contribute significantly to household per-capita income.
    Date: 2007–02
  25. By: Alejandro Portes (Princeton University); Steven Shafer (Princeton University)
    Abstract: We review the empirical literature on ethnic economic enclaves after the concept was formulated twenty-five years ago. The balance of this literature is mixed, but many studies reporting negative conclusions were marred by faulty measurement of the concept. We discuss the original theoretical definition of enclaves, the hypotheses derived from it, and the difficulties in operationalizing them. For evidence, we turn to census data on the location and the immigrant group that gave rise to the concept in the first place – Cubans in Miami. We examine the economic performance of this group, relative to others in this metropolitan area, and in the context of historical changes in its own mode of incorporation. Taking these changes into account, we find that the ethnic enclave had a significant economic payoff for its founders – the earlier waves of Cuban exiles – and for their children, but not for refugees who arrived in the 1980 Mariel exodus and after. Reasons for this disjuncture are examined. Implications of these results for enclave theory and for immigrant entrepreneurship in general are discussed.
    Date: 2006–05
  26. By: Lars Nesheim (Institute for Fiscal Studies)
    Abstract: A hedonic price function describes the equilibrium relationship between characteristics of a product and its price. They are used to predict prices of new goods, to adjust for quality change in price indexes, and to measure consumer and producer valuations of differentiated products. They emerge as market outcomes from both competitive and non-competitive markets. The functional form is determined by the distribution of buyers and their preferences, the distribution of sellers and their costs, and the structure of competition in the market.
    Date: 2006–09

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