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on Urban and Real Estate Economics |
| By: | Brunnermeier, Markus K; Julliard, Christian |
| Abstract: | A reduction in inflation can fuel run-ups in housing prices if people suffer from money illusion. For example, investors who decide whether to rent or buy a house by simply comparing monthly rent and mortgage payments do not take into account that inflation lowers future real mortgage costs. We decompose the price-rent ratio in a rational component — meant to capture the proxy effect and risk premia — and an implied mispricing. We find that inflation and nominal interest rates explain a large share of the time-series variation of the mispricing, and that the tilt effect is very unlikely to rationalize this finding. |
| Keywords: | behavioural finance; housing; inflation illusion; interest rate; money illusion; mortgages; real estate |
| JEL: | G12 R2 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6183&r=ure |
| By: | Florence Goffette-Nagot (GATE - Groupe d'analyse et de théorie économique - [CNRS : UMR5824] - [Université Lumière - Lyon II] - [Ecole Normale Supérieure Lettres et Sciences Humaines]); Claire Dujardin (CORE - Center for Operations Research and Econometrics - [Université catholique de Louvain]) |
| Abstract: | This paper is aimed at examining how individual unemployment is influenced both by location in a deprived neighborhood and public housing. Our identification strategy is twofold. First, we estimate a simultaneous probit model of public housing accommodation, type of neighborhood, and unemployment, thus accounting explicitely for correlation of unobservables between the three behaviors. Second, we take advantage of the situation of the public housing sector in France, which allows us to use public housing accommodation as a powerful<br />determinant of neighborhood choices and to use household's demographic characteristics as exclusion restrictions. Our results show that public housing does not have any direct effect on unemployment. However, living within the 35% more deprived neighborhoods does increase the unemployment probability significantly. As expected, the effect of neighborhood substantially decreases when dealing with the endogeneity of neighborhood and when using public housing as a determinant of neighborhood choice. |
| Keywords: | Neighborhood effects ; public housing ; unemployment ; simultaneous probit models ; simulated maximum likelihood |
| Date: | 2007–03–13 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00133854_v2&r=ure |
| By: | Gobillon, Laurent; Selod, Harris |
| Abstract: | In this paper, we investigate how residential segregation and bad physical access to jobs contribute to urban unemployment in the Paris region. We first survey the general mechanisms according to which residential segregation and spatial mismatch can have adverse labour-market outcomes. We then discuss the extent of the problem with the help of relevant descriptive statistics computed from the 1999 Census of the Population and from the 2000 General Transport Survey. Finally, we estimate the effect of indices of segregation computed at the neighbourhood and municipality levels, as well as job accessibility indices on the labour-market transitions out of unemployment using the 1990-2002 Labour Force Survey. Our results show that neighbourhood segregation is a key factor that prevents unemployed workers from finding a job. These results are robust to potential location endogeneity biases. |
| Keywords: | residential segregation; sensitivity analysis; spatial mismatch; urban unemployment |
| JEL: | J64 R14 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6198&r=ure |
| By: | Gobillon, Laurent; Magnac, Thierry; Selod, Harris |
| Abstract: | There are large spatial disparities in unemployment durations across the 1,300 municipalities in the Paris region (Ile-de-France). In order to characterize these imbalances, we estimate a proportional hazard model stratified by municipality on an exhaustive dataset of all unemployment spells starting in the first semester of 1996. This model allows us to recover a survival function for each municipality that is purged of individual observed heterogeneity. We show that only 30% of the disparities in the survival rates relate to observed individual variables. Nearly 70% of the remaining disparities are captured by local indicators, mainly segregation indices. |
| Keywords: | duration model; residential segregation; spatial mismatch; urban unemployment |
| JEL: | C41 J64 R23 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6199&r=ure |
| By: | Namkee Ahn; Maite Blázquez |
| Abstract: | This paper undertakes an investigation of the relationship between housing tenure, residential mobility and job mobility. The analysis is done for Spain, France and Denmark, using data from the European Community Household Panel (ECHP, 1995-2001). The econometric technique consists of a bivariate probit model that allows us to account for the simultaneity of behaviors in housing and labor markets. Our results confirm the Oswald hypothesis only in the case of Denmark, where homeowners are found to be less mobile on the labor market. In contrast, the effect of homeownership on job mobility is small in France and no effect is shown in Spain. Finally, our results reveal that, in all countries, mobility is satisfaction driven: Those less satisfied in their job (housing) are more likely to change job (house), and lower satisfaction in commuting time increases job mobility but not residential mobility. |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdaddt:2007-05&r=ure |
| By: | Eid, Jean; Overman, Henry G.; Puga, Diego; Turner, Matthew A |
| 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 neighbourhoods. Our results indicate that current interest in changing the built environment to counter the rise in obesity is misguided. |
| Keywords: | obesity; selection effects; urban sprawl |
| JEL: | I12 R14 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6191&r=ure |
| By: | Alessandro Calza (European Central Bank); Tommaso Monacelli (Bocconi University); Livio Stracca (European Central Bank) |
| Abstract: | We study the role of institutional characteristics of mortgage markets in affecting the strength and timing of the effects of monetary policy shocks on house prices and consumption in a sample of OECD countries. We document three facts: (1) there is significant divergence in the structure of mortgage markets across the main industrialised countries; (2) at the business cycle frequency, the correlation between consumption and house prices increases with the degree of flexibility/development of mortgage markets; (3) the transmission of monetary policy shocks on consumption and house prices is stronger in countries with more flexible/developed mortgage markets. We then build a two-sector dynamic general equilibrium model with price stickiness and collateral constraints, where the ability of borrowing is endogenously linked to the nominal value of a durable asset (housing). We study how the response of consumption to monetary policy shocks is affected by alternative values of three key institutional parameters: (i) down-payment rate; (ii) mortgage repayment rate; (iii) interest rate mortgage structure (variable vs. fixed interest rate). In line with our empirical evidence, the sensitivity of consumption to monetary policy shocks increases with lower values of (i) and (ii), and is larger under a variable-rate mortgage structure. |
| Keywords: | House Prices, Mortgage Markets, Collateral Constraints, Monetary Policy |
| JEL: | E21 E44 E52 |
| Date: | 2007–02–16 |
| URL: | http://d.repec.org/n?u=RePEc:cfs:cfswop:wp200710&r=ure |
| By: | Hill Kulu (Max Planck Institute for Demographic Research, Rostock, Germany); Andres Vikat (Max Planck Institute for Demographic Research, Rostock, Germany) |
| Abstract: | This study examines fertility variation across housing types and childbearing patterns after housing changes. While the effect of family changes on housing choices has been studied in detail, little is known about childbearing patterns within various housing types, despite the fact that many studies suggest housing as an important determinant of fertility. We use longitudinal register data from Finland and apply hazard regression. Firstly, we observe a significant variation in the fertility levels across housing types – fertility is highest among couples in single-family houses and lowest among those in apartments, with the variation remaining significant even after controlling for the demographic and socio-economic characteristics of women. Secondly, our results show elevated fertility levels after couples have changed their housing, suggesting that much of the fertility variation across housing types could be attributed to selective moves. Thirdly, the study also reveals relatively a high risk of third birth for couples in single-family houses several years after the move, suggesting that living in spacious housing and in a family-friendly environment for a longer time may lead to higher fertility. |
| Keywords: | Finland, event history analysis, fertility, housing, migration, residential mobility |
| JEL: | J1 Z0 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:dem:wpaper:wp-2007-014&r=ure |
| By: | Elisabet Viladecans Marsal; Josep Maria Arauzo Carod |
| Abstract: | The objective of this paper is to analyse the influence of agglomeration economies on location decisions taken by new firms inside metropolitan areas. Following the literature, we consider that agglomeration economies are related to the concentration of an industry (location economies) and/or to the size of the city itself (urbanisation economies). As we assume that these economies differ according to firms' level of technology, our sample comprises new firms from high, intermediate and low technology industries. Our results confirm these sectoral differences and show some interesting location patterns for manufacturing firms. Taking into account the renewed interest in the influence of geography and distance in the location of economic activity, we introduce in our estimation the effect of the area's central city as a determinant for the location of new firms in the rest of the metropolitan area. This allows us to determine whether a suburbanisation effect exists and whether this effect remains the same regardless of the industry involved. Our main statistical source is the REI (Spanish Industrial Establishments Register), which provides plant-level microdata for the creation and location of new industrial firms. |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdaeee:224&r=ure |
| By: | Vicente Royuel (Faculty of Economics, University of Barcelona); Rosina Moreno (Faculty of Economics, University of Barcelona); Esther Vaya (Faculty of Economics, University of Barcelona) |
| Abstract: | There are several determinants that influence household location decisions. More concretely, recent economic literature assigns an increasingly important role to the variables governing quality of life. Nevertheless, the spatial stationarity of the parameters is implicitly assumed in most studies. Here we analyse the role of quality of life in urban economics and test for the spatial stationarity of the relationship between city growth and quality of life. |
| Keywords: | quality of life, urban economics, geographically weighted regressions |
| JEL: | R00 E00 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:ira:wpaper:200703&r=ure |
| By: | Overman, Henry G.; Puga, Diego; Turner, Matthew A |
| Abstract: | This paper decomposes the growth in land occupied by residences in the United States to give the relative contributions of changing demographics versus increases in the land area used by individual households. Between 1976 and 1992 the amount of residential land in the United States grew 47.5% while population only grew 17.8%. At first glance, this suggests an important role for per household increases. However, the calculations in this paper show that only 24.3% of the growth in residential land area can be attributed to State level changes in land per household. 37.5% is due to overall population growth, 5.9% to the shift of population towards States with larger houses, 22.7% to an increase in the number of households over this period, and the remaining 9.5% to interactions between these changes. There are large differences across states and metropolitan areas in the relative importance of these components. |
| Keywords: | land use; population growth |
| JEL: | O51 R14 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6190&r=ure |
| By: | Eleonora Patacchini (University of Rome "La Sapienza"); Yves Zenou (Research Institute of Industrial Economics, GAINS, CEPR and IZA) |
| Abstract: | We investigate the racial gap in test scores between black and white students in Britain both in levels and differences across the school years. We find that there is an increasing racial gap in test scores between ages 7 and 11, and a decreasing one between ages 11 and 16. Using the richness of information of the National Child Development Study, we find that the evolution of the racial test score gap reflects the racial parenting gap. The latter can, in turn, be explained by the fact that, during this period, the social structure of black families has gone through important changes while it has remained roughly the same for white families. |
| Keywords: | ethnic minorities, education, cultural differences, family structure |
| JEL: | I21 J15 J24 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2613&r=ure |
| By: | Massimiliano Bratti (University of Milan and IZA); Daniele Checchi (University of Milan and IZA); Antonio Filippin (University of Milan and IZA) |
| Abstract: | In this paper we investigate the existence and the size of territorial differences in Italian students’ mathematical competencies. Our analysis benefits from a new data set that merges the 2003 wave of the OECD Programme for International Student Assessment (PISA) with territorial data collected from several statistical sources and with administrative school data collected by the Italian Ministry of Education. We consider three different groups of educational inputs: individual characteristics (mainly family background), school types and available resources, and territorial features related to labour market, cultural resources and aspirations. In addition to the standard gradient represented by parental education and occupation, we find that student sorting across school types also plays a significant role. Among the local factors measured at province level, we find a significant impact of buildings maintenance and employment probabilities. When accounting for territorial differences, we find that most of the North-South divide (75%) is accounted for by differences in endowments, while the local school production functions account for the remaining fraction. |
| Keywords: | education, PISA, students, territorial differences |
| JEL: | J21 J24 H52 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2603&r=ure |
| By: | Stephen L. Ross (University of Connecticut); Yves Zenou (Research Institute of Industrial Economics, Stockholm, GAINS, CEPR and IZA) |
| 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 behavioral 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 labor 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 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2601&r=ure |
| By: | Eleonora Patacchini (University of Rome "La Sapienza"); Yves Zenou (Research Institute of Industrial Economics, GAINS, CEPR and IZA) |
| Abstract: | We develop a model that analyzes the impact of residential neighborhood and parents’ involvement in education on children’s educational attainment and test it using the UK National Child Development Study. We find that the better the quality of the neighborhood, the higher the parents’ involvement in children’s education, indicating cultural complementarity. For high-educated parents, the child’s educational attainment is more affected by the parents’ involvement than by the neighborhood quality while, for low-educated parents, the neighborhood quality seems to play the major role. |
| Keywords: | education, cultural transmission, cultural substitution, peer effects |
| JEL: | I21 J13 J24 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2608&r=ure |
| By: | Wallace E. Oates (Department of Economics, University of Maryland) |
| Abstract: | The traditional theory of public finance has made a strong case for a major role for fiscal decentralization. This case is based on an improved allocation of resources in the public sector. And it has four basic elements. First, regional or local governments are in a position to adapt outputs of public services to the preferences and particular circumstances of their constituencies, as compared to a central solution which presumes that one size fits all. Second, in a setting of mobile households, individuals can seek out jurisdictions that provide outputs well suited to their tastes, thereby increasing the potential gains from the decentralized provision of public services (Tiebout 1956). Third, in contrast to the monopolist position of the central government, decentralized levels of government face competition from their neighbors; such competition constrains budgetary growth and provides pressures for the efficient provision of public services. And fourth, decentralization may encourage experimentation and innovation as individual jurisdictions are free to adopt new approaches to public policy; in this way, decentralization can provide a valuable Alaboratory for fiscal experiments. However, this basic economic rationale for decentralization of the public sector is not quite so simple and compelling as it appears. Some of the more recent literature provides, first, a thoughtful and provocative critique of the traditional view of fiscal decentralization, and, second, some new approaches that reveal its dark side, especially in practice. There is emerging, in short, a broader perspective on fiscal decentralization that raises some serious questions about its capacity to provide an unambiguously positive contribution to an improved performance of the public sector. My purpose in this paper is twofold. First, I want to review the basic theory of fiscal decentralization. There are some loose ends to the traditional argument that open up some intriguing issues. Second, I want to turn to some of new literature on fiscal discipline in multilevel government. This literature has focused attention on some basic and destructive forces that can undermine the economic performance of a relatively decentralized public sector. I find it helpful to begin by revisiting a Decentralization Theorem that I formulated long ago. As a point of departure, I want to explain briefly why I introduced the proposition and the rationale for its particular form and proof. |
| Keywords: | Fiscal Decentralization, Public Finance |
| JEL: | H41 H71 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:rcr:wpaper:07_01&r=ure |
| By: | Carole Brunet (GATE CNRS); Andrew Clark (DELTA CNRS); Jean-Yves Lesueur (GATE CNRS) |
| Abstract: | The objective of this paper is to provide microeconomic evidence for the so called “Oswald’s hypothesis”, which is whether homeownership results in negative outcomes in the labour market. To estimate this effect we use two data base, comparing results from British Household Permanent Survey and French part of European Household Panel Survey. In a first step, a multinomial logit model for the choice of tenure status is estimated. Estimated probabilities of being either homeowner, public or private renter are then used to explain the length of an individual unemployment spell. This flexible method of estimation accounts for both censoring and selection bias, without constraining the shape of the hazard rate of leaving unemployment. Results suggested strong differences between French and British household behaviour. Home-ownership has a positive effect on unemployment duration in France but no significant effect is detected in Britain. However we find a positive impact of public renters on unemployment duration in Britain. These stylised facts seems to confirm the existence of a real spillover effect between labour market and housing market |
| Keywords: | unemployment duration, mobility, residential status |
| JEL: | C41 J6 R21 |
| Date: | 2006–11 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:0613&r=ure |
| By: | Michael Iacono; David Levinson; Ahmed El-Geneidy (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota) |
| Abstract: | Modern urban regions are highly complex entities. Despite the difficulty of modeling every relevant aspect of an urban region, researchers have produced a rich variety models dealing with inter-related processes of urban change. The most popular types of models have been those dealing with the relationship between transportation network growth and changes in land use and the location of economic activity, embodied in the concept of accessibility. This paper reviews some of the more common frameworks for modeling transportation and land use change, illustrating each with some examples of operational models that have been applied to real-world settings. |
| Keywords: | Transport, land use, models, review network growth, induced demand, induced supply |
| JEL: | R42 R31 R21 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:nex:wpaper:mtluc&r=ure |
| By: | Juan Ayuso (Banco de España); Roberto Blanco (Banco de España); Fernando Restoy (Banco de España) |
| Abstract: | This paper analyses the contribution of interest rates to explain recent house price developments in Spain trying to reconcile different pieces of evidence. On the one hand, empirical evidence supports the view that interest rates are a key variable to explain house price developments. As a matter of fact, using simple asset pricing relations recent changes in house prices could be fully explained by movements in ex-post real interest rates. However, more refined asset pricing models show that the changes in the discount factor cannot fully explain the recent course of house prices in Spain. To resolve this puzzle we provide evidence that shows that the actual real cost of financing might have decreased significantly less than what the course of ex-post real rates would suggest. |
| Keywords: | house prices, real interest rates, intertemporal marginal rate of substitution, stochastic discount factor |
| JEL: | E43 G12 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:bde:opaper:0608&r=ure |
| By: | Sarah Brown; Karl Taylor (Department of Economics, The University of Sheffield) |
| Abstract: | We explore the effect of bullying at school on the educational attainment of a sample of individuals drawn from the British National Child Development Study (NCDS). Our empirical findings suggest that school bullying has an adverse effect on human capital accumulation both at and beyond school. Moreover, the impact of bullying on educational attainment at age sixteen is found to be similar in magnitude to class size effects, which have attracted recent attention in the economics literature. Furthermore, in contrast to class size effects, the adverse influence of bullying on human capital attainment remains during adulthood. In addition, being bullied at school directly influences wages received during adulthood as well as indirectly influencing wages via educational attainment. |
| Keywords: | Bullying, Education, Harassment, Human Capital. |
| JEL: | J24 Z12 |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2005015&r=ure |
| By: | David Levinson (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota); Lei Zhang |
| Abstract: | Ramp meters in the Twin Cities have been the subject of a recent test of their effectiveness, involving turning them off for 8 weeks. This paper analyzes the resultswith and without ramp metering for several representative freeways during the afternoon peak period. Seven performance measures: mobility, equity, productivity, consumers' surplus, accessibility, travel time variation and travel demand responses are compared. It is found that ramp meters are particularly helpful for long trips relative to short trips.Ramp metering, while generally beneficial to freeway segments, may not improve trip travel times (including ramp delays). The reduction in travel time variation comprisesanother benefit from ramp meters. Non-work trips and work trips respond differently to ramp meters. The results are mixed, suggesting a more refined ramp control algorithm,which explicitly considers ramp delay, is in order. |
| Keywords: | Ramp Meters, Evaluation, Equity, Mobility, Accessibility, Productivity, Consumers' Surplus, Travel Time Variation, Travel Demand |
| JEL: | R41 R48 D10 D8 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:nex:wpaper:rampmetersontrial&r=ure |
| By: | David Levinson (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota); Wei Chen |
| Abstract: | Empirical data and statistical models are used to answer the question of where new highway routes are most likely to be located. High-quality land-use, population distribution and highway network GIS data for the Twin CitiesMetropolitan Area from 1958 to 1990 are developed for this study. The highway system is classified into three levels, Interstate highways, divided highways, andsecondary highways. Binary logit models estimate the new route growth probability of divided highways and secondary highways. Interstates, however,are not modeled here and are used as a predictor in modeling the growth of divided highways and secondary highways. The results show that the area's land-use attributes and population density level do have significant relationship with the area's likelihood of adding new highway routes. |
| Keywords: | network growth, hierarchy of roads, land-use, population, GIS. |
| JEL: | R41 R42 R48 O33 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:nex:wpaper:areabasednetworkgrowth&r=ure |
| By: | Jan Marcus Matauschek |
| Abstract: | In recent decades protection of the environment has become an issue of wide public interest. Both on a national and an EU level a multitude of statutes and directives in this area have been enacted. In many cases, these provisions intervene into business activity. This paper explores the way in which environmental protection law can affect real estate projects. The paper uses the example of a development project in Hamburg/Germany, where a population of corncrakes (a small bird) halted a large scale housing project as the bird is protected under the EU Birds Directive (79/409/EEC). The author conducts a cost benefit analysis (CBA), comparing the stopped project and a newly proposed, amended project, which takes the requirements of the directive into account. The author reviews as to whether a study of this nature is justified under aspects of philosophy of science and as to whether the employed method of cost-benefit analysis is appropriate for this purpose By using the residual value method of land valuation the author determines the implicit value which society places on a corncrake. This value is defined as the difference between the residual land value of the stopped project and the residual land value of the alternative project. The value of the bird is thus expressed as the foregone profits which could have been realised with the first, much larger project. The result is that society's valuation of a corncrake amounts to approximately Euro7.2m. A sensitivity analysis and discussion of limitations conclude the paper. |
| URL: | http://d.repec.org/n?u=RePEc:bep:dewple:2005-1-1121&r=ure |