nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2007‒04‒21
twenty-two papers chosen by
Steve Ross
University of Connecticut

  1. Urban Density and Pupil Attainment By Stephen Gibbons; Olmo Silva
  2. Urban growth and subcenter formation: A trolley ride from the Staples Center to Disneyland and the Rose Bowl By Berliant, Marcus; Wang, Ping
  3. High Relocation Costs in Search-Matching Models: Theory and Application to Spatial Mismatch By Yves Zenou
  4. Multifamily Properties: Opting In, Opting Out and Remaining Affordable By HUD - PD&R
  5. Housing Market Development in Estonia: Is There a Real Estate Boom? By Ene Kolbre; Angelika Kallakmaa-Kapsta
  6. A class of spatial econometric methods in the empirical analysis of clusters of firms in the space By Giuseppe Arbia; Giuseppe Espa; Danny Quah
  7. Endogenous Job Destruction and Job Matching in Cities By Yves Zenou
  8. The Effect of Pre-Primary Education on Primary School Performance By Samuel Berlinski; Sebastian Galiani; Paul Gertler
  9. Predicting Staying in or Leaving Permanent Supportive Housing That Serves Homeless People with Serious Mental Illness By Yin-Ling Irene Wong, CMHPSR; Trevor R. Hadley, CMHPSR; Dennis P. Culhane, CMHPSR; Steve R. Poulin, CMHPSR; Morris R. Davis, MDAC; Brian A. Cirksey, MDAC; James L. Brown, MDAC; M. Davis and Company, Inc.; University of Pennsylvania Center for Mental Health Policy and Services Research (CMHPSR) Philadelphia, PA
  10. Giving Children a Better Start: Preschool Attendance & School-Age Profiles By Sam Berlinksi; Sebastian Galiani; Marco Manacorda
  11. Evolution of regional clusters in nanotechnology. Empirical findings from Germany. By Henn, Sebastian
  12. Unemployment and Gang Crime: Could Prosperity Backfire? By Panu Poutvaara; Mikael Priks
  13. Scholarship in Action: Applied Research and Community Change By HUD - PD&R
  14. The Effect of Location of Finding a Job in the Paris Region By GOBILLON, Laurent; MAGNAC, Thierry; SELOD, Harris
  15. Agglomeration and labour productivity in Spanish industry: a long-term analysis By Julio Martinez Galarraga; Elisenda Paluzie Hernandez; Jordi Pons Novell; Daniel Aurelio Tirado Fabregat
  16. Social Interactions with Endogenous Associations By Bruce A. Weinberg
  17. The Productivity Argument for Investing in Young Children By James J. Heckman; Dimitriy V. Masterov
  18. The Geography and the Effect of Creative People in Germany By Michael Fritsch
  19. Subprime Lending and Alternative Financial Service Providers: A Literature Review and Empirical Analysis By HUD - PD&R
  20. The Effects of Inflation and Demographic Change on Property Crime: A Structural Time-Series Approach. By R. Alan Seals; John Nunley
  21. Crime Distribution & Victim Behavior During a Crime Wave By Rafael Di Tella; Sebastian Galiani; Ernesto Schargrodsky
  22. 0.19% Subsidy-Free Spatial Pricing By DREZE, Jacques; LE BRETON, Michel; SAVVATEEV, Alexei; WEBER, Shlomo

  1. By: Stephen Gibbons (CEP, London School of Economics); Olmo Silva (CEP, CEE, London School of Economics and IZA)
    Abstract: We explore the association between urban density and pupil attainment using three cohorts of pupils in schooling in England. Although - as widely recognised - attainment in dense urban places is low on average, this is not because urban environments disadvantage pupils, but because the most disadvantaged pupils with low average attainments attend the most urbanised schools. To control for this, we exploit changes in urban density faced by pupils during compulsory transition from Primary to Secondary school, and measure educational progress at the end of the Secondary phase, relative to attainment at the end of Primary schooling. Our results suggest that there are small but significant benefits from education in schools in more densely urbanised settings. We detect this density advantage even amongst pupils moving relatively short distances between Primary and Secondary schools within urban areas, so we cannot attribute it to broad urbanisation effects experienced by pupils making rural-urban school moves. A more likely explanation lies in greater school choice and competition between closely co-located educational providers.
    Keywords: urban density and agglomeration, school choice and competition, pupil achievement
    JEL: I20 R20 J24
    Date: 2007–04
  2. By: Berliant, Marcus; Wang, Ping
    Abstract: The long-term trends of urbanization suggest: not only have more cities formed, but the leading metropolises have grown larger, with a number of peripheral subcenters developing over time. Conventional models of urban growth are limited, in that commuting cost and congestion eventually result in decreasing returns in a monocentric city as population becomes very large. We construct a general-equilibrium model with dynamic interactions between spatial agglomeration and urban development, driven by location-dependent knowledge spillovers. Our contribution allows endogenous development of subcenters to capture benefits from knowledge spillovers and offset diminishing returns from urban congestion, thus permitting more sustained city growth.
    Keywords: Core-Periphery Urban Structure; Agglomerative Production Activity; Endogenous Formation of Cities
    JEL: R12 D51 C78
    Date: 2007–04–17
  3. By: Yves Zenou (Research Institute of Industrial Economics, GAINS, CEPR and IZA)
    Abstract: We develop a standard search-matching model in which mobility costs are so high that it is too costly for workers to relocate when a change in their employment status occurs. We show that, in equilibrium, wages increase with distance to jobs and commuting costs because firms need to compensate the transportation cost difference between the employed and unemployed workers at each location in the city. We also show that the equilibrium land rent is negatively affected by the unemployment benefit because an increase in the latter induce firms to create less jobs, which, in turn, reduces the competition in the land market. We then use this model to provide a mechanism for the observed spatial mismatch between where black workers live and where jobs are. Because blacks and whites differ by their contact rate, we show that the former reside far away from jobs, have higher unemployment rates and lower wages. This is because the housing market amplifies the negative effects of the labor market by creating additional frictions.
    Keywords: search frictions, spatial frictions, efficiency, spatial mismatch hypothesis
    JEL: D83 J15 J64 R14
    Date: 2007–04
  4. By: HUD - PD&R
    Abstract: The U.S. Department of Housing and Urban Development's (HUD's) assisted project-based multifamily properties are privately owned properties representing a significant component of federally assisted housing for low-income families. This is in contrast to the public housing stock, which is publicly owned and operated. The HUD-assisted project-based multifamily housing stock includes more than 22,000 properties with more than 1.5 million units. They were developed under programs that were created in the 1960s and 1970s to supplement the public housing program, as part of a policy change that aimed to promote more privately owned development of affordable housing.
    JEL: H00
    Date: 2006–01
  5. By: Ene Kolbre (School of Economics and Business Administration, Tallinn University of Technology); Angelika Kallakmaa-Kapsta (School of Economics and Business Administration, Tallinn University of Technology)
    Abstract: The Estonian economy including the real estate market, especially the housing market, has undergone a rapid development since its very existence in the 1990s. The number of notarised purchase-sale contracts of real estate has increased over 80 times over the past 10 years. The fastest growth rates in the real estate market have been in the housing sector. The total value of notarised purchase-sale contracts of registered immovables with residential buildings and ownership of dwellings has increased from 271 million euros in 2001 to 1982 million euros in 2005, whereas the average purchase-sale price per square metre of a 2-room apartment in Tallinn rose in 2004 22% and in 2005 59%. In resent years there have been repeated hints in the housing market of an approaching real estate crash. The development of the housing market has been investigated from three main aspects. First, the development of and changes in Estonian economic environment are evaluated and links to the general development of the whole real estate market and especially of housing market are provided. Secondly, in greater detail the demand and factors influencing demand in the housing market are analysed. Thirdly, the supply of the housing market, the factors that facilitate and inhibit this development are investigated. The housing market development in Estonia, differences from and similarities with Latvia and Lithuania are also presented in this paper.
    Keywords: Estonian, Latvian, Lithuanian housing market, demand, supply
    JEL: R21 R31
    Date: 2006
  6. By: Giuseppe Arbia; Giuseppe Espa; Danny Quah
    Abstract: In this paper we aim at identifying stylized facts in order to suggest adequate models of spatial co–agglomeration of industries. We describe a class of spatial statistical methods to be used in the empirical analysis of spatial clusters. Compared to previous contributions using point pattern methods, the main innovation of the present paper is to consider clustering for bivariate (rather than univariate) distributions, which allows uncovering co–agglomeration and repulsion phenomena between the different industrial sectors. Furthermore we present the results of an empirical application of such methods to a set of European Patent Office (EPO) data and we produce a series of empirical evidences referred to the the pair–wise intra–sectoral spatial distribution of patents in Italy in the nineties. In this analysis we are able to identify some distinctive joint patterns of location between patents of different sectors and to propose some possible economic interpretations.
    Keywords: Agglomeration, Bivariate K–functions, co–agglomeration, Non parametric concentration measures, Spatial clusters, Spatial econometrics
    JEL: C21 D92 L60 O18 R12
    Date: 2007
  7. By: Yves Zenou (Research Institute of Industrial Economics, GAINS, CEPR and IZA)
    Abstract: We propose a spatial search-matching model where both job creation and job destruction are endogenous. Workers are ex ante identical but not ex post since their job can be hit by a technological shock, which decreases their productivity. They reside in a city and commuting to the job center involves both pecuniary and time costs. Thus, workers with high wages are willing to live closer to jobs to save on time commuting costs. We show that, in equilibrium, there is a one-to-one correspondence between the productivity space and the urban location space since high-productivity workers bid away low-productivity workers in order to occupy locations close to jobs. We also show that in the bargaining process, there is a spatial element in the wage setting since firms need to compensate workers for their spatial costs. Compared to the non-spatial model, the unemployment rate and the reservation productivity are lower and the job-creation rate is higher because the urban space through commuting costs and land rent create additional frictions in the labor market.
    Keywords: job search, commuting costs, wage distribution, urban land use
    JEL: D83 J41 J64 R14
    Date: 2007–03
  8. By: Samuel Berlinski; Sebastian Galiani; Paul Gertler
    Abstract: Although the theoretical case for universal pre-primary education is strong, the empirical foundation is weak. In this paper, we contribute to the empirical case by investigating the effect of a large expansion of universal pre-primary education on subsequent primary school performance in Argentina. We estimate that one year of preprimary school increases average third grade test scores by 8 percent of a mean or by 23 percent of the standard deviation of the distribution of test scores. We also find that preprimary school attendance positively affects student’s self-control in the third grade as measured by behaviors such as attention, effort, class participation, and discipline.
    Keywords: Preschool, Pre-primary education, Primary school performance
    JEL: I2 J1
    Date: 2006–07–01
  9. By: Yin-Ling Irene Wong, CMHPSR; Trevor R. Hadley, CMHPSR; Dennis P. Culhane, CMHPSR; Steve R. Poulin, CMHPSR; Morris R. Davis, MDAC; Brian A. Cirksey, MDAC; James L. Brown, MDAC; M. Davis and Company, Inc.; University of Pennsylvania Center for Mental Health Policy and Services Research (CMHPSR) Philadelphia, PA
    Abstract: The Permanent Housing component of the Supportive Housing Program, the Department’s principal program to meet the needs of homeless people with disabilities, was established to offer homeless people with disabilities, including mental illness, an assurance of permanent housing and appropriate supportive services. The program is designed to provide a structure that counteracts the disruptions of both homelessness and disability. However, while many formerly homeless people remain in permanent supportive housing for many years, substantial numbers leave within months of entry. The questions of why people leave permanent housing and what happens to them constitute the principal focus of this study.
    JEL: I38
    Date: 2006–03
  10. By: Sam Berlinksi; Sebastian Galiani; Marco Manacorda
    Abstract: We study the effect of pre-primary education on children's subsequent school outcomes by exploiting a unique feature of the Uruguayan household survey (ECH) that collects retrospective information on preschool attendance in the context of a rapid expansion in the supply of preprimary places. Using a within household estimator, we find small gains from preschool attendance at early ages that magnify as children grow up. By age 15, treated children have accumulated 0.8 extra years of education and are 27 percentage points more likely to be in school compared to their untreated siblings. Instrumental variables estimates that control for non random selection of siblings into pre-school lead to similar results. We speculate that early grade repetition harms subsequent school progression and that pre-primary education appears as a successful policy option to prevent early grade failure and its long lasting consequences.
    Keywords: Preschool, Pre-primary education, Primary school performance
    JEL: I2 J1
    Date: 2007–01–01
  11. By: Henn, Sebastian
    Abstract: This article aims at establishing a wider understanding of the evolution of spatial clusters. It will be argued that the potential to generate regional growth is dependent on the way a cluster emerges. Two models of cluster formation will be distinguished in detail – start-up clusters and unrelated spatial concentrations. In its sectoral orientation the study is focused on nanotechnology, a key(technology)-industry said to contribute to new growth spurts in the industrialised world. By analysing the evolution of regional clusters in the Saarland and in Berlin-Brandenburg it will be shown that both types of cluster formation can be found in nanotechnology, demanding different modes of policy intervention.
    Keywords: Cluster; Innovation; Emergence; Evolution; Location; Nanotechnology; Cluster Dynamics; Hightech; Regional Development; Spatial Dynamics
    JEL: R58 R30 R11 O30
    Date: 2006
  12. By: Panu Poutvaara (University of Helsinki and IZA); Mikael Priks (University of Munich)
    Abstract: Empirical evidence reveals that unemployment tends to increase property crime but that it has no effect on violent crime. To explain these facts, we examine a model of criminal gangs and suggest that there is a substitution effect between property crime and violent crime at work. In the model, non-monetary valuation of gang membership is private knowledge. Thus the leaders face a trade-off between less crime per member in large gangs and more crime per member in small gangs. Unemployment increases the relative attractiveness of large and less violent gangs engaging more in property crime.
    Keywords: violence, crime, gangs, unemployment, identity
    JEL: K42 D71 D74
    Date: 2007–03
  13. By: HUD - PD&R
    Abstract: Through its Office of University Partnerships, HUD's Office of Policy Development and Research supports the research efforts of college and university students and faculty. The department recognizes that good research and analysis is the foundation to meaningful community outreach. This edited monograph highlights the benefits to be derived from engaged, community-based research. The articles included describe the application of the scholarly principles of analysis, data collection, and interpretation to the real problems of housing and urban development confronting our communities. The unifying theme throughout this collection is how much communities and universities can achieve by working together in research partnerships. Such research has had both immediate and long-term impacts on the state of the nation's housing and community development programs.
    JEL: A00
    Date: 2006–08
  14. By: GOBILLON, Laurent; MAGNAC, Thierry; SELOD, Harris
    JEL: C41 J64 R23
    Date: 2007–02
  15. By: Julio Martinez Galarraga; Elisenda Paluzie Hernandez; Jordi Pons Novell; Daniel Aurelio Tirado Fabregat (Universitat de Barcelona)
    Abstract: This paper analyzes the relationship between spatial density of economic activity and interregional differences in the productivity of industrial labour in Spain during the period 1860-1999. In the spirit of Ciccone and Hall (1996) and Ciccone (2002), we analyze the evolution of this relationship over the long term in Spain. Using data on the period 1860-1999 we show the existence of an agglomeration effect linking the density of economic activity with labour productivity in the industry. This effect was present since the beginning of the industrialization process in the middle of the 19th century but has been decreasing over time. The estimated elasticity of labour productivity with respect to employment density was close to 8% in the subperiod 1860-1900, reduces to a value of around 7% in the subperiod 1914-1930, to 4% in the subperiod 1965-1979 and becomes insignificant in the final subperiod 1985-1999. At the end of the period analyzed there is no evidence of the existence of net agglomeration effects in the industry. This result could be explained by an important increase in the congestion effects in large industrial metropolitan areas that would have compensated the centripetal or agglomeration forces at work. Furthermore, this result is also consistent with the evidence of a dispersion of industrial activity in Spain during the last decades.
    Keywords: agglomeration economies, regional disparities, spanish economic history
    JEL: N12 O4 R1
    Date: 2007
  16. By: Bruce A. Weinberg
    Abstract: This paper develops a model of social interactions with endogenous association. People are assumed to invest in relationships to maximize their utility. Even in a linear-in-means model, when associations are endogenous, the effect of macro-group composition on behavior is non-linear and varies across individuals. We also show that larger groups facilitate sorting. Using data on associations among high school students, we provide a range of evidence consistent with our model. Individuals associate with people whose behaviors and characteristics are similar to their own. This tendency is stronger in large groups. We also show that behaviors vary within and between macro-groups in the way predicted by endogenous association.
    JEL: I21 I32 J15
    Date: 2007–04
  17. By: James J. Heckman (University of Chicago, American Bar Foundation, University College Dublin and IZA); Dimitriy V. Masterov (University of Michigan)
    Abstract: This paper presents a productivity argument for investing in disadvantaged young children. For such investment, there is no equity-efficiency tradeoff.
    Keywords: early childhood investment, noncognitive skills, cognitive skills
    JEL: H52 I28
    Date: 2007–04
  18. By: Michael Fritsch (University of Jena, School of Busniess and Economics, Max Planck Institute of Economics Jena, and Institute for Economic Research (DIW Berlin))
    Abstract: This paper investigates the geography and the effect of people in creative occupation in Germany. The population share of the Creative Class as well as of bohemians and artists is relatively high in larger cities, but smaller places and rural regions may also have a considerable proportion of people with a creative job. While ethnical and cultural diversity and a high level of public supply in health care and education can explain the distribution of creative people, employment opportunities seem to play only a minor role. There is a positive statistical relationship between the share of people in creative occupations, the level of new business formation and the innovativeness of regions. A high share of creative occupations seems to be conducive to regional growth; however, the exact nature of this relationship is still unclear.
    Keywords: Creativity, innovation, entrepreneurship, regional development
    JEL: O31 O18 R11
    Date: 2007–03–30
  19. By: HUD - PD&R
    Abstract: The last two decades have been marked by significant changes in consumer financial services. Two significant changes that have been evident are the rapid growth of both subprime mortgage lending and alternative financial service providers (AFSPs), such as check cashers, payday lenders, and pawnshops. A common concern with both of these industries is high fees for their services and disproportionate targeting of low-income and minority households. Another common element regarding these trends is the variety of studies arguing that the growth in use of these higher-cost financial services in low-income and minority communities is due in part to the absence of banks from these areas. But while much has been written in recent years on the growth of these two segments of the financial services market, there is limited research on the extent to which these phenomena are related. The purpose of this study is to examine subprime lending and the prevalence of AFSPs through a common lens to investigate the extent of similarities and differences in the prevalence of these activities in low-income and minority communities.
    JEL: G21
    Date: 2006–03
  20. By: R. Alan Seals; John Nunley
    Abstract: This paper extends previous empirical research on the determinants of aggregate property crime rates in two dimensions.  First, we examine the effect of inflation on property crime rates.  Then, using a structural time-series approach we show that it is possible to estimate consistently the effects of exogenous macroeconomic variables on aggregate property crime rates without introducing endogenous deterrence to the model.  Inflation is statistically significant, positive, and persistent for all property crime rates examined.  We conclude that price stability contributes considerably to the reduction of property crimes.
    Keywords: property crime, inflation, female labor force participation, manufacturing employment, structural time series, unobserved component models
    JEL: J11 J21
  21. By: Rafael Di Tella; Sebastian Galiani; Ernesto Schargrodsky
    Abstract: The study of how crime affects different income groups faces several difficulties. The first is that crime-avoiding activities vary across income groups. Thus, a lower victimization rate in one group may not reflect a lower burden of crime, but rather a higher investment in avoiding crime. A second difficulty is that, typically, only a small fraction of the population is victimized so that empirical tests often lack the statistical power to detect differences across groups. We take advantage of a dramatic increase in crime rates in Argentina during the late 1990s to document several interesting patterns. First, the increase in victimization experienced by the poor is larger than the increase endured by the rich. The difference appears large: low-income people have experienced increases in victimization rates that are almost 50 percent higher than those suffered by high-income people. Second, for home robberies, where the rich can protect themselves (by hiring private security, for example), we find significantly larger increases in victimization rates amongst the poor. In contrast, for robberies on the street, where the rich can only mimic the poor, we find similar increases in victimization for both income groups. Third, we document direct evidence on pecuniary and non-pecuniary protection activities by both the rich and poor, ranging from the avoidance of dark places to the hiring of private security. Fourth, we show the correlations between changes in protection and mimicking and changes in crime victimization. Fifth, we offer one possible way of using these estimates to explain the incidence of crime across income groups.
    Keywords: Victimization, income distribution, private security, victim adaptation
    JEL: K42
    Date: 2006–11–01
  22. By: DREZE, Jacques; LE BRETON, Michel; SAVVATEEV, Alexei; WEBER, Shlomo
    JEL: D70 H20 H73
    Date: 2006–12

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