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on Urban and Real Estate Economics |
| By: | Sylvain Barde |
| Abstract: | This paper extends the Puga (1999) model by introducing urban frictions. It assumes that the agglomeration of manufacturing in a city imposes a cost on the inhabitants of the agglomerated region. Furthermore, an implicit function methodology is developed to provide a numerical stability function that does not require prior analytical work. Simulations reveal that these numerical stability conditions are consistent with the original Puga (1999) analytical predictions. The central finding is that the extension significantly alters the agglomeration properties of the original Puga framework. In particular, partial agglomeration becomes a stable long run outcome in both with and without migration. Furthermore, the level of sensitivity of the agglomeration to the friction cost market parameters is shown to be different in the both cases. This outlines the need to evaluate the imperfectness of migration when modifying the urban geography as a policy implication. |
| Keywords: | Agglomeration; new economic geography; migration; urban friction |
| JEL: | R11 R12 F12 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:ukc:ukcedp:0702&r=ure |
| By: | Judith K. Hellerstein; David Neumark; Melissa McInerney |
| Abstract: | We contrast the spatial mismatch hypothesis with what we term the racial mismatch hypothesis -- that the problem is not a lack of jobs, per se, where blacks live, but a lack of jobs into which blacks are hired, whether because of discrimination or labor market networks in which race matters. We first report new evidence on the spatial mismatch hypothesis, using data from Census Long-Form respondents. We construct direct measures of the presence of jobs in detailed geographic areas, and find that these job density measures are related to employment of black male residents in ways that would be predicted by the spatial mismatch hypothesis -- in particular that spatial mismatch is primarily an issue for low-skilled black male workers. We then look at racial mismatch, by estimating the effects of job density measures that are disaggregated by race. We find that it is primarily black job density that influences black male employment, whereas white job density has little if any influence on their employment. This evidence implies that space alone plays a relatively minor role in low black male employment rates. |
| JEL: | J71 J78 R12 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13161&r=ure |
| By: | Victor Matheson (Department of Economics, College of the Holy Cross); Robert Baade (Department of Economics and Business, Lake Forest College); Mimi Nikolova (Department of Economics and Business, Lake Forest College) |
| Abstract: | Supporters of sports stadium construction often defend taxpayer subsidies for stadiums by suggesting that sports infrastructure can serve as an anchor for local economic redevelopment. Have such promises of economic rejuvenation been realized? The City of Chicago provides an interesting case study on how a new stadium, U. S. Cellular Field, has been integrated into its southside neighborhood in a way that may well have limited local economic activity. This economic outcome stands in stark contrast to Wrigley Field in northern Chicago which continues to experience a synergistic commercial relationship with its neighborhood. |
| Keywords: | sports, stadiums, development, baseball, Chicago, economic impact |
| JEL: | L83 O18 R53 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:spe:cpaper:0701&r=ure |
| By: | Kolko, Jed |
| Abstract: | Economic research on industry location and agglomeration has focused nearly exclusively on manufacturing. This paper shows that services are prominent among the most agglomerated industries, especially at the county level. Because traditional measures of knowledge spillovers, natural resource inputs, and labor pooling explain little of agglomeration in services industries, this paper takes an alternative approach and looks at co-agglomeration to assess why industries cluster together. By considering the location patterns of pairs of industries instead of individual industries, the traditional agglomeration explanations can be measured more richly, and additional measures – like the need to locate near suppliers or customers – can be incorporated. The results show that co-agglomeration between pairs of services industries is driven by knowledge spillovers and the direct trading relationship between the industries, especially at the zip code level. Information technology weakens the need for services industries to co-agglomerate at the state level, perhaps because electronic transport of services outputs lowers the value of longer-distance proximity. These results are in sharp contrast to results for manufacturing, for which labor pooling contributes most to co-agglomeration, and the direct-trading relationship contributes more to state-level co-agglomeration. These differences between services and manufacturing are consistent with simple models of transport costs. |
| Keywords: | agglomeration; economic geography; services; technology; internet; co-agglomeration; firm location; transport costs |
| JEL: | R30 R12 L80 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:3362&r=ure |
| By: | Manacorda, Marco; Galiani, Sebastian; Berlinski, Samuel |
| Abstract: | The authors 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 pre-primary places. Using a within household estimator, they 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 with their untreated siblings. Instrumental variables estimates that control for nonrandom selection of siblings into preschool lead to similar results. The authors 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: | Primary Education,Education For All,Youth and Governance,Early Childhood Development,Educational Sciences |
| Date: | 2007–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4240&r=ure |
| By: | Brigitte S. Waldorf (Department of Agricultural Economics, College of Agriculture, Purdue University) |
| Abstract: | This paper— part of a comprehensive project on industry clusters and rural competitiveness— explores the role of industrial specialization and rurality on economic performance for counties in the continental United States. Regression models are estimated that evaluate the impact of industry cluster-specific employment shares on per capita income growth overall, as well as in a sequence of different contextual settings. Overall, the results suggest that economic disparities across U.S. counties will diminish. The results also suggest that economic specialization “per se” is not a guarantee for economic growth. Instead, economic growth very much depends on the type of specialization and the contextual setting, with distinct differences between, for example, the metropolitan sphere, the rural sphere, and the rural-metro interface. |
| Keywords: | Manufactured Housing;Economic Growth, Industry Clusters, Rural America |
| JEL: | O18 O51 R11 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:pae:wpaper:07-01&r=ure |
| By: | Sylvain Barde |
| Abstract: | This paper attempts to model directly the "folk theorem" of spatial economics, according to which increasing returns to scale are essential for understanding the geographical distributions of activity. The model uses the simple structure of most New Economic Geography papers, with two identical regions, a costlessly traded agricultural sector and a manufacturing sector subject to iceberg costs. This simple setting isolates IRS in manufacturing production function as the only potential agglomerating force. This implies that an unstable symmetric equilibrium means IRS cause agglomeration. The central result is that while a CRS manufacturing sector will always stay at the symmetric equilibrium, the presence of IRS in manufacturing causes the symmetric equilibrium to become unstable and agglomeration becomes the only long run equilibrium for the system. |
| Keywords: | Agglomeration; increasing returns to scale; imperfect competition |
| JEL: | R10 R12 F12 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:ukc:ukcedp:0701&r=ure |
| By: | Berliant, Marcus; Sabarwal, Tarun |
| Abstract: | This paper presents a difference in the comparative statics of general equilibrium models with land when there are finitely many agents, and when there is a continuum of agents. Restricting attention to quasi-linear and Cobb-Douglas utility, it is shown that with finitely many agents, an increase in the (marginal) commuting cost increases land rent per unit (that is, land rent averaged over the consumer's equilibrium parcel) paid by each consumer. In contrast, with a continuum of agents, average land rent goes up close to the central business district, is constant at some intermediate distance, and decreases for consumers farther away. Therefore, there is a qualitative difference between the two types of models, and this difference is potentially testable. |
| Keywords: | Large Urban Economies; Comparative Statics; Continuous and Discrete Agent Models |
| JEL: | R13 R14 D51 |
| Date: | 2007–06–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:3393&r=ure |
| By: | Michael Fritsch (University of Jena, School of Busniess and Economics, Max Planck Institute of Economics Jena, and Institute for Economic Research (DIW Berlin)); Viktor Slavtchev (University of Jena, School of Busniess and Economics) |
| Abstract: | Innovation processes are characterized by a pronounced division of labor between actors. Two types of externality may arise from such interactions. On the one hand, a close location of actors affiliated to the same industry may stimulate innovation (MAR externalities). On the other hand, new ideas may be born by the exchange of heterogeneous and complementary knowledge between actors, which belong to different industries (Jacobs' externalities). We test the impact of both MAR as well as Jacobs' externalities on innovative performance at the regional level. The results suggest an inverted u-shaped relationship between regional specialization in certain industries and innovative performance. Further key determinants of the regional innovative performance are private sector R&D and university-industry collaboration. |
| Keywords: | Innovation, technical efficiency, patents, agglomeration concentration, specialization, diversity, regional analysis. |
| JEL: | O31 O18 R12 |
| Date: | 2007–06–05 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2007-018&r=ure |
| By: | Vanessa E. Daniel (Department of Spatial Economics, Vrije Universiteit); Raymond J.G.M. Florax (Department of Agricultural Economics, Purdue University); Piet Rietveld (Department of Spatial Economics, Vrije Universiteit) |
| Abstract: | Climate change, the ‘boom and bust’ cycles of rivers, and altered water resource management practice have caused significant changes in the spatial distribution of the risk of flooding. Hedonic pricing studies, predominantly for the US, have assessed the spatial incidence of risk and the associated implicit price of flooding risk. Using these implicit price estimates and their associated standard errors, we perform a meta-analysis and find that houses located in the 100-year floodplain have a –0.3 to –0.8% lower price. The actual occurrence of a flooding event or increased stringency in disclosure rules causes ex ante prices to differ from ex post prices, but these effects are small. The marginal willingness to pay for reduced risk exposure has increased over time, and it is slightly lower for areas with a higher per capita income. We show that obfuscating amenity effects and risk exposure associated with proximity to water causes systematic bias in the implicit price of flooding risk. |
| Keywords: | Manufactured Housing; valuation, environmental risk, meta-analysis, hedonic pricing |
| JEL: | D81 Q51 Q54 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:pae:wpaper:07-02&r=ure |
| By: | Jean Bourdon (IREDU - Institut de recherche sur l'éducation : Sociologie et Economie de l'Education - [CNRS : FRE5211] - [Université de Bourgogne]); Markus Frölich (SIAW-HSG - [University of St. Gallen]); Katharina Michaelowa (Institut für Politikwissenschaft - [University of Zurich]) |
| Abstract: | Primary school enrolment rates are very low in francophone Africa. In order to enhance education supply, many<br />countries have launched large teacher recruitment programmes in recent years, whereby teachers are no longer engaged on civil servant positions, but on the basis of (fixed-term) contracts typically implying considerably lower salaries and a sharply reduced duration of professional training. While this policy has led to a boost of primary enrolment, there is a concern about a loss in the quality of education. In this paper we analyse the impact on educational quality, by estimating nonparametrically the quantile treatment effects for Niger, Togo and Mali, based on very informative data, comparable across these countries. We find that contract teachers do relatively better for low ability children in low grades than for high ability children in higher grades. When positive treatment effects were found, they tended to be more positive at the low to medium quantiles; when negative effects were found they tended to be more pronounced at the high ability quantiles. Hence, overall it seems that contract teachers do a relatively better job for teaching students with learning difficulties than for teaching the ‘more advanced' children. This implies that contract teachers tend to reduce inequalities in student outcomes. At the same time, we also observe clear differences between the countries. We find that, overall, effects are positive in Mali, somewhat mixed in Togo (with positive effects in 2nd and negative effects in 5th grade) and negative in Niger. This ordering is consistent with theoretical expectations derived from a closer examination of the different ways of implementation of the contract teacher programme in the three countries. In Mali and, to some extent, in Togo, the contract teacher system works more through the local communities. This may have led to closer monitoring and more effective hiring of contract teachers. In Niger, the system was changed in a centralized way with all contract teachers being public employees, so that there is no reason to expect much impact on local monitoring. In addition, the extremely fast hiring of huge numbers of contract teachers may also have contributed to relatively poor performance in Niger. These results are expected to be relevant for other sub-Saharan African countries, too, as well as for the design of new contract teacher programmes in the future. |
| Keywords: | Subsaharan Africa ; Primary school ; Enrolment ; Teachers ; Recruitment programme ; Civil servants ; Teacher training ; Quality of education ; Mali ; Togo ; Niger |
| Date: | 2007–05–29 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00150147_v1&r=ure |
| By: | Michael Alexeev (Indiana University Bloomington); Luba Habodaszova (City University/VSM, Bratislava, Slovakia) |
| Abstract: | We analyze the implications of decentralization for the incentives of local governments to provide productivity enhancing local public goods and extort bribes from local entrepreneurs. We show that an increase in the share of locally raised tax revenue left with the local government raises its incentives to provide public goods and brings more entrepreneurs into the official economy. Corruption, measured by the size of bribes that local officials charge entrepreneurs for issuing licenses for operating officially, may increase or decrease, depending on the extent to which public goods enhance the entrepreneur’s productivity. The tests using cross-sectional country-level data support the model’s implications. |
| Keywords: | decentralization, local public goods, corruption, unofficial economy |
| JEL: | H77 D73 O17 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:inu:caeprp:2007008&r=ure |
| By: | Markus Froelich; Jean Bourdon; Katharina Michaelowa |
| Abstract: | Primary school enrolment rates are very low in francophone Africa. In order to enhance education supply, many countries have launched large teacher recruitment programmes in recent years, whereby teachers are no longer engaged on civil servant positions, but on the basis of (fixed-term) contracts typically implying considerably lower salaries and a sharply reduced duration of professional training. While this policy has led to a boost of primary enrolment, there is a concern about a loss in the quality of education. In this paper we analyse the impact on educational quality, by estimating nonparametrically the quantile treatment effects for Niger, Togo and Mali, based on very informative data, comparable across these countries. We find that contract teachers do relatively better for low ability children in low grades than for high ability children in higher grades. When positive treatment effects were found, they tended to be more positive at the low to medium quantiles; when negative effects were found they tended to be more pronounced at the high ability quantiles. Hence, overall it seems that contract teachers do a relatively better job for teaching students with learning difficulties than for teaching the ‘more advanced’ children. This implies that contract teachers tend to reduce inequalities in student outcomes. At the same time, we also observe clear differences between the countries. We find that, overall, effects are positive in Mali, somewhat mixed in Togo (with positive effects in 2nd and negative effects in 5th grade) and negative in Niger. This ordering is consistent with theoretical expectations derived from a closer examination of the different ways of implementation of the contract teacher programme in the three countries. In Mali and, to some extent, in Togo, the contract teacher system works more through the local communities. This may have led to closer monitoring and more effective hiring of contract teachers. In Niger, the system was changed in a centralized way with all contract teachers being public employees, so that there is no reason to expect much impact on local monitoring. In addition, the extremely fast hiring of huge numbers of contract teachers may also have contributed to relatively poor performance in Niger. These results are expected to be relevant for other sub-Saharan African countries, too, as well as for the design of new contract teacher programmes in the future. |
| JEL: | O15 I C14 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:usg:dp2007:2007-20&r=ure |
| By: | Robert J. Shiller (Cowles Foundation, Yale University) |
| Abstract: | This paper looks for markers of ends of real estate booms or busts. The changes in market psychology and related indicators that occurred at real estate market turning points in the United States since the 1980s are compared with changes at turning points in the more distant past. In all these episodes changes in an atmosphere of optimism about the future course of home prices, changes in public interpretation of the boom, as well as evidence of supply response to the high prices of a boom, are noted. |
| Keywords: | Home prices, Boom, Bubble, Regime change, Stock market, California, Florida |
| JEL: | R31 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:1610&r=ure |
| By: | David Card; Alexandre Mas; Jesse Rothstein |
| Keywords: | normal retirement age, retirement behavior, social security reform |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:515&r=ure |
| By: | Arnaud Simon (DRM - Dauphine Recherches en Management - [CNRS : UMR7088] - [Université Paris Dauphine - Paris IX]) |
| Abstract: | In this paper we examine the applicability of arbitrage theory to real estate. Arbitrage theory has been applied to the valuation of mortgages using partial differential equations, however the implicit assumptions made are problematic when applied to real estate. The latter is a very complex financial asset, and for instance, for the case of default options, one could produce very large errors (even up to 100%) by applying - unwisely - conventional arbitrage theory techniques. The consequences of real estate appraisal are in this paper studied in particular. Because one has encountered similar problems in real options theory as in real estate, the tools developed in that field could probably well adapt to real estate; we provide here an example. Finally the possibility of pricing contingent claims written on properties is discussed. |
| Keywords: | Real estate finance, arbitrage theory, pricing error, real options |
| Date: | 2007–05–31 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00150903_v1&r=ure |
| By: | Bannier, Christina E.; Fecht, Falko; Tyrell, Marcel |
| Abstract: | Open-end real estate funds are of particular importance in the German bank- dominated financial system. However, recently the German open-end fund industry came under severe distress which triggered a broad discussion of required regulatory interventions. This paper gives a detailed description of the institutional structure of these funds and of the events that led to the crisis. Furthermore, it applies recent banking theory to openend real estate funds in order to understand why the open-end fund structure was so prevalent in Germany. Based on these theoretical insights we evaluate the various policy recommendations that have been raised. |
| Keywords: | Open-End Funds, Liquidity Transformation, Liquidity Crisis, Risk Sharing |
| JEL: | G23 G28 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp2:5575&r=ure |