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on Urban and Real Estate Economics |
| By: | Patrick Bayer; Fernando Ferreira; Robert McMillan |
| Abstract: | This paper develops a comprehensive framework for estimating household preferences for school and neighborhood attributes in the presence of sorting. It embeds a boundary discontinuity design in a heterogeneous model of residential choice to address the endogeneity of school and neighborhood attributes. The model is estimated using restricted-access Census data from a large metropolitan area, yielding a number of new results. First, households are willing to pay less than one percent more in house prices -- substantially lower than previous estimates -- when the average performance of the local school increases by five percent. Second, much of the apparent willingness to pay for more educated and wealthier neighbors is explained by the correlation of these sociodemographic measures with unobserved neighborhood quality. Third, neighborhood race is not capitalized directly into housing prices; instead, the negative correlation of neighborhood race and housing prices is due entirely to the fact that blacks live in unobservably lower quality neighborhoods. Finally, there is considerable heterogeneity in preferences for schools and neighbors: in particular, we find that households prefer to self-segregate on the basis of both race and education. |
| JEL: | H0 H4 H72 R0 R21 R31 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13236&r=ure |
| By: | Torbjørn Hægeland, Oddbjørn Raaum and Kjell G. Salvanes (Statistics Norway) |
| Abstract: | Despite important policy implications associated with the allocation of education resources, evidence on the effectiveness of school inputs remains inconclusive. In part, this is due to endogenous allocation; families sort themselves non-randomly into school districts and school districts allocate money based in order to compensate (or reinforce) differences in child abilities, which leaves estimates of school input effects likely to be biased. Using variation in education expenditures induced by the location of natural resources in Norway, we examine the effect of school resources on pupil outcomes. We find that higher school expenditures, triggered by higher revenues from local taxes on hydropower plants, have a significantly positive effect on pupil performance at age 16. The IV estimates contrast with the standard cross-sectional estimates that reveal no effects of extra resources. |
| Keywords: | Pupil achievement; school resources |
| JEL: | I21 I28 J24 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:508&r=ure |
| By: | Jordi Jofre Monseny; Alberto Sole Olle (Universitat de Barcelona) |
| Abstract: | This paper analyses empirically how differences in local taxes affect the intraregional location of new manufacturing plants. These effects are examined within the random profit maximization framework while accounting for the presence of different types of agglomeration economies (localization/ urbanization/ Jacobs economies) at the municipal level. We look at the location decision of more than 10,000 establishments locating between 1996 and 2003 across more than 400 municipalities in Catalonia, a Spanish region. It is necessary to restrict the choice set to the local labor market and, above all, to control for agglomeration economies so as to identify the effects of taxes on the location of new establishments. |
| Keywords: | agglomeration economies, local taxes, firm location |
| JEL: | H32 R3 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:bar:bedcje:2007180&r=ure |
| By: | André MEUNIE (GREThA); Guillaume POUYANNE (GREThA) |
| Abstract: | The Environmental Kuznets Curve (EKC) has given rise to a flourishing literature since the beginning of the 90’s. The EKC postulates an inverted U-shaped relationship between income and polluting emissions: there would be a level of wealth beyond which polluting emissions would decrease. Surprisingly, this issue has rarely been applied to the cities. Yet we consider such a question as a pertinent one. This article aims at analyzing the Urban EKC (UEKC) hypothesis. It tests it with a sample of 37 cities in the world. Previous studies on the UEKC hypothesis are very scarce. They are the ground for us, to define a specific methodological posture. First, we use polluting emissions per capita instead of pollutants concentrations: thus we control for the influence of urban size. Second, we only take in account pollutants due to a unique source, which is daily mobility. This makes the explanation of the income-polluting emissions relation easier, as our comments are based on a specific, well constituted literature about factors of daily mobility. We expose the theoretical mechanisms by which the UEKC due to daily mobility could be validated. The impact of income on polluting emissions is threefold : behavioural, with a direct effect and an indirect one ; technical (the environmental efficiency of the vehicles increases) ; political (planning authorities wish to evolve towards a « sustainable mobility »). The empirical part of the paper is a test of the UEKC on a sample of 37 cities in the world. We present three important results. First, the estimation of quadratic regressions gives an inverted U-shaped relationship for most of the pollutants, which doesn’t permit to invalidate the UEKC hypothesis. Second, we show that the explanation of such curves is linked to two sets of factors: individual behaviours (e.g. modal choice) and collective choices (e.g. transit supply). Third, we discuss the validity of the UEKC hypothesis, that is we seek to explain the level of polluting emissions. As many factors are entangled, we use a principal components analysis to show that the influence of income may in fact reflect the influence of both urban form and consumers’ habits on polluting emissions due to daily mobility. |
| Keywords: | Environmental Kuznets Curve ; daily mobility ; urban ; polluting emissions |
| JEL: | Q53 Q56 R12 R14 R41 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:grt:wpegrt:2007-04&r=ure |
| By: | Sund, Krister (Swedish Institute for Social Research, Stockholm University) |
| Abstract: | In this paper I use a rich dataset in order to observe each student over time in different subjects and courses. Unlike most peer studies, I identify the peers and the teachers that each student has had in every classroom. This enables me to handle the simultaneity and selection problems, which are inherent in estimating peer effects in the educational production function. I use a value-added approach with lagged peer achievement to avoid simultaneity and extensive fixed effects to rule out selection. To be specific, it is within-student across-subject variation with additional controls for time-invariant teacher characteristics that is exploited. Moreover, I identify students that are attending classes in which they have no peers from earlier education which otherwise could bias the result. I find positive peer effects for the average student but also that there is a non-linear dimension. Lower-achieving students benefit more from an increase in both mean peer achievement and the spread in peer achievement within the classroom than their higher-achieving peers. |
| Keywords: | Economics of education; Peer effects |
| Date: | 2007–05–07 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sofiwp:2007_008&r=ure |
| By: | Zoltan J. Acs (George Mason University; Max Planck Institute of Economics, Jena, Germany); Monika I. Megyesi (University of Baltimore) |
| Abstract: | Creativity is changing the way cities approach economic development and formulate policy. Creative metropolises base their economic development strategies, at least partly, on building communities attractive to the creative class worker. While there are countless examples of high-tech regions transforming into creative economies, traditionally industrial cities have received much less attention in this regard. This research draws on Baltimore to assess the potential of transforming a traditionally industrial region into a creative economy. It analyses Baltimore's performance on dimensions of talent, tolerance, technology, and territory both as a stand-alone metropolitan area and in comparison to similar industrial metropolises. Using data from the US Census Bureau and research on creativity measures, this case study concludes that Baltimore has the opportunity to capitalize on the creative economy because of its openness to diversity, established technology base, and appealing territorial amenities. An important consideration in the transformation towards a creative economy is Baltimore's geographic proximity and access to the largest reservoir of creative talent in the US: Washington, DC. |
| Keywords: | creativity, creative class, creativity index, creative cities, talent, technology, tolerance, territory, bohemian index, gay index, old industrial cities, Baltimore, economic development, economic growth, entrepreneurship |
| JEL: | D64 M13 M14 |
| Date: | 2007–07–02 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2007-024&r=ure |
| By: | David B. Audretsch (Max Planck Institute of Economics, Jena, Germany; Indiana University, USA); Max Keilbach (Max Planck Institute of Economics, Jena, Germany) |
| Abstract: | Whereas initially physical capital and later, knowledge capital were viewed as crucial for growth, more recently a very different factor, entrepreneurship capital, has emerged as a driving force of economic growth. In this paper, we define a region's capacity to create new firms start-ups as the region's entrepreneurship capital. We then investigate the local embeddedness of this variable and which variables have an impact on this variable. Using data for Germany, we find that knowledge-based entrepreneurship capital is driven by local levels of knowledge creation and the acceptance of new ideas, indicating that local knowledge flows play an important role. Low-tech entrepreneurship capital is rather increased by regional unemployment and driven by direct incentives such as subsidies. All three measures are locally clustered, indicating that indeed, entrepreneurship capital is a phenomenon that is driven by local culture, and is therefore locally bounded. |
| Keywords: | Entrepreneurship capital, Local Clusters, Knowledge Spillovers, Spatial Econometrics |
| JEL: | L60 O30 G30 |
| Date: | 2007–07–02 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2007-029&r=ure |
| By: | Otto Raspe; Frank van Oort |
| Abstract: | This paper contributes to the debate on localized knowledge externalities as potential source for firm productivity gains. We apply multilevel analysis to link firm productivity (and growth) to knowledge intensive spatial contexts in the Netherlands. If localized knowledge externalities are important, then firms are hypothesised to co-locate in order to capitalize on each other's knowledge stocks. We conceptualise the regional knowledge base by three dimensions: local 'research and development' intensity, local 'innovativeness', and the characterization of locations by a ‘knowledge workers’ dimension (based on ICT use, educational level, communicative and creative skills). Controlling for firm's heterogeneity, we find a relatively small spatial effect: regional characteristics contribute for only a few percents to firm productivity. The regional intensity of 'innovation' most significantly contributes to this effect. We do not find a contextual spatial effect for productivity growth. These results suggest that the territorial dimension of knowledge externalities should not be exaggerated. |
| Keywords: | productivity, multilevel analysis, localized knowledge externalities, Netherlands |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:0706&r=ure |
| By: | Kenneth A. Small (Department of Economics, University of California-Irvine) |
| Abstract: | The main transportation issues facing cities today fall into familiar categories--congestion and public transit. For congestion, there is now a far richer menu of options that are understood, technically feasible, and perhaps politically feasible. One can now contemplate offering roads of different qualities and prices. Many selected road segments are now operated by the private sector. Road pricing is routinely considered in planning exercises, and field experiments have made it more familiar to urban voters. Concerns about environmental effects of urban trucking have resulted in serious interest in tolled truck-only express highways. As for public transit, there is a need for political mechanisms to allow each type of transit to specialize where it is strongest. The spread of “bus rapid transit” has opened new possibilities for providing the advantages of rail transit at lower cost. The prospect of pricing and privatizing highway facilities could reduce the amount of subsidy needed to maintain a healthy transit system. Privately operated public transit is making a comeback in other parts of the world. The single most positive step toward better urban transportation would be to encourage the spread of road pricing. A second step, more speculative because it has not been researched, would be to use more environmentally-friendly road designs that provide needed capacity but at modest speeds, and that would not necessarily serve all vehicles. |
| Keywords: | Transportation policy; Road pricing; Privatization; Product differentiation |
| JEL: | R4 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:060724&r=ure |
| By: | Alejandro Esteller (Institut d'Economia de Barcelona (IEB); Universitat de Barcelona (UB)); Albert Solé (Institut d'Economia de Barcelona (IEB); Universitat de Barcelona (UB)) |
| Abstract: | The well-known "Decentralization Theorem" (Oates, 1972) establishes the superiority of decentralized public provision over the centralized case, which is not so sensitive to the diversity of expenditure needs among territories. We test this hypothesis using a unique Spanish database that provides information on road and educational infrastructure investment and capital stocks by region both before and after the decentralization of such responsibilities. We find that investment in both categories is much more sensitive to regional output and to infrastructure users and costs when sub-central governments have the responsibility over such services. |
| Keywords: | Decentralization, Growth, Human capital, Roads |
| JEL: | D72 H54 H72 H77 I20 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:357450art73&r=ure |
| By: | Robert DeYoung; W. Scott Frame; Dennis Glennon; Daniel P. McMillen; Peter J. Nigro |
| Abstract: | We study recent changes in the geographic distances between small businesses and their bank lenders using a large random sample of loans guaranteed by the Small Business Administration. Consistent with extant research, we find that small borrower-lender distances generally increased between 1984 and 2001, with a rapid acceleration in distance beginning in the late 1990s. We also document a new phenomenon: a fundamental reordering of borrower-lender distance by the borrowers’ neighborhood income and race characteristics. Historically, borrower-lender distance tended to be shorter than average for historically underserved (for example, low-income and minority) areas, but by 2000 borrowers in these areas tended to be farther away from their lenders on average. This structural change is coincident in time with the adoption of credit scoring models that rely on automated lending processes and quantitative information, and we find indirect evidence consistent with this link. Our findings suggest that there has been increased entry into local markets for small business loans, and this development should help allay fears that movement toward automated lending processes will reduce small businesses’ access to credit in already underserved markets. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2007-11&r=ure |
| By: | Fosgerau, Mogens; Pilegaard, Ninette |
| Abstract: | We embed a stylized traffic model within a general equilibrium model in which labor supply is endogenous and income taxes are distortionary. Within this framework we derive simple rules for performing a cost-benefit analysis that can be applied knowing only the output of the traffic model and a factor that accounts for the labor market distortion in a consistent manner. Thus the rules that we derive should be applicable in the large number of cost-benefit analyses that are performed based on the output of traffic models. Such analyses are routinely performed and guide the allocation of a large share of public investment in many countries of the world as well as the assessment of policies such as road user charging. We find that the rules for leisure transport are exactly the same as in a conventional CBA that includes the marginal cost of public funds. For business travel and commuting we find new rules as a result of the assumption that transport costs have the same distortionary effect as income taxes. |
| Keywords: | Cost-benefit; Transport; General Equilibrium |
| JEL: | R42 H40 |
| Date: | 2007–06–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:3902&r=ure |
| By: | CASTRIOTA STEFANO |
| Abstract: | Fluctuations of house and stock prices have an important effect on household wealth and, consequently, on household consumption patterns. Unfortunately, the recent literature has analyzed the determinants of human well-being and has shown that the relationship between consumption capabilities and happiness is not necessarily linear. In other words, higher income does not automatically imply higher well-being. In this paper I analyze the effects of real estate and stock market fluctuations on self-reported life-satisfaction levels of around 400,000 Western European citizens from 1975 to 2002. There are three main findings. First, both house and stock price increases have a positive effect on happiness. Second, real estate fluctuations are more important than stock market ones, both in relative and absolute terms. Third, when running regressions by age and income subgroups, the coefficients of the two financial variables are always non-negative. Furthermore, low income people are the most sensitive to both stock and house price increases while no big differences emerge among the reaction of different age cohorts. Thus, there does not seem to be room for social conflicts among age cohorts and income groups. |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceiswp:252&r=ure |