nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2007‒07‒20
eight papers chosen by
Steve Ross
University of Connecticut

  1. Wage Premia in Employment Clusters: Agglomeration Economies or Worker Heterogeneity? By Shihe Fu; Stephen L. Ross
  2. "The Effects of a Declining Housing Market on the U.S. Economy" By Dimitri B. Papadimitriou; Greg Hannsgen; Gennaro Zezza
  4. How Decisive Is the Decisive Voter? By Eric J. Brunner; Stephen L. Ross
  5. Does Pollution Increase School Absences? By Janet Currie; Eric Hanushek; E. Megan Kahn; Matthew Neidell; Steven Rivkin
  6. Conformism and Cooperation in a Local Interaction Model By Mengel, Friederike
  7. Statistically Significant Changes in the Poverty-Rate, 1997-98 to 2002-03 By Rodgers, J.R.
  8. A Compact City and a Better Balance: New Flexibility in Dutch Planning Provides a Model for Balanced Development By Ladd Schiess

  1. By: Shihe Fu (Southwestern University of Finance and Economics (China)); Stephen L. Ross (University of Connecticut)
    Abstract: The correlation between wage premia and concentrations of firm activity may arise due to agglomeration economies or workers sorting by unobserved productivity. A worker's residential location is used as a proxy for their unobservable productivity attributes in order to test whether estimated work location wage premia are robust to the inclusion of these controls. Further, in a locational equilibrium, identical workers must receive equivalent compensation so that after controlling for residential location (housing prices) and commutes workers must be paid the same wages and only wage premia arising from unobserved productivity differences should remain unexplained. The models in this paper are estimated using a sample of male workers residing in 33 large metropolitan areas drawn from the 5% Public Use Microdata Sample (PUMS) from the 2000 U.S. Decennial Census. We find that wages are higher when an individual works in a location that has more workers or a greater density of workers. These agglomeration effects are robust to the inclusion of residential location controls and disappear with the inclusion of commute time suggesting that the effects are not caused by unobserved differences in worker productivity. Extended model specifications suggest that wages increase with the education level of nearby workers and the concentration of workers in an individual's own industry or occupation.
    Keywords: Agglomeration, Wages, Sorting, Locational Equilibrium, Human Capital
    JEL: R13 R30 J24 J31
    Date: 2007–06
  2. By: Dimitri B. Papadimitriou; Greg Hannsgen; Gennaro Zezza
    Abstract: Longstanding speculation about the likelihood of a housing market collapse has given way in the past few months to consideration of just how far the housing market will fall and how much damage the debacle will inflict on the economy. In this paper, we discuss recent developments related to the housing market; econometrically assess the magnitude of the impact of housing price decreases on real private expenditure; assess the importance of new types of mortgages and mortgage-related securities; and briefly analyze possible policy responses.
    Date: 2007–07
  3. By: Zhang, Yi; Shing, Hui-Fai
    Abstract: Congestion charging in London was introduced in February 2003 to reduce traffic levels in the centre of London. Postcode sector level property prices for sectors both inside and outside the zone are investigated under the premise that the benefits of transport innovation can be captured by property prices. If housing markets are efficient, residential property prices should capture all the benefits and costs to commuters that a location offers. The aim of this investigation is to firstly compare property prices inside and outside the congestion charging zone, and secondly to measure the sensitivity of house prices to distance from the zone boundary both inside and outside the zone. The main analysis is based on the quasi-experimental differences-in-differences approach. It is found that the gap between property price inside and outside the zone has actually reduced as a result of congestion charging. Also, after the implementation of the congestion charge, the sensitivity of house prices with respect to distance from the boundary has fallen for sectors inside the zone relative to sectors outside the zone.
    Keywords: Congestion Charging; Property Prices; Difference in differences; Transport Innovations
    JEL: R31 R41 R48
    Date: 2006–08
  4. By: Eric J. Brunner (Quinnipiac University); Stephen L. Ross (University of Connecticut)
    Abstract: This paper provides a new test of the political economy "as if" proposition that underlies nearly all empirical studies that utilize the median voter model. Specifically, we employ a unique dataset to examine whether the voter with the median income is decisive in local spending referenda. Previous tests of the median voter model have typically relied on aggregate cross sectional data to examine whether the voter with the median income is pivotal. These studies are likely biased because communities differ across a variety of unobservable dimensions that are likely correlated with both the cost of providing public services and with the distribution of income in each community. In contrast to previous studies we make use of a unique pair of California referendums to estimate a first difference specification that controls for jurisdiction unobservables. The first referendum proposed to lower the required vote share for passing local educational bonding initiatives from 67 to 50 percent, and the second referendum, which was held only six months later, proposed lowering the vote requirement from 67 to 55 percent. This pair of votes allows us to precisely test whether voters vote on each referendum "as if" future public service provision under the rules of that referendum would be determined by the income of the proposed decisive voter. This approach avoids the need to assume that public spending accurately captures public service levels and eliminates potential bias from time invariant district attributes that are likely correlated with median income. Our empirical results suggest that jurisdiction median income accurately captures the expected outcomes of majority votes on public service spending and that voters understand the impact of small changes in the identity of the decisive voter. The estimated effect of median income on voting are not present in counterfactuals estimated at the census tract and state assembly district level.
    Keywords: Median Voter Hypothesis, Voting, School Spending
    JEL: H4 H7 I2
    Date: 2007–07
  5. By: Janet Currie; Eric Hanushek; E. Megan Kahn; Matthew Neidell; Steven Rivkin
    Abstract: We examine the effect of air pollution on school absences using unique administrative data for elementary and middle school children in the 39 largest school districts in Texas. These data are merged with information from monitors maintained by the Environmental Protection Agency. To control for potentially confounding factors, we adopt a difference-in-difference-in differences strategy, and control for persistent characteristics of schools, years, and attendance periods in order to focus on variations in pollution within school-year-attendance period cells. We find that high levels of carbon monoxide (CO) significantly increase absences, even when they are below federal air quality standards.
    JEL: I18 Q51
    Date: 2007–07
  6. By: Mengel, Friederike
    Abstract: We present and analyze a local interaction model where agents play a bilateral prisoner's dilemma game with their neighbors. Agents learn about behavior through payoff-biased imitation of their interaction neighbors (and possibly some agents beyond this set). We find that the [Eshel, I., L. Samuelson and A. Shaked, 1998, Altruists, Egoists and Hooligans in a Local Interaction Model, Am. Econ. Rev 88] result that polymorphic states are stochastically stable in such a setting is not robust. In particular whenever agents use information also of some agents beyond their interaction neighbors the unique stable outcome is one where everyone chooses defection. Introducing a sufficiently strong conformist bias into the imitation process we find that full cooperation always emerges. Conformism is thus identified as a new mechanism that can stabilize cooperation.
    Keywords: Cooperation; Imitation; Local Interaction; Conformism.
    JEL: C72 C73
    Date: 2007–04
  7. By: Rodgers, J.R. (University of Wollongong)
    Abstract: Sampling variation should be taken into account when sample data are used to estimate changes in the poverty rate over time. This paper reports poverty rates and their standard errors, calculated using data from the 1997-98 and 2002-03 Surveys of Income and Housing, and tests whether the poverty rate in Australia has changed significantly over this time period. The results depend on where the equivalised poverty line is set and whether its real value is held constant. With a constant real poverty line, a decrease in the poverty rate is observed and, except at low poverty thresholds, the reduction is statistically significant. However, with a relative poverty line set equal to half the median, or half the mean, current income, a significant increase in the poverty rate is observed, which is due to an increase in the average real income of the Australian population between the two survey dates.
    Date: 2007
  8. By: Ladd Schiess
    Date: 2007–06–22

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