nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2007‒08‒08
33 papers chosen by
Steve Ross
University of Connecticut

  1. Housing Supply and Land Use Regulation in the Netherlands By Wouter Vermeulen; Jan Rouwendal
  2. National, regional and metro-specific factors of the U.S. housing market By Dong Fu
  3. Optimal Retirement Asset Decumulation Strategies: The Impact of Housing Wealth By Wei Sun; Robert Triest; Anthony Webb;
  4. Will Reverse Mortgages Rescue the Baby Boomers? By Andrew D. Eschtruth; Wei Sun; Anthony Webb;
  5. Urbaphobie et désir d'urbain, au péril de la ville By Sallez, Alain
  6. Credit constraints and housing markets in New Zealand By Andrew Coleman
  7. Educational Implications of School Systems at Different Stages of Schooling By Jung Hur; Kang Changhui
  8. Do Households Benefit from Financial Deregulation and Innovation? The Case of the Mortgage Market By Kristopher Gerardi; Harvey S. Rosen; Paul Willen
  9. Charter School Performance in New Jersey By Jason Barr
  10. The impact of housing market institutions on labour mobility; a European cross-country comparison By Thomas de Graaff; Michiel van Leuvensteijn
  11. Governmental activity, integration, and agglomeration By Ingrid Ott; Susanne Soretz
  12. Should Urban Transit Subsidies Be Reduced? By Parry, Ian W.H.; Small, Kenneth
  13. Spillover Effects of Spatial Growth Poles - a Reconciliation of Conflicting Policy Targets? By Alexander Kubis; Mirko Titze; Joachim Ragnitz
  14. Unscheduled School Closings and Student Performance By Dave E. Marcotte; Steven W. Hemelt
  15. Do School Inspections Improve Primary School Performance? By Rob Luginbuhl; Dinand Webbink; Inge de Wolf
  16. The Trade-off between Private Lots and Public Open Space in Subdivisions at the Urban-Rural Fringe By Kopits, Elizabeth A.; McConnell, Virginia D.; Walls, Margaret A.
  17. Neighborhood Socioeconomic Disadvantage, Residential Stability, and Perceptions of Social Support among New Mothers By Kristin Turney; Kristen Harknett
  18. Do People Plan to Tap Their Home Equity in Retirement? By Alicia H. Munnell; Mauricio Soto; Jean-Pierre Aubry;
  19. Zero down payment mortgage default By Kelly, Austin
  20. What can go wrong will go wrong: Birthday effects and early tracking in the German school system By Hendrik Jürges; Kerstin Schneider
  21. Tipping and the Dynamics of Segregation in Neighborhoods and Schools By David Card; Alexandre Mas; Jesse Rothstein
  22. Do Small Classes Reduce the Achievement Gap between Low and High Achievers? Evidence from Project STAR By Spyros Konstantopoulos
  23. Schooling in Developing Countries: The Roles of Supply, Demand and Government Policy By Orazem, Peter; King, Elizabeth M
  25. "Dual' gravity: Using spatial econometrics to control for multilateral resistance" By Kristian Behrens; Cem Ertur; Wilfried Koch
  26. Airport and Access Mode Choice : A Generalized Nested Logit Model Approach By Gelhausen, Marc Christopher; Wilken, Dieter
  27. "Cracks in the Foundations of Growth: What Will the Housing Debacle Mean for the U.S. Economy?" By Dimitri B. Papadimitriou; Greg Hannsgen; Gennaro Zezza
  28. A Comparison of the Efficiency in Manufacturing in the Centre and Periphery of Europe By Aykut Lenger
  29. Airport and Access Mode Choice in Germany: A Generalized Neural Logit Model Approach By Gelhausen, Marc Christopher
  30. Targeting the unbanked-financial literacy's magic bullet? By Tatom, Jojn; Godsted, David
  31. Segregation, the Concentration of Poverty, and Birth Weight By Emily Moiduddin; Douglas S. Massey
  32. Detecting a cluster in a region without complete statistical data, using Input-Output analysis: The case of the Rioja wine cluster By Mikel Larreina
  33. Information and repeat-sales By Arnaud Simon

  1. By: Wouter Vermeulen (CPB, The Hague, and VU University Amsterdam); Jan Rouwendal (VU University Amsterdam)
    Abstract: In spite of a growing recognition of the importance of supply conditions for the level and volatility of house prices, empirical work on housing supply outside the US is scarce. This paper considers various measures of housing supply in the Netherlands, where real house prices have roughly tripled since 1970. Besides the volume of investment in residential structures, and new housing construction in units, we derive time series of structure and location quality in a hedonic analysis. Each of these variables appears to be almost fully inelastic with respect to house prices in at least the short to medium long run. Further analysis of the quality of location index shows that conventional models of competitive land and housing markets cannot account for these findings. However, they may be well explained in terms of the rather extensive body of interventions by the Dutch government.
    Keywords: housing supply; residential investment; housing markets; land use regulation
    JEL: E22 R31 R52
    Date: 2007–07–31
  2. By: Dong Fu
    Abstract: We build a dynamic latent factor model to decompose housing prices in major U.S. metropolitan areas into national, regional, and metro-specific idiosyncratic factors, in order to distinguish the different dynamics behind housing price movements. We find that there is a distinctive national factor that has contributed about one-fourth of the individual metropolitan's housing price volatility. The regional factor accounts for another one-fourth and the idiosyncratic factor explains about half of housing price fluctuations. However, at the regional level, the factors' contributions vary across a fairly wide range. Although it only has modest explanatory power of housing price volatility, the national factor seems to account for much of the price increase in the current housing boom. Interestingly, the regional factor exerts negative influence on housing prices in a fairly large number of metros lately, only to be outweighed by the national factor's positive contribution. We also explore the possible forces influencing the national factor of housing price movements, including monetary policy, population growth, real economic activity, general inflation and other asset prices.
    Date: 2007
  3. By: Wei Sun; Robert Triest (Federal Reserve Bank of Boston); Anthony Webb (Center for Retirement Research, Boston College);
    Abstract: A considerable literature examines the optimal decumulation of financial wealth in retirement. We extend this line of research to incorporate housing, which comprises the majority of most households’ non-pension wealth. We use VARs to estimate the relationship between the returns on housing, stocks, and bonds, and use simulation techniques to investigate a variety of decumulation strategies incorporating reverse mortgages. Under a wide variety of assumptions, we find that the average household would be as much as 33 percent better off taking a reverse mortgage as a lifetime income relative to what appears to be the most common strategy of delaying until financial wealth is exhausted and then taking a line of credit. It would be as much as 62 percent better off relative to not taking a reverse mortgage at all. Housing wealth displaces bonds in optimal portfolios, making the low rate of participation in the stock market even more of a puzzle.
    Keywords: optimal, decumulation, retirement, housing, non-pension wealth, reverse mortgages
    Date: 2006–11
  4. By: Andrew D. Eschtruth; Wei Sun (Center for Retirement Research, Boston College); Anthony Webb (Center for Retirement Research, Boston College);
    Abstract: Many of today’s workers are at risk of having insufficient resources in retirement. The reason for this gloomy picture is a rapidly changing retirement landscape defined by a rising Social Security retirement age, a sharp decline in traditional pensions coupled with modest 401(k) balances, low saving rates, and longer lifespans. However, one potential bright spot is housing equity, which has grown rapidly in recent years and is the largest non-pension asset for most households. The home value for the typical household approaching retirement was $200,000 in 2004 — up from $139,000 in 2001. This brief examines the extent to which homeowners can count on housing wealth to support their consumption in retirement. The first section introduces reverse mortgages as an option for accessing housing wealth in retirement. The second section describes trends in the reverse mortgage market. The third section explains what factors determine how much a homeowner can borrow through a reverse mortgage. The fourth section highlights the impact of changes in interest rates on reverse mortgages. Given the sensitivity to interest rates, households planning for retirement should be careful not to overestimate the potential of home equity.
    Keywords: reverse mortgages, baby boomers, housing equity, non-pension assets, retirement consumption
    Date: 2006–09
  5. By: Sallez, Alain (ESSEC Business School)
    Abstract: Individual housing is preferred by French people since world war 2, 87 % in 2006. This tendency has given birth to urban sprawl rejected by city-planner because it is a form of non sustainable development. They propose urban politics of densification, "the compact city", which may fail if one does not take into account the social demand.
    Keywords: City Planning; Habitat; Urban Sprawl; Urbaphoby
    JEL: R00
    Date: 2007–05
  6. By: Andrew Coleman (Reserve Bank of New Zealand)
    Abstract: The paper develops an overlapping generations model incorporating a realistic depiction of the credit constraints facing home buyers to explain why home ownerships rates have declined in New Zealand since 1990 despite a significant relaxation of credit constraints. The model focuses attention on the role of property investors in the property market, and suggests changes in credit constraints mainly affect the tenure decisions of individual households, but not the aggregate level of house prices. The model suggests the decline in real interest rates is likely to be the cause of the rise in house prices and the decline in home ownership rates since 1990.
    JEL: E40
    Date: 2007–07
  7. By: Jung Hur (Department of Economics, National University of Singapore); Kang Changhui (Department of Economics, National University of Singapore)
    Abstract: In educating students national public school systems use different methods of grouping students by ability across schools. We consider four different school systems of student allocation at different stages of schooling and their educational implications. Our two-period model suggests that both the frequency and sequence of ability grouping play an important role in producing educational implications. As different households prefer different combinations of school systems, the overall performance of a school system is determined by how households are distributed over income and a child's ability and the voting of households.
    Keywords: Education, Comprehensive and Selective School Systems
    JEL: D11 I20
    Date: 2007
  8. By: Kristopher Gerardi (Federal Reserve Bank of Boston); Harvey S. Rosen (Princeton University); Paul Willen (Federal Reserve Bank of Boston)
    Abstract: The U.S. mortgage market has experienced phenomenal change over the last 35 years. Most observers believe that the deregulation of the banking industry and financial markets generally has played an important part in this transformation. This paper develops and implements a technique for assessing the impact of changes in the mortgage market on individuals and households. Our analysis is based on an implication of the permanent income hypothesis: that the higher a household’s future income, the more it desires to spend and consume, ceteris paribus. If we have perfect credit markets, then desired consumption matches actual consumption and current spending on housing should forecast future income. Since credit market imperfections mute this effect, we can view the strength of the relationship between housing spending and future income as a measure of the “imperfectness” of mortgage markets. Thus, a natural way to determine whether mortgage market developments have actually helped households by decreasing market imperfections is to see whether this link has strengthened over time. We implement this framework using panel data going back to 1969. We find that over the past several decades, housing markets have become less imperfect in the sense that households are now more able to buy homes whose values are consistent with their long-term income prospects. One issue that has received particular attention is the role that the housing Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, have played in improving the market for housing finance. We find no evidence that the GSEs’ activities have contributed to this phenomenon. This is true whether we look at all homebuyers, or at subsamples of the population whom we might expect to benefit particularly from GSE activity, such as lowincome households and first-time homebuyers.
    JEL: D14 G21 R21
    Date: 2007–03
  9. By: Jason Barr
    Abstract: This paper investigates charter school performance in New Jersey from 2000 to 2006. The analysis shows that charter schools have lower performance than public schools in the same districts on fourth grade standardized tests for Language and Math, but performance improves as charter schools gain experience. In addition, I find that the N.J. Dept. of Education is effectively closing low-performing charter schools. Lastly, regression results provide evidence of a competitive effect from charter schools to public schools.
    Keywords: Charter Schools, Student Achievement, Competition, New Jersey
    JEL: H4 I2
    Date: 2007–07
  10. By: Thomas de Graaff; Michiel van Leuvensteijn
    Abstract: In this paper, we study the effects of housing market institutions on labour mobility. We construct durations for individuals leaving their current job for a different job, becoming unemployed or leaving the labour market, from a sample of households from 14 European countries in 1994–2001. We merge this data with country specific housing market institutions, such as transaction taxes, and language and religion diversity. Similar to previous studies, estimated hazards indicate that home-ownership reduces job-to-job mobility as well as the probability to become unemployed or economically inactive on a individual level. However, a comparison between countries reveals that countries with high levels of homeownership rates also have high levels of unemployment. Therefore, this paper is able to reconcile the seemingly contrasting empirical results from both the macroeconomic and the microeconomic level.
    Keywords: housing market; transaction costs; labor mobility; unemployment
    JEL: J60 J61 R23
    Date: 2007–06
  11. By: Ingrid Ott (Institute of Economics, Leuphana University of Lüneburg); Susanne Soretz (Department Growth and Distribution, University of Hannover)
    Abstract: This paper analyzes, within a regional growth model, the impact of productive governmental policy and integration on the spatial distribution of economic activity. Integration is understood as enhancing territorial cooperation between the regions, and it describes the extent to which one region may benefit from the other region's public input, e.g. the extent to which regional road networks are connected. Both, integration and the characteristics of the public input crucially affect whether agglomeration arises and if so to which extent economic activity is concentrated: As a consequence of enhanced intergation, agglomeration is less likely to arise and concentration will be lower. Relative congestion reinforces agglomerartion, thereby increasing equilibrium concentraion. Due to the congestion externalities, the market outcome ends up in subotimally high concentration.
    Keywords: public inputs, agglomeration, integration
    JEL: O4 R5
    Date: 2006–07
  12. By: Parry, Ian W.H. (Resources for the Future); Small, Kenneth
    Abstract: This paper derives intuitive and empirically useful formulas for the optimal pricing of passenger transit and for the welfare effects of adjusting current fare subsidies, for peak and off-peak urban rail and bus systems. The formulas are implemented based on a detailed estimation of parameter values for the metropolitan areas of Washington (D.C.), Los Angeles, and London. Our analysis accounts for congestion, pollution, and accident externalities from automobiles and from transit vehicles; scale economies in transit supply; costs of accessing and waiting for transit service as well as service crowding costs; and agency adjustment of transit frequency, vehicle size, and route network to induced changes in demand for passenger miles. The results support the efficiency case for the large fare subsidies currently applied across mode, period, and city. In almost all cases, fare subsidies of 50 percent or more of operating costs are welfare improving at the margin, and this finding is robust to alternative assumptions and parameters.
    Keywords: transit subsidies, scale economies, traffic congestion, welfare effects
    JEL: R48 H21
    Date: 2007–07–16
  13. By: Alexander Kubis; Mirko Titze; Joachim Ragnitz
    Abstract: Regional economic policy faces the challenge of two competing policy goals - reducing regional economic disparities vs. promoting economic growth. The allocation of public funds has to weigh these goals particularly under the restriction of scarce financial re- sources. If, however, some region turns out to be a regional growth pole with positive spillovers to its disadvantaged periphery, regional policies could be designed to recon- cile the conflicting targets. In this case, peripheral regions could indirectly participate in the economic development of their growing cores. We start our investigation by defining and identifying such growth poles among German regions on the NUTS 3 administrative level based on spatial and sectoral effects. Using cluster analysis, we determine significant characteristics for the general identification of growth poles. Patterns in the sectoral change are identified by means of the change in the employment. Finally, we analyze whether and to what extent these growth poles ex- ert spatial spillover effects on neighbouring regions and thus mitigate contradictory in- terests in regional public policy. For this purpose, we apply a Spatial-Cross-Regressive- Model (SCR-Model) including the change in the secondary sector which allows to con- sider functional economic relations on the administrative level chosen (NUTS 3).
    Keywords: Size and Spatial Distributions of Regional Economic Activity; Cross-Sectional Models; Spatial Models; Treatment Effect Models; Regional, Urban, and Rural Analyses
    JEL: R12 C21 O18
    Date: 2007–07
  14. By: Dave E. Marcotte (University of Maryland Baltimore County and IZA); Steven W. Hemelt (University of Maryland Baltimore County)
    Abstract: Do students perform better on statewide assessments in years in which they have more school days to prepare? We explore this question using data on math and reading assessments taken by students in the 3rd, 5th and 8th grades since 1994 in Maryland. Our identification strategy is rooted in the fact that tests are administered on the same day(s) statewide in late winter or early spring, and any unscheduled closings due to snow reduce instruction time, and are not made up until after the exams are over. We estimate that in academic years with an average number of unscheduled closures (5), the number of 3rd graders performing satisfactorily on state reading and math assessments within a school is nearly 3 percent lower than in years with no school closings. The impacts of closure are smaller for students in 5th and 8th grade. Combining our estimates with actual patterns of unscheduled closings in the last 3 years, we find that more than half of schools failing to make adequate yearly progress (AYP) in 3rd grade math or reading, required under No Child Left Behind, would have met AYP if schools had been open on all scheduled days.
    Keywords: education, accountability, testing, school resources
    JEL: I2 I21
    Date: 2007–07
  15. By: Rob Luginbuhl; Dinand Webbink; Inge de Wolf
    Abstract: Inspectors from the Dutch Inspectorate of Education inspect primary schools, write inspection reports on each inspected school, and make recommendations as to how each school can improve. We test whether these inspections result in better school performance. Using a fixed-effects model, we find evidence that school inspections do lead to measurably better school performance. Our assessment of school performance is based on the Cito test scores of pupils in their final year of primary school. Therefore school improvement means increased Cito test scores. The results indicate that the Cito test scores improve by 2% to 3% of a standard deviation of the test score in the two years following an inspection. The arithmetic component shows the largest improvement. Our estimates are the result of an analysis of two types of school inspections performed between 1999 and 2002, where one type was more intensive than the other. In one fixed-effects model, we assume that the effect of the two types of school inspections was the same. We cannot, however, be sure that the estimates from this model are free from the problem of endogeneity bias. Therefore, we also obtain estimates for a less restrictive fixed-effects model. In this less restrictive model, we make use of the fact that a subset of the more intensive school inspections occurs at a representative selection of primary schools. Based on this smaller, essentially randomly drawn sample of schools, we can be confident that these estimates of the effect of school inspections are free from endogeneity bias. Due to the limited number of inspections at randomly selected schools, these estimates are not significantly different from zero. These estimates are, however, consistent with the effects found based on all inspections. The less restrictive model also allows for the effect of the more intensive inspections to differ from that for the less intensive ones. We find evidence that the more intensive inspections are responsible for larger increases in the Cito test scores than the less intensive ones.
    Keywords: school improvement; school inspection; natural experiment
    JEL: I21
    Date: 2007–06
  16. By: Kopits, Elizabeth A.; McConnell, Virginia D. (Resources for the Future); Walls, Margaret A. (Resources for the Future)
    Abstract: In many communities on the urban–rural fringe, subdivisions are subject to “clustering” rules, in which houses must be located on a portion of the total land area and the remainder of the land is left as open space. This open space may be undisturbed forest or pastureland, or it may include recreation facilities and trails. In some communities, the open space may remain in agricultural use as pasture or cropland. Although the open space may provide benefits to subdivision residents, it means that those residents are living in a higher-density setting than people living in conventional subdivisions. It is unclear whether the benefits offset the loss experienced by smaller lots and higher density. This trade-off is the focus of our study. We use data on subdivision house sales occurring between 1981 and 2001 in a county on the fringe of the Washington, DC, metropolitan area to estimate a hedonic price model. We examine how households value being adjacent to open space and having more open space in the subdivision, and how they may be willing to trade off those amenities with their own private lot space. We find that private acreage matters to households—a 10 percent larger lot leads to about a 0.6 percent higher house price, all else being equal. Subdivision open space is also valuable to households, but the marginal effect is much smaller than the marginal effect of private lot space. We also find that subdivision open space does substitute for private land, but the extent of the trade-off is small. We use the results of the estimated hedonic model to simulate the effects on prices of jointly increasing open space and reducing average lot size, holding the size of the subdivision constant. We find that average house prices are lower with clustering, particularly for interior lots that are not adjacent to open space.
    Keywords: subdivisions, clustering, hedonic property values, open space
    JEL: Q51 Q24 R14 H41
    Date: 2007–07–10
  17. By: Kristin Turney (University of Pennsylvania); Kristen Harknett (University of Pennsylvania)
    Abstract: Neighborhoods are important sites for the formation and development of social ties. In theory, living in a disadvantaged neighborhood may be associated with lacking social support. We investigate this hypothesis among mothers of young children using longitudinal data from the Fragile Families and Child Wellbeing study (N=4,211). We find that mothers in disadvantaged neighborhoods, compared with their counterparts in better neighborhoods, are less likely to have a safety net of friends or family to rely on for monetary or housing assistance. We also find that residential stability is associated with stronger personal safety nets. For mothers who move when their children are young, moving to a better neighborhood seems to have little effect on their perceived instrumental support, but moving to a more disadvantaged neighborhood is associated with a decline in instrumental support.
    Date: 2007–02
  18. By: Alicia H. Munnell; Mauricio Soto (Center for Retirement Research, Boston College); Jean-Pierre Aubry (Center for Retirement Research, Boston College);
    Abstract: Many of today’s workers are at risk of having insufficient resources in retirement. The reason for this gloomy picture is a rapidly changing retirement landscape defined by a rising Social Security retirement age, a sharp decline in traditional pensions coupled with modest 401(k) balances, and longer life spans. Yet, in spite of these trends, Americans have not responded by saving more on their own. Outside of employer-sponsored pension plans, individuals save virtually nothing for retirement. The one potential bright spot is housing equity, which is the major asset for most families. While most retired households do not currently tap equity, this approach may be a luxury that future retirees will not be able to afford. As the baby boomers retire and the retirement income system contracts, housing equity is likely to become an increasingly important source of support. To see if attitudes are changing about the potential for using one’s home to cover living expenses in retirement, this brief reports on a survey that asks older working people today the role they think their house will play in their future. The results show that most households do not plan to access their home equity to cover regular living expenses. The house is seen as insurance against old-age contingencies and as a way to leave a bequest to children or charity. But the characteristics of those who say “yes” to tapping home equity suggest that more will do so in the future.
    Keywords: saving, employer-sponsored, pension plans, housing equity, regular living expenses, older working people, tap
    Date: 2007–05
  19. By: Kelly, Austin
    Abstract: Previous research has focused on equity as a prime determinant of mortgage default propensities. This paper extends the analysis of mortgage default to include mortgages that require no down payment from the purchaser. A continuous time hazard model is used to estimate the conditional probability of a serious delinquency, or a claim, as a function of a host of standard control variables, and indicators for the presence and source of the down payment. The data consist of a nationally representative random sample of about 5,000 FHA insured single family mortgages endorsed in Fiscal Years 2000, 2001, and 2002, observed through September 30, 2006, and samples of about 1,000 FHA loans each from the Atlanta, Indianapolis, and Salt Lake City MSAs in the same time period. The results indicate that borrowers who provide down payments from their own resources have significantly lower default propensities than do borrowers whose down payments come from relatives, government agencies, or non-profits. Borrowers with down payments from seller-funded non-profits, who make no down payment at all, have the highest default rates. Additionally, borrowers who do not make down payments from their own resources tend to have higher loss given default in the small subset of loans that had completed the property disposition process.
    Keywords: mortgage default; down payment; credit risk; mortgage termination; mortgage performance; FHA; down payment assistance; Nehemiah mortgage; Ameridream
    JEL: G28 R21 G21
    Date: 2007–07–31
  20. By: Hendrik Jürges; Kerstin Schneider (Mannheim Research Institute for the Economics of Aging (MEA))
    Abstract: At the age of ten German pupils are given a secondary school track recommendation which largely determines the actual track choice. Track choice has major effects on the life course, mainly through labor market outcomes. Using data from the German PISA extension study, we analyze the effect of month of birth and thus relative age on such recommendations. We find that younger pupils are less often recommended to and actually attend Gymnasium, the most attractive track in terms of later life outcomes. Flexible enrolment and grade retention partly offset these inequalities and the relative age effect dissipates as students age.
    Date: 2007–07–16
  21. By: David Card; Alexandre Mas; Jesse Rothstein
    Keywords: normal retirement age, retirement behavior, social security reform
    Date: 2006–10
  22. By: Spyros Konstantopoulos (Northwestern University and IZA)
    Abstract: Given that previous findings on the social distribution of the effects of small classes have been mixed and inconclusive, in the present study I attempted to shed light on the mechanism through which small classes affect the achievement of low- and high-achieving students. I used data from a 4-year large-scale randomized experiment (project STAR) to examine the effects of small classes on the achievement gap. The sample consisted of nearly 11,000 elementary school students who participated in the experiment from kindergarten to grade 3. Meta-analysis and quantile regression methods were employed to examine the effects of small classes on the achievement gap in mathematics and reading SAT scores. The results consistently indicated that higher-achieving students benefited more from being in small classes in early grades than other students. The findings also indicated that although all types of students benefited from being in small classes, reductions in class size did not reduce the achievement gap between low and high achievers.
    Keywords: small classes, achievement variability, meta-analysis
    JEL: I2
    Date: 2007–07
  23. By: Orazem, Peter; King, Elizabeth M
    Abstract: In developing countries, rising incomes, increased demand for more skilled labor, and government investments of considerable resources on building and equipping schools and paying teachers have contributed to global convergence in enrollment rates and completed years of schooling. Nevertheless, in many countries substantial education gaps persist between rich and poor, between rural and urban households and between males and females. To address these gaps, some governments have introduced school vouchers or cash transfers programs that are targeted to disadvantaged children. Others have initiated programs to attract or retain students by expanding school access or by setting higher teacher eligibility requirements or increasing the number of textbooks per student. While enrollments have increased, there has not been a commensurate improvement in knowledge and skills of students. Establishing the impact of these policies and programs requires an understanding of the incentives and constraints faced by all parties involved, the school providers, the parents and the children. The chapter reviews the economic literature on the determinants of schooling outcomes and schooling gaps with a focus on static and dynamic household responses to specific policy initiatives, perceived economic returns and other incentives. It discusses measurement and estimation issues involved with empirically testing these models and reviews findings. Governments have increasingly adopted the practice of experimentation and evaluation before taking steps to expand new policies. Often pilot programs are initiated in settings that are atypically appropriate for the program, so that the results overstate the likely impact of expanding the program to other settings. Program expansion can also result in general equilibrium feedback effects that do not apply to isolated pilots. These behavioral models provide a useful context within which to frame the likely outcomes of such expansion.
    Keywords: Education, household demand for education, education policy
    JEL: I2
    Date: 2007–07–31
  24. By: Juan Miguel Benito (Universidad del País Vasco); Penélope Hernández (Universidad de Alicante)
    Abstract: This paper is a note in which we prove that Cellular Automata are suitable tools to model multi-agent interactive procedures. In particular, we apply the argument to validate results from simulation tools obtained for the classical model of segregation of Thomas Schelling (1971a).
    Keywords: Cellular Automata, segregation, local information
    JEL: C61 C73 D82
    Date: 2007–07
  25. By: Kristian Behrens (CORE, Universite catholique de Louvain); Cem Ertur (LEO, Universite d'Orleans, France); Wilfried Koch (LEG, Universite de Bouugogne, France)
    Abstract: We propose a quantity-based 'dual' version of the gravity equation that yields an estimating equation with both cross-sectional interdependence and spatially lagged error terms. Such an equation can be concisely estimated using spatial econometric techniques. We illustrate this methodology by applying it to the Canada-U.S. data set used previously, among others, by Anderson and van Wincoop (2003) and Feenstra (2002, 2004). Our key result is to show that controlling directly for spatial interdependence across trade flows, as suggested by theory, significantly reduces border effects because it captures 'multilateral resistance'. Using a spatial autoregressive moving average specification, we find that border effects between the U.S. and Canada are smaller than in previous studies: about 8 for Canadian provinces and about 1.3 for U.S. states. Yet, heterogeneous coefficient estimations reveal that there is much variation across provinces and states.
    Date: 2007–06
  26. By: Gelhausen, Marc Christopher; Wilken, Dieter
    Abstract: The purpose of the paper is to present a novel approach of a general airport and access mode choice model. Based on data of the German Air Traveller Survey 2003 with a sample size of about 210.000 passengers interviewed at 21 airports a three-stage nested logit model has been estimated in a first step. 7 different access modes to the airport are modelled, subdivided into four private and three public travel modes. The model includes 7 different market segments: Domestic, European and Intercontinental travel, each segment split up into private and business travel. The European private travel segment is further subdivided into short stay trips and holiday travel. The aim is to develop a generally applicable airport and access mode choice model. Thereby it is possible to analyse future in terms of new airport constellations and new airport access modes. To achieve this, Kohonens Self-Organizing-Maps are used to identify different airport clusters and assign every airport to the appropriate cluster. Based on these airport clusters the aforementioned nested logit model has been estimated. The model is fully flexible regarding airports and access modes included in the analysis, thereby it is possible to evaluate any scenario, whether it is existing today or not. Furthermore, the model is not restricted in terms of the maximum number of airport/access mode combinations allowed. Interesting model applications comprise new high speed intercity access to existing airports or the impact of new airports like for example Berlin-Brandenburg International. Analysis of airport and access mode choice in border regions is possible, too.
    Keywords: Airport and access mode choice; Airport categories; Artificial neural networks; Discrete choice model; Generalized nested logit model; Kohonen's Self-Organizing Maps
    JEL: C25 C45 C14
    Date: 2006
  27. By: Dimitri B. Papadimitriou; Greg Hannsgen; Gennaro Zezza
    Abstract: With economic growth having cooled to 0.7 percent in the first quarter of 2007, the economy can ill afford a slump in consumption by the American household. But it now appears that the household sector could finally give in to the pressures of rising gasoline prices, a weakening home market, and a large debt burden. The signals are still mixed; for example, while April’s retail sales numbers caused concern, May’s were much improved, and so was the ISM manufacturing index for June. Consumption growth indicates a slowdown. This Public Policy Brief examines the American household and its economic fortunes, concentrating on how falling home prices might hamper economic growth, generate social dislocations, and possibly lead to a full-blown financial crisis.
    Date: 2007–07
  28. By: Aykut Lenger (Department of Economics, Ege University)
    Abstract: The objective of this paper is to estimate efficiency in manufacturing activities in some selected countries in Europe and to provide an answer to the question of whether or not contiguity to an efficient country contributes to the efficiency levels of manufacturing industries. The Stochastic Frontier Analysis (SFA) is conducted for a limited sample of countries in the periphery and centre of Europe for this purpose. Our estimates show that the more efficient manufacturing industries in our sample are generally in centre countries. Peripheral countries have also increased their efficiency levels some of which were quite low in the beginning of the period. The spatial correlation analysis provided a weak evidence for the spatial dependence of efficiencies, thus a weak base for the argument such that countries were affected by the more efficient manufacturing activity around them. A wider sample of countries may provide stronger evidence, though.
    Keywords: Efficiency, manufacturing industry, spatial spillovers
    JEL: O14 L60
    Date: 2007–07
  29. By: Gelhausen, Marc Christopher
    Abstract: The purpose of the paper is to present a novel approach of a general airport and access mode choice model. Based on data of the German Air Traveller Survey 2003 with a sample size of about 210.000 passengers interviewed at 21 airports a three-stage nested logit model has been estimated in a first step. 7 different access modes to the airport are modelled, subdivided into four private and three public travel modes. The model includes 7 different market segments: Domestic, European and Intercontinental travel, each segment split up into private and business travel. The European private travel segment is further subdivided into short stay trips and holiday travel. The aim is to develop a generally applicable airport and access mode choice model. Thereby it is possible to analyse future in terms of new airport constellations and new airport access modes. To achieve this, Kohonens Self-Organizing-Maps are used to identify different airport clusters and assign every airport to the appropriate cluster. Based on these airport clusters the aforementioned nested logit model has been estimated. In a second step, neural networks are applied to the problem of airport and access mode choice. On the basis of neural networks a new kind of discrete choice model called "Generalized Neural Logit Model" has been developed. To optimize the network structure genetic algorithms have been applied. Such a model fits into the structure of a General Extreme Value model and satisfies the condition of utility maximization. A second airport and access mode choice model based on the Generalized Neural Logit Model and the airport clusters has been estimated. Although the former approach showed for most market segments a good model fit, the new approach showed a significant increase in model fit especially for those market segments the model fits of which in the nested logit model were less satisfying.
    Keywords: Airport and access mode choice model; Concept of alternative groups; Discrete choice model; Generalized Neural Logit-Model; Kohonen’s Self Organizing Maps; Artificial neural networks
    JEL: C53 C25 C14
    Date: 2006–08
  30. By: Tatom, Jojn; Godsted, David
    Abstract: Adult financial illiteracy is a major problem in the US and elsewhere. Financial fraud and poor performance in managing personal finances go hand in hand. The nation’s bankruptcy and home mortgage foreclosure rates rate have continued to climb despite improving employment opportunities, rapid growth in the nation’s income and bankruptcy reform aimed at making bankruptcy filing less necessary and more difficult. America’s personal savings rate hovers in negative territory. As new financial services and technologies proliferate, many low income persons are being left in the dust, often unable to participate in cost saving or high-return opportunities, or they are offered new services only on very unfavorable terms. At the same time, lack of financial and technological safeguards has made it easier to exploit all individuals through identity theft, mortgage fraud, or legal, but financially dubious, new products. In some cases, new technology is being forced on low-income individuals by a coordinated federal push for electronic payment of benefits. While an imposition on the otherwise unbanked, increasing access to financial institutions may provide a useful introduction to a higher level of financial information and literacy, as well as enhancing their confidence and ability in financial management.
    Keywords: Unbanked; financial literacy; financial institutions; bank deposits
    JEL: G28 H31
    Date: 2006–11–14
  31. By: Emily Moiduddin (Princeton University); Douglas S. Massey (Princeton University)
    Abstract: In this analysis we connect neighborhood conditions to birth outcomes through their intermediate effects on allostatic load. We hypothesize that neighborhood poverty and racial isolation combine to produce unsafe environments which raise allostatic load and thereby increase the likelihood of negative coping behaviors (substance abuse) while lowering the odds of health-promoting behaviors (prenatal visits to a health professional). We expect these behaviors, in turn, to produce lower birth weights. Using data from the Fragile Families Study we find substantial support for this hypothesized sequence of events. The two greatest direct effects on birth weight are risky behavior and racial isolation. Neighborhood poverty and prenatal care have small but significant direct effects. Though neighborhood safety—our hypothesized indicator for allostatic load—has no significant direct effect on birth weight, it has small, significant indirect effects by raising the likelihood of risky behavior and by lowering the odds of prenatal care.
    Date: 2006–11
  32. By: Mikel Larreina
    Abstract: In recent times the role of wine in regional economies has been a major political issue, highlighting the importance of measuring accurately the multiplier effect of wine in regions with large wine sectors. This paper provides a case study of how to construct vital parts of an Input-Output table for a region without complete statistics, and how to use them thereafter to interpret the economic structure of the region. This methodology may be adapted to other wine clusters, and to related clusters, such as brewing and distilling
    Keywords: Wine, Rioja, cluster, Input-Output, regional economy.
    JEL: R11 R15 Q19
    Date: 2007–06
  33. By: Arnaud Simon (DRM - Dauphine Recherches en Management - [CNRS : UMR7088] - [Université Paris Dauphine - Paris IX])
    Abstract: What is the informational structure of the repeat-sales index? In this article we answer it, deconstructing the global index in its building blocks. As by-products of this reformulation we establish very simple and intuitive formulas for the volatility of the index and the reversibility phenomenon. We study the formal link between the repeat-sales index and the price indexes (median, hedonic…). We introduce a methodology of data analysis that improves greatly the extraction of the information embedded in a dataset. At last, we give some elements for a more general theory of the informational repeat-sales indexes.
    Keywords: Repeat-sales index, information, algorithmic decomposition, volatility, reversibility
    Date: 2007–07–20

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