nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2007‒08‒14
eighteen papers chosen by
Steve Ross
University of Connecticut

  1. How Much Do Public Schools Really Cost? Estimating the Relationship Between House Prices and School Quality By Ian Davidoff; Andrew Leigh
  2. Catching Up or Falling Behind? Income Distribution of Chinese Cities By Chun-Yu Ho; Dan Li
  3. Mechanisms and Impacts of Gender Peer Effects at School By Victor Lavy; Analía Schlosser
  4. Spatial Mismatch or Racial Mismatch? By Judith Hellerstein; Melissa McInerney; David Neumark
  5. Persistence of the School Entry Age Effect in a System of Flexible Tracking By Patrick A. Puhani; Andrea M. Weber
  6. Changes in Workplace Segregation in the United States Between 1990 and 2000: Evidence from Matched Employer-Employee Data By Judith Hellerstein; Melissa McInerney; David Neumark
  7. Left Behind By Design: Proficiency Counts and Test-Based Accountability By Derek Neal; Diane Whitmore Schanzenbach
  8. An Empitical Analysis of Political and Informative Trends on Municipalities of an Italian Region. By Raffaella SANTOLINI
  9. Class Size and Sorting in Market Equilibrium: Theory and Evidence By Miguel Urquiola; Eric Verhoogen
  10. The Housing Tenure of Immigrants in Ireland: Some Preliminary Analysis By David Duffy
  11. Spatial Growth and Industry Age By Klaus Desmet; Esteban Rossi-Hansberg
  12. Commodity tax competition and industry location under the destination - and the origin - principle By Kristian, BEHRENS; Johnathan H. HAMILTON; Gianmarco I.P., OTTAVIANO
  13. Institutional effects as determinants of learning outcomes : exploring state variations in Mexico By Alvarez, Jesus; Moreno, Vicente Garcia; Patrinos, Harry Anthony
  14. Combating Poverty and Social Exclusion in France By Stéphanie Jamet
  15. Returns to Local-Area Health Care Spending: Using Health Shocks to Patients Far From Home By Joseph J. Doyle, Jr.
  17. The Regional Dimension of Taxes and Public Expenditure in Ireland By Edgar Morgenroth
  18. Cost Liability and Residential Space Heating Expenditures of Welfare Recipients in Germany By Katrin Rehdanz; Sven Stoewhase

  1. By: Ian Davidoff; Andrew Leigh
    Abstract: This paper investigates the relationship between housing prices and the quality of public schools in the Australian Capital Territory. To disentangle the effects of schools and other neighbourhood characteristics on the value of residential properties, we compare sale prices of homes on either side of high school attendance boundaries. We find that a 5 percent increase in test scores (approximately one standard deviation) is associated with a 3.5 percent increase in house prices. Our result is in line with private school tuition costs, and accords with prior research from Britain and the United States. Estimating the effect of school quality on house prices provides a possible measure of the extent to which parents value better educational outcomes.
    Keywords: housing demand, school quality
    JEL: I22 R21
    Date: 2007–07
  2. By: Chun-Yu Ho (Department of Economics, Boston University); Dan Li (Department of Economics, Boston University)
    Abstract: This paper analyzes the evolution of Chinese urban income distribution across space and time in post-reform era. Our results suggest no evidence on income convergence across cities during the period 1984-2003. We find that cities with comparable income level are likely to be co-located in the same region; further, cities tend to mirror the mobility of their counterparts located in the same province, but not the same region. The divergence in urban income across the nation will continue if the current economic growth pattern persists in the future.
    Keywords: City Income Distribution; Convergence; Markov Process; Spatial Dependence; China
    JEL: O15 O18 R12 R58
    Date: 2007–03
  3. By: Victor Lavy; Analía Schlosser
    Abstract: The consequences of gender social and learning interactions in the classroom are of interest to parents, policy makers, and researchers. However, little is known about gender peer effects in schools and their operational channels. In this paper, we estimate the effects of classroom gender composition on scholastic achievements of boys and girls in Israeli primary, middle, and high schools and identify the mechanisms through which these peer effects are enacted. In particular, we examine whether gender peer effects work through changes in classroom learning and social environment, teaching methods and pedagogy, and teacher burnout and work satisfaction. In assessing these mechanisms, we distinguish between the effects generated by changes in the classroom gender composition and those generated by changes in the behavior of students. To control for potentially confounding unobserved characteristics of schools and students that might be correlated with peer gender composition, we rely on idiosyncratic variations in gender composition across adjacent cohorts within the same schools. Our results suggest that an increase in the proportion of girls leads to a significant improvement in students' cognitive outcomes. The estimated effects are of similar magnitude for boys and girls. As important mechanisms, we find that a higher proportion of female peers lowers the level of classroom disruption and violence, improves inter-student and student-teacher relationships as well as students' overall satisfaction in school, and lessens teachers' fatigue. We find, however, no effect on individual behavior of boys or girls, which suggests that the positive peer effects of girls on classroom environment are due mostly to compositional change, namely due to having more girls in the classroom and not due to improved behavior of peers.
    JEL: I2 I21 J16
    Date: 2007–08
  4. By: Judith Hellerstein; Melissa McInerney; David Neumark
    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.
    Date: 2007–06
  5. By: Patrick A. Puhani; Andrea M. Weber
    Abstract: In Germany, the streaming of students into an academic or nonacademic track at age 10 can be revised at later stages of secondary education. To investigate the importance of such revisions, we use administrative data on the student population in the German state of Hessen to measure the persistence of school entry age’s impact on choice of secondary school track. Based on exogenous variation in the school entry age by birth month, we obtain regression discontinuity estimates for different cohorts and grades up to the end of secondary education. We show that the effect of original school entry age on a student’s later attending grammar school disappears exactly at the grade level in which educational institutions facilitate track modification.
    Keywords: Education, identification, regression discontinuity design, instrumental variables, relative maturity
    JEL: I21 I28 J24
    Date: 2007–07
  6. By: Judith Hellerstein; Melissa McInerney; David Neumark
    Abstract: We present evidence on changes in workplace segregation by education, race, ethnicity, and sex, from 1990 to 2000. The evidence indicates that racial and ethnic segregation at the workplace level remained quite pervasive in 2000. At the same time, there was fairly substantial segregation by skill, as measured by education. Putting together the 1990 and 2000 data, we find no evidence of declines in workplace segregation by race and ethnicity; indeed, black-white segregation increased. Over this decade, segregation by education also increased. In contrast, workplace segregation by sex fell over the decade, and would have fallen by more had the services industry - a heavily female industry in which sex segregation is relatively high - not experienced rapid employment growth.
    Keywords: segregation, education, race, ethnicity, sex
    JEL: J11 J15 J16 J21 J24
    Date: 2007–06
  7. By: Derek Neal; Diane Whitmore Schanzenbach
    Abstract: Many test-based accountability systems, including the No Child Left Behind Act of 2001 (NCLB), place great weight on the numbers of students who score at or above specified proficiency levels in various subjects. Accountability systems based on these metrics often provide incentives for teachers and principals to target children near current proficiency levels for extra attention, but these same systems provide weak incentives to devote extra attention to students who are clearly proficient already or who have little chance of becoming proficient in the near term. We show based on fifth grade test scores from the Chicago Public Schools that both the introduction of NCLB in 2002 and the introduction of similar district level reforms in 1996 generated noteworthy increases in reading and math scores among students in the middle of the achievement distribution. Nonetheless, the least academically advantaged students in Chicago did not score higher in math or reading following the introduction of accountability, and we find only mixed evidence of score gains among the most advantaged students. A large existing literature argues that accountability systems built around standardized tests greatly affect the amount of time that teachers devote to different topics. Our results for fifth graders in Chicago, as well as related results for sixth graders after the 1996 reform, suggest that the choice of the proficiency standard in such accountability systems determines the amount of time that teachers devote to students of different ability levels.
    JEL: D78 I2 J41
    Date: 2007–08
  8. By: Raffaella SANTOLINI (Universita' Politecnica delle Marche, Dipartimento di Economia)
    Abstract: The aim of this paper is to conduct an empirical investigation regarding the presence of political and informative trends in tax setting of local governments as an alternative theoretical explanation to the tax mimick-ing. Both phenomena have been tested on municipalities' cross-sectional data of the Marche region with a spatial econometrics model. Discrimi-nating among several sources of tax mimicking, including public spend-ing spill-over, some evidence was found in favour of the political trend. As regards the informative trend, non significant results were observed testing tax interaction among heterogeneous coalitions. However, some evidence is present on local public spending.
    Keywords: informative trend, political trend, spatial econometrics, tax mimicking
    JEL: C31 H71 H72 H77
    Date: 2007–07
  9. By: Miguel Urquiola; Eric Verhoogen
    Abstract: This paper examines how schools choose class size and how households sort in response to those choices. Focusing on the highly liberalized Chilean education market, we develop a model in which schools are heterogeneous in an underlying productivity parameter, class size is a component of school quality, households are heterogeneous in income and hence willingness to pay for school quality, and schools are subject to a class-size cap. The model offers an explanation for two distinct empirical patterns observed among private schools that accept government vouchers: (i) There is an inverted-U relationship between class size and household income in equilibrium, which will tend to bias cross-sectional estimates of the effect of class size on student performance. (ii) Some schools at the class size cap adjust prices (or enrollments) to avoid adding another classroom, which produces stacking at enrollments that are multiples of the class size cap. This generates discontinuities in the relationship between enrollment and household characteristics at those points, violating the assumptions underlying regression-discontinuity (RD) research designs. This result suggests that caution is warranted in applying the RD approach in settings in which parents have substantial school choice and schools are free to set prices and influence their enrollments.
    JEL: C2 I2 L1 O1
    Date: 2007–08
  10. By: David Duffy (Economic and Social Research Institute (ESRI))
    Abstract: feature of the Irish economy in recent years has been the high net flow of people into the country. The analysis compares owner-occupancy by natives and immigrants in 1995 and 2004. The results show that immigrants have higher headship rates than the native population but have a much lower rate of owner-occupancy than natives and that the gap has widened over time. The longer an immigrant has been resident in Ireland the more likely they are to be homeowners. The changing mix of the immigrant population may be a contributing factor in explaining the widening gap.
    JEL: J61 R21
    Date: 2007–04
  11. By: Klaus Desmet; Esteban Rossi-Hansberg
    Abstract: U.S. county data for the last 20 or 30 years show that manufacturing employment has been deconcentrating. In contrast, the service sector exhibits concentration in counties with intermediate levels of employment. This paper presents a theory where local sectoral growth is driven by technological diffusion across space. The age of an industry -- measured as the time elapsed since the last major general purpose technology innovation in the sector -- determines the pattern of scale dependence in growth rates. Young industries exhibit non-monotone relationships between employment levels and growth rates, while old industries experience negative scale dependence in growth rates. The model then predicts that the relationship between county employment growth rates and county employment levels in manufacturing at the turn of the 20th century should be similar to the same relationship in services in the last 20 years. We provide evidence consistent with this prediction.
    JEL: E2 O3 O4 R1
    Date: 2007–08
  12. By: Kristian, BEHRENS; Johnathan H. HAMILTON; Gianmarco I.P., OTTAVIANO
    Abstract: We develop a model of commodity tax competition with monopolistically competitive internationally mobile firms, transport costs, and asymmetric country sizes. We investigate the impacts of non-cooperative tax setting, as well as of tax harmonization and changes in the tax principle, in both the short and the long run. The origin principle, when compared to the destination principle, is shown to exacerbate tax competition and to erode tax revenues, yet leads to a more equal spatial distribution of economic activity. This suggests that federations which care about spatial inequality, like the European Union, face a non-trivial- choice for their tax principle that goes beyond the standard considerations of tax revenue redistribution.
    Keywords: commodity tax competitions; origin principle; destination principle; tax harmonization; industry location
    JEL: F12 H22 H87 R12
    Date: 2007–07–30
  13. By: Alvarez, Jesus; Moreno, Vicente Garcia; Patrinos, Harry Anthony
    Abstract: This paper uses the OECD ' s Program for International Student Assessment student-level achievement database for Mexico to estimate state education production functions, controlling for student characteristics, family background, home inputs, resources, and institutions. The authors take advantage of the state-level variation and representative sample to analyze the impact of institutional factors such as state accountability systems and the role of teachers ' unions in student achievement. They argue that accountability, through increased use of state assessments, will improve learning outcomes. The authors also cast ligh t on the role of teachers ' unions, namely their strength through appointments to the school and relations with state governments. The analysis shows the importance of good relations between states and unions. Furthermore, it demonstrates that accountability systems are cost-effective measures for improving outcomes.
    Keywords: Tertiary Education,Education For All,Teaching and Learning,Secondary Education,Primary Education
    Date: 2007–07–01
  14. By: Stéphanie Jamet
    Abstract: Reducing poverty and social exclusion is an important objective for all French governments. Even though conventionally measured poverty is in fact lower than in most other countries, it is still higher than can be easily accepted. The current policy approach involves a large number of measures tailored to different circumstances. Some policies have unwanted side effects on labour market performance, and their cost-effectiveness could be improved to obtain better outcomes with the same resources. Concentrations of poverty and social exclusion in certain geographic areas and among certain groups of the population provide one of the most difficult challenges, for which contributions from education, labour market, housing, urban planning and anti-discrimination policies, as well as from the social services, are necessary. This Working Paper relates to the 2007 OECD Economic Survey of France (, and is also available in French under the title “Lutter contre la pauvreté et l’exclusion sociale en France”.
    Keywords: unemployment, France, labour markets, poverty
    JEL: H50 I32 I38 J30 R31
    Date: 2007–08–01
  15. By: Joseph J. Doyle, Jr.
    Abstract: Health care spending varies widely across markets, yet there is little evidence that higher spending translates into better health outcomes, possibly due to endogeneity bias. The main innovation in this paper compares outcomes of patients who are exposed to different health care systems that were not designed for them: patients who are far from home when a health emergency strikes. The universe of emergencies in Florida from 1996-2003 is considered, and visitors who become ill in high-spending areas have significantly lower mortality rates compared to similar visitors in lower-spending areas. The results are robust across different types of patients and within groups of destinations that appear to be close demand substitutes.
    JEL: I12
    Date: 2007–08
  16. By: Giancarlo Corò (Department of Economics, University Of Venice Cà Foscari); Stefano Micelli (Department of Business, University Of Venice Cà Foscari)
    Abstract: This essay examines the situation and the lines of development of industrial districts from the point of view of local systems of innovation. First of all, this article points out to the modernity factors of the district model – which are ascribable to the supply chain economy, to entrepreneurial dynamics and to the importance of geography as a competitive resource – through the analysis of recent contributions of economic literature that examined the emerging organizational models in knowledge economy. Secondly, the outcomes of recent research on leading companies of Italian industrial districts will be presented, looking at three particularly topics of ongoing changes: the process of international opening of the value chain, the technological conditions of competitive advantage, the relationship between strategies and economic performance. Finally, some considerations on the issue of policies will be developed. Such considerations underline the need to re-think the traditional models of local governance of development and suggest to look at the new external district economies, based on service economies, on much more considerable investments in training, technological and cultural activities and, finally, on more aware institutional actions with reference to the association of companies in innovation projects.
    Keywords: Industrial districts, Innovation Systems, Entrepreneurship, Global Value Chain
    JEL: L26
    Date: 2007
  17. By: Edgar Morgenroth (Economic and Social Research Institute (ESRI))
    Abstract: In Ireland as in many other countries there has been an ongoing debate on the nature, degree and trends of regional imbalance, which has led to substantial research output. While much is now known about these trends, the degree to which they are ameliorated by existing public policies has not been systematically examined. This paper considers two aspects of public policy namely the fiscal system and public expenditure. In particular regional government accounts are constructed, which identify the level of taxation, subsidisation and public expenditure at the regional level. These are then used to identify the degree of regional re-distribution. That analysis confirms that the fiscal system does reduce relative income differences in Ireland. Dublin and the South-West contribute to a substantial resource transfer to other regions. In contrast to the findings for the UK, the level of transfers is found to be highly related to the state of development. In other words the fiscal system works in a progressive manner in relation to regional disparities. Nevertheless the better off regions receive an above average level of expenditure so that the system only partially equalises.
    Keywords: Regional disparities, government expenditure, taxes
    JEL: H72 H77 R11
    Date: 2007–05
  18. By: Katrin Rehdanz; Sven Stoewhase (Research unit Sustainability and Global Change, Hamburg)
    Abstract: Within the German welfare system, heating expenditures of recipients are in general fully covered by the government. This paper empirically tests for the hypothesis that households receiving welfare payments turn to over consumption of residential space heating. We use microdata from two different data sources to explore whether conditional heating expenditures of these households significantly differ from those of other households. Our empirical findings suggest that even when controlling for a range of other factors this is indeed the case as heating expenditures lie about 10 percent above those of other households. These results are fairly robust to sensitivity analyses. Our results imply that there is potential scope for cost savings if this policy is changed.
    Keywords: Social welfare; Germany; Space heating; Economic incentives
    JEL: H23 Q41 Q48
    Date: 2007–06

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