nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2007‒08‒18
fifteen papers chosen by
Steve Ross
University of Connecticut

  1. Spatial Determinants of Land Prices in Auckland:Does the Metropolitan Urban Limit Have an Effect? By Arthur Grimes; Yun Liang
  2. Skill-Biased Agglomeration Effects and Amenities: Theory with an Application to Italian Cities By Alberto Dalmazzo; Guido De Blasio
  3. Adjustment in Local Labour and Housing Markets By Arthur Grimes; David C. Maré; Melanie Morten
  4. The role of landscape amenities in regional development: a survey of migration, regional economic and hedonic pricing studies By Felix Schlaepfer
  5. The relationship between the establishment age distribution and urban growth By R. Jason Faberman
  6. Persistence of the School Entry Age Effect in a System of Flexible Tracking By Puhani, Patrick A.; Weber, Andrea M.
  7. Educational achievement and socioeconomic background: causality and mechanisms in Senegal By DUMAS Christelle; LAMBERT Sylvie
  8. Conditional Beta- and Sigma-Convergence in Space: A Maximum Likelihood Approach By Michael Pfaffermayr
  9. Why Should a Firm Choose to Limit the Size of its Market Area? By Marco Alderighi; Claudio A. Piga
  10. Gender and the Automobile – An Analysis of Non-work Service Trips By Colin Vance; Rich Iovanna
  11. The Roles of Ethnicity and Language Acculturation in Determining the Interprovincial Migration Propensities in Canada: from the Late 1970s to the Late 1990s By Xiaomeng Ma; Kao-Lee Liaw
  12. Are Gangs an Alternative to Legitimate Employment? Investigating the Impact of Labor Market Effects on Gang Affiliation. By R. Alan Seals
  13. School Nutrition Programs and the Incidence of Childhood Obesity By Rusty Tchernis; Daniel Millimet; Muna Hussain
  14. The effect of relative thinking on firm strategy and market outcomes: A location differentiation model with endogenous transportation costs By Azar, Ofer H.
  15. Population Aging, Elderly Migration and Education Spending: Intergenerational Conflict Revisited By Mehmet Serkan Tosun; Claudia Williamson; Pavel Yakovlev

  1. By: Arthur Grimes (Motu Economic and Public Policy Research); Yun Liang (Motu Economic and Public Policy Research)
    Abstract: Land prices within monocentric cities typically decline from the centre to the urban periphery. More complex patterns are observed in polycentric and coastal cities; discrete jumps in value can occur across zoning boundaries. Information on these patterns within Auckland is important to understand: (a) the nature of Auckland's development, including the impact of infrastructure investments; and (b) the effects of regulation in causing discrete land valuation changes. One such regulation in Auckland is the metropolitan urban limit (MUL); we specifically examine whether the existence of this growth limit affects land prices. We do so in the context of a model of all Auckland land values over a twelve-year period, finding a strong zoning boundary effect on land prices.
    Keywords: growth limits; zoning restrictions; boundary effects; land value gradients
    JEL: R14 R38 R52
    Date: 2007–08
  2. By: Alberto Dalmazzo; Guido De Blasio
    Abstract: We provide a spatial equilibrium model with skill heterogeneity and then bring the model to data on workers living in Italian cities. Theoretically, we postulate that agglomeration to affect both production and consumption. Moreover, we allow the evaluation of urban amenities to vary across skill-groups. Empirically, we find evidence of a substantial urban rent premium, while we fail to find support for the urban wage premium. These results apply more dramatically to higheducated individuals, who care about the consumption effects of agglomeration disproportionately more than their lesseducated counterparts. We show that urban skilled workers benefit from jobs of higher quality (better working environment; higher consideration received by others) and valuate amenities more (local public goods, such as transportation, health and schooling services; shopping possibilities, and the cultural consumption potentials made possible by the location of cinemas, theaters, and museums).
    Keywords: agglomeration, cities.
    JEL: R0
    Date: 2007–04
  3. By: Arthur Grimes (Motu Economic and Public Policy Research); David C. Maré (Motu Economic and Public Policy Research); Melanie Morten (Motu Economic and Public Policy Research)
    Abstract: This paper analyses local labour and hosuing market adjustment in New Zealand from 1989 to 2006. We use a VAR approach to examine the adjustment of employment, employment rate, participation rate, wages, and house prices in response to employment shocks. Migration is a major adjustment response at both a national and regional level. Nationally, a 1% positive employment shock leads to a long-run level of employment 1.3% higher, with half of the extra jobs filled by migrants. A 1% region-specific employment shock raises the long-run regional share of employment by 0.5 percentage points, due entirely to in-migration. House price responses differ at different spatial scales. Nationally, house prices are very responsive to employment shocks: a 1% employment shock raising long run house prices by 6% , as may be expected with an upward sloping housing supply curve. Paradoxically, this relationship does not hold at the regional level.
    Keywords: Regional Labour Market Adjustment; Internal Migration; House Prices; Vector Autoregression
    JEL: R23 J61 C33
    Date: 2007–08
  4. By: Felix Schlaepfer (Socioeconomic Institute, University of Zurich)
    Abstract: Quality of life factors continue to gain importance in residential location decisions as well as location decisions of firms. One such factor is an attractive local landscape. The aim of this paper is to provide a survey of the empirical literature on the role of landscape amenities in local economic change. Following common amenity definitions, we define landscape amenities as landscape features that are location-specific, latent non-market input goods that directly enter residents’ utility functions. Using this definition we identify thirty-nine relevant studies that use either migration or regional economic models or hedonic pricing techniques. One result from the analysis of migration and regional economic studies is that intra-country migrants were attracted by amenities about as frequently as by a low tax burden. Effects of amenities on employment and income are less well established. However, many of these studies used rather limited amenity variables. The results from hedonic studies show that a wide variety of local amenity attributes are partly capitalized in housing prices and that studies on a larger geographic scale are more likely to identify a significant a role of amenities. Newly available land cover datasets and spatial analysis tools have the potential to overcome important data limitations of many earlier studies. Future research may thus contribute to a better understanding of the role of landscape amenities in economic change and to a better coordination of regional and environmental policies.
    Keywords: landscape amenities, migration, local development, hedonic models, environmental valuation, regional economic modeling, land use
    JEL: Q26 Q51 R11 R23
    Date: 2007–08
  5. By: R. Jason Faberman
    Abstract: This paper presents new evidence on the relationship between a metropolitan area’s employment growth and its establishment age distribution. The author finds that cities with a relatively younger distribution of establishments tend to have higher growth, as well as higher job and establishment turnover. Geographic variations in the age distribution account for 38 percent of the geographic differences in growth, compared to the 32 percent accounted for by variations in industry composition. Differences are disproportionately accounted for by entrants and young (5 years or younger) establishments. Furthermore, the relationship between age and growth is robust to controls for urban diversity and education. Overall, the results support a microfoundations view of urban growth, where the benefits of agglomeration affect firms not through some production externality but through a process that determines which firms enter, exit, and thrive at a given location.
    Date: 2007
  6. By: Puhani, Patrick A.; Weber, Andrea M.
    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: 2007–08
  7. By: DUMAS Christelle; LAMBERT Sylvie
    Abstract: This paper addresses the relationship between schooling and socioeconomic background, in particular parents’ education. We use an original survey conducted in 2003 in Senegal that provides instruments to deal with the endogeneity of background variables. These instruments describe the environment in which parents lived when they were ten years old. The estimated effect of father’s education more than doubles when its endogeneity is accounted for and, unexpectedly, becomes much bigger than the impact of mother’s education. We focus on the understanding of the channels through which parental education affects children’s schooling and present results pointing at the role of parental education in shaping parental preferences for the education of their offspring. Finally, we present empirical evidence suggesting that family background has as much impact after entry to school as it does at younger ages.
    Keywords: schooling mobility, education demand.
    JEL: D12 I21 O12
    Date: 2007–05
  8. By: Michael Pfaffermayr
    Abstract: Empirical work on regional growth under spatial spillovers uses two workhorse models: the spatial Solow model and Verdoorn's model. This paper contrasts these two views on regional growth processes and demonstrates that in a spatial setting the speed of convergence is heterogenous in both considered models, depending on the remoteness and the income gap of all regions. Furthermore, the paper introduces Wald tests for conditional spatial sigma-convergence based on a spatial maximum likelihood approach. Empirical estimates for 212 European regions covering the period 1980-2002 reveal a slow speed of convergence of about 0.7 percent per year under both models. However, pronounced heterogeneity in the convergence speed is evident. The Wald tests indicate significant conditional spatial sigma-convergence of about 2 percent per year under the spatial Solow model. Verdoorn's specification points to a smaller and insignificant variance reduction during the considered period.
    Keywords: Conditional spatial Beta- and Sigma-convergence; Spatial Solow model; Verdoorn's model; Spatial maximum likelihood estimates; European regions
    JEL: R11 C21 O47
    Date: 2007–08
  9. By: Marco Alderighi (University of Valle d'Aosta, Italy.); Claudio A. Piga (Dept of Economics, Loughborough University)
    Abstract: We study when a monopolistically-competitive firm may optimally choose to limit the size of its market. This may be the case when the cost of serving the market with geographically dispersed customers is increasing in size. We also investigate the incentives faced by a firm to limit the reach of its market, when it adopts different pricing schemes. We show that under certain assumptions the derived equilibria are constrained socially optimal.
    Keywords: Monopolistic competition; Transport costs; Endogenous fixed costs; Overlapping market areas
    JEL: D21 D43 F12 L13 R12
    Date: 2007–08
  10. By: Colin Vance; Rich Iovanna
    Abstract: Focusing on individual motorists in car-owning households in Germany, this analysis econometrically investigates the determinants of automobile travel for non-work service activities against the backdrop of two questions: 1) Does gender play a role in determining the probability of car use and the distance driven? 2) If so, how is this role mitigated or exacerbated by other socioeconomic attributes of the individual and the household in which they reside? Drawing on a panel of data collected between 1996 and 2003, we specify Heckman’s sample selection model to control for biases that could otherwise arise from the existence of unobservable variables that determine both the discrete and continuous choices pertaining to car use.The results indicate that although women,on average, undertake more non-work travel than men, they undertake less of such travel by car, implying a greater reliance on other modes. Moreover, employment status, age, the number of children, automobile availability, and the proximity to public transit are all found to have significantly different effects on the probability of non-work car travel between men and women, but – with the exception of automobile availability – not on the distance driven.Taken together, these results suggest that policies targeted at reducing automobile dependency and associated negative externalities such as congestion are unlikely to have uniform effects across the sexes, findings having implications for both policy evaluation as well as travel demand forecasting.
    Keywords: Automobile travel, gender, Heckman model, Monte Carlo simulation
    JEL: R21 R41
    Date: 2007–05
  11. By: Xiaomeng Ma; Kao-Lee Liaw
    Abstract: The main purpose of this paper is to study the roles of ethnicity and language acculturation in determining the propensities to make interprovincial migration in Canada in 1976-81, 1981-86, and 1996-2001, based on the micro data of the 1981, 1986 and 2001 censuses. Since these propensities are also subject to the strong effects of other explanatory factors, a multivariate analysis using a binomial logit model is conducted. An important methodological contribution of this paper is the clarification of the interpretational mistakes in the previous multivariate analyses of Trovato and Halli (1983 and 1990) that depended on the widely used log linear models. Our empirical findings turn out to be substantively more sensible than the earlier findings in the literature. With respect to the less complicated case of non-French minority ethnic groups, the empirical data are found to be mostly supportive of the following two hypotheses. H1: The propensities to make inter-provincial migration are lower for minority ethnic groups than for the mainstream ethnic group. H2: The use of English as home language, which represents an important cultural shift towards the mainstream, increases the inter-provincial migration propensities of minority ethnic groups. The very strong support for these two hypotheses by the Italian ethnic group and the lack of support for H2 by the Jewish ethnic group are highlighted and explained. With respect to the more complicated case of the French ethnic group, our findings are supportive of the following two hypotheses. H3: Among those residing outside Quebec, the propensities to make inter-provincial migration are greater for the French ethnic group than for the mainstream ethnic group. H4: This difference is greater for the French ethnic group that continues to use French as the home language than for the French ethnic group that has shifted the home language to English. It is unfortunate that the support for H4, which could aggravate the spatial polarization of the French and Non-French populations between Quebec and the rest of Canada, became successively stronger towards the late 1990s. Fortunately, this trend was countered by a mild narrowing of the extremely wide gap in the propensities to leave Quebec between the English-speaking British and the French-speaking French.
    Keywords: Interprovincial Migration, Ethnic Selectivity, Language Acculturation, Canada
    JEL: J61
    Date: 2007–06
  12. By: R. Alan Seals
    Abstract: This paper adds to the literature estimates of local labor market effects on gang participation. I use data from the 1997 cohort of the National Longitudinal Survey of Youth (NLSY97) to model the probability of gang involvement. The effect of the local unemployment rate is statistically significant and positive, across a wide-range of model specifications. However, robustness checks reveal gang participation of individuals less than sixteen years-of-age (the legal minimum age for most jobs) is not responsive to the local unemployment rate. Gang participation among individuals with lower ASVAB scores is more sensitive to the local unemployment rate.
    Keywords: gang participation, NLSY, intelligence, unemployment
    JEL: J00 J19
    Date: 2007–08
  13. By: Rusty Tchernis (Indiana University Bloomington); Daniel Millimet (Southern Methodist University); Muna Hussain (Southern Methodist University)
    Abstract: In light of the recent rise in childhood obesity, the School Breakfast Program (SBP) and National School Lunch Program (NSLP) have received renewed attention, despite the fact that they have existed for decades. The SBP, in particular, is viewed as a potentially important component of any policy reform designed to combat the increased prevalence of overweight children given the importance attributed to a nutritious breakfast. Using panel data on over 13,500 students from kindergarten through third grade, we assess the relationship between SBP and NSLP participation on (relatively) long-run measures of child weight. While we find more mixed evidence on the association between NSLP participation and child weight, we obtain a relatively robust positive association between SBP participation and child weight, particularly for white children, entering kindergarten in the `normal' weight range, with mothers of moderate education.
    JEL: C31 H51 I18 I28
    Date: 2007–07
  14. By: Azar, Ofer H.
    Abstract: Consumers often have to decide whether to go to a remote store for a lower price. Only the absolute price difference between the stores should be relevant in this case, but several experiments showed that people exhibit "relative thinking": they are affected also by the relative savings (relative to the good's price). This article analyzes the effects of this bias on firm strategy and market outcomes using a two-period game-theoretic model of location differentiation. Relative thinking causes consumers to make less effort to save a constant amount when they buy more expensive goods. In the location differentiation context this behavior can be modeled by consumers who behave as if their transportation costs are an increasing function of the good's price. This gives firms an additional incentive to raise prices, in order to increase the perceived transportation costs of consumers, which consequently softens competition and allows higher profits. Therefore, the response of firms to relative thinking raises prices and profits and reduces consumer surplus, in both periods. Total welfare is unchanged in the first period, and in the second period it is either unchanged or reduced, depending on whether the objective or subjective transportation costs are used to compute welfare. The main results of the model (firms' response to relative thinking increases prices and reduces consumer surplus) are likely to hold also in the context of search. The article also explains why "relative thinking" is a more appropriate term than "mental accounting" (which was often used before) to describe this behavior, and discusses why people might exhibit relative thinking.
    Keywords: Competitive Strategy; Relative Thinking; Pricing; Mental Accounting; Consumer Psychology; Consumer Attitudes & Behavior; Cognitive Processes; Behavioral Decision Making; Industrial Organization; Product Differentiation.
    JEL: D10 M31 L10 L13 D43
    Date: 2007
  15. By: Mehmet Serkan Tosun (University of Nevada, Reno); Claudia Williamson (Department of Economics, West Virginia University); Pavel Yakovlev (Department of Economics, West Virginia University)
    Abstract: Elderly have been increasingly targeted as a group to enhance economic development and the tax base in communities. A major factor in their rise in importance is the rapid increase in the number of retired elderly through aging of the U.S. population. While recent literature on elderly migration tends to focus on how elderly migration patterns are influenced by state fiscal variables, the reverse effect from elderly population on fiscal variables is very plausible as shown to be the case for estate, inheritance, and gift taxes by Conway and Rork (2006). In this paper, we reexamine the intergenerational conflict in education financing raised by Poterba (1997) using U.S. state and county level data that allows to analyze how preferences for education might vary across different elderly age groups, which has not been explored before. Moreover, this paper uses a variety of advanced econometric techniques to estimate the impact of elderly population and elderly migration on education spending. Our state and county regression results broadly support the presence of intergenerational conflict in education financing. We also find dramatic age heterogeneity in preferences for education spending among elderly migrants.
    Keywords: Population aging, elderly migration, education spending, intergenerational conflict
    JEL: H75 R23
    Date: 2007–08

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