nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2007‒09‒02
sixteen papers chosen by
Steve Ross
University of Connecticut

  1. Persistence of the School Entry Age Effect in a System of Flexible Tracking By Patrick A. Puhani; Andrea M. Weber
  2. Measuring the persistence of spatial autocorrelation: How long does the spatial connection between housing markets last? By Ryan R. Brady
  3. Re-Examining the Role of Teacher Quality In the Educational Production Function By Cory Koedel; Julian Betts
  4. Do Teacher Absences Impact Student Achievement? Longitudinal Evidence from One Urban School District By Raegen T. Miller; Richard J. Murnane; John B. Willett
  5. The Wrong Side(s) of the Tracks Estimating the Causal Effects of Racial Segregation on City Outcomes By Elizabeth Oltmans Ananat
  6. Class Size and Sorting in Market Equilibrium: Theory and Evidence By Miguel Urquiola; Eric A. Verhoogen
  7. Contracting for Government Services: Theory and Evidence from U.S. Cities By Jonathan Levin; Steven Tadelis
  8. The Property Market and the Macroeconomy of the Mainland: A Cross Region Study By Wensheng Peng; Dickson C. Tam; Matthew S. Yiu
  9. Determinants of Academic Attainment in the US: a Quantile regression analysis of test scores By Haile, Getinet; Nguyen, Ngoc Anh
  10. To Segregate or to Integrate: Education Politics and Democracy By David de la Croix; Matthias Doepke
  11. A traffic plan to make residential areas car-limited : traffic planning in Groningen By Tsubohara, S.
  12. Location-Specific Human Capital, Location Choice and Amenity Demand By Douglas J. Krupka
  13. The Value of Water Connections in Central American Cities: A Revealed Preference Study By NAUGES Céline; STRAND Jon;
  14. How Disasters Affect Local Labor Markets: The Effects of Hurricanes in Florida By Ariel R. Belasen; Solomon W. Polachek
  15. "Reform of Local Bonds System in Japan"(in Japanese) By Nobuki Mochida
  16. Keeping Up With The Schmidts: An Empirical Test of Relative Deprivation Theory in the Neighbourhood Context By Simon Burgess; Gundi Knies; Carol Propper

  1. By: Patrick A. Puhani (Leibniz University of Hannover, SIAW, University of St. Gallen and IZA); Andrea M. Weber (Leibniz University of Hannover and Darmstadt University of Technology)
    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
  2. By: Ryan R. Brady (United States Naval Academy)
    Abstract: How fast and how long (and to what magnitude) does a change in housing prices in one region affect its neighbors? In this paper, I apply a time series technique for measuring impulse response functions from linear projections to a spatial autoregressive model of housing prices. For a dynamic panel of California counties, the data reveal that spatial autocorrelation between regional housing prices is highly persistent over time, lasting up to two and half years. This result, and the econometric techniques employed, should be of interest to not only housing and regional economists, but to a variety of applied econometricians as well.
    Date: 2007–08
  3. By: Cory Koedel (Department of Economics, University of Missouri-Columbia); Julian Betts
    Abstract: This study uses administrative data linking students and teachers at the classroom level to estimate teacher value-added to student test scores. We find that variation in teacher quality is an important contributor to student achievement more important than has been implied by previous work. This result is attributable, at least in part, to the lack of a ceiling effect in the testing instrument used to measure teacher quality. We also show that teacher qualifications are almost entirely unable to predict value-added. Motivated by this result, we consider whether it is feasible to incorporate value-added into evaluation or merit pay programs.
    Keywords: teacher quality, educational production, teacher value-added, value-added, test-score ceiling effects, teacher evaluation, teacher accountability, elementary school
    JEL: I20 I21 J24
    Date: 2007–08–22
  4. By: Raegen T. Miller; Richard J. Murnane; John B. Willett
    Abstract: Rates of employee absences and the effects of absences on productivity are topics of conversation in many organizations in many countries. One reason is that high rates of employee absence may signal weak management and poor labor-management relations. A second reason is that reducing rates of employee absence may be an effective way to improve productivity. This paper reports the results of a study of employee absences in education, a large, labor-intensive industry. Policymakers' concern with teacher absence rests on three premises: (1) that a significant portion of teachers' absences is discretionary, (2) that teachers' absences have a nontrivial impact on productivity, and (3) that feasible policy changes could reduce rates of absence among teachers. This paper presents the results of an empirical investigation of the first two of these premises; it discusses the third premise. We employ a methodology that accounts for time-invariant differences among teachers in skill and motivation. We find large variation in adjusted teacher absence rates among schools. We estimate that each 10 days of teacher absences reduce students' mathematics achievement by 3.3 percent of a standard deviation.
    JEL: I2 J08 J22 J33 J38
    Date: 2007–08
  5. By: Elizabeth Oltmans Ananat
    Abstract: At the metropolitan level there is a striking negative correlation between residential racial segregation and population characteristics -- particularly for black residents -- but it is widely recognized that this correlation may not be causal. This paper provides a novel test of the causal relationship between segregation and population outcomes by exploiting the arrangements of railroad tracks in the 19th century to isolate plausibly exogenous variation in cities' susceptibility to segregation. I show that, conditional on miles of railroad track laid, the extent to which track configurations physically subdivided cities strongly predicts the level of segregation that ensued after the Great Migration of African-Americans to northern and western cities in the 20th century. At the start of the Great Migration, though, track configurations were uncorrelated with racial concentration, ethnic dispersion, income, industry, education, and population, indicating that reverse causality is unlikely. Instrumental variables estimates demonstrate that segregation leads to lower incomes and lower education among blacks. For whites, there is a mix of positive and negative effects: segregation decreases the probability of being a college graduate or a high earner, but also decreases the probability of being poor or unemployed. Segregation could generate these effects either by affecting human capital acquisition of residents of different races and socio-economic groups ('production') or by inducing sorting by race and SES into different cities ('selection'). This paper provides evidence that is most consistent with a combination of both production and selection.
    JEL: I0 J15 J61
    Date: 2007–08
  6. By: Miguel Urquiola (Columbia University and NBER); Eric A. Verhoogen (Columbia University, BREAD, CEPR and IZA)
    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.
    Keywords: class size, sorting, regression discontinuity
    JEL: I2 O1 C2 L1
    Date: 2007–07
  7. By: Jonathan Levin; Steven Tadelis
    Abstract: Local governments can provide services with their own employees or by contracting with private or public sector providers. We develop a model of this "make-or-buy" choice that highlights the trade-off between productive efficiency and the costs of contract administration. We construct a dataset of service provision choices by U.S. cities and identify a range of service and city characteristics as significant determinants of contracting decisions. Our analysis suggests an important role for economic efficiency concerns, as well as politics, in contracting for government services.
    JEL: D23 D73 H11 L33
    Date: 2007–08
  8. By: Wensheng Peng (Hong Kong Monetary Authority); Dickson C. Tam (Hong Kong Monetary Authority); Matthew S. Yiu (Hong Kong Institute for Monetary Research)
    Abstract: This paper studies the nexus between the property market and the macroeconomy of Mainland China in 1998-2004, using panel data models covering 31 provinces and major cities. The estimates suggest three main conclusions. First, there seemed to be a two-way linkage between property price and GDP growth. In particular, property price increase had a significant positive impact on investment, but no evidence of a wealth effect on consumption is obtained. Second, bank credit expansion did not seem to play an 'accelerating' role in property price inflation, although the latter is found to have contributed to bank credit increase in recent years. Third, property price growth may have deviated from fundamentals in coastal areas, as evidenced by a negative relationship between housing and rental prices.
    Date: 2007–03
  9. By: Haile, Getinet; Nguyen, Ngoc Anh
    Abstract: We investigate the determinants of high school students’ academic attainment in maths, reading and science; focusing particularly on possible effects that ethnicity and family background may have on attainment. Using data from the NELS2000 and employing quantile regression techniques, we find two important results. First, the gaps in maths, reading and science test scores among ethnic groups vary across the conditional quantiles of the measured test scores. Specifically, Blacks and Hispanics tend to fare worse in their attainment at higher quantiles, particularly in science. Secondly, the effects of family background factors such as parental education and father’s occupation also vary across quantiles of the test score distribution. The implication of these findings is that the commonly made broad distinction on whether one is from a privileged/disadvantaged ethnic and/or family background may not tell the whole story that the academic attainment discourse has to note. Interventions aimed at closing the gap in attainment between Whites and minorities may need to target higher levels of the test score distribution.
    Keywords: Educational attainment; Quantile regression;
    JEL: I20
    Date: 2007
  10. By: David de la Croix (CORE, Catholic University of Louvain); Matthias Doepke (University of California, Los Angeles, CEPR, NBER and IZA)
    Abstract: The governments of nearly all countries are major providers of primary and secondary education to their citizens. In some countries, however, public schools coexist with private schools, while in others the government is the sole provider of education. In this study, we ask why different societies make different choices regarding the mix of private and public schooling. We develop a theory which integrates private education and fertility decisions with voting on public schooling expenditures. In a given political environment, high income inequality leads to more private education, as rich people opt out of the public system. More private education, in turn, results in an improved quality of public education, because public spending can be concentrated on fewer students. Comparing across political systems, we find that concentration of political power can lead to multiple equilibria in the determination of public education spending. The main predictions of the theory are consistent with state-level and micro data from the United States as well as cross-country evidence from the PISA study.
    Keywords: public education, private education, voting, democracy
    JEL: D72 I21 H42 O10
    Date: 2007–08
  11. By: Tsubohara, S. (Groningen University)
    Date: 2007
  12. By: Douglas J. Krupka (IZA)
    Abstract: The role of amenities in the flow of migrants has been debated for some years. This paper advances an original model of amenities that work through household production instead of directly through the utility function. Area characteristics (amenities) affect household production, causing certain kinds of human capital investments to be rewarded more than others. Area heterogeneity makes such investments location-specific, in that some areas’ characteristics will reward certain kinds of knowledge more than others. This specificity - along with a period of exogenous location (before migration can be carried out) - increases the opportunity costs of moving, diminishes migration flows between dissimilar locations and increases valuation of amenities which were present in the originating area. These theoretical results emphasize people’s sorting across areas and thus differ from the results of the standard model of compensating differentials. Empirical tests of the model’s predictions using NLSY79 data show that childhood investments affect migration flows in the way proposed by the model.
    Keywords: migration, amenities, human capital, location specificity
    JEL: R23 J61
    Date: 2007–08
  13. By: NAUGES Céline (LERNA, University of Toulouse); STRAND Jon;
    Date: 2006–08
  14. By: Ariel R. Belasen (Saint Louis University); Solomon W. Polachek (State University of New York at Binghamton and IZA)
    Abstract: Exogenous shocks often impact a local labor market more than at the national level. This study improves upon the standard Difference in Difference (DD) approach by examining exogenous shocks using a Generalized Difference in Difference (GDD) econometric approach that identifies the effects of shocks resulting from hurricanes. Based on the Quarterly Census of Employment and Wages (QCEW) data on earnings and employment, the earnings of an average worker in Florida will increase as much as four percent within the first quarter of being hit directly by a hurricane, whereas the effects of a hurricane occurring in a neighboring county move earnings per worker in the opposite direction by roughly the same percentage. As time goes by, workers in both sets of counties will experience faster growth in their earnings than workers in completely unaffected counties; however, this is coupled with a slower growth rate in employment. Powerful hurricanes have greater effects than their weaker counterparts. Additionally, the shifts in earnings and employment can be traced back, in part, to geographic features of the counties, namely that the coastal and Panhandle counties exhibit greater effects than landlocked counties. Although focus is on hurricanes in Florida, this GDD technique is applicable to a wider range of exogenous shocks.
    Keywords: exogenous shock, difference-in-difference estimation, local labor markets, earnings, employment, hurricanes
    JEL: J23 J49 Q54 R11
    Date: 2007–08
  15. By: Nobuki Mochida (Faculty of Economics, University of Tokyo)
    Abstract: Japanese local bond system faced major challenge since the World War‡U. This paper shows accurately and widely as much as possible what the issue is, and investigates pros and cons to this from the viewpoint of finance. We argue that the change in last few years was fundamental rather than stopgap and it is the turning point since the US occupation period reform just after the Second World War. The driving forces for these reforms include three factors: decentralization, deregulation in financial sector and the deterioration of the financial conditions of the small local governments. We argue that the reform is basically advanced toward a preferable direction. However, it will take time for the local government and the institutional investor to become accustomed to new system as the player. Especially, small-scale municipalities with scarce fiscal resources would become disadvantageous as decentralization progresses.
    Date: 2007–08
  16. By: Simon Burgess (University of Bristol); Gundi Knies (Institute for Social and Economic Research); Carol Propper (University of Bristol)
    Abstract: We test empirically whether people’s life satisfaction depends on their relative income position in the neighbourhood, drawing on a unique dataset, the German Socio-economic Panel Study (SOEP) matched with micro-marketing indicators of population characteristics. Relative deprivation theory suggests that individuals are happier the better their relative income position in the neighbourhood is. To test this theory we estimate micro-economic happiness models for the years 1994 and 1999 with controls for own income and for neighbourhood income at the zip-code level (roughly 9,000 people). There exist no negative and no statistically significant associations between neighbourhood income and life satisfaction, which refutes relative deprivation theory. If anything, we find positive associations between neighbourhood income and happiness in all cross-sectional models and this is robust to a number of robustness tests, including adding in more controls for neighbourhood quality, changing the outcome variable, and interacting neighbourhood income with indicators that proxy the extent to which individuals may be assumed to interact with their neighbours. We argue that the scale at which we measure neighbourhood characteristics may be too large still to identify the comparison effect sought after.
    Date: 2007–08

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