nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2007‒11‒17
23 papers chosen by
Steve Ross
University of Connecticut

  1. School Choice: Traditional Mechanisms and Extending the Poor's Ability to Choose By Sinan Sarpça; Kuzey Yılmaz; Eric Hanushek
  2. Tax differentials and agglomeration economies in intraregional firm location By Jordi Jofre-Monseny; Albert Solé-Ollé
  3. Local fiscal inflation in France : an unexpected consequence of the growing importance of metropolitan areas ? (In French) By Olivier THOMAS (LEREPS-GRES)
  4. The Formation of School Peer Groups: Pupils’ Transition from Primary to Secondary School in England By Simon Burgess; Ron Johnston; Tomas Key; Carol Propper; Deboarh Wilson
  5. Influencia de la inmigración en la elección escolar By Adriana Sánchez Hugalde
  6. Resources and student achievement – evidence from a Swedish policy reform By Fredriksson, Peter; Öckert, Björn
  7. Bridging the gap between growth theory and the new economic geography: The spatial Ramsey model By Raouf Boucekkine; C. Camacho; B. Zou
  8. Transport Costs and the Size of Cities: the Case of Russia By Albrecht Kauffmann
  9. Acting Up or Opting Out? Truancy in Irish Secondary Schools By Merike Darmody; Emer Smyth; Selina McCoy
  10. Adolescents' Educational Attainment and School Experiences in Contemporary Ireland By Merike Darmody; Emer Smyth; Selina McCoy
  11. Tax Motivated Takings By Thomas J. Miceli; Kathleen Segerson; C. F. Sirmans
  12. Partial Fiscal Decentralization By Jan K. Brueckner
  13. Segregation and Black Political Efficacy By Elizabeth Oltmans Ananat; Ebonya L. Washington
  14. Acculturation Identity and Educational Attainment By Nekby, Lena; Rödin, Magnus; Özcan, Gülay
  15. Holiday Destinations: Understanding the Travel Choices of Irish By Seán Lyons; Karen Mayor; Richard S.J. Tol
  16. The Financial Centres of Shanghai and Hong Kong: Competition or Complementarity? By Karreman, B.; Knaap, G.A. van der
  17. Where do MNEs Expand Production: Location Choices of the Pharmaceutical Industry in Europe after 1992 By Frances Ruane; Xiaoheng Zhang
  18. Road Pricing and Retail Revenues: Results from the Stockholm Road Pricing Trial By Daunfeldt, Sven-Olov; Rudholm, Niklas; Rämme, Ulf
  19. What determines entrepreneurial clusters? By Luigi Guiso; Fabiano Schivardi
  20. On the Factors that Affect Airline Flight Frequency and Aircraft Size By Vivek Pai
  21. Factor Taxes and Business Location By Eugene Beaulieu; Kenneth James McKenzie; Jean-Francois Wen
  22. Keeping Up With the Schmidts: An Empirical Test of Relative Deprivation Theory in the Neighbourhood Context By Gundi Knies; Simon Burgess; Carol Propper
  23. Second Homes vs. Hotels: a Suggestion for a Self-enforcing Policy By Guido Candela; Massimiliano Castellani; Maurizio Mussoni

  1. By: Sinan Sarpça (Department of Economics, Koç University); Kuzey Yılmaz (Department of Economics, Koç University); Eric Hanushek (Stanford University)
    Abstract: We develop a multi-community urban land use framework to investigate the implications of increasing school choice opportunities on educational and residential choices of a city's residents. When deciding on the location and the size of land, the households care about the distance to the business district, and a local public good: education. There is a private education alternative that breaks the link between choosing a residence area and choosing a school. The households differ in their incomes and preferences for education. In five models that differ in various aspects of choice and financing, we study the housing and education choices of the city residents, and the endogenously determined education provision levels in equilibrium. The results of the article support reformist arguments: We ¯rst show that the presence of a private alternative benefits every household, whereas school district consolidation hurts everyone. We then examine two policies that aim to increase choice. An untargeted local government support (financed by property taxes) that can be used at the private school can improve things for talented poor. A policy that supports the talented poor (using city income taxes) with funds that can be used for public as well as private schools can also improve welfare of all talented students, rich or poor.
    Keywords: Tiebout Model, Urban Location Model, School Choice.
    JEL: H4 H7 I2
    Date: 2007–09
  2. By: Jordi Jofre-Monseny (Institut d'Economia de Barcelona (IEB); Universitat de Barcelona (UB)); Albert Solé-Ollé (Institut d'Economia de Barcelona (IEB); Universitat de Barcelona (UB))
    Abstract: This paper analyses empirically how differences in local taxes affect the intraregional location of new manufacturing plants. These effects are examined within the random profit maximization framework while accounting for the presence of different types of agglomeration economies (localization/ urbanization/ Jacobs' economies) at the municipal level. We look at the location decision of more than 10,000 establishments locating between 1996 and 2003 across more than 400 municipalities in Catalonia, a Spanish region. It is necessary to restrict the choice set to the local labor market and, above all, to control for agglomeration economies so as to identify the effects of taxes on the location of new establishments.
    Keywords: Agglomeration economies, Firm location, Local taxes
    JEL: R3 H32
    Date: 2007
  3. By: Olivier THOMAS (LEREPS-GRES)
    Abstract: This paper intends to question the current development of metropolitan areas in France, and its induced effects. Contrary to the expected benefits (lower costs for the production of public services, scale economies), metropolitan, areas in France has entailed an increase in local taxes and tax burden. Although a part of this fiscal inflation can be attributed to a better quality of public services, the idea that this inflation is the normal result of the strategy of mayors will be stressed.
    Keywords: French metropolitan areas – urban communities with own taxes – fiscal inflation – local public economics – budgetary strategy
    JEL: H30 H73 R51
    Date: 2007
  4. By: Simon Burgess; Ron Johnston; Tomas Key; Carol Propper; Deboarh Wilson
    Abstract: This paper examines the transitions from primary to secondary school for a contemporary cohort of children moving between state schools in England. It uses data on over 12,000 primary schools, over 2000 secondary schools and around 400,000 pupils. The results suggest that the experiences of poor (FSM) pupils at age 11 may be quite different, on average, to their non-poor peers. Poor pupils’ primary peer groups are more fractured at the age of 11 and these pupils tend to find themselves more concentrated within lower performing secondary schools. High ability pupils are more likely to go to the modal secondary school if it is better than average; the reverse is true for low ability pupils. Poor pupils are less likely to go to the modal school when it is better than average but more likely to go when it is worse. Finally, we find that primary schools which have high academic test scores have more bifurcated flows: poor and non-poor pupils are dispersed across different secondary schools, with the former more likely to attend a low performing secondary school.
    Keywords: Primary to secondary school transitions; England; regression and graphical analysis
    JEL: I21
    Date: 2007–02
  5. By: Adriana Sánchez Hugalde (Institut d'Economia de Barcelona (IEB); Universitat de Barcelona (UB))
    Abstract: This empirical work studies the influence of immigrant students on individuals’ school choice in one of the most populated regions in Spain: Catalonia. It has estimated, following the Poisson model, the probability that a certain school, which immigrant students are already attending, may be chosen by natives as well as by immigrants, respectively. The information provided by the Catalonia School Department presents school characteristics of all the primary and secondary schools in Catalonia during the 2001/02 and 2002/03 school years. The results obtained support the evidence that Catalonia native families avoid schools attended by immigrants. Natives certainly prefer not to interact with immigrants. Private schools are more successful in avoiding immigrants. Finally, the main reason for non-natives’ choice is the presence of other non-natives in the same school.
    Keywords: School Choice, Immigration
    JEL: I21 J15
    Date: 2007
  6. By: Fredriksson, Peter (IFAU - Institute for Labour Market Policy Evaluation); Öckert, Björn (IFAU - Institute for Labour Market Policy Evaluation)
    Abstract: This paper utilizes a policy change to estimate the effect of teacher density on student performance. We find that an increase in teacher density has a positive effect on student achievement. The baseline estimate – obtained by using the grade point average as the outcome variable – implies that resource increases corresponding to the class-size reduction in the STAR-experiment (i.e., a reduction of 7 students) improves performance by 2.6 percentile ranks (or 0.08 standard deviations). When we use test score data for men, potentially a more objective measure of student performance, the effect of resources appears to be twice the size of the baseline estimate.
    Keywords: Student performance; teacher/student ratio; policy reform; differences-in-differences
    JEL: I21 I28 J24
    Date: 2007–10–19
  7. By: Raouf Boucekkine; C. Camacho; B. Zou
    Abstract: We study a Ramsey problem in in¯nite and continuous time and space. The problem is discounted both temporally and spatially. Capital flows to loca- tions with higher marginal return. We show that the problem amounts to optimal control of parabolic partial differential equations (PDEs). We rely on the existing related mathematical literature to derive the Pontryagin con- ditions. Using explicit representations of the solutions to the PDEs, we first show that the resulting dynamic system gives rise to an ill-posed problem in the sense of Hadamard (1923). We then turn to the spatial Ramsey problem with linear utility. The obtained properties are significantly dfferent from those of the non-spatial linear Ramsey model due to the spatial dynamics induced by capital mobility.
    Keywords: Ramsey model, Economic geography, Parabolic partial differential equations, optimal control.
    JEL: C61 C62 O41
    Date: 2007–09
  8. By: Albrecht Kauffmann
    Date: 2007–11
  9. By: Merike Darmody (Economic and Social Research Institute (ESRI)); Emer Smyth (Economic and Social Research Institute (ESRI)); Selina McCoy (Economic and Social Research Institute (ESRI))
    Abstract: This paper explores the way in which truancy levels are structured by individual social class and the social mix of the school within the Republic of Ireland. Drawing on a national survey of young people, truancy levels are found to be higher among orking-class and Traveller students. Truancy is more prevalent in predominantly working-class schools, mainly because young people see them as less supportive and more disorderly environments. The mpirical analyses are situated within the context of the concepts of individual and nstitutional habitus as well as resistance theory. Our findings suggest the institutional habitus of the school is a strong factor in influencing truancy levels among young people. While truancy operates as a form of student resistance to the school system, it serves to reproduce social class inequalities since it is associated with more negative educational and labour market outcomes in the longer term.
    Date: 2007–10
  10. By: Merike Darmody (Economic and Social Research Institute (ESRI)); Emer Smyth (Economic and Social Research Institute (ESRI)); Selina McCoy (Economic and Social Research Institute (ESRI))
    Date: 2007–10
  11. By: Thomas J. Miceli (University of Connecticut); Kathleen Segerson (University of Connecticut); C. F. Sirmans (University of Connecticut)
    Abstract: Tax motivated takings are takings by a local government aimed purely at increasing its tax base. Such an action was justified by the Supreme Court's ruling in Kelo v. New London, which allowed the use of eminent domain for a private redevelopment project on the grounds that the project promised spillover public benefits in the form of jobs and taxes. This paper argues that tax motivated takings can lead to inefficient transfers of land for the simple reason that assessed values understate owners' true values. We therefore propose a reassessment scheme that greatly reduces the risk of this sort of inefficiency.
    Keywords: Eminent domain, holdout problem, property taxes, takings, urban redevelopment
    JEL: H71 K11 R51
    Date: 2007–11
  12. By: Jan K. Brueckner (Department of Economics, University of California-Irvine)
    Abstract: The fiscal decentralization impulse now sweeping the world often leads to partial decentralization, where subnational governments are funded by central transfers, rather than leading to full local autonomy. Despite the practical important of this arrangement, the literature contains no economic analysis of a partial decentralization regime in a Tiebout-style model. This paper provides such an analysis, relying on the key assumption that public-good provision requires effort on the part of government officials. By choosing different degrees of effort, localities can then provide different public-good levels even when a fixed, common transfer constrains them to spend the same amount. A number of useful results are derived.
    Keywords: Decentralization; Tiebout
    JEL: H0 H7
    Date: 2007–09
  13. By: Elizabeth Oltmans Ananat; Ebonya L. Washington
    Abstract: The impact of segregation on Black political efficacy is theoretically ambiguous. On one hand, increased contact among Blacks in more segregated areas may mean that Blacks are better able to coordinate political behavior. On the other hand, lesser contact with non-Blacks may mean that Blacks have less political influence over voters of other races. We find that exogenous increases in segregation lead to decreases in Black civic efficacy, as measured by an ability to elect Representatives who vote liberally and more specifically in favor of legislation that is favored by Blacks. This tendency for Representatives from more segregated MSAs to vote more conservatively arises in spite of the fact that Blacks in more segregated areas hold more liberal political views than do Blacks in less segregated locales. We find evidence that this decrease in efficacy is driven by greater divergence between Black and non-Black political views in the most segregated areas. Because Blacks are a minority in every MSA, increased divergence by race implies that the mean Black voter viewpoint is farther away from the mean voter viewpoint. Thus, reduced Black political efficacy may be one reason that Blacks in exogenously more segregated areas experience worse economic outcomes.
    JEL: D72 J15
    Date: 2007–11
  14. By: Nekby, Lena (Stockholm University Linnaeus Center for Integration Studies - SULCIS); Rödin, Magnus (Stockholm University Linnaeus Center for Integration Studies - SULCIS); Özcan, Gülay (Stockholm University Linnaeus Center for Integration Studies - SULCIS)
    Abstract: This paper explores the identity formation of a cohort of students with immigrant backgrounds in Sweden and the consequences of identity for subsequent educational attainment. Unique for this study is that identity is defined according to a two-dimensional acculturation framework based on both strength of identity to the (ethnic) minority and to the (Swedish) majority culture. Results indicate that integrated men are associated with significantly higher levels of education than assimilated men. No differences in educational attainment are found between the assimilated and the integrated for women. These results put into question the premise of oppositional identities, i.e., a trade-off between ethnic identity and educational achievement, among immigrants in Sweden.
    Keywords: Ethnic Identity; Acculturation; Ethnic minorities; Education
    JEL: J15 J16 J21 Z13
    Date: 2007–11–09
  15. By: Seán Lyons (Economic and Social Research Institute (ESRI)); Karen Mayor (Economic and Social Research Institute (ESRI)); Richard S.J. Tol (Economic and Social Research Institute (ESRI))
    Abstract: This paper uses a McFadden choice model to measure the importance of destination, household and seasonal characteristics on the tourism destination choices of Irish households. The analysis is based on quarterly survey data of Irish households’ travel destinations between 2000 and 2006. In total, some 55 000 holiday trips were observed. Destination characteristics such as temperature, GDP and coastline are found to positively influence choice probabilities, while population density and distance have a negative effect on choice. Household specific characteristics such as the numbers of people over 60 and children in a household are found to be important. We also identify differences in preferences across seasons and a change over time of the effect of destination country GDP on Irish holiday destination choices.
    Keywords: International Tourism, Ireland, Demand Modelling
    JEL: D12 L83
    Date: 2007–09
  16. By: Karreman, B.; Knaap, G.A. van der (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: The contemporary rise of China in the new geo-economy is increasingly pressurising the spatial distribution of financial activity in mainland China and Hong Kong. With the re-emergence of Shanghai, many people foresee the furture demise of Hong Kong as the most important financial centre for the China mainland. This paper shows that conviction seems rather premature. Bases on the concepts of comparative advantage and market segmentation, the extent to which Shanghai and Hong Kong can be considered complementary financial centres is assessed. By using the listings of mainland China based companies on the stock exchange of each financial centre, it is shown that both cities do not only appear to have distinct hinterlands but they also differ strongly in terms of sectoral specialisation.
    Keywords: Geography of finance;financial centres;urban competition;Hong Kong;Shanghai;China;
    Date: 2007–09–13
  17. By: Frances Ruane (Economic and Social Research Institute (ESRI)); Xiaoheng Zhang (The Institute for International Integration Studies, Trinity College Dublin)
    Abstract: Differences in regulations, technical standards and national medical cultures across EU member states created a highly segmented pharmaceutical market in Europe prior to the implementation of the Single Market Programme. The subsequent reduction in non-tariff barriers to trade would be expected to have an impact on where pharmaceutical multinationals locate production within the EU. Using discrete-choice models, we study the determinants of multinationals’ location choices in terms of expanded production at existing facilities. Our results support the findings of New Economic Geography models that predict reduced rather than increased agglomeration in the face of trade-cost reductions.
    Keywords: Economic geographic, location choice, discrete choice models, European integration, FDI
    JEL: F15 F23 R12
    Date: 2007–10
  18. By: Daunfeldt, Sven-Olov (The Swedish Retail Institute); Rudholm, Niklas (The Swedish Retail Institute); Rämme, Ulf (The Swedish Retail Institute)
    Abstract: This paper studies the impact of the Stockholm road pricing trial on retail revenues. The analysis is performed using revenue data from 14 shopping malls, 9 within the tool area and 5 outside the tool area. The data also include revenue data from a sample of retail stores located along the main shopping streets in Stockholm. The results show that the Stockholm road pricing trial did not negatively affect retail revenue, neither in shopping malls nor in the sample of retail stores.
    Keywords: Road tolls; congestion fee; congestion charge; retail revenues; retail profits
    JEL: D12 H31 L81
    Date: 2007–11–06
  19. By: Luigi Guiso; Fabiano Schivardi
    Abstract: We contrast two potential explanations of the substantial di¤erences in entrepreneurial activity observed across geographical areas: entry costs and external effects. We extend the Lucas model of entrepreneurship to allow for heterogeneous entry costs and for externalities that shift the distribution of entrepreneurial talents. We show that these assumptions have opposite predictions on the relation between entrepreneurial activity and .rm level TFP: with di¤erent entry costs, in areas with more entrepreneurs firms' average productivity should be lower and vice versa. We test these implications on a sample of Italian firms and unambiguously reject the entry costs explanation in favor of the externalities one. We also investigate the sources of external e¤ects, finding robust evidence that learning externalities are an important determinant of cross-sectional differences in entrepreneurial activity.
    Keywords: Entrepreneurship, clustering, agglomeration economies
    JEL: D24 D62 J23
    Date: 2007
  20. By: Vivek Pai (Department of Economics, University of California-Irvine)
    Abstract: This paper assesses the determinants of aircraft size and frequency of flights on airline routes by considering market demographics, airport characteristics, airline characteristics and route characteristics. The paper shows that frequency and aircraft size increase with population, income, and runway length. An increase in the proportion of managerial workers in the labor force or the proportion of population below the age of 25 results in greater frequency with the use of small planes. Slot constrained airports and an increase in the number of nearby airports lead to lower flight frequency with the use of smaller planes. Hubs and low cost carriers are associated with larger plane sizes and higher frequency, while regional airline ownership leads to higher frequency and the use of smaller planes. An increase in distance between the endpoints leads to lower frequency with the use of larger planes. As airport delay rises, airlines reduce frequency and use smaller planes, though when airport cancellations rise, flight frequency increases with the use of larger planes. This finding suggests airlines utilize frequency and aircraft size to hedge against flight cancellations.
    Keywords: Airline; Frequency; Aircraft size; Markets
    JEL: C51 D21 L20 L93 R41
    Date: 2007–11
  21. By: Eugene Beaulieu; Kenneth James McKenzie; Jean-Francois Wen
    Date: 2007–10–26
  22. By: Gundi Knies; Simon Burgess; Carol Propper
    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.
    Keywords: Life satisfaction, Neighbourhood effects, Comparison income, Reference group
    JEL: I31 C23 Z1
    Date: 2007–05
  23. By: Guido Candela (University of Bologna and The Rimini Centre for Economics Analysis, Italy.); Massimiliano Castellani (University of Bologna and The Rimini Centre for Economics Analysis, Italy.); Maurizio Mussoni (University of Bologna and The Rimini Centre for Economics Analysis, Italy.)
    Abstract: We set up a theoretical model, in which the policy maker of a tourism destination has to choose how to allocate the limited natural resource landbetween private holiday accommodations (i.e. second homes) or hotels. In a framework of partial equilibrium, the policy maker minimizes a loss function which measures the loss of political consensus and is de ned by a linear combination of the policy maker and the local community preferences. We can obtain both a corner solution, in which we have extreme choices of only holiday houses or only hotels, and an internal solution, in which we have a linear combination of them. To do that the policy maker can use as economic policy instruments either standard policies (indirect control - a Pigou tax - or direct control - regulation) or non-standard policies (a reinvestment commitment of the …rm in the tourism destination). The final policy maker decision was made by assessing the welfare consequences of the policy implications.
    Date: 2007–07

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