nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2008‒04‒15
twenty papers chosen by
Steve Ross
University of Connecticut

  1. Can information asymmetry cause agglomeration? By Berliant, Marcus; Kung, Fan-chin
  2. Crime and Social Sanction By Paolo Buonanno; Daniel Montolio; Paolo Vanin
  3. Urban Inequality and Political Recruitment Networks By Strömblad, Per; Myrberg, Gunnar
  4. The Nexus of Income and Size Distribution of Chinese Cities, 1984 - 2003 By Chun- Yu Ho; Dan Li
  5. Who Needs Agglomeration? Varying Agglomeration Externalities and the Industry Life Cycle By Frank Neffke; Martin Svensson Henning; Ron Boschma; Karl-Johan Lundquist; Lars-Olof Olander
  6. Human Capital Externalities in Western Germany By Daniel F. Heuermann
  7. Individual Contacts, Collective Patterns. Prato 1975-97, a story of interactions. By Fioretti, Guido
  8. World City Network Expansion 2000-2004. An appraisal of the determinants of connectivity growth among world cities By Renato Aristides Orozco Pereira
  9. What do we know about spatial entry? By Nicolas Debarsy; Marcus Dejardin
  10. Productivity and Proximity By Don Webber; Paul White
  11. Use of Elective Surgery in Public hospitals:Modeling Access-Cost Quality Trade-offs in a Spatial Framework By Anurag Sharma; Anthony Harris; Jeff Richardson
  12. Do creative industries cluster? Mapping Creative Local Production Systems in Italy By Luciana Lazzeretti; Rafael Boix Domenech; Francesco Capone
  13. Current Account Patterns and National Real Estate Markets By Joshua Aizenman; Yothin Jinjarak
  14. Rural to Urban Migration: A District Level Analysis for India By Mitra, Arup; Murayama, Mayumi
  15. What Drives the Productive Efficiency of a Firm? - the importance of industry, location, R&D, and size By Badunenko, Oleg; Fritsch, Michael; Stephan, Andreas
  16. The Effectiveness of Objective 1 Structural Funds in the EU 15: New Empirical Evidence from NUTS 3 Regions By Martin Falk; Franz Sinabell
  17. In what circumstances is investment in HSR worthwhile? By De Rus, G.; Nash, C.A.
  18. Regional disparities in mortality by heart attack: evidence from France By Laurent Gobillon; Carine Milcent
  19. Targeted Advertising: The Role of Subscriber Characteristics in Media Markets By Chandra, Ambarish
  20. Choosing hybrid organizations for local servicesdelivery: An empirical analysis of partial privatization By Xavier Fageda; Germa Bel

  1. By: Berliant, Marcus; Kung, Fan-chin
    Abstract: The modern literature on city formation and development, for example the New Economic Geography literature, has studied the agglomeration of agents in size or mass. We investigate agglomeration in sorting or by type of worker, that implies agglomeration in size when worker populations differ by type. This kind of agglomeration can be driven by asymmetric information in the labor market, specifically when firms do not know if a particular worker is of high or low skill. In a model with two types and two regions, workers of different skill levels are offered separating contracts in equilibrium. When mobile low skill worker population rises or there is technological change that favors high skilled workers, integration of both types of workers in the same region at equilibrium becomes unstable, whereas sorting of worker types into different regions in equilibrium remains stable. The instability of integrated equilibria results from firms, in the region to which workers are perturbed, offering attractive contracts to low skill workers when there is a mixture of workers in the region of origin.
    Keywords: Adverse Selection; Agglomeration
    JEL: R13 D82 R12
    Date: 2008–04–01
  2. By: Paolo Buonanno (University of Bergamo); Daniel Montolio (University of Utrecht); Paolo Vanin (University of Padova)
    Abstract: Social sanctions may be a strong deterrent of crime. This paper presents a formal model that relates crime and social sanction to social interaction density. We empirically test the theoretical predictions using a provincial level panel dataset on dierent crimes in Italy between 1996 and 2003. We exploit detailed demographic and geo-morphological information to develop exogenous measures of social interaction density. We estimate a spatial panel model by means of a GMM procedure and we nd that provinces with denser social interactions display significantly and substantially lower rates of property crime, but not of violent crime.
    Keywords: Crime, Spatial Panel, Social Interaction, Social Sanction
    JEL: A14 K42 Z13
    Date: 2008–03
  3. By: Strömblad, Per (Institute for Futures Studies); Myrberg, Gunnar (Uppsala University)
    Abstract: This paper provides evidence of segregation-generated differences in political recruitment networks. By taking explicit account of social-geographical differentiation in the urban landscape, we evaluate—in prior work largely neglected—contextual effects on requests for participation. Consistent with previous research, we find that those activists who try to convince others to participate in political life systematically use a set of selection criteria when deciding whom to approach. However, using recent data based on a sample of inhabitants of Swedish cities and properties of their neighborhoods, we also show that the degree of (aggregate-level) social exclusion negatively influences (individual-level) recruitment efforts. This contextual effect stems both from the disproportional population composition as such in residential areas, and from recruiters’ rational avoidance of areas marked by high levels of social exclusion. We conclude that these logics jointly reinforce urban inequalities regarding the chances for ordinary citizens to be invited to political life.
    Keywords: political recruitment; political recruiters; contextual effects; Civic Voluntarism Model; statistical discrimination
    JEL: I39 J19
    Date: 2008–02
  4. By: Chun- Yu Ho (Department of Economics, Boston University); Dan Li (Department of Economics, Boston University)
    Abstract: We estimate the distribution dynamics of city income and size in China during 1984-2003 using stochastic kernel. Our results show that intra-distribution mobility are significant in both income and size and provide evidences on China experienced internal brain drain.
    Keywords: City Income, City Size, Distribution Dynamics, Kernel Density, China
    JEL: O15 O18 R11
    Date: 2007–09
  5. By: Frank Neffke; Martin Svensson Henning; Ron Boschma; Karl-Johan Lundquist; Lars-Olof Olander
    Abstract: In this paper, the changing roles of agglomeration externalities during different stages of the industry life cycle are investigated. A central argument is that agglomeration externalities vary with mode of competition, innovation intensity, and characteristics of learning opportunities in industries. Following the Industry Life Cycle perspective, we distinguish between young and mature industries, and investigate how these benefit from MAR, Jacobs’ and Urbanization externalities. The empirical analysis builds on a Swedish plant level dataset that covers the period of 1974-2004.The outcomes of panel data regression models show that the benefits industries derive from their local environment are strongly associated with their stage in the industry life cycle. Whereas MAR externalities increase with the maturity of industries, Jacobs’ externalities decline when industries are more mature. This is in line with the hypothesis that young industries operate in an environment dominated by rapid product innovation and low levels of standardization. Hence, it pays off when knowledge can be sourced locally from many different sources, but there is still little scope for specialization benefits. Mature industries, in contrast, are associated with lower innovation intensities and a focus on cost saving process innovations. Therefore, there are major benefits to be derived from specialization, whereas knowledge spillovers from different industries are less relevant. The distinction between the product competition in young industries and price competition in mature industries is reflected in our finding that high regional factor costs are detrimental to mature industries, but not to young industries. This can also be related to the finding that high quality living environments, attractive for highly paid employees, are important to young industries. Overall, the outcomes stress that industrial life cycles have to be taken into account in the analysis of agglomeration externalities.
    Keywords: agglomeration externalities, industry life cycle, urbanization, Sweden
    Date: 2008–04
  6. By: Daniel F. Heuermann (Institute for Labour Law and Industrial Relations in the EC, University of Trier)
    Abstract: The paper sheds light on the impact of spatial agglomeration of human capital on individual wages in Western Germany. Using panel data it shows that regional wage differentials are to a large extent attributable to localized human capital externalities arising from the regional share of highly qualified workers. Employing the regional number of public schools and of students as instrumental variables the paper shows that human capital externalities are underestimated in ordinary panel regressions for wages of highly qualified and non-highly qualified workers alike due to supply shifts of highly qualified workers. An analysis by sector reveals that human capital externalities are more pronounced in manufacturing than in the service sector. We find indication that highly qualified workers benefit from intra-industry knowledge spillovers, while non-highly qualified workers profit from pecuniary externalities between industries. Our findings are stable among a variety of indicators of regional human capital and robust to the inclusion of other sources of increasing returns, as well as wage curve, price level, and amenity effects.
    Keywords: Human Capital Externalities, Agglomeration, Urban Wage Premium
    JEL: D62 D83 J24 J31 O15
    Date: 2008–03
  7. By: Fioretti, Guido
    Abstract: This article presents an agent-based model (ABM) of an Italian textile district where thousands of small firms specialize in particular phases of fabrics production. It is an empirical model because it reconstructs the communications between firms when they arrange production chains. In their turn, production chains reflect into the pattern of road traffic in the geographical areas where the district extends. It is a methodological model because it aims to show that ABMs can be used to reconstruct a web of movements in geographical space. ABMs are proposed as a tool for Hägerstrand’s “time-geography”.
    Keywords: Industrial districts; Industrial clusters; Agent-based models; Prato
    JEL: R30 C63 R49
    Date: 2008–03–15
  8. By: Renato Aristides Orozco Pereira
    Abstract: The term “globalization” has long been vented indiscriminately everywhere with few being capable to either define or measure it. Cities are said to be at the forefront of the “works of globalization” by becoming coordinating centers for the transnational activities of multinational corporations. Ultimately, they become tied up to each other, as those activities require information inputs from different regions of the world. The article uses the advanced corporate service firms’ location patterns to measure the linkages between cities. As social, economical, cultural and political information about the cities flow through the firms’ network of branch offices, a highly connected city provides better corporate servicing to businessman wanting to do business elsewhere. By calculating the total connectivity of each city to the rest of the world, as well as total presence of global service firms within these cities, in the years 2000 and 2004, we produce a measure of the connectivity growth in the period. In a second moment, we use a linear regression model to test hypothesis concerning the determinants of connectivity growth in those cities. Results show us that connectivity growth in a city, in case of firm’s network expansion, display a “rich-get-rich” behavior on which well connected cities became even more connected. Furthermore, connectivity growth is responsive to competition, agglomeration economies, infrastructure, trade openness, human capital and the overall economic level of the country. Some of the variables behave differently according to the service firms’ sector being analyzed. In particular, we scrutinize the role of human capital as a determinant of connectivity growth in the management and banking sector, and interpret the results as a function of whether the sector is skilled-labor intensive (management) or capital intensive (banking).
    Keywords: Globalization, World City Network, Interlock Network Model, Global City Model, Economic Geography, GaWC
    Date: 2008–04
  9. By: Nicolas Debarsy (CERPE - FUNDP-University of Namur, FNRS); Marcus Dejardin (CERPE - FUNDP-University of Namur)
    Abstract: In his oft-cited "What do we know about entry?", Paul Geroski (1995) gave a survey of empirical works on this central topic regarding industrial organization and, more precisely, market dynamics. Surprisingly, his article remains silent on the spatial dimension of these dynamics. This paper gives first accessory support to some of the Geroski's a-spatial observations with reference to firm entries and exits of a selection of retail and consumer service industries in Belgium over the 1998-2001 period. More important is the proposed application of the Exploratory Spatial Data Analysis (ESDA) that has been developed for in-depth exploring of spatial datasets. Evidences are collected at highly disaggregated geographical and industrial levels. They do not only contribute to a better understanding of the geographical patterns of the industries, but they lead to interesting observations regarding industrial organization and market dynamics by examining the space-time structures of entries and exits. These observations may be considered as an opening tribute towards a spatial extension of what Geroski has presented as stylized facts in his 1995 article.
    Keywords: entry, exit, spatial interactions, local market, ESDA
    JEL: L11 L80 R12
    Date: 2008–03–27
  10. By: Don Webber (School of Economics, University of the West of England, Bristol); Paul White (Department of Mathematics and Statistics, University of the West of England, Bristol, UK)
    Abstract: Abstract: Papers examining a developed nation’s labour productivity frequently ignore spatial effects. We present empirical results indicating that geographical proximity matters for plant-level productivity.
    Keywords: distance; labour productivity
    JEL: C21 R32
    Date: 2008–03
  11. By: Anurag Sharma (Centre for Health Economics, Monash University); Anthony Harris (Centre for Health Economics, Monash University); Jeff Richardson (Centre for Health Economics, Monash University)
    Abstract: The overall objective of the paper is to model and econometrically analyze the impact of access costs (travel time to hospital) and quality of health care on the utilization of elective health services in public hospitals. We argue that patients might face a trade-off between better perceived quality of care and access costs. The extant literature has not yet developed a common framework which explicitly incorporates the quality and access trade-off. The first aim of this paper is to help fill this gap. We propose a stylized model where GPs and Specialists act as gatekeepers, waiting times act as a rationing device; and perception of quality and access costs contributes to the choice of hospital for treatment. A secondary objective of the paper is to explore econometric approaches to simultaneously deal with access cost quality tradeoff and its effect on patient flows across regions. The geographic access costs lead to interaction between regions which is termed as spatial dependence. This is econometrically tested by applying spatial regression techniques focussing on spatial panel models recently proposed but not yet been widely applied to health economics. The results show that spatial effects especially the geographic neighborhood effects significantly affect the hospital utilization rates at a regional level. Travel time is found to have significant and negative effect on hospital utilization for some Diagnostic categories. The effect of quality of care (measured by the rate of adverse events) is negative and significant for one category of separations. However the effect is quantitatively small. We do not find any evidence of trade-off between quality and travel time for all category of separations. Policy implications are discussed..
    Date: 2008–03
  12. By: Luciana Lazzeretti (Dept. of Business Economics, University of Florence); Rafael Boix Domenech (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona); Francesco Capone (Dept. of Business Economics, University of Florence)
    Abstract: An important debate on the role of creativity and culture as factors of local economic development is distinctly emerging. Despite the emphasis put on the theoretical definition of these concepts, it is necessary to strengthen comparative research for the identification and analysis of the kind of creativity embedded in the territory as well as its determinants. Creative local production systems are identified in Italy and Spain departing from local labour markets as territorial units, and focusing on two different kinds of creative industries: traditional cultural industries (publishing, music, architecture and engineering, performing arts) and technology-related creative industries (R&D, ICT, advertising). The results suggest the existence of different patterns of concentration of creative industries in both countries and the concentration of creative industries in the
    Keywords: creative industries, creative local systems, agglomeration economies
    JEL: L22 R12 L82
    Date: 2008–03
  13. By: Joshua Aizenman; Yothin Jinjarak
    Abstract: This paper studies the association between the current account and real estate valuation across countries, subject to data availability [43 countries, of which 25 are OECD], during 1990-2005. We find robust and strong positive association between current account deficits and the appreciation of the real estate prices/(GDP deflator). Controlling for lagged GDP/capita growth, inflation, financial depth, institution, urban population growth and the real interest rate; a one standard deviation increase of the lagged current account deficits is associated with a real appreciation of the real estate prices by 10%. This real appreciation is magnified by financial depth, and mitigated by the quality of institutions. Intriguingly, the economic importance of current account variations in accounting for the real estate valuation exceeds that of the other variables, including the real interest rate and inflation. Among the OECD countries, we find evidence of a decline overtime in the cross country variation of the real estate/(GDP deflator), consistent with the growing globalization of national real estate markets. Weaker patterns apply to the non-OECD countries in the aftermath of the East Asian crisis.
    JEL: F15 F21 F32 R21 R31
    Date: 2008–04
  14. By: Mitra, Arup; Murayama, Mayumi
    Abstract: Based on the recent census data this paper analyses the district level rural to urban migration rates (both intra-state and the inter-state) among males and females separately. Both the rates are closely associated irrespective of whether the migrants originate from the rural areas within the state or outside the state. This would suggest that women usually migrate as accompanists of the males. Though many of the relatively poor and backward states actually show large population mobility, which is primarily in search of a livelihood, the mobility of male population is also seen to be prominent in the relatively advanced states like Maharashtra and Gujarat. Rapid migration of rural females within the boundaries of the states is, however, evident across most of the regions. The social networks, which play an important role in the context of migration are prevalent among the short distance migrants and tend to lose their significance with a rise in the distance between the place of origin and destination though there are some exceptions to this phenomenon. Besides the north-south divide in the Indian context is indeed a significant phenomenon with a few exceptions of metropolitan cities. As regards the effect of factors at the place of destination, prospects for better job opportunities are a major determinant of male migration. Low castes and minority groups tend to pull migration through network effects. Among females also these effects are evident though with the inclusion of the male migration rate they become less significant. Finally the paper brings out the policy implications.
    Keywords: Rural-to-urban migration, Poverty, India, 2001 census, Gender, Population movement
    JEL: J61 R23
    Date: 2008–03
  15. By: Badunenko, Oleg (DIW Berlin); Fritsch, Michael (Friedrich Schiller University Jena, Max Planck Institute of Economics Jena and DIW); Stephan, Andreas (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper investigates the factors that explain the level and dynamics of manufacturing firm productive efficiency. In our empirical analysis, we use a unique sample of about 39,000 firms in 256 industries from the German Cost Structure Census over the years 1992-2005. We estimate the efficiencies of the firms and relate them to firm-specific and environmental factors. We find that (1) about half the model’s explanatory power is due to industry effects, (2) firm size accounts for another 20 percent, and (3) location of headquarters explains approximately 15 percent. Interestingly, most other firm characteristics, such as R&D intensity, outsourcing activities, or the number of owners, have extremely little explanatory power. Surprisingly, our findings suggest that higher R&D intensity is associated with being less efficient, though higher R&D spending increases a firm’s efficiency over time.
    Keywords: Frontier analysis; determinants of efficiency; firm performance; industry effects; regional effects; firm size
    JEL: D24 L10 L25
    Date: 2008–04–02
  16. By: Martin Falk (WIFO); Franz Sinabell (WIFO)
    Abstract: Based on a sample of 1,084 European regions (EU 15) over the period 1995-2004, we estimate the determinants of regional growth of GDP per capita, allowing for both spatial lag and spatial error dependence. We find that robust LM tests can not reject the null hypothesis of no spatial dependence when country dummy variables are included in the growth equation. OLS and robust regression methods show that population density and industry share are significantly and positively related to economic growth. Regions that received EU structural funds have a significantly higher growth of GDP per capita, but the effect is only marginally significant. Blinder-Oaxaca decompositions reveal that the growth differential between Objective 1 regions and the remaining regions is solely due to the difference in the characteristics and not to differences in the coefficients. Finally, we find that the added value gained in Objective 1 regions is much lower than the resources that have been allocated to them.
    Keywords: regional growth, EU structural funds, Objective 1 funding, spatial dependence, urbanisation
    Date: 2008–02–20
  17. By: De Rus, G.; Nash, C.A.
    Abstract: The case for building new High Speed Rail (HSR) infrastructure depends its the capacity to generate social benefits which compensate for the construction, maintenance and operation costs. Decisions to invest in this technology have not always been based on sound economic analysis. A mix of arguments, besides time savings –strategic considerations, environmental effects, regional development and so forth– have often been used with inadequate evidence to support them. We have explored under what conditions net welfare gains can be expected from new HSR projects. In this paper we use some simplifying assumptions with the aim of obtaining a benchmark: the minimum level of demand from which a positive social net present value could be expected when new capacity does not provide additional benefits beyond time savings from diverted and generated demand.
    Keywords: public investmest; infrastructure; cost-benefit analysis; transport; high speed rail.
    JEL: R40 D61
    Date: 2007–12
  18. By: Laurent Gobillon; Carine Milcent
    Abstract: This paper studies the determinants of the regional disparities in the mortality of patients treated in a hospital for a heart attack in France. These determinants can be some differences in patient characteristics, treatments, hospital charateristics, and local healthcare market structure. We assess their importance with an exhaustive administrative dataset over the 1998-2003 period using a stratified duration model. The raw disparities in the propensity to die within 15 days between the extreme regions reaches 80%. It decreases to 47% after controlling for the patient characteristics and their treatments. In fact, a variance analysis shows that innovative treatments play an important role. Remaining regional disparities are significantly related to the local healthcare market structure. The more patients are locally concentrated in a few large hospitals rather than many small ones, the lower the mortality.
    Date: 2008
  19. By: Chandra, Ambarish
    Abstract: This paper seeks to establish the importance of targeted advertising in media markets. Using zip-code level circulation for US daily newspapers, I show that newspapers facing more competition have lower circulation prices but higher advertising prices than similar newspapers facing little or no competition. I explain this by showing that newspapers in more competitive markets are better able to segment readers according to their location and demographics. This leads to greater homogeneity in the characteristics of subscribers and raises advertisers' willingness to pay for such readers. The results imply a substantial benefit to advertisers and media firms from targeted advertising.
    Keywords: Targeted Advertising; Media Markets; Newspapers; Media Segmentation
    JEL: D4 L1
    Date: 2008–03
  20. By: Xavier Fageda (Faculty of Economics, University of Barcelona); Germa Bel (Faculty of Economics, University of Barcelona)
    Abstract: The empirical literature about factors explaining local government delivery choices has traditionally focused the attention on the public or private production dilemma. However, hybrid organizational forms such as mixed public-private firms are increasingly used in several European countries. This paper makes use of survey data from Spanish municipalities to examine motivations of local governments for engaging in hybrid organizational forms. Data refer to two very relevant local services: water distribution and solid waste collection. The empirical analysis indicates that the use of mixed firms emerge as a type of pragmatically based ‘third way’ between pure public and pure private production. Indeed, local governments make use of mixed firms when cost considerations (scale economies, transaction costs and so on), financial constraints and private interests exert contradictory pressures. On the contrary, political and ideological factors do not play any significant role on the local government decision of engaging or not in joint ventures with private partners.
    Keywords: Partial privatization, local governments
    JEL: L33 R51 H72
    Date: 2008–04

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