nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2008‒05‒10
23 papers chosen by
Steve Ross
University of Connecticut

  1. Homebuying in New Orleans Before and After Katrina: Patterns by Space, Race and Income By Immergluck, Dan; Lee, Yun Sang
  2. Which communities should be afraid of mobility? The effects of agglomeration economies on the sensitivity of firm location to local taxes By Jordi Jofre-Monseny; Albert Solé-Ollé
  3. The Incentive Role of Creating "Cities" in China By Li, Lixing
  4. Searching for the Best Neighborhood: Mobility and Social Interactions By Yannis M. Ioannides; Giulio Zanella
  5. Large-Scale Redevelopment Initiatives and Home Values: The Case of the Atlanta Beltline Project By Immergluck, Dan
  6. Heterogeneity in Technical Efficiency of the French Urban Transport: 1995 to 2002 By Carlos Pestana Barros; Jean-Pascal Guironnet; Nicolas Peypoch; William Roy
  7. A Theory of Urban Squatting and Land-Tenure Formalization in Developing Countries By Jan K. Brueckner; Harris Selod
  8. INNOVATIVE CITY IN WEST CHINA CHONGQING By Sigurdson , Jon; Palonka, Krystyna
  9. Quasi-Experimental Estimates of the Effect of Class Size on Achievement in Norway By Leuven, Edwin; Oosterbeek, Hessel; Rønning, Marte
  10. The Emergence of Information Sharing in Credit Markets By Brown, Martin; Zehnder, Christian
  11. Cities, Market Integration and Going to Sea: Stunting and the standard of living in early nineteenth-century England and Wales By J.Humphries; T. Leunig
  12. Does Wal-Mart Sell Inferior Goods? By Emek Basker
  13. Education policy and tax competition with imperfect student and labor mobility By Tim Krieger; Thomas Lange
  14. Spend more, get more? An iniquiry into English local government performance By Revelli Federico
  15. Is the intertemporal income elasticity of the value of travel time unity? By Swärdh, Jan-Erik
  16. Internal migration and growth in Italy By Etzo, Ivan
  17. Interaction between vertical and horizontal tax competition: evidence and some theory. By Rizzo, Leonzio
  18. Local Service Provision in Selected OECD Countries: Do Decentralized Operations Work Better? By Giorgio Brosio; Ehtisham Ahmad; Vito Tanzi
  19. The value of time from subjective data on life satisfaction and job satisfaction: An empirical assessment By Isacsson, Gunnar; Karlström, Anders; Swärdh, Jan-Erik
  20. Persistence in Airline Accidents By Carlos Pestana Barros; João Ricardo Faria; Luis A. Gil-Alana
  21. The Rise of the Mega-Region By Florida, Richard; Gulden, Tim; Mellander, Charlotta
  22. Estimating Local Welfare Generated by a Professional Sports Team: An Application to the Minnesota Vikings under Threat of Relocation By John R. Crooker; Aju J. Fenn
  23. Flight Delays in Spanish Airports By Carlos Pestana Barros; Ester Gutiérrez; Sebastián Lozano

  1. By: Immergluck, Dan; Lee, Yun Sang
    Abstract: Natural disasters can conceivably have significant impacts on the “neighborhood sorting” of different racial or economic groups across intrametropolitan space. Using Home Mortgage Disclosure Act data we examine mortgage-financed homebuying activity within the New Orleans MSA before and after Hurricane Katrina. We find that, while the total amount of homebuying in the 7-parish New Orleans MSA was relatively unchanged between 2004 and 2006, homebuying in the city declined significantly, and declined most in places experiencing severe storm damage. We also find that after Hurricane Katrina, the proportion of homebuyers in the region and the city who were African-American or low-income declined. Finally, we find that segregation levels of African-American and lower-income homebuyers f declined in the year following Katrina. However, some of this effect is likely due to smaller overall numbers of lower-income and African-American buyers in the region.
    Keywords: New Orleans; housing after disasters; segregation
    JEL: R20 R21 R23
    Date: 2008–04–27
  2. By: Jordi Jofre-Monseny (Universitat de Barcelona & IEB); Albert Solé-Ollé (Universitat de Barcelona, IEB & CESifo)
    Abstract: This paper examines the effects of agglomeration economies (AE) on the sensitivity of firm location to tax differentials. An initial reading of the story suggests that, with AE, when a firm moves into a community attracted by a tax reduction, other firms may decide to move in as well. This suggests that AE increase the sensitivity of firm location to local taxes. However, a second version of the story reads that, if economic activities are highly concentrated in space, AE might offset any tax differential, hence suggesting a reduction in this sensitivity. This paper provides a theoretical model of intraregional firm location with Marshallian AE that is able to generate both hypotheses: AE increase (decrease) the effect of taxes when locations are (are not) of a similar size. We then use Spanish municipal data for the period 1995-2002 to test these hypotheses, analyzing the combined effect of local business taxes and Marshallian AE on the intraregional location of employment. In line with the theory, a municipality with stronger AE experiences lower (higher) tax effects if it is sufficiently dissimilar (similar) to its neighbors in terms of size.
    Keywords: Local taxes, agglomeration economies, local employment growth, instrumental variables.
    JEL: R3 H32
    Date: 2008
  3. By: Li, Lixing
    Abstract: This paper examines a distinctive mechanism of providing incentives to local governments – upgrading counties to "cities". In China, awarding city status to existing counties is the dominant way of creating new urban administrative units, during which the local government gets many benefits. Using a large panel data set covering all counties in China during 1993-2004, I investigate the determinants of upgrading. I find that the official minimum requirements for upgrading are not enforced in practice. Instead, economic growth rate plays a key role in obtaining city status. An empirical test is then conducted to distinguish between a principal-agent incentive mechanism and political bargaining. The findings are consistent with the hypothesis that the central government uses upgrading to reward local officials for high growth, as well as aligning local interests with those of the center. This paper highlights the importance of both fiscal and political incentives facing the local government. The comparison between incentive mechanism and bargaining sheds light on an important question about China’s politics of governance: where does power lie in China?
    Keywords: economic growth; incentive mechanism; bargaining; political centralization; fiscal decentralization; county-to-city upgrading; central-local relationship
    JEL: H77 H11 O40 R11 P26
    Date: 2008–04
  4. By: Yannis M. Ioannides; Giulio Zanella
    Abstract: The paper seeks to contribute to the social interactions literature by exploiting data on individuals’ self-selection into neighborhoods. We study a model in which households search for the best location in the presence of neighborhood effects in the formation of children’s human capital and in the process of cultural transmission. We use micro data from the PSID which we have merged, using geocodes, with contextual information at the levels of census tracts and of counties from the 2000 US Census. We control for numerous individual characteristics and neighborhood attributes and find, consistently with neighbourhood effects models, that households with children, but not those without, are more likely to move out of neighborhoods whose attributes are not favorable to the production of human capital and the transmission of parents’ cultural traits, and to move into neighborhoods which instead exhibit desirable such attributes.
    JEL: R23 Z13
    Date: 2008–05
  5. By: Immergluck, Dan
    Abstract: This paper examines the property value impacts of a very large-scale redevelop initiative in Atlanta. Large impacts are found in lower-income neighborhoods surrounding the proposed project.
    Keywords: gentrification; property values
    JEL: R20 R21 R31
    Date: 2007
  6. By: Carlos Pestana Barros; Jean-Pascal Guironnet; Nicolas Peypoch; William Roy
    Abstract: In this paper, we analyze the heterogeneity in the technical efficiency of a sample of French urban transport companies with a translog production frontier model. The model generates efficiency disentangling homogenous and heterogeneous variables. Our study concluded that outputs and inputs play a major role in transport efficiency and we find that the efficiency scores vary along the sample. Policy implication is derived.
    Keywords: Urban Transport; France, Translog random Frontier Model and Decision-Making Unit.
    Date: 2008–03
  7. By: Jan K. Brueckner (Department of Economics, University of California-Irvine); Harris Selod (Paris School of Economics)
    Abstract: This paper offers a new theoretical approach to urban squatting, reflecting the view that squatters and formal residents compete for land within a city. The key implication of this view is that squatters ``squeeze" the formal market, raising the price paid by formal residents. The squatter organizer, however, ensures that this squeezing is not too severe, since otherwise the formal price will rise to a level that invites eviction by landowners (defensive expenditures by squatter households also help to forestall eviction). Because eviction is thus absent in equilibrium, the model differs crucially from previous analytical frameworks, where eviction occurs with some probability.
    Keywords: Squatting; Formalization
    JEL: R00 R31 O18
    Date: 2008–01
  8. By: Sigurdson , Jon (European Institute of Japanese Studies); Palonka, Krystyna (European Institute of Japanese Studies)
    Abstract: This working paper offers insights on science and technology in China with supporting official and interview data. The paper, as evidenced from the title, is indicating the future role of Chongqing and its evolution primarily focusing on the period of rapid development of the Municipality after Chongqing became a political entity on the same level as provinces of China. This has coincided with the planning, construction and completion of the Three Gorges Dam Project involving the resettlement of 1,000,000 people – most them coming to the rural areas Chongqing Municipality. Three major sub-themes are highlighted. First, the city played important role during more than 2000 years of its history (in 1981, for example it became first inland port in China open for foreign commerce). In the XX century Chongqing was national capital during the Second World War and the Japanese invasion (Nationalists government). Since then it enjoyed higher political status and economic independence than any other city of the same size in whole western China. Second, the municipality’s geographical position and demographic condition makes it quite unique in West China. It has a population of 31 million, an area of 82 square km, a population density of 379 persons per km2 and a location at the upper reaches of Chang (Yangtze) River. This makes it the gate of Southwest China. Third, Chongqing has a strong basic multi-faced economy in the region. Central investment since the 1950s has assisted the development of a relatively strong modern industrial base in the city. Despite the post-Mao reform era’s impact on social and economic disparities as between the coastal areas and the west, Chongqing remains one of the China’s strongest city economies. Its industrial output value ranked 11th among the 35 biggest city economies in China in 2000, though it ranked behind the top ten most industrialized coastal cities, all of which had attracted much greater foreign investment during the reform era. The campaign to Open up the West provides Chongqing with the opportunity to act as the growth pole for a number of less industrialized provincial-level units in north-west and south-west China. Fourth, the initiatives by central authorities and the extraordinary task of Three Gorges Dam project required among other great tasks also relocation of over 1,2 million people, the rebuilding of two cities, eleven county towns and one hundred sixteen townships from the site of Three Gorges Dam water reservoir. Until 2005 there were already almost one million residents resettled. Less than 20 per cent moved outside Chongqing municipality and the majority was to be accommodated within the region of Chongqing Municipality.
    Keywords: Regional development; clusters; Regional innovation System (RIS); Development block; competence block; technology system; High Technology Parks; Overview of Science and Technology; FDI
    JEL: I18 I23 L53 O31 O32 R58
    Date: 2008–02–15
  9. By: Leuven, Edwin (University of Amsterdam); Oosterbeek, Hessel (University of Amsterdam); Rønning, Marte (Statistics Norway)
    Abstract: Using a comprehensive administrative database we exploit independent quasi-experimental methods to estimate the effect of class size on student achievement in Norway. The first method is based on a maximum class size rule in the spirit Angrist and Lavy (1999). The second method exploits population variation as first proposed by Hoxby (2000). The results of both methods (and of variations on these methods) are very similar and cannot reject that the class size effect is equal to zero. The estimates are very precise; we can rule out effects as small as 1.5 percent of a standard deviation for a one student change in class size during three years in a row.
    Keywords: class size, educational production
    JEL: I2
    Date: 2008–04
  10. By: Brown, Martin (Swiss National Bank); Zehnder, Christian (Harvard Business School)
    Abstract: We examine how asymmetric information and competition in the credit market affect voluntary information sharing between lenders. We study an experimental credit market in which information sharing can help lenders to distinguish good borrowers from bad ones, ecause borrowers may exogenously switch locations. Lenders are, however, engaged in spatial competition, and thus may lose market power by sharing information with competitors. Our results suggest that asymmetric information in the credit market increases the frequency of information sharing between lenders significantly. Competition between lenders reduces information sharing, but the impact of competition seems to be only of second order importance.
    Keywords: information sharing; credit; competition; asymmetric information
    JEL: D82 G21 G28
    Date: 2008–04–30
  11. By: J.Humphries (All Souls, Oxford); T. Leunig (LSE)
    Abstract: A new source, 1840s Admiralty seamen’s tickets, is used to explore three anthropometric issues. First, did being born in a city, with its associated disamenities, stunt? Second, did being born near a city, whose markets sucked foodstuffs away, stunt? Third, did child labour stunt? Being born in a city stunted although the effect was limited except in the largest cities. In contrast, opportunities to trade did not stunt. Finally although adults who went to sea young were shorter than those who did not enlist until fully grown, going to sea did not stunt. Rather the prospect of plentiful food at sea attracted stunted adolescents, who reversed most of their stunting as a result. But child labour at sea was unique: wages were largely hypothecated to the child as food and shelter, rather than paid in cash that might be spent on other family members.
    Date: 2008–05–02
  12. By: Emek Basker (Department of Economics, University of Missouri-Columbia)
    Abstract: I estimate the aggregate income elasticity of Wal-Marts and Targets revenues using quarterly data for 19972006. I find that Wal-Marts revenues increase during bad times, whereas Targets revenues decrease, consistent with Wal-Mart selling inferior goods in the technical sense of the term. An upper bound on the aggregate income elasticity of demand for Wal-Marts wares is 0.5.
    Keywords: Retail, Wal-Mart, Target, Inferior Goods
    JEL: L81 D12
    Date: 2008–04–29
  13. By: Tim Krieger (University of Paderborn); Thomas Lange (Ifo institute for economic research & University of Konstanz)
    Abstract: In this paper we analyze the effect of increasing labor (i.e. graduates’/ academics’) and student mobility on net tax revenues when revenuemaximizing governments compete for human capital by means of income tax rates and amenities offered to students (positive expenditure) or rather tuition fees (negative expenditure). We demonstrate that these instruments are strategic complements and that increasing labor mobility due to ongoing globalization not necessarily implies intensified tax competition and an erosion of revenues. On the contrary, the equilibrium tax rate even increases in mobility. Amenities offered to students (or rather tuition fees) may either increase or decrease, and, overall, net revenues increase. An increase in student mobility, however, erodes revenues due to intensified tax and amenity competition.
    Keywords: labor mobility, student mobility, higher education, tax competition, public expenditure competition
    JEL: I22 J61 F22 H2 H87
    Date: 2008–01
  14. By: Revelli Federico (University of Turin)
    Abstract: Based on a unique measure of performance of English local governments in the provision of public services (Comprehensive Performance Assessment, CPA), this paper develops a simple analytical framework that fully encompasses the institutional features of the British system of local government finance in order to model the process of performance determination, and uses panel data (2002-2007) to identify the determinants of local government performance. Due to the nature of CPA ratings - measured on a five category (poor to excellent) scale - the empirical work relies on an ordered response approach allowing for cross-sectional heterogeneity. Maximum likelihood estimation of a random effects ordered probit model provides no evidence in support of the “spend more, get more” hypothesis, but rather suggests that spending in excess of centrally set standards has a detrimental effect on local public service performance.
    Date: 2008–04
  15. By: Swärdh, Jan-Erik (VTI)
    Abstract: The purpose of this study is to estimate the intertemporal income elasticity of the value of travel time (VTT) and test whether it differs from one. The empirical analysis is performed on Swedish revealed preference data, where voluntary job changers' individual wage premium for commuting time changes is used as an estimate of VTT. The panel structure of the data implies the opportunity to use a lagged net income variable on individual level to estimate the income elasticity in an intertemporal way. The result does not support an intertemporal income elasticity of VTT that is different from one and this result is robust over several different empirical specifications. Hence, the policy implication of this study is in contrast to a recent recommendation by an EU-financed project, Heatco, which propose an intertemporal income elasticity of 0.7.
    Keywords: Value of travel time; Value of travel time savings; VTTS; Intertemporal; Income elasticity; Revealed preferences
    JEL: C20 C81 R41
    Date: 2008–04–28
  16. By: Etzo, Ivan
    Abstract: The analysis focuses on the impact of interregional migration flows on regional growth rates during the period 1983-2002. A first important result is that migration did affect regional growth rates in Italy. Moreover, the results from the analysis of the two sub-periods, 1983-1992 and 1993-2002, show that the different trends of migration flows during the two decades and their differences in human capital content did affect regional growth in different ways. Both net migration rate and gross migration rates are used as regressors in different estimations. Furthermore, in order to investigate how the human capital content of migrants affected the regional growth, a further specification of the empirical model differentiates the migration rates according with their educational attainment. The outcomes show that migrants with a high educational attainment have the strongest impact on regional growth.
    Keywords: internal migration and growth; convergence; human capital; panel data.
    JEL: E0 O18
    Date: 2008–05
  17. By: Rizzo, Leonzio
    Abstract: The aim of this paper is to determine to what extent and how federal taxes affect local tax decisions. Testing the impact of an increase in the federal tax on horizontal tax competition with Canada-US data for 1984--1994, we find evidence that an increase in federal tax affects horizontal tax competition. The novelty of our approach is that it indirectly tests the effect of an increase in federal tax on provincial tax, by testing whether provincial reaction to an increase in neighboring tax changes according to the federal tax level. The test allows for control of yearly macroeconomic shocks by inserting dummies for each year. These are not used in the empirical literature on vertical tax competition because they would cause perfect collinearity with the federal tax.
    Keywords: horizontal externality; vertical externality; tax competition; tax rate
    JEL: H77 H7 H72 H71 H73
    Date: 2007
  18. By: Giorgio Brosio; Ehtisham Ahmad; Vito Tanzi
    Abstract: There is a widespread presumption that decentralization improves public service provision. This has led to policy prescriptions that are assiduously adhered to by countries and international. This paper reviews the recent evidence from OECD countries-which is seen to be inconclusive. This suggests the need for a careful design of programs that take into account the political economy constraints and incentives, as well as more systematic and thorough evaluations of outcomes.
    Date: 2008–03–21
  19. By: Isacsson, Gunnar (VTI); Karlström, Anders (KTH); Swärdh, Jan-Erik (VTI)
    Abstract: This paper compares estimates of the value of commuting time, working time and household working time from empirical models of subjective assessments of life satisfaction and job satisfaction, respectively, to the corresponding estimates obtained from an empirical search model of the labour market. The results indicate that all three variables produce rather high estimates of the value of commuting time. The results regarding the value of working time differ more between the different outcome variables and it is only significantly different from zero in the model of life satisfaction. Perhaps less surprisingly, the estimate of the value of household working time is also only significantly different from zero in the model of life satisfaction in contrast to the models of job satisfaction and job durations where it is insignificantly different from zero. This paper compares estimates of the value of commuting time, working time and household working time from empirical models of subjective assessments of life satisfaction and job satisfaction, respectively, to the corresponding estimates obtained from an empirical search model of the labour market. The results indicate that all three variables produce rather high estimates of the value of commuting time. The results regarding the value of working time differ more between the different outcome variables and it is only significantly different from zero in the model of life satisfaction. Perhaps less surprisingly, the estimate of the value of household working time is also only significantly different from zero in the model of life satisfaction in contrast to the models of job satisfaction and job durations where it is insignificantly different from zero.
    Keywords: Life satisfaction; job satisfaction; job search; value of time
    JEL: C25 C41 J62 R41
    Date: 2008–04–21
  20. By: Carlos Pestana Barros; João Ricardo Faria; Luis A. Gil-Alana
    Abstract: This paper analyses airline accident data from 1927-2006, through fractional integration. It is shown that airline accidents are persistent and (fractionally) cointegrated with airline traffic. There exists a negative relation between air accidents and airline traffic, with the effect of the shocks to that relationship disappearing in the long run. Policy implications are derived for countering accident events.
    Keywords: Accidents; airline; Time series; Persistence; Long memory; Cointegration.
    JEL: D79 H56
    Date: 2008–03
  21. By: Florida, Richard (MPI Rotman School of Management); Gulden, Tim (Center for International and Security Studies at the University of Maryland School of Public Policy); Mellander, Charlotta (Prosperity Institute of Scandinavia JIBS and CESIS)
    Abstract: This paper uses a global dataset of nighttime light emissions to produce an objectively consistent set of mega-regions for the globe. We draw on high resolution population data to estimate the population of each of these regions. We then process the light data in combination with published estimates of national GDP to produce rough but useful estimates of the economic activity of each region. We also present estimates of technological and scientific innovation. We identify 40 mega-regions with economic output of more than $100 billion that produce 66 percent of world output and accounts for 85 percent of global innovation.
    Keywords: Mega-region; Globalization; Urbanization; Nighttime lights
    JEL: O18 R10
    Date: 2008–04–28
  22. By: John R. Crooker (University of Central Missouri); Aju J. Fenn (The Colorado College)
    Abstract: The issue of public financing for a professional sports team is one that has seen vigorous debate in the state of Minnesota. This study offers the opportunity to examine the welfare contribution of the Minnesota Vikings to Minnesota households in the context of a credible threat to team relocation. We find the credibility of relocation is essential to providing unbiased estimates of welfare. This study utilizes contingent valuation methodology (CVM) and a random utility model (RUM) to analyze Minnesotans’ decision-making mechanisms for supporting a new stadium initiative. While previous studies have attempted to measure the welfare associated with a sports franchise, we develop and discuss bias that may be imparted to estimates when the researcher fails to calculate a choke price. Further, we develop an unbiased approach to identify welfare when respondents perceive a risk of losing the franchise. Our study suggests a 95% confidence interval on the welfare contribution of the Vikings to households in Minnesota is $435.4 million to $1,499.1 million.
    Keywords: Stadium Costs, Sports Economics, Contingent Valuation, Random Utility Model
    JEL: H41 L83
    Date: 2008–05
  23. By: Carlos Pestana Barros; Ester Gutiérrez; Sebastián Lozano
    Abstract: This paper analyses the duration of flight delays at Spanish airports. To do so, several hazard models are adopted to take into account the delays observed. The results show that the most important factors are certain airport characteristics and contextual characteristics. The policy implications are derived.
    Keywords: hazard model; flights; Spanish airports; delays; duration.
    Date: 2008–03

This nep-ure issue is ©2008 by Steve Ross. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.