nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2008‒07‒05
28 papers chosen by
Steve Ross
University of Connecticut

  1. How Differences in Property Taxes within Cities Affect Urban Sprawl? By Song, Yan; Zenou, Yves
  2. Teacher Quality, Teacher Licensure Tests, and Student Achievement By Richard Buddin; Gena Zamarro
  3. On Measuring the Complexity of Urban Living By Lubna Hasan
  4. A Study of Residential Housing Demand in India By Bandyopadhyay, Arindam; Kuvalekar, S V; Basu, Sanjay; Baid, Shilpa; Saha, Asish
  5. Endogenous Job Destruction and Job Matching in Cities By Zenou, Yves
  6. Social Interactions and Labor Market Outcomes in Cities By Zenou, Yves
  7. Exclusionary Policies in Urban Development, How under-servicing of migrant households affects the growth and composition of Brazilian cities By Leo Feler; J. Vernon Henderson
  8. Primary School Architecture in Portugal: A Case Study By José M. R. Freire da Silva
  9. Exploring Differences in Expenditure for the Functionally Impaired: Neighborhood Interaction and the Federal Structure By Birkelöf, Lena
  10. Are Shrinking and Leisure Substitutable? An Empirical Test of Efficiency Wages Based on Urban Economic Theory By Ross, Stephen L.; Zenou, Yves
  11. A Flexible School for Early Childhood Education in Italy By Giorgio Ponti
  12. Street Vendors : Urban Problem and Economic Potential By Harlan Dimas
  13. Attracting and Retaining Teachers in High-Need Schools: Do Financial Incentives Make Financial Sense? By Jennifer Imazeki
  14. Investable Tax Credits: The Case of the Low Income Housing Tax Credit By Mihir A. Desai; Dhammika Dharmapala; Monica Singhal
  15. The Bright and Dark Side of Cooperation for Regional Innovation Performance By Tom Broekel; Andreas Meder
  16. Special Primary School Complex in the United Kingdom: Booker Park By Mark Robinson
  17. Labour pooling as a source of agglomeration: An empirical investigation By Henry G. Overman; Diego Puga
  18. Predicting Downturns in the US Housing Market: A Bayesian Approach By Rangan Gupta; Sonali Das
  19. Privatization of Credence Goods:Theory and Evidence from Service Contracting By Lindqvist, Erik
  20. Is a DFM Well-Suited in Forecasting Regional House Price Inflation? By Sonali Das; Rangan Gupta; Alain Kabundi
  21. Inference Based on Alternative Bootstrapping Methods in Spatial Models with an Application to County Income Growth in the United States By Daniel C. Monchuk; Dermot J. Hayes; John Miranowski
  22. Child Work and Other Determinants of School Attendance and School Attainment in Bangladesh By Khanam, Rasheda; Ross, Russell
  23. What Determines Local Expenditures on Mental Health Care in Sweden Really? By Andersson, Linda; Henriksen, Anna
  24. Direct Democracy and Local Public Goods: Evidence from a Field Experiment in Indonesia By Benjamin A. Olken
  25. House Prices and Economic Risks - Are Irish Households Rational? By Dirk G. Baur and Conor McKeating
  26. Economic Geography and Wages in Brazil: Evidence from Micro-Data By Thibault Fally; Rodrigo Paillacar; Cristina Terra
  27. Is There Increasing Regional Specialisation within the General Process of Deindustrialisation? By Kurt Geppert; Martin Gornig; Anna Lejpras
  28. Restaurant Prices and the Minimum Wage By Fougère, Denis; Gautier, Erwan; Le Bihan, Hervé

  1. By: Song, Yan (University of North Carolina at Chapel Hill, USA); Zenou, Yves (Research Institute of Industrial Economics (IFN))
    Abstract: This article attempts a formal analysis of the connection between the differentiated property tax rates within urban areas and urban spatial pattern in U.S. cities. We first develop a duocentric-city model where the Central Business District (CBD) is located at the origin while the Suburban Business District (SBD) is at the other end of the city. We show that the ratio between the property tax in the suburbs and in the center has an ambiguous impact on the size of the city. We then test this model empirically to determine this sign by using a dataset of effective property tax rates we developed using GIS techniques for central cities and suburbs in 445 urbanized areas. The empirical analysis estimates the link between these two variables by controlling for variables such as population, income, agricultural rent, commuting cost, climate, crime, and employment structure. Results from the empirical analyses suggest that a lower property tax rate in the suburbs in comparison to the central city is associated with more expansive urban growth and greater level of decentralization of population and employment.
    Keywords: Central City; Suburbs; Urban Sprawl; Urban Decentralization; Differentiated Property Tax
    JEL: H30 H71 R14
    Date: 2008–06–19
  2. By: Richard Buddin; Gena Zamarro
    Abstract: Teacher quality is a key element of student academic success, but little is known about how specific teacher characteristics influence classroom outcomes. This research examines whether teacher licensure test scores and other teacher attributes affect elementary student achievement. The results are based on longitudinal student-level data from Los Angeles. California requires three types of teacher licensure tests as part of the teacher certification process; a general knowledge test, a subject area test (single subject for secondary teachers and multiple subject for elementary teachers), and a reading pedagogy test for elementary school teachers. The student achievement analysis is based on a value-added approach that adjusts for both student and teacher fixed effects. The results show large differences in teacher quality across the school district, but measured teacher characteristics explain little of the difference. Teacher licensure test scores are unrelated to teacher success in the classroom. Similarly, student achievement is unaffected by whether classroom teachers have advanced degrees. Teacher experience is positively related with student achievement, but the linkage is weak and largely reflects poor outcomes for teachers during their first year or two in the classroom.
    Keywords: teacher quality, teacher licensure, student achievement, two-level fixed effects, education production function
    JEL: J44 J45 H0 H75 I21
    Date: 2008–05
  3. By: Lubna Hasan (Pakistan Institute of Development Economics, Islamabad)
    Abstract: This paper explores the concept of city ranking as a way to measure the dynamics and complexities of urban life. These rankings have various dimensions and uses. Both the context in which these rankings are done and their nature have changed considerably over time. These rankings face many methodological and measurement problems. A review of major city rankings and the related literature is carried out to suggest a framework for the ranking of Pakistani cities.
    Keywords: Quality of Life, Cities, Urbanisation
    JEL: R12 O18 R23
    Date: 2008
  4. By: Bandyopadhyay, Arindam; Kuvalekar, S V; Basu, Sanjay; Baid, Shilpa; Saha, Asish
    Abstract: The empirical research on housing market in India is scarce due to the paucity of information. The monograph on “A Study of Residential Housing Demand in India” is the outcome of a Study conducted by the National Institute of Bank Management (NIBM) for National Housing Bank (NHB) and partially addresses advice of Reserve Bank of India to NHB on studying the housing and real estate sector. This study provides exhaustive empirical research and detailed analysis (both micro and macro level) of current status and future growth potential of housing industry in India, its back-ward and forward linkages, financing structure and nature of underlying risk in the housing market in India.
    Keywords: Housing Demand Estimation; Micro & Macro Analysis; Default Risk; Financial Institutions
    JEL: G2 P25 G32 E6 R21 G21
    Date: 2008–04–01
  5. By: Zenou, Yves (Research Institute of Industrial Economics (IFN))
    Abstract: We propose a spatial search-matching model where both job creation and job destruction are endogenous. Workers are ex ante identical but not ex post since their job can be hit by a technological shock, which decreases their productivity. They reside in a city and commuting to the job center involves both pecuniary and time costs. Thus, workers with high wages are willing to live closer to jobs to save on time commuting costs. We show that, in equilibrium, there is a one-to-one correspondence between the productivity space and the urban location space. Workers with high productivities and wages reside close to jobs, have low commuting costs and pay high land rents. We also show that higher commuting costs and higher unemployment benefits lead to more job destruction.
    Keywords: Job Search; Commuting Costs; Wage Distribution; Urban Land Use
    JEL: D83 J41 J64 R14
    Date: 2008–06–19
  6. By: Zenou, Yves (Research Institute of Industrial Economics (IFN))
    Abstract: We develop a model where information about jobs is essentially obtained through friends and relatives, i.e. strong and weak ties. Workers commute to a business center to work and to interact with other people. We find that housing prices increase with the level of social interactions in the city because information about jobs is transmitted more rapidly and, as a result, individuals are more likely to be employed and to be able to pay higher land rents. We also show that, under some conditions, workers using more their weak ties than strong ties to find a job receive a higher wage. We finally demonstrate that workers living far away from jobs pay lower housing prices but experience higher unemployment rates than those living close to jobs because they mainly rely on their strong ties to obtain information about jobs.
    Keywords: Weak Ties; Labor Market; Social Networks; Land Rent
    JEL: A14 J60 R14
    Date: 2008–06–19
  7. By: Leo Feler; J. Vernon Henderson
    Abstract: Localities in developed countries often restrict construction and population growth through regulations governing land usage, lot sizes, building heights, and frontage requirements. In developing countries, such policies are less effective because of the existence of unregulated, informal housing markets. Cities in developing countries that seek to limit in-migration must also discourage entry into informal housing by providing low levels of public services to this sector. In this paper, we analyze the causes of slums, using data from Brazilian urban areas. We develop a model of the decisions that localities make to affect in-migration and find evidence that localities act strategically. Richer and larger localities in an urban area reduce provision of water and sewerage connections to the smaller houses in which poorer migrants would live to discourage the in-migration of these poorer migrants and deflect them to other localities. We also find that under-servicing smaller houses reduces the population growth rate of localities. Not only does it reduce the in-migration of low-educated households, it seems that, because of negative externalities, such under-servicing also reduces the growth rate of higher-educated households.
    JEL: D7 H7 J6 O15 O54 R5
    Date: 2008–06
  8. By: José M. R. Freire da Silva
    Abstract: Describing primary schools in a small city in Portugal is an opportunity for an overall look at the evolution of schools in general as special public buildings. A look at four of the six primary schools in the city of Caldas da Rainha shows how these public buildings have evolved, what they represent to the community, and how their architecture has corresponded to changing concepts in education and demands for flexibility over the years.
    Keywords: Portugal, school building design, learning environment, educational buildings, school infrastructure, primary school
    Date: 2008–06
  9. By: Birkelöf, Lena (Department of Economics, Umeå University)
    Abstract: The purpose of this paper is to study the determinants of the differences in expenditure on services for functionally impaired individuals among municipalities in Sweden. Expenditure per capita differs greatly across municipalities, even when accounting for the nature of the service. A spatial autoregressive model is used to test whether the decisions on the expenditure level in a neighboring municipality affect the municipality’s own expenditure. The results show that a positive spatial interaction exists among neighbors. However, when controlling for level differences among counties the spatial interaction coefficient becomes negative although not significantly determined. Therefore, the positive interaction first found can be interpreted either as a result of differences in the way county councils diagnose individuals or due to interaction or mimicking among neighbors belonging to the same county council.
    Keywords: Local Public Expenditures; Spatial Econometrics; Functional Impairment
    JEL: H72 I18 R12
    Date: 2008–06–27
  10. By: Ross, Stephen L. (University of Connecticut); Zenou, Yves (Research Institute of Industrial Economics (IFN))
    Abstract: Recent theoretical work has examined the spatial distribution of unemployment using the efficiency wage model as the mechanism by which unemployment arises in the urban economy. This paper extends the standard efficiency wage model in order to allow for behavioral substitution between leisure time at home and effort at work. In equilibrium, residing at a location with a long commute affects the time available for leisure at home and therefore affects the trade-off between effort at work and risk of unemployment. This model implies an empirical relationship between expected commutes and labor market outcomes, which is tested using the Public Use Microdata sample of the 2000 U.S. Decennial Census. The empirical results suggest that efficiency wages operate primarily for blue collar workers, i.e. workers who tend to be in occupations that face higher levels of supervision. For this subset of workers, longer commutes imply higher levels of unemployment and higher wages, which are both consistent with shirking and leisure being substitutable.
    Keywords: Efficiency Wage; Leisure; Urban Unemployment
    JEL: J41 R14
    Date: 2008–06–19
  11. By: Giorgio Ponti
    Abstract: The design of this flexible school for early childhood education in Milan, Italy, takes into account children’s development and the different ways they experience space according to their age. The facilities will include not only a nursery school and kindergarten, but also a drop-in day-care centre, a play centre and outdoor areas to develop the senses.
    Keywords: Italy, flexibility, learning environment, educational buildings, early childhood education, educational architecture
    Date: 2008–06
  12. By: Harlan Dimas (School of Economics-Faculty of Economics Padjadjaran University)
    Abstract: Of the many trials faced by city managers in developing countries, one of the most challenging is undoubtedly the Street Vendors (SV) problem. They are a perpetual problem for street and sidewalk users in most Indonesian cities. Their spill-over business onto roadways is the source of traffic congestion. Their informal setting and business refuse (garbage) cause unsightly urban vista. However there is now a gradual shift of perspectives that focus on their economic potentials, offering a smart city manager a host of development opportunities. Hence the current policy of harassment and elimination of SV, as practiced by most municipalities in Indonesia, is counter productive at best and inhuman at worst. This paper discusses the roots of the SV phenomenon (found to be mostly economics) and suggests several SV management solutions sampled from best practices from around the world.
    Keywords: Street Vendors Management, Economic Policy, Best Practices, Local (Urban) Economic Development
    JEL: P25
    Date: 2008–06
  13. By: Jennifer Imazeki (Department of Economics, San Diego State University)
    Abstract: This study synthesizes what we know and do not know about policies to attract and retain teachers in high-need schools and assesses the relative cost-effectiveness of two types of policies. Research consistently shows that teacher quality is likely to be lower in schools with higher proportions of students from disadvantaged backgrounds. This pattern is likely a result of several factors but the most well-documented is teachers’ mobility choices within and across districts. Although there are numerous programs across the country intended to attract and retain highly-skilled teachers in high-need schools, there is very little assessment of their effectiveness. Given the lack of evidence on specific interventions, I use the results from existing studies of teacher mobility and attrition to compare the effect of salary incentives and induction or mentoring programs. Although financial incentives are arguably the most straightforward policies for states and districts to adopt, high-need schools may be better served if policymakers and researchers devoted more attention to more cost-effective alternatives.
    Date: 2008–01
  14. By: Mihir A. Desai; Dhammika Dharmapala; Monica Singhal
    Abstract: The Low Income Housing Tax Credit (LIHTC) represents a novel tax expenditure program that employs "investable" tax credits to spur production of low-income rental housing. While it has grown into the largest source of new affordable housing in the U.S. and its structure is now being replicated in other programs, the LIHTC has also drawn skepticism and calls for its repeal. This paper outlines a conceptual framework for exploring the conditions under which investable tax credits may be the most effective mechanism to deliver a production subsidy and discusses the desirability of employing investable tax credits in other policy domains. Estimates of tax expenditures under this program are provided and efficiency costs, distributional issues, and the likely effects of reforms to tax provisions such as the AMT are considered.
    JEL: H2 H76 R31 R51
    Date: 2008–06
  15. By: Tom Broekel (Department of Economic Geography, Faculty of Geosciences, Utrecht University, The Netherlands); Andreas Meder (School of Economics and Business Administration, Friedrich Schiller University Jena, Germany)
    Abstract: Studies analyzing the importance of intra- and inter-regional cooperation for regional innovation performance are mainly of qualitative nature and focus strongly on the positive effects that high levels of cooperation can yield. For the case of the German labor market regions and the Electrics + Electronics industry the paper provides a quantitative-empirical analysis taking into account the possibility of negative effects related to regional lock-in, lock-out, and cooperation overload situations. Using conditional nonparametric frontier techniques and cooperation behavior measures we ï¬nd positive as well as substantial negative effects of cooperation with the latter being induced by excessive and unbalanced cooperation behavior.
    Keywords: regional innovation performance, cooperation, lock-out, lock-in, cooperation overload
    JEL: R12 O18 O31
    Date: 2008–06–26
  16. By: Mark Robinson
    Abstract: Booker Park School is a new complex for pre-primary children and primary pupils with a range of behavioural and learning difficulties. To respond to the pupils’ varied needs, the school facilities offer a high degree of flexibility and a quality environment for learning.
    Keywords: United Kingdom, flexibility, school building design, educational buildings, special needs, primary school
    Date: 2008–06
  17. By: Henry G. Overman; Diego Puga
    Abstract: We provide empirical evidence on the role of labour market pooling in determining the spatial concentration of UK manufacturing establishments. This role arises because large concentrations of employment iron out idiosyncratic shocks and improve establishments\' ability to adapt their employment to good and bad times. We measure the likely importance of labour pooling by calculating the fluctuations in employment of individual establishments relative to their sector and averaging by sector. Our results show that sectors whose establishments experience more idiosyncratic volatility are more spatially concentrated, even after controlling for a range of other industry characteristics that include a novel measure of the importance of localized intermediate suppliers.
    Keywords: labour market pooling; spatial concentration
    JEL: R30
    Date: 2008–06–23
  18. By: Rangan Gupta (Department of Economics, University of Pretoria); Sonali Das (LQM, CSIR, Pretoria)
    Abstract: This paper estimates Bayesian Vector Autoregressive (BVAR) models, both spatial and non-spatial (univariate and multivariate), for the twenty largest states of the US economy, using quarterly data over the period 1976:Q1 to 1994:Q4; and then forecasts one-to-four quarters ahead real house price growth over the out-of-sample horizon of 1995:Q1 to 2006:Q4. The forecasts are then evaluated by comparing them with the ones generated from an unrestricted classical Vector Autoregressive (VAR) model and the corresponding univariate variant the same. Finally, the models that produce the minimum average Root Mean Square Errors (RMSEs), are used to predict the downturns in the real house price growth over the recent period of 2007:Q1 to 2008:Q1. The results show that the BVARs, in whatever form they might be, are the best performing models in 19 of the 20 states. Moreover, these models do a fair job in predicting the downturn in 18 of the 19 states, however, they always under-predict the size of the decline in the real house price growth rate – an indication of the need to incorporate the role of fundamentals in the models.
    Keywords: BVAR Model; BVAR Forecasts; Forecast Accuracy; SBVAR Model; SBVAR Forecasts; VAR Model; VAR Forecasts
    JEL: E17 E27 E37 E47
    Date: 2008–06
  19. By: Lindqvist, Erik (Research Institute of Industrial Economics (IFN))
    Abstract: A wide range of services provided by the public sector are credence goods, i.e., services for which the producer has private information whether a certain treatment is needed or not. This paper studies how ownership affects the incentives for producers to reveal such information to public procurers. I develop a model where procurers buy a more extensive treatment in case quality is high. Private firms have strong incentives to reduce cost and must be given rents in order not to shirk on non-contractible quality. The existence of rents makes private firms try to induce demand for unnecessary treatments. Public sector managers have no incentive to cut cost, implying that optimal contracts don't entail rents unless quality is very important. Public sector managers instead use their informational advantage to avoid unpleasant tasks. Empirical evidence from residential care for teenagers with behavioral problems supports the model's predictions. Private ownership prolongs the duration of treatment by more than a year, doubling total cost. Unlike private facilities, public facilities are much more likely to initiate treatment breakdowns for teenagers that are particularly burdensome to treat.
    Keywords: Privatization; Public Sector Contracting; Credence Goods; Incomplete Contracts; Contracting Out; Residential Youth Care; Juvenile Delinquency
    JEL: H11 H40 L32 L33
    Date: 2008–06–04
  20. By: Sonali Das (LQM, CSIR, Pretoria); Rangan Gupta (Department of Economics, University of Pretoria); Alain Kabundi (Department of Economics and Econometrics, University of Johannesburg)
    Abstract: This paper uses the Dynamic Factor Model (DFM) framework, which accommodates a large cross-section of macroeconomic time series for forecasting regional house price inflation. As a case study, we use data on house price inflation for five metropolitan areas of South Africa. The DFM used in this study contains 282 quarterly series observed over the period 1980Q1-2006Q4. The results, based on the Mean Absolute Errors of one- to four-quarters-ahead out of sample forecasts over the period of 2001Q1 to 2006Q4, indicate that, in majority of the cases, the DFM outperforms the VARs, both classical and Bayesian, with the latter incorporating both spatial and non-spatial models. Our results, thus, indicate the blessing of dimensionality.
    Keywords: Dynamic Factor Model, VAR, BVAR, Forecast Accuracy
    JEL: C11 C13 C33 C53
    Date: 2008–06
  21. By: Daniel C. Monchuk; Dermot J. Hayes (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); John Miranowski
    Abstract: This study examines correlates with aggregate county income growth across the 48 contiguous states from 1990 to 2001. Since visual inspection of the variable to be explained shows a clear spatial relationship and to control for potentially endogenous variables, we estimate a two-stage spatial error model. Given the lack of theoretical and asymptotic results for such models, we propose and implement a number of spatial bootstrap algorithms, including one allowing for heteroskedasticity, to infer parameter significance. Among the results of a comparison of the marginal effects in rural versus non-rural counties, we find that outdoor recreation and natural amenities favor positive growth in rural counties, densely populated rural areas enjoy stronger growth, and property taxes correlate negatively with rural growth.
    Keywords: county income growth, rural development, spatial bootstrapping.
    Date: 2008–06
  22. By: Khanam, Rasheda; Ross, Russell
    Abstract: The paper examines the linkages between child work and both school attendance and school attainment of children aged 5–17 years using data from a survey based in rural Bangladesh. This paper first looks at school attendance as an indicator of a child’s time input in schooling; then it measures the “schooling-for-age” as a learning achievement or schooling outcome. The results from the logistic regressions show that school attendance and grade attainment are lower for children who are working. The gender-disaggregated estimates show that probability of grade attainment is lower for girls than that of boys. Household permanent income, parental education and supply side correlates of schooling (presence of a primary (grade 1-6) school and secondary (grade 6-10) school in the village) are appeared to be significant determinants of schooling in rural Bangladesh. The results of this study further show that the effect of household permanent income, parental education and presence of secondary school is higher for grade attainment than school attendance.
    Keywords: Schooling; Child Labour; Logit; Bangladesh
    JEL: J13 I21 C25 O12
    Date: 2005–03
  23. By: Andersson, Linda (Department of Business, Economics, Statistics and Informatics); Henriksen, Anna (Department of Business, Economics, Statistics and Informatics)
    Abstract: The objective of this paper is to analyze the determinants of local expenditures on mental health care in Sweden. We use a unique dataset that identifies the localities’ expenditures explicitly directed towards mental health care. Based on these data we find that there is increasing returns to scale in the provision of local mental health services in terms of population. However, it appears as if local policy variables, local earnings potential (economic opportunities), geographical area or other indicators that have been put forward in the debate, cannot explain the large variation in local expenditures on mental health care in
    Keywords: local expenditures; mental health care
    JEL: H72 I18 I38
    Date: 2008–06–25
  24. By: Benjamin A. Olken
    Abstract: This paper presents an experiment where 48 Indonesian villages were randomly assigned to choose development projects through either representative-based meetings or direct election-based plebiscites. Plebiscites resulted in dramatically higher satisfaction among villagers, increased knowledge about the project, greater perceived benefits, and higher reported willingness to contribute. Changing the political mechanism had much smaller effects on the actual projects selected, with some evidence that plebiscites resulted in projects chosen by women being located in poorer areas. The results show that direct participation in political decision making can substantially increase satisfaction and legitimacy, even when it has little effect on actual decisions.
    JEL: D72
    Date: 2008–06
  25. By: Dirk G. Baur and Conor McKeating
    Abstract: This study analyzes the evolution of house prices in Ireland and investigates the question of whether Irish households are overexposed to certain economic risks rendering the decision to buy a house too risky and hence irrational. We use a simple theoretical framework to demonstrate the investment options of a typical household and derive the risk factors associated with the purchase of a house with respect to other types of investment. Irish households hold the majority of their investments in property, specifically in their own houses. The empirical results illustrate that this wealth is exposed to inflation, interest rate changes and the business cycle. This exposure, while not problematic in times of low interest rates, moderate inflation and economic expansion, amplifies the risk to the value of households’ investments if inflation increases, interest rates rise or the economy is in recession. We argue that the adoption of the euro has increased this risk because interest rates are exogenous to the Irish economy which could lead to a situation of deteriorating economic conditions and rising interest rates. Our findings indicate that Irish households potentially underestimate the risk of buying a house. Viewing the purchase of a house as a risky investment could help reduce private debt in the future.
    Date: 2008–06–06
  26. By: Thibault Fally (PSE – Paris School of Economics); Rodrigo Paillacar (CES – Université de Paris 1); Cristina Terra (THEMA – Université de Cergy-Pontoise, EPGE – Fundação Getulio Vargas)
    Abstract: This paper estimates the impact of market and supplier access on wage disparities across Brazilian states, incorporating the control of individual characteristics to the new economic geography methodology. We estimate market and supplier access disaggregated by industry, and we compute separately access to international and internal markets. We find a strong correlation between market access and wages differentials, even after controlling for individual characteristics, firm productivity, the source of market access (international, national or local), and using instrumental variables. Furthermore, market access turns out to be more important than supplier access.
    Date: 2008
  27. By: Kurt Geppert; Martin Gornig; Anna Lejpras
    Abstract: Trade theory and economic geography suggest that the removal of trade barriers is likely to bring about more economic specialisation and potentially more diverse development paths between countries and regions. Thus, the deepening and extending European integration should be accompanied by an increasing regional specialisation. In contrast, our results for the period from 1995 to 2004 show considerably declining differences in the share of manufacturing in total value added across nations and regions of the EU. The decrease in sectoral specialisation is accompanied by a strong and almost uniform process of deindustrialisation. However, this trend is slowing down and manufacturing shares appear to be gradually approaching lower limits. These bounds are specific according to national affiliation and settlement types of regions.
    Keywords: Regional specialisation, deindustrialisation, EU, nonlinear modelling
    JEL: R11 O14 O18
    Date: 2008
  28. By: Fougère, Denis; Gautier, Erwan; Le Bihan, Hervé
    Abstract: We examine the effect of the minimum wage on restaurant prices. For that purpose, we estimate a price rigidity model by exploiting a unique dataset of individual price quotes used to calculate the Consumer Price Index in France. We find a positive and significant impact of the minimum wage on prices. We obtain that the effect of the minimum wage on prices is very protracted. The aggregate impact estimated with our model takes more than a year to fully pass through to retail prices.
    Keywords: Inflation; Minimum wage; Price stickiness; Restaurant prices
    JEL: D43 E31 L11
    Date: 2008–06

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