nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2008‒09‒13
thirty-six papers chosen by
Steve Ross
University of Connecticut

  1. The Foreclosure-House Price Nexus: Lessons from the 2007-2008 Housing Turmoil By Charles W. Calomiris; Stanley D. Longhofer; William Miles
  2. Does urban sprawl increase the costs of providing local public services? Evidence from Spanish municipalities By Albert Solé-Ollé; Miriam Hortas Rico
  3. Parents, peers, or school inputs: Which components of school outcomes are capitalized into house value? By David M. Brasington; Donald R. Haurin
  4. Active Transport, Public Transportation, and Obesity in Metropolitan Areas of the United States. By Thomas K. Tiemann; Paul Miller; Erika Lamanna
  5. An Empirical Analysis of Teacher Spillover Effects in Secondary School By Cory Koedel
  6. Housing Busts and Household Mobility By Fernando Ferreira; Joseph Gyourko; Joseph Tracy
  7. New Evidence on Gibrat’s Law for Cities By González-Val, Rafael; Lanaspa, Luis; Sanz, Fernando
  8. Agglomeration and Growth : Cross-Country Evidence By Marius BRÜLHART; Federica SBERGAMI
  9. Understanding Efficiency Differences of Schools: Practitioners' Views on Students, Staff Relations, School Management and the Curriculum By Tanja Kirjavainen
  10. Teacher Preparation and Student Achievement By Donald Boyd; Pamela Grossman; Hamilton Lankford; Susanna Loeb; James Wyckoff
  11. Do We Care about Built Cultural Heritage? The Empirical Evidence Based on the Veneto House Market By Paolo Rosato; Lucia Rotaris; Margaretha Breil; Valentina Zanatta
  13. Additive Hedonic Regression Models with Spatial Scaling Factors: An Application for Rents in Vienna By Wolfgang Brunauer; Stefan Lang; Peter Wechselberger; Sven Bienert
  14. Fiscal policy instruments for reducing congestion and atmospheric emissions in the transport sector : a review By Timilsina, Govinda R.; Dulal, Hari B.
  15. Housing, Health and Happiness By Matias Cattaneo; Sebastian Galiani; Paul Gertler; Sebastian Martinez; Rocio Titiunik
  16. Staying Together for the Sake of the Home? House Price Shocks and Partnership Dissolution in the UK By Helmut Rainer; Ian Smith
  17. The Impact of Intergovernmental Grants on Cost Efficiency: Theory and Evidence from German Municipalities By Kalb, Alexander
  18. Pitfalls of Participatory Programs: Evidence From a Randomized Evaluation in Education in India By Abhijit Banerjee; Rukmini Banerji; Esther Duflo; Rachel Glennerster; Stuti Khemani
  19. A Choice Modelling Approach for Assessment of Use and Quasi-Option Values in Urban Planning for Areas of Environmental Interest By Elisabetta Strazzera; Elisabetta Cherchi; Silvia Ferrini
  20. Determinants of land use changes: a spatial multinomial probit approach By Olivier Parent; Raja Chakir
  21. Local Social Capital and Geographical Mobility: A Theory By David, Quentin; Janiak, Alexandre; Wasmer, Etienne
  22. What we can learn from a comparison of the schooling systems of South Africa and Argentina By Martin Gustafsson; Alejandro Morduchowicz
  23. Imputed Rental Income, Taxation and Income Distribution in Finland By Saarimaa; Tuukka
  24. Local Social Capital and Geographical Mobility: Some Empirics and a Conjecture on the Nature of European Unemployment By David, Quentin; Janiak, Alexandre; Wasmer, Etienne
  25. Footloose Capital and Locational Advantage of a Hub By Kikuchi, Toru
  26. Pitfalls of participatory programs : evidence from a randomized evaluation in education in India By Banerjee, Abhijit V.; Banerji, Rukmini; Duflo, Esther; Glennerster, Rachel; Khemani, Stuti
  27. Value-Added to What? How a Ceiling in the Testing Instrument Influences Value-Added Estimation By Cory Koedel; Julian Betts
  28. Pricing and investment of cross-border transport infrastructure By Se-il Mun; Shintaro Nakagawa
  29. I-35W Bridge Collapse: Travel Impacts and Adjustment Strategies By Nebiyou Tilahun; David Levinson
  30. Transport and welfare consequences of infrastructure investment : a case study for the Betuweroute By Koetse, M.J.; Rouwendal, J.
  31. Inferences for Selected Location Quotients with Applications to Health Outcomes. By Gemechis D. Djira; Frank Schaarschmidt; Bichaka Fayissa
  32. Quality of schooling, returns to schooling and the 1981 vouchers reform in Chile By Patrinos, Harry Anthony
  33. Do community-driven development projects enhance social capital ? evidence from the Philippines By Labonne, Julien; Chase, Robert S.
  34. The impact of cash transfers on school enrollment : evidence from Ecuador By Oosterbeek, Hessel; Ponce, Juan; Schady, Norbert
  35. A model for pricing real estate derivatives with stochastic interest rates By Ciurlia, Pierangelo; Gheno, Andrea
  36. Habit Formation, Information Exchange and the Social Geography of Demand By Babutsidze, Zakaria; Cowan, Robin

  1. By: Charles W. Calomiris; Stanley D. Longhofer; William Miles
    Abstract: Despite housing's importance to the economy and worries about recent financial and economic turmoil traceable to housing market difficulties, little has been written on how distress in the housing market, measured by foreclosures, affects home prices, or how these variables interact with other macroeconomic or housing variables such as employment, housing permits or sales. Employing a panel VAR model to examine quarterly state-level data, our paper is the first to systematically analyze these interactions. There is substantial regional variation across states, which facilitates our ability to identify linkages among variables. Importantly, price-foreclosure linkages work in both directions; foreclosures have a significant, negative effect on home prices, while an increase in prices alleviates distress by lowering foreclosures. Similarly, employment and foreclosures have mutually negative effects on each other. The impact of foreclosures on prices, while negative and significant, is quite small in magnitude. We demonstrate this by simulating house price changes in response to extreme foreclosure shocks. Even under extremely pessimistic scenarios for foreclosure shocks, average U.S. house prices, as measured by the comprehensive OFHEO house price index (which we argue is the most reliable and useful measure of house prices to use for our purposes), likely would decline only slightly or remain essentially flat in response to foreclosures like those predicted for the 2008-2009 period. This suggests that home prices are quite sticky, and that fears of a major fall in house prices, with all of its attendant negative macroeconomic consequences, typically are not warranted even in extreme foreclosure circumstances.
    JEL: R21 R31
    Date: 2008–09
  2. By: Albert Solé-Ollé (Universitat de Barcelona & IEB); Miriam Hortas Rico (Universitat de Barcelona & IEB)
    Abstract: This paper examines the impact of urban sprawl, a phenomenon of particular interest in Spain, which is currently experiencing this process of rapid, low-density urban expansion. Many adverse consequences are attributed to urban sprawl (e.g., traffic congestion, air pollution and social segregation), though here we are concerned primarily with the rising costs of providing local public services. Our initial aim is to develop an accurate measure of urban sprawl so that we might empirically test its impact on municipal budgets. Then, we undertake an empirical analysis using a cross-sectional data set of 2,500 Spanish municipalities for the year 2003 and a piecewise linear function to account for the potentially nonlinear relationship between sprawl and local costs. The estimations derived from the expenditure equations for both aggregate and six disaggregated spending categories indicate that low-density development patterns lead to greater provision costs of local public services.
    Keywords: Urban sprawl, local public spending.
    JEL: H1 H72 R51
    Date: 2008
  3. By: David M. Brasington; Donald R. Haurin
    Abstract: Previous research has established that people bid more for houses in high-performing school districts. But what is it about school outcomes that drive house prices: the parents, the peers, or the school inputs? We study the extent that house values are affected by each of the components of an education production function. Based on 123 school districts and 26,000 house transactions, we find the primary component of school outcomes that is capitalized into house prices is the amount of parental inputs. In the explanation of variations in house prices, variations in parental characteristics are eight times more important than similar variations in school inputs, and twelve times more important than variations in peer groups. This result suggests that land values in a particular community will be increased more by attention to zoning laws that influence the mix of renters to homeowners and the type of households entering a community compared to investing in additional public school inputs.
    Date: 2008
  4. By: Thomas K. Tiemann (Department of Economics, Elon University); Paul Miller (Department of Health and Human Performance, Elon University); Erika Lamanna (Department of Economics, Elon University)
    Abstract: There is a well established relationship between exercise and weight in individuals. Recently, relationships between less urban sprawl and more leisure exercise and between certain urban characteristics usually associated with less sprawl and exercise for transportation have been found. This paper completes the less-sprawl-more exercise for transportation-lower weight sequence by finding that counties in metropolitan areas where more people complete their journey to work by walking, biking, or taking public transportation have fewer people who are overweight.
    JEL: I18 R10
    Date: 2008–07
  5. By: Cory Koedel (Department of Economics, University of Missouri-Columbia)
    Abstract: This paper examines whether educational production in secondary school involves joint production among teachers across subjects. In doing so, it also provides insights into the reliability of value-added modeling. Teacher value- added to reading test scores is estimated for four different teacher types: English, math, science and social studies. While the initial results indicate that reading output is jointly produced by math and English teachers, post-estimation falsification tests debunk the math-teacher effects - that is, there is in fact no evidence of joint production in secondary school. The results offer a mixed review of the value-added methodology, suggesting that it may be useful in some contexts but not others. .
    Keywords: value-added, teacher quality, secondary school teachers, educational production
    JEL: I20
    Date: 2008–07–22
  6. By: Fernando Ferreira; Joseph Gyourko; Joseph Tracy
    Abstract: Using two decades of American Housing Survey data from 1985-2005, we estimate the impact on household mobility of owners having negative equity in their homes and of rising mortgage interest rates. We find that both lead to lower, not higher, mobility rates over time. The impacts are economically large, with mobility being almost 50 percent lower for owners with negative equity in their homes. This does not imply that current worries about defaults and owners having to move from their homes are entirely misplaced. It does indicate that, in the past, the lock-in effects of these two factors were dominant over time. Our results cannot simply be extrapolated to the future, but policy makers should begin to consider the consequences of lock-in and reduced household mobility because they are quite different from those associated with default and higher mobility.
    JEL: R0 R21 R23
    Date: 2008–09
  7. By: González-Val, Rafael; Lanaspa, Luis; Sanz, Fernando
    Abstract: The aim of this work is to test empirically the validity of Gibrat’s Law in the growth of cities, using data for all the twentieth century of the complete distribution of cities (without any size restrictions) in three countries: the US, Spain and Italy. On considering the distribution of cities, we find a tendency to divergence. However, this fact does not impede, whether from an empirical or a theoretical point of view, that city size distribution can be adequately approximated with a lognormal distribution. Also, the conclusions which can be obtained as to fulfilment or not of Gibrat’s Law depend, first, on the sample size and, second, on the size of the cities being considered (large or small), which means that the results of any study which does not use all the distribution will be relative.
    Keywords: Gibrat’s Law; city size distribution; urban growth
    JEL: C14 R00
    Date: 2008–09–05
  8. By: Marius BRÜLHART; Federica SBERGAMI
    Abstract: We investigate the impact of within-country spatial concentration of economic activity on country-level growth, using cross-section OLS and dynamic panel GMM estimation. Agglomeration is measured alternatively through measures of urbanization and through indices of spatial concentration based on data for sub-national regions. Across estimation techniques, data sets and variable definitions, we find evidence that supports the "Williamson hypothesis": agglomeration boosts GDP growth only up to a certain level of economic development. The critical level is estimated at some USD 10,000, corresponding roughly to the current per-capita income level of Brazil or Bulgaria. This implies that the tradeoff between national growth and inter-regional equality may gradually lose its relevance.
    Keywords: economic growth; agglomeration; urbanization; dynamic panel estimation
    JEL: O4 R11 R12
    Date: 2008–04
  9. By: Tanja Kirjavainen
    Abstract: This study analyses the views of the staff members of nine upper secondary schools in Finland that were in the upper or lower tails of the efficiency distribution measured with stochastic frontier analysis. Teachers and principals were interviewed on their views about the students, staff relations, school management, curriculum work, parent-school relations, teacher training, and evaluation .In efficient schools, views concerning the students were caring, appreciating all students. Respecting views were also present, with students? own initiative being appreciated. In inefficient schools there was more often frustration or disappointment at the low performance of the students. In efficient schools, staff relations were professional, whereas in some inefficient schools it was characterized as tense. Management and decision making were participative in efficient schools and teachers were happy with their possibilities to influence school matters. In inefficient schools, there were disappointments and frustrated views about the management and possibilities to have an influence. Curriculum work was seen as way to develop the school and the work in efficient schools. In inefficient schools, it was considered as an administrative measure.
    Keywords: Efficiency, upper secondary schools, school management, staff relations, stochastic frontier analysis
    Date: 2008–09–02
  10. By: Donald Boyd; Pamela Grossman; Hamilton Lankford; Susanna Loeb; James Wyckoff
    Abstract: There are fierce debates over the best way to prepare teachers. Some argue that easing entry into teaching is necessary to attract strong candidates, while others argue that investing in high quality teacher preparation is the most promising approach. Most agree, however, that we lack a strong research basis for understanding how to prepare teachers. This paper is one of the first to estimate the effects of features of teachers' preparation on teachers' value-added to student test score performance in math and English Language Arts. Our results indicate variation across preparation programs in the average effectiveness of the teachers they are supplying to New York City schools. In particular, preparation directly linked to practice appears to benefit teachers in their first year.
    JEL: I20 I21 I28 J24 J45
    Date: 2008–09
  11. By: Paolo Rosato (Fondazione Eni Enrico Mattei); Lucia Rotaris (Fondazione Eni Enrico Mattei and Università di Trieste); Margaretha Breil (Fondazione Eni Enrico Mattei); Valentina Zanatta (Fondazione Eni Enrico Mattei)
    Abstract: Italian historical buildings require urgent and costly maintenance and restoration works, but neither the local, nor the national public administrators can afford these expenditures. Nevertheless the built cultural heritage represent a unique resource of the territory, as it embodies the local social, historical, and cultural values, generates positive externalities (Musgrave, 1959), and stimulates economic activities mainly related to tourism. Is it possible to quantify how much we care about historical buildings and to measure this value in monetary terms? The aim of this paper is to answer to this question via the hedonimetric approach. Specifically, we try to verify if the proximity to historical villas, districts, palaces, squares, fortresses, religious buildings and archeological site systematically influence the house market equilibrium price in the Veneto region (Italy). The paper is organized as follows: in section two a brief review of the literature is reported, in section three the database used for the hedonimetric estimates is described, in section four the econometric models and the results we had obtained are illustrated, and in section five some final comments are drawn.
    Keywords: Cultural Heritage Externalities, Hedonic Housing Price Method
    JEL: Z1 D62 Q51
    Date: 2008–07
  12. By: Jason P. Brown; Raymond J.G.M. Florax; Kevin T. McNamara (Department of Agricultural Economics, College of Agriculture, Purdue University)
    Abstract: The paper starts with a discussion of a conceptual model of location factors in U.S. manufacturing investment at the state level. The purpose of the paper is to test the relative importance of growth factors influencing investment and whether or not they have changed in importance over time. These factors include agglomeration, market structure, labor, infrastructure, and fiscal policy. A better understanding of investment flows in the manufacturing sector will help determine how growth factors have changed over time and which economic development policies may be most appropriate at targeting the sector. The analysis covers the time period 1994 to 2006 for the 48 contiguous states, with data taken from the Annual Survey of Manufactures, the Bureau of Economic Analysis, and the Bureau of Labor Statistics. Panel methods are used to test for fixed effects due to heterogeneity across states. Spatial panel methods with time effects are used for determination and specification of spatial and temporal effects. Empirical results are consistent across the empirical models put forth. Results suggest that market demand remains one of the most important location factors of manufacturing investment. Investment also goes to states with more productive labor and localized agglomeration of manufacturing activity.
    Keywords: manufacturing, investment, location factors
    JEL: L60 R11 R30
    Date: 2008
  13. By: Wolfgang Brunauer; Stefan Lang; Peter Wechselberger; Sven Bienert
    Abstract: We apply additive mixed regression models (AMM) to estimate hedonic price equations. Non-linear effects of continuous covariates as well as a smooth time trend are modeled non-parametrically through P-splines. Unobserved district-specific heterogeneity is modeled in two ways: First, by location specific intercepts with the postal code serving as a location variable. Second, in order to permit spatial variation in the nonlinear price gradients, we introduce multiplicative scaling factors for nonlinear covariates. This allows highly nonlinear implicit price functions to vary within a regularized framework, accounting for district-specific spatial heterogeneity. Using this model extension, we find substantial spatial variation in house price gradients, leading to a considerable improvement of model quality and predictive power.
    Keywords: Hedonic regression, submarkets, multiplicative spatial scaling factors, semiparametric models, P-splines
    Date: 2008–08
  14. By: Timilsina, Govinda R.; Dulal, Hari B.
    Abstract: This paper reviews the literature on the fiscal policy instruments commonly used to reduce transport sector externalities. The findings show that congestion charges would reduce vehicle traffic by 9 to 12 percent and significantly improve environmental quality. The vehicle tax literature suggests that every 1 percent increase in vehicle taxes would reduce vehicle miles by 0.22 to 0.45 percent and CO2 emissions by 0.19 percent. The fuel tax is the most common fiscal policy instrument; however its primary objective is to raise government revenues rather than to reduce emissions and traffic congestion. Although subsidizing public transportation is a common practice, reducing emissions has not been the primary objective of such subsidies. Nevertheless, it is shown that transport sector emissions would be higher in the absence of both public transportation subsidies and fuel taxation. Subsidies are also the main policy tool for the promotion of clean fuels and vehicles. Although some studies are very critical of biofuel subsidies, the literature is mostly supportive of clean vehicle subsidies.
    Keywords: Transport Economics Policy&Planning,Environmental Economics&Policies,Transport and Environment,Taxation&Subsidies,Transport in Urban Areas
    Date: 2008–06–01
  15. By: Matias Cattaneo (Department of Economics, University of Michigan); Sebastian Galiani (Department of Economics, Washington University in St. Louis); Paul Gertler (Haas Business School, University of California); Sebastian Martinez (World Bank); Rocio Titiunik (Department of Agricultural and Resource Economics, University of California)
    Abstract: Despite the importance of housing for people’s well-being, there is little evidence on the causal impact of housing and housing improvement programs on health and welfare. In this paper, we help to fill this gap by investigating the impact of a large-scale effort by the Mexican Government to replace dirt floors with cement floors on child health and adult happiness. We find that replacing dirt floors with cement floors significantly improves the health of young children. Specifically, we find significant decreases in the incidence of parasitic infestations, diarrhea, and the prevalence of anemia, and an improvement in children’s cognitive development. Additionally, we find that replacing dirt floors by cement floors significantly improves adult welfare, as measured by increased satisfaction with their housing and quality of life, as well as by lower scores on depression and perceived stress scales.
    JEL: I12 I38 H43
    Date: 2008–08
  16. By: Helmut Rainer; Ian Smith
    Abstract: This paper explores the importance of unanticipated house price shocks for marital dissolution in the UK using individual household data from the British Household Panel Survey (BHPS) and county-level house price data from the Halifax House Price Index (HHPI). Results suggest that positive and negative house price shocks have asymmetric eects on the probability of partnership dissolution. Negative house price shocks significantly increase the risk of partnership dissolution, while positive house price shocks do not have a significant eect in general. The destabilizing eect of negative house price shocks is particularly pronounced for couples with dependent children, low family income, and high mortgage debt. Results are robust to a wide variety of specifications.
    Keywords: House Price Shocks, Marital Dissolution.
    JEL: C23 D10 R31
    Date: 2008–08
  17. By: Kalb, Alexander
    Abstract: In this paper we use a simple bureaucracy model of fiscal illusion to analyze the impact of intergovernmental grants on the cost efficiency of local jurisdictions. We find that a higher degree of redistribution within a system of fiscal equalization or an increase in the amount of grants received by a local jurisdiction leads to an extension of organizational slack or X-inefficiency in that jurisdiction. This theoretical prediction is tested by conducting an empirical analysis using a broad panel of German municipalities. The results of the empirical analysis are consistent with the theoretical findings and therefore support the existence of a negative incentive effect of intergovernmental grants on local authorities' cost efficiency.
    Keywords: Cost efficiency, Fiscal equalisation, Intergovernmental grants, Bureaucracy, Stochastic frontier analysis, German municipalities
    JEL: H11 H77
    Date: 2008
  18. By: Abhijit Banerjee; Rukmini Banerji; Esther Duflo; Rachel Glennerster; Stuti Khemani
    Abstract: Participation of beneficiaries in the monitoring of public services is increasingly seen as a key to improving their efficiency. In India, the current government flagship program on universal primary education organizes both locally elected leaders and parents of children enrolled in public schools into committees and gives these groups powers over resource allocation, and monitoring and management of school performance. However, in a baseline survey we found that people were not aware of the existence of these committees and their potential for improving education. This paper evaluates three different interventions to encourage beneficiaries' participation through these committees: providing information, training community members in a new testing tool, and training and organizing volunteers to hold remedial reading camps for illiterate children. We find that these interventions had no impact on community involvement in public schools, and no impact on teacher effort or learning outcomes in those schools. However, we do find that the intervention that trained volunteers to teach children to read had a large impact on activity outside public schools -- local youths volunteered to be trained to teach, and children who attended these camps substantially improved their reading skills. These results suggest that citizens face substantial constraints in participating to improve the public education system, even when they care about education and are willing to do something to improve it.
    JEL: I21 O12
    Date: 2008–09
  19. By: Elisabetta Strazzera (University of Cagliari); Elisabetta Cherchi (DIT and CIREM, University of Cagliari); Silvia Ferrini (DEPFID, University of Siena, CSERGE and University of East Anglia)
    Abstract: This study adopts a discrete choice modelling methodology to evaluate individuals’ preferences over planning alternatives for an urban site of environmental interest. Since such projects involve some uncertainty and irreversibility, a special attention is devoted to the estimation of the quasi-option values which are associated to project development. Two distinct measures for the quasi-option value are estimated, and both coefficients indicate that the public places a significant value on reduction of the possibility of adverse irreversible effects: a more prudent development strategy is valued about four times more than a procedure that provides a lesser hedge against undesired outcomes. Furthermore, the study involved elicitation of intertemporal preferences over projects with different time spans, and estimation of the implicit discount rates: the values obtained seem high if compared to standard discount rates applied to public projects, but not far from current interest rates on consumption.
    Keywords: Urban Planning, Environmental Values, Choice Modelling, Use Values, Quasi-option Values, Discounting
    JEL: C35 Q51 R41
    Date: 2008–07
  20. By: Olivier Parent; Raja Chakir
    Abstract: Changes in land use patterns impact significantly environmental conditions as well as economic and social welfare. These changes are influenced by socio-economic as well as pedo-climatic factors. A good understanding of how these factors influence land use patterns would provide new dimensions to policy making and public policy evaluation. To this end, we propose a Spatial Multinomial Probit model to examine the determinants of land use change, at the parcel level, in the French D´epartement du Rhones from 1992 to 2003. It is based on an economic model that assumes that landowners have a choice between 4 land use categories for a given parcel at a given date: (1) agricultural, (2) forest, (3) urban and (4) no use. Each landowner compares costs and benefits associated with each parcel and each class and chooses the optimal land use to maximize his/her profit. We propose a Spatial Multinomial Probit model that allows for covariates and spatial dependence, and we use these features to explore the relative importance of factors that drive landowners to choose a specific land use category. Our findings suggest the presence of spatial patterns, implying that the decision to choose land use for a given parcel of land is strongly influenced by nonobserved factors in neighboring parcels. Moreover, results confirm that interdependencies among land use alternatives, accounted for in the spatial multinomial probit model by the correlation structure, are required for the estimation of land use decision.
    Date: 2008
  21. By: David, Quentin (ECARES, Free University of Brussels); Janiak, Alexandre (University of Chile); Wasmer, Etienne (Sciences Po, Paris)
    Abstract: In this paper, we attempt to understand the determinants of mobility by introducing the concept of local social capital. Investing in local ties is rational when workers anticipate that they will not move to another region. Reciprocally, once local social capital is accumulated, incentives to move are reduced. Our model illustrates several types of complementarity leading to multiple equilibria (a world of local social capital and low mobility vs. a world of low social capital and high propensity to move). It also shows that local social capital is systematically negative for mobility, and can be negative for employment, but some other types of social capital can actually raise employment.
    Keywords: European unemployment, geographical mobility, social capital
    JEL: J2 J61 Z1
    Date: 2008–08
  22. By: Martin Gustafsson (Department of Economics, University of Stellenbosch); Alejandro Morduchowicz (International Institute for Educational Planning, Buenos Aires)
    Abstract: An existing accounting framework to describe an education system is elaborated and used as a framework for understanding and comparing the resource allocation policies of the South African and Argentinean schooling systems. The comparison highlights how, by paying fewer teachers more (relative to GDP per capita), South Africa is structurally forced to deal with relatively large class sizes. Both countries have attempted to use production function studies to understand ways of improving pupil performance, and in both countries the utilisation of education human resources appears particularly important. The economic case for expanding secondary schooling is perhaps not as strong as the policies, especially those in Argentina, suggest. Whilst rates of return to secondary schooling do not appear to offer concrete policy direction, a cross-country analysis that takes into account a secondary school completion ratio (a statistic calculated for this analysis) suggests that more policy emphasis should go towards improving the quality of secondary schooling.
    Keywords: South Africa, Argentina, education policy, education financing, school, education, secondary school, educational quality
    JEL: D20 H52 I22
    Date: 2008
  23. By: Saarimaa; Tuukka
    Abstract: This paper analyses the effects of imputed rental income from owner-occupied housing and its taxation on income distribution in Finland. Using micro-data from the 2004 Wealth Survey produced by Statistics Finland we find that owner-occupied housing has a significant impact on the well-being of many households. In 2004 imputed rental income constituted on average about 10 percent of homeowner households? disposable income. Furthermore, including imputed rental income to household disposable income decreased overall inequality measured by the Gini index. The estimated tax revenue forgone in 2004 was 1.9 billion euros amounting to almost 15 percent of the total government income and wealth tax revenue collected that year. On the other hand, the tax subsidy resulting from non-taxation of imputed rental income is skewed toward high-income households who are more likely to be homeowners and also more likely to own outright. The paper also made a comparison of the current tax system where imputed rental income is untaxed to two alternative tenure neutral tax systems where imputed rental income is taxed. The results indicate that the effects on overall inequality depend vitally on the way the increased tax revenue is transferred back to the households. The calculations in this paper ignore any behavioural responses by the households. JEL Codes: H23, H24, R21.
    Keywords: Imputed rental income, tax subsidy, income distribution
    Date: 2008–07–02
  24. By: David, Quentin (ECARES, Free University of Brussels); Janiak, Alexandre (University of Chile); Wasmer, Etienne (Sciences Po, Paris)
    Abstract: European labor markets are characterized by the low geographical mobility of workers. The absence of mobility is a factor behind high unemployment when jobless people prefer to remain in their home region rather than to go prospecting in more dynamic areas. In this paper, we attempt to understand the determinants of mobility by introducing the concept of local social capital. Using data from a European household panel (ECHP), we provide various measures of social capital, which appears to be a strong factor of immobility. It is also a fairly large factor of unemployment when social capital is clearly local, while other types of social capital are found to have a positive effect on employability. We also find evidence of the reciprocal causality, that is, individuals born in another region have accumulated less local social capital. Finally, observing that individuals in the South of Europe appear to accumulate more local social capital, while in Northern Europe they tend to invest in more general types of social capital, we argue that part of the European unemployment puzzle can be better understood thanks to the concept of local social capital.
    Keywords: European unemployment, geographical mobility, social capital
    JEL: J2 J61 Z1
    Date: 2008–08
  25. By: Kikuchi, Toru
    Abstract: The purpose of this study is to illustrate, with a simple three-region (located on a line), two-good (homogeneous good/differentiated high-tech products), two-factor (labor/``footloose'' capital) model, how falling transport costs can affect firms' location decisions and trade structure. It is shown that the locational advantage of a central hub is magnified via firms' location decisions.
    JEL: F12
    Date: 2008
  26. By: Banerjee, Abhijit V.; Banerji, Rukmini; Duflo, Esther; Glennerster, Rachel; Khemani, Stuti
    Abstract: Participation of beneficiaries in the monitoring of public services is increasingly seen as key to improving their efficiency. In India, the current government flagship program on universal primary education organizes community members, specifically locally elected leaders and parents of children enrolled in public schools, into committees and gives these powers over resource allocation, monitoring and management of school performance. However, in a baseline survey this paper finds that people were not aware of the existence of these committees and their potential for improving education. The paper evaluates three different interventions to encourage beneficiaries'participation: providing information, training community members in a new testing tool, and training and organizing volunteers to hold remedial reading camps for illiterate children. The authors find that these interventions had no impact on community involvement in public schools, and no impact on teacher effort or learning outcomes in those schools. However, the intervention that trained volunteers to teach children to read had large impact on activity outside public schools -- local youths volunteered to be trained, and children who attended these camps substantially improved their reading skills. These results suggest that citizens face substantial constraints in participating to improve the public education system, even when they care about education and are willing to do something to improve it.
    Keywords: Primary Education,Education For All,Teaching and Learning,Health Monitoring&Evaluation,Tertiary Education
    Date: 2008–03–01
  27. By: Cory Koedel (Department of Economics, University of Missouri-Columbia); Julian Betts
    Abstract: Value-added measures of teacher quality may be sensitive to the quantitative properties of the testing instruments upon which they are based. This paper focuses on the sensitivity of value-added to a particularly relevant testing-instrument property test-score-ceiling effects. Test-score ceilings are likely to be increasingly common in testing instruments across the country as education policy continues to emphasize proficiency-based reform. Encouragingly, we show that over a wide range of test-score- ceiling severity, teachers value-added estimates are only negligibly influenced by ceiling effects. However, as ceiling conditions approach those found in minimum-competency testing environments, value-added results are significantly altered.
    Keywords: Value Added, Test Score Ceiling, Ceiling Effects, Teacher Quality, Teacher Value Added
    JEL: I20 I21 J24
    Date: 2008–06–15
  28. By: Se-il Mun (Graduate School of Economics, Kyoto University); Shintaro Nakagawa (Institute of Economic Research, Kyoto University)
    Abstract: We develop a simple two-country model of international trade in which the transportation cost between countries is endogenously determined by decisions concerning capacity and price (road toll, rail fare) of infrastructure. We evaluate alternative regimes of pricing and investment, i.e., free access (e.g., public road), pricing and investment by two governments, and private operation. Comparisons between free-access and other regimes reveal that pricing plays a positive role of encouraging investment. However, pricing by governments results in lower welfare since excessively high prices are charged. We also show that higher welfare could be attained by elaborating the design of bidding systems for the right to build and operate the infrastructure.
    JEL: H54 R42 R48
    Date: 2008–09
  29. By: Nebiyou Tilahun; David Levinson (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota)
    Abstract: On August 1st, 2007, the I-35W bridge crossing the Mississippi river fell into the Mississippi river. In addition to the human tragedy that it caused, the bridge failure also impacted how people moved in the area. The bridge carried 140,000 cars daily. As such it required a signiï¬cant amount of traffic ï¬nd new routes to reach their destinations. Traffic impacts may also have led to changes in mode, time, or some trips being foregone. Those who changed routes were not just the ones that previously used the bridge. With the I-35 traffic using alternate routes, those who saw or anticipated higher traffic also found it necessary to re route their trips. In this study we ask a sam- ple of people that were recruited for another study, if their travels had been impacted by the failure of the bridge, how they coped and what impacts it had on their travels and other activities.
    Keywords: I-35W Bridge, Minnesota, Minneapolis, Travel Behavior
    JEL: R41 R48 D63
    Date: 2008
  30. By: Koetse, M.J. (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics); Rouwendal, J.
    Abstract: This paper presents a study on appraisal of the Betuweroute, a 160 kilometre dedicated freight railway line connecting the port of Rotterdam with the German Ruhr area. The Betuweroute is an interesting example of a major investment in railroads for several reasons. Political decision making on the Betuwe project and calculations on its profitability were based on questionable assumptions, the two most important ones being that freight transport by trucks would become substantially more expensive, and that inland waterways would not be used more intensively for freight transport. Even though construction is completed, it is still unclear to what extent the route is going to be used in the future. Even though this may suggest that the Betuweroute is financially unviable, it should be noted that it provides a potentially important link in the transport network that links the major harbours of Hamburg, Rotterdam and Antwerp with the German hinterland. If the line could – in the near or more remote future – attract a large share of transit freight, as was expected in official project appraisals, it will be of considerable importance for the competitive position of the port of Rotterdam relative to Hamburg and Antwerp. In the paper we provide a brief review of the history of the project and its place in the freight transport network of north-western Europe. Then we proceed to a formal analysis of the impact of pricing of the various modes on the appraisal of the Betuweroute, based on the MOLINO model. The network we use includes the ports of Rotterdam, Antwerp and Hamburg and distinguishes between transport by road, railway and inland waterways. Since the Betuweroute connects Rotterdam to the Ruhr area, we use transport to and from this area as the driving force of the transport flows on this network. We present model simulations for scenario’s with and without the Betuweroute and with and without marginal social costs pricing.
    Keywords: Transport pricing; MOLINO model; Infrastructure appraisal; Betuweroute
    JEL: C15 D62 H23 R41 R48
    Date: 2008
  31. By: Gemechis D. Djira; Frank Schaarschmidt; Bichaka Fayissa
    Abstract: Location quotient (LQ) is an index frequently used in geography and economics to measure the relative concentration of activities. This quotient is calculated in a variety of ways depending on which group to use as a reference. Here, we focus on simultaneous inference for the ratios of the individual proportions to the overall proportion based on binomial data. Apparently, this is a multiple comparison problem and multiplicity adjusted location quotients have not been addressed up to now. In fact, there is a negative correlation between the comparisons. The quotients can be simultaneously tested against unity and simultaneous confidence intervals can be constructed for the LQs based on existing probability inequalities and by directly using the asymptotic joint distribution of the associated z-statistics. The proposed inferences are appropriate for analysis based on sample surveys. A real data set is used to demonstrate the application of multiplicity adjusted LQs. A simulation study is also carried out to assess the performance of the proposed methods in terms of achieving a nominal coverage probability. It is observed that the coverage of the simple Bonferroni adjusted Fieller intervals for LQs is just as good as the coverage of the method which directly takes the correlations into account.
    Keywords: Location quotients, Fieller's theorem, Multiple comparison.
    JEL: C12 R11
    Date: 2008–09
  32. By: Patrinos, Harry Anthony
    Abstract: This paper exploits unique information on cognitive ability to examine the importance of schooling and non-schooling cognitive skills for heterogeneous individuals using instrumental variables estimation. Using a binary instrument based on the 1981 reform in Chile, the authors find that the main beneficiaries of the reform were those who at the time were pupils in basic schooling (ages 6-13). For this treated group of pupils, only a negligible part of the estimated return to schooling is due to classical ability bias. The labor market reward to an additional year of schooling is a measure of the"true"non-cognitive return to schooling. However, once the treated group is expanded to include secondary school students, the pure return to schooling decreases dramatically, while the return to schooling cognitive and non-schooling cognitive skills increases accordingly, suggesting that a large part of the estimated return in an earnings function is due to classical ability bias. For this treated group (mixture of basic school and secondary school age students), the labor market rewarded cognitive skills (especially those acquired through schooling) significantly.
    Keywords: Education For All,Primary Education,Secondary Education,Teaching and Learning,Access&Equity in Basic Education
    Date: 2008–05–01
  33. By: Labonne, Julien; Chase, Robert S.
    Abstract: This paper explores the social capital impacts of a large-scale, community-driven development project in the Philippines in which communities competed for block grants for infrastructure investment. The analysis uses a unique data set of about 2,100 households collected before the project started (2003) and after one cycle of sub-project implementation (2006) in 66 treatment and 69 matched control communities. Participation in village assemblies, the frequency with which local officials meet with residents and trust towards strangers increased as a result of the project. However, there is a decline in group membership and participation in informal collective action activities. This may have been because households were time-constrained, so that in order to participate in project activities, they needed to temporarily reduce their participation in informal activities. An alternative explanation is that the project improved the efficiency of formal forms of social capital and thus households needed to rely less on informal forms. Finally, the results indicate that, in the short run, the project might have reduced the number of other investments.
    Keywords: Housing&Human Habitats,Access to Finance,Social Accountability,Social Capital,Banks&Banking Reform
    Date: 2008–07–01
  34. By: Oosterbeek, Hessel; Ponce, Juan; Schady, Norbert
    Abstract: This paper presents evidence about the impact on school enrollment of a program in Ecuador that gives cash transfers to the 40 percent poorest families. The evaluation design consists of a randomized experiment for families around the first quintile of the poverty index and of a regression discontinuity design for families around the second quintile of this index, which is the program's eligibility threshold. This allows us to compare results from two different credible identification methods, and to investigate whether the impact varies with families'poverty level. Around the first quintile of the poverty index the impact is positive while it is equal to zero around the second quintile. This suggests that for the poorest families the program lifts a credit constraint while this is not the case for families close to the eligibility threshold.
    Keywords: Rural Poverty Reduction,Access to Finance,Health Systems Development&Reform,Poverty Reduction Strategies,Primary Education
    Date: 2008–06–01
  35. By: Ciurlia, Pierangelo; Gheno, Andrea
    Abstract: The real estate derivatives market allows participants to manage risk and return from exposure to property, without buying or selling directly the underlying asset. Such market is growing very fast hence the need to rely on simple yet effective pricing models is very great. In order to take into account the real estate market sensitivity to the interest rate term structure in this paper is presented a two-factor model where the real estate asset value and the spot rate dynamics are jointly modeled. The pricing problem for both European and American options is then analyzed and since no closed-form solution can be found a bidimensional binomial lattice framework is adopted. The model proposed allows calibration to the interest rate and volatility term structures.
    JEL: G13
    Date: 2008–08–08
  36. By: Babutsidze, Zakaria (UNU-MERIT); Cowan, Robin (UNU-MERIT, Maastricht University, BETA, University of Strasbourg)
    Abstract: This paper is concerned with clustering in demand. We present a discrete choice model of consumption that incorporates habit formation and information exchange among consumers in fixed social networks. We provide an analytical solution to a special case of the model by using technical tools from chemistry and biology. We demonstrate the validity of these results for the general case numerically. It is shown that clustering in demand is a solution to the complex system we are analyzing, and that clustering pattern can be short-term or long-lasting depending on the characteristics of the society.
    Keywords: demand, clustering, information, partial differential equations
    JEL: C65 D11 D83
    Date: 2008

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