nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2008‒09‒29
35 papers chosen by
Steve Ross
University of Connecticut

  1. Housing Externalities By Esteban Rossi-Hansberg; Pierre-Daniel Sarte; Raymond Owens III
  2. Does School Privatization Improve Educational Achievement? Evidence from Sweden's Voucher Reform By Böhlmark, Anders; Lindahl, Mikael
  3. Tax Treatment of Owner Occupied Housing and Wealth Inequality By Sang-Wook Stanley Cho; Johanna Francis
  4. The non-stationary influence of geography on the spatial agglomeration of production in the EU By Chasco, Coro; López, Ana María; Guillain, Rachel
  5. Juvenile delinquent mortgages: bad credit or bad economy? By Andrew Haughwout; Richard Peach; Joseph Tracy
  6. The Panic of 2007 By Gary B. Gorton
  7. Housing affordability and tenure choices: an empirical investigation By Giaccaria Sergio; Talarico Antonio; Bravi Marina
  8. School vouchers and student achievement: recent evidence, remaining questions By Lisa Barrow; Cecilia Elena Rouse
  9. Real Wage Inequality By Enrico Moretti
  10. Peer Effects and Human Capital Accumulation: the Externalities of ADD By Anna Aizer
  11. The Impact of Local Public Services and Geographical Cost of Living Differences on Poverty Estimates By Aaberge, Rolf; Langørgen, Audun; Mogstad, Magne; Østensen, Marit
  12. Promotion with and without learning : effects on student enrollment and dropout behavior By King, Elizabeth M.; Orazem, Peter F.; Paterno, Elizabeth M.
  13. Searching for clusters in tourism. A quantitative methodological proposal By Cristina Santos; Alexandre Almeida; Aurora A.C. Teixeira
  14. Have amenities become relatively more important than firm productivity advantages in metropolitan areas? By Richard Deitz; Jaison R. Abel
  15. Characteristics of Home Mortgage Lending to Racial or Ethnic Groups in Iowa By Eathington, Liesl; Swenson, David A.
  16. Pecuniary Knowledge Externalities: Evidence from European Regions By Antonelli Cristiano; Patrucco Pierpaolo; Quatraro Francesco
  17. Neighborhood Diversity Characteristics in Iowa and their Implications for Home Loans and Business Investment By Eathington, Liesl; Swenson, David A.
  18. Property Prices and Exposure to Multiple Noise Sources: Hedonic Regression with Road and Railway Noise By Andersson, Henrik; Jonsson, Lina; Ögren, Mikael
  19. An agent-based computational approach to explaining persistent spatial unemployment disparities By McArthur, David; Thorsen, Inge; Ubøe, Jan
  20. The impact of economic openness on the vertical structure of the public sector By Antonio Sciala'; Riccardo Tilli
  21. State of Elementary Education in Public Schools of Gujarat: A Study of Schools Run by the Bharuch Municipality By Raj, Madhusudan
  22. Building an Environmental Quality Index for a big city: a spatial interpolation approach with DP2 By Montero, José María; Larraz, Beatriz; Chasco, Coro
  23. Efficiency and Equity in the use of eminent domain, with local externalies By Jonathan Pincus; Perry Shapiro
  24. Quasi-experimental estimates of the effect of class size on achievement in Norway By Marte Rønning; Edvin Leuven; Hessel Oosterbeek
  25. The Transition from School to Jail: Youth Crime and High School Completion Among Black Males By Antonio Merlo; Kenneth I. Wolpin
  26. Getting out of the car: an institutional/evolutionary approach to sustainable transport policies By Gerardo Marletto
  27. The L2H2 Auction: Efficiency and Equity in the Assemblage of Land for Public Use Revision 5 By Jonathan Pincus; Perry Shapiro
  28. An Exploratory Study of the Role of Educational Incentives in Primary Education in Gujarat By Banerjee Tathagata
  29. The Effect of High School Employment on Educational Attainment: A Conditional Difference-in-Differences Approach By Buscha, Franz; Maurel, Arnaud; Page, Lionel; Speckesser, Stefan
  30. Initial Risk Matrix, Home Resources, Ability Development and Children's Achievement By Blomeyer, Dorothea; Coneus, Katja; Laucht, Manfred; Pfeiffer, Friedhelm
  31. Are your firm’s taxes set in Warsaw? Spatial tax competition in Europe By Karen Crabbé; Hylke Vandenbussche
  32. Geographic Equity in Hospital Utilization: Canadian Evidence Using a Concentration-Index Approach By Jeremiah Hurley; Michel Grignon; Li Wang; Tara McGrath
  33. The Optimal Distance to Port for Exporting Firms By Gries, Thomas; Naude, Wim; Matthee, Marianne
  34. A Question of Title: Property Rights and Asset Values By Thomas J. Miceli; Henry J. Munneke; C. F. Sirmans; Geoffrey K. Turnbull
  35. Tax Competition – Areas of Display and Romanian Effects By Mitu, Narcis-Eduard

  1. By: Esteban Rossi-Hansberg; Pierre-Daniel Sarte; Raymond Owens III
    Abstract: Using data compiled from concentrated residential urban revitalization programs implemented in Richmond, VA, between 1999 and 2004, we study residential externalities. Specifically, we provide evidence that in neighborhoods targeted by the programs, sites that did not directly benefit from capital improvements nevertheless experienced considerable increases in land value relative to similar sites in a control neighborhood. Within the targeted neighborhoods, increases in land value are consistent with externalities that fall exponentially with distance. In particular, we estimate that housing externalities decrease by half approximately every 990 feet. On average, land prices in neighborhoods targeted for revitalization rose by 2 to 5 percent at an annual rate above those in the control neighborhood. These increases translate into land value gains of between $2 and $6 per dollar invested in the program over a six-year period. We provide a simple theory that helps us interpret and estimate these effects.
    JEL: D62 H23 R21 R31
    Date: 2008–09
  2. By: Böhlmark, Anders (SOFI, Stockholm University); Lindahl, Mikael (Uppsala University)
    Abstract: This paper evaluates general achievement effects of choice and competition between private and public schools at the nine-year school level by assessing a radical voucher reform that was implemented in Sweden in 1992. Starting from a situation where the public schools essentially were monopolists on all local school markets, the degree of privatization has developed very differently across municipalities over time as a result of this reform. We estimate the impact of an increase in private enrolment on short, medium and long-term educational outcomes of all pupils using within-municipality variation over time, and control for differential pre-reform and concurrent municipality trends. We find that an increase in the private school share moderately improves short-term educational outcomes such as 9th-grade GPA and the fraction of students who choose an academic high school track. However, we do not find any impact on medium or long-term educational outcomes such as high school GPA, university attainment or years of schooling. We conclude that the first-order short-term effect is too small to yield lasting positive effects.
    Keywords: private schooling, choice, competition, educational achievement
    JEL: I22 I28 H40
    Date: 2008–09
  3. By: Sang-Wook Stanley Cho (University of New South Wales, School of Economics); Johanna Francis (Fordham University, Department of Economics)
    Abstract: In the U.S., mortgage interest deductibility provides a financial incentive for home ownership over renting as well as an incentive to “over-consume” housing since houses are not fungible. Home-ownership is also often promoted as a safe means of wealth creation. We construct and calibrate a quantitative general equilibrium lifecycle model with homeownership and mortgage decisions to investigate the degree to which the wealth inequality in the United States is driven by the home mortgage interest deduction and the untaxed nature of imputed rents from owner-occupied housing. As the tax treatment of housing will disproportionately create tax savings for the top deciles of the income distribution, we quantify how the tax deductibility contributes to the heavily skewed distribution of wealth in the United States using data from the Survey of Consumer Finances. Although the tax treatment of owner occupied housing alone is unlikely to produce the extreme wealth concentration at the far right tail of the distribution, we argue that it is re-enforced by a bequest motive. We find that removing mortgage interest deductibility and taxing imputed rents reduces the Gini coefficient by 0.04 points, caused by a re-allocation of wealth from the top 10 percentiles to the bottom 50 percentiles of the wealth distribution.
    Keywords: Mortgage interest deductibility, housing, wealth, inequality
    JEL: E21
    Date: 2008
  4. By: Chasco, Coro; López, Ana María; Guillain, Rachel
    Abstract: In this paper, we investigate the relative importance of geographic features on the location of production in the EU. Specifically, we want to quantify how much of the spatial pattern of GDP can be attributed to only exogenous first nature elements (physical and political geography) and how much can be derived from endogenous second nature factors (man-made agglomeration economies). In order to disentangle both effects empirically, and to learn how they are interrelated, we control for second nature. We use a methodology based on an analysis of variance (ANOVA), which is applied to a panel of 1,171 European NUT-3 in 2006. We demonstrate that -due to a high degree of spatial non-stationarity present in the data- results can be biased if spatial autocorrelation and spatial heterogeneity, as well as multicollinearity and endogeneity, are not properly taken into account.
    Keywords: Agglomeration; Geography; Spatial Heterogeneity; Endogeneity; EU Regions
    JEL: C51 O18 C52 R12 O52 C21
    Date: 2008–09–24
  5. By: Andrew Haughwout; Richard Peach; Joseph Tracy
    Abstract: We study early default, defined as serious delinquency or foreclosure in the first year, among nonprime mortgages from the 2001 to 2007 vintages. After documenting a dramatic rise in such defaults and discussing their correlates, we examine two primary explanations: changes in underwriting standards that took place over this period and changes in the economic environment. We find that while credit standards were important in determining the probability of an early default, changes in the economy after 2004 - especially a sharp reversal in house price appreciation - were the more critical factor in the increase in default rates. A notable additional result is that despite our rich set of covariates, much of the increase remains unexplained, even in retrospect. Thus, the fact that the credit markets seemed surprised by the rate of early defaults in the 2006 and 2007 nonprime vintages becomes more understandable.
    Keywords: Subprime mortgage ; Default (Finance) ; Credit ; Economic conditions ; Housing - Prices
    Date: 2008
  6. By: Gary B. Gorton
    Abstract: How did problems with subprime mortgages result in a systemic crisis, a panic? The ongoing Panic of 2007 is due to a loss of information about the location and size of risks of loss due to default on a number of interlinked securities, special purpose vehicles, and derivatives, all related to subprime mortgages. Subprime mortgages are a financial innovation designed to provide home ownership opportunities to riskier borrowers. Addressing their risk required a particular design feature, linked to house price appreciation. Subprime mortgages were then financed via securitization, which in turn has a unique design reflecting the subprime mortgage design. Subprime securitization tranches were often sold to CDOs, which were, in turn, often purchased by market value off-balance sheet vehicles. Additional subprime risk was created (though not on net) with derivatives. When the housing price bubble burst, this chain of securities, derivatives, and off-balance sheet vehicles could not be penetrated by most investors to determine the location and size of the risks. The introduction of the ABX indices, synthetics related to portfolios of subprime bonds, in 2006 created common knowledge about the effects of these risks by providing centralized prices and a mechanism for shorting. I describe the relevant securities, derivatives, and vehicles and provide some very simple, stylized, examples to show: (1) how asymmetric information between the sell-side and the buy-side was created via complexity; (2) how the chain of interlinked securities was sensitive to house prices; (3) how the risk was spread in an opaque way; and (4) how the ABX indices allowed information to be aggregated and revealed. I argue that these details are at the heart of the answer to the question of the origin of the Panic of 2007.
    JEL: E1 E32 G2
    Date: 2008–09
  7. By: Giaccaria Sergio (University of Turin); Talarico Antonio; Bravi Marina
    Abstract: Several empirical studies have established that tenure choice and households mobility decisions are highly correlated (Ozyildirim et al., 2005). In the literature, there have been two methods that have used to estimate tenure choice models. The first uses a sample of recent movers while the second employs a sample of all households. Other approaches are mixed (Painter, 2000). This work refers on the results of an empirical analysis, developed to the urban level, by a sample of movers (renters and homeowners). The main goal is to test if homeownership is systematically preferred to leasing and if the housing affordability effect can be estimated by a tenure choice model. A random utility approach is used to model observed choices of renterswithin and between rent and property markets. The analytical results confirm, as expected, the strong trend to the homeownership for the families of renters. But, in current economic situation, the high value of the rent is systematically associated with a reduced chance of changing for the medium-income households. Monetary estimates of affordable rents are given in the last part of the paper, conditioned to the income level, the family size and the previous and actual level of affordability.
    Date: 2008–11
  8. By: Lisa Barrow; Cecilia Elena Rouse
    Abstract: In this article, we review the empirical evidence on the impact of education vouchers on student achievement, and briefly discuss the evidence from other forms of school choice. The best research to date finds relatively small achievement gains for students offered education vouchers, most of which are not statistically different from zero. Further, what little evidence exists regarding the potential for public schools to respond to increased competitive pressure generated by vouchers suggests that one should remain wary that large improvements would result from a more comprehensive voucher system. The evidence from other forms of school choice is also consistent with this conclusion. Many questions remain unanswered, however, including whether vouchers have longer-run impacts on outcomes such as graduation rates, college enrollment, or even future wages, and whether vouchers might nevertheless provide a cost-neutral alternative to our current system of public education provision at the elementary and secondary school level.
    Date: 2008
  9. By: Enrico Moretti
    Abstract: A large literature has documented a significant increase in the return to college over the past 30 years. This increase is typically measured using nominal wages. I show that from 1980 to 2000, college graduates have increasingly concentrated in metropolitan areas that are characterized by a high cost of housing. This implies that college graduates are increasingly exposed to a high cost of living and that the relative increase in their real wage may be smaller than the relative increase in their nominal wage. To measure the college premium in real terms, I deflate nominal wages using a new CPI that allows for changes in the cost of housing to vary across metropolitan areas and education groups. I find that half of the documented increase in the return to college between 1980 and 2000 disappears when I use real wages. This finding does not appear to be driven by differences in housing quality and is robust to a number of alternative specifications. The implications of this finding for changes in well-being inequality depend on why college graduates sort into expensive cities. Using a simple general equilibrium model, I consider two alternative explanations. First, it is possible that the relative supply of college graduates increases in expensive cities because college graduates are increasingly attracted by amenities located in those cities. In this case, higher cost of housing reflects consumption of desirable local amenities, and there may still be a significant increase in well-being inequality even if the increase in real wage inequality is limited. Alternatively, it is possible that the relative demand of college graduates increases in expensive cities due to shifts in the relative productivity of skilled labor. In this case, the relative increase in skilled workers' standard of living is offset by higher cost of living. The empirical evidence indicates that relative demand shifts are more important than relative supply shifts, suggesting that the increase in well-being inequality between 1980 and 2000 is smaller than the increase in nominal wage inequality.
    JEL: J01 J2 J31 R00
    Date: 2008–09
  10. By: Anna Aizer
    Abstract: Although recent work has shown that peers affect human capital accumulation, the mechanisms are not well understood. Knowing why high achieving peers matter, because of their innate ability, disciplined behavior or some other factor, has important implications for our understanding of the education production function and for how we organize schools and classrooms. In this paper I provide evidence that peer behavior is an important mechanism. To identify the impact of peer behavior on achievement separate from ability or other characteristics, I exploit exogenous improvements in classmates' inattention/impulsivity that result from a diagnosis of ADD. After children with ADD are diagnosed, I show that their behavior improves, but that no other characteristics, including achievement, change. I find that peer behavior significantly affects cognitive achievement and that resources such as class size can overcome the negative peer effects observed, consistent with the model of education production proposed by Lazear (2001). These findings have important implications for our understanding not only of peer effects but also of the relationship between health, productivity and growth.
    JEL: I1 I18 I2
    Date: 2008–09
  11. By: Aaberge, Rolf (Statistics Norway); Langørgen, Audun (Statistics Norway); Mogstad, Magne (Statistics Norway); Østensen, Marit (Statistics Norway)
    Abstract: Despite a broad consensus on the need to take into account the value of public services and geographical cost of living differences when measuring poverty, there is little reliable evidence on how these factors actually affect poverty estimates. Unlike the standard approach in studies of the distribution of public services, this paper employs a method for valuing sector-specific local public services that allows for differences between municipalities in unit costs for providing public services. Furthermore, recipient frequencies in various demographic groups are used as the basis for determining the allocation of the value of these services on citizens of the municipalities. Geographical differences in living costs are taken into account by using municipal housing price indices or by replacing the country-specific poverty line with municipal-specific poverty lines. Applying Norwegian register data for the period 1993-2001, we find that disregarding the value of local public services and geographical cost of living differences yields a misleading picture of poverty.
    Keywords: geographical cost of living differences, in-kind transfers, public services, poverty, housing price indices, municipal-specific poverty lines
    JEL: D31 H72 I30
    Date: 2008–09
  12. By: King, Elizabeth M.; Orazem, Peter F.; Paterno, Elizabeth M.
    Abstract: Many educators and policymakers have argued for lenient grade promotion policy - even automatic promotion - in developing country settings where grade retention rates are high. The argument assumes that grade retention discourages persistence or continuation in school and that the promotion of children with lower achievement does not hamper their ability or their peers'ability to perform at the next level. Alternatively, promoting students into grades for which they are not prepared may lead to early dropout behavior. This study shows that in a sample of schools from the Northwest Frontier Province of Pakistan, students are promoted primarily on the basis of merit. An econometric decomposition of promotion decisions into a component that is based on merit indicators (attendance and achievement in mathematics and language) and another that is uncorrelated with those indicators allows a test of whether parental decisions to keep their child in school is influenced by merit-based or non-merit-based promotions. Results suggest that the enrollment decision is significantly influenced by whether learning has taken place, and that grade promotion that is uncorrelated with merit has a negligible impact on school continuation.
    Keywords: Tertiary Education,Education For All,Secondary Education,Primary Education,Teaching and Learning
    Date: 2008–09–01
  13. By: Cristina Santos (Faculdade de Economia, Universidade do Porto); Alexandre Almeida (Faculdade de Economia, Universidade do Porto); Aurora A.C. Teixeira (INESC Porto, CEMPRE, Faculdade de Economia, Universidade do Porto)
    Abstract: The tourism industry is one of Europe’s leading employers, and for many regions highly dependent on tourists’ spending, innovation is the difference between growth and stagnation. Thus, at a regional level, tourism may function as a driving force of socioeconomic development and thus contribute to the demise of regional disparities. Such lever effect is usually associated to a geographical concentration abusively denominated of clusters. Most of the studies within the tourism industry identify clusters resorting to simplistic analyses of geographic location measures or experts’ opinions. These latter tend to neglect the essence of the cluster concept, namely the inter-linkages among regional actors. In the present paper, we propose a methodology to rigorously identify tourism clusters, stressing the importance of networks and cooperation between agents.
    Keywords: Clusters; Tourism; Methodology
    JEL: R12 R15 L83 C67
    Date: 2008–09
  14. By: Richard Deitz; Jaison R. Abel
    Abstract: We analyze patterns of compensating differentials to determine whether a region's bundle of site characteristics has a greater net effect on household location decisions relative to firm location decisions in U.S. metropolitan areas over time. We estimate skill-adjusted wages and attribute-adjusted rents using hedonic regressions for 238 metropolitan areas in 1990 and 2000. Within the framework of the standard Roback model, we classify each metropolitan area based on whether amenities or firm productivity advantages dominate and analyze the extent to which these classifications change between 1990 and 2000. We then decompose compensating differentials into amenity and firm productivity advantage components and examine how these components change. Empirical results suggest that while the relative importance of amenities appears to have increased slightly between 1990 and 2000, firm productivity advantages continued to dominate amenities in the vast majority of metropolitan areas during this decade.
    Keywords: Metropolitan areas - Statistics ; Industrial location ; Households ; Industrial productivity
    Date: 2008
  15. By: Eathington, Liesl; Swenson, David A.
    Abstract: This is an analysis of home mortgage loan application data for 2006, as reported under requirements of the Home Mortgage Disclosure Act (HMDA). We included only those applications where both the race and ethnicity of the applicant were reported by the financial institution in this study. For applications with more than one borrower, only the racial and ethnic characteristics of the first applicant were considered. We excluded applications that did not move beyond the pre-approval process into the formal application process. Finally, we excluded loans that were purchased but not originated by the reporting financial institutions.
    JEL: R0
    Date: 2008–09–17
  16. By: Antonelli Cristiano (University of Turin); Patrucco Pierpaolo (University of Turin); Quatraro Francesco (University of Turin)
    Abstract: The paper investigates the effects of agglomeration and specialization of technological activities on regional productivity growth,applying the notion of pecuniary knowledge externalities. The latter are indirect interdependencies between firms mediated by the price system. Pecuniary knowledge externalities enable to appreciate both the positive and negative effects associated with the regional concentration of knowledge generating activities. Our analysis leads to specify the hypothesis of an inverted U-shaped relationship between the agglomeration of innovation activities and productivity growth. The empirical investigation, based upon 138 European regions in the years 1996 through 2003, supports the hypothesis that agglomeration yields diminishing positive net effects beyond a maximum. The homogeneity of knowledge generating activities however reduces absorption costs and hence rises the net benefits at each agglomeration level.
    Date: 2008–03
  17. By: Eathington, Liesl; Swenson, David A.
    Abstract: The geographic concentration of the state’s minority population within a relatively small number of diverse neighborhoods suggests an additional important dimension for analysis and begs an important question: How do these racially and ethnically diverse neighborhoods differ from less diverse areas of the state? Furthermore, what are the implications for these concentrations of racial or ethnic diversity for homeownership and business development?
    JEL: R0
    Date: 2008–09–17
  18. By: Andersson, Henrik (VTI); Jonsson, Lina (VTI); Ögren, Mikael (VTI)
    Abstract: This study examines the effect of road and railway noise on property prices. It uses the hedonic regression technique on a Swedish data set that contains information about both road and railway noise for each property, and finds that road noise has a larger negative impact on the property prices than railway noise. This is in line with the evidence from the acoustical literature which has shown that individuals are more disturbed by road than railway noise, but contradicts recent results from a hedonic study on data of the United Kingdom.
    Keywords: Hedonic Pricing; Noise; Railway Traffic; Road Traffic
    JEL: C13 C21 Q51 Q53
    Date: 2008–09–18
  19. By: McArthur, David (Stord/Haugesund University College); Thorsen, Inge (Stord/Haugesund University College); Ubøe, Jan (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)
    Abstract: This paper explores possible reasons for persistent spatial unemployment disparities using agent-based computational methods. The method relies on observing the actions of thousands of individuals within an artificial society. The paper models the effect of unemployment insurance, wage disparities, region specific amenities and innate residential preferences on regional labour market interactions, accounting for both migration and commuting. An empirical example of Rogaland county in south-west Norway is given, where unemployment disparities have proved remarkably persistent for decades. The model provides non-trivial insight into the nature of spatial unemployment disparities as well as making a valuable contribution to the policy debate.
    Keywords: Unemployment insurance; wage disparities; region specific amenities; innate residential preferences; regional labour market interactions
    JEL: R10 R12 R15
    Date: 2008–09–22
  20. By: Antonio Sciala' (Universita' di Padova); Riccardo Tilli (Universita' di Roma)
    Abstract: The aim of this paper is to investigate the impact of economic openness on the vertical structure of the public sector within a country. To tackle this issue we set up a simple theoretical model of fiscal federalism, where both central and local public spending enter the objective functions of both a central government and an aggregate local public sector, accommodating a wide range of behaviours. The degree of economic openness is assumed to erode central tax revenues and through this channel to affect the size of central spending, the size of grants paid to local governments and the optimal amount of local public spending. Consequences on the degree of decentralization are investigated. The main findings are that for a large subset of parameters an increase in economic openness leads to: a) a lower level of central government expenditures; b) a lower level of general government expenditures; c) a higher level of local taxation; d) a higher degree of public sector decentralization.
    Keywords: openness, decentralization, fiscal federalism, public sector, government size.
    JEL: H77 H50 H11
    Date: 2008
  21. By: Raj, Madhusudan
    Abstract: In India the 73rd and 74th constitutional amendments have given powers and responsibility of achieving the goal of Universal Elementary Education (UEE) to the local body governments. The present study has examined the situation of elementary schools run by Bharuch municipality. The evidence show that the situation of elementary education is unsatisfactory and in bad shape. The number of schools has declined rapidly, the learning levels of students are miserable, community participation is almost non-existent, private cost of so called free municipality education is high; and the state of the mid-day meal scheme looks very grim. Municipality schools are loosing ground in Bharuch city.
    Keywords: Bharuch municipality; Elementary education; Education; UEE; Local body government
    JEL: H75 H41 I21 H52
    Date: 2008
  22. By: Montero, José María; Larraz, Beatriz; Chasco, Coro
    Abstract: The elaboration of Environmental Quality Indexes (EQI) for big cities is one of the main topics in regional and environmental economics. One of the usual methodological paths consists of generating a single measure as a linear combination of several air contaminants applying Principal Component Analysis (PCA). Then, as a final step, a spatial interpolation is carried out to determine the level of contamination across the city in order to point out the so-called ‘hot points’. In this article, we propose an alternative approach to build an EQI introducing some methodological and practical novelties. From the point of view of the selection of the variables, first we will consider noise -joint to air pollution- as a relevant environmental variable. We also propose to add ‘subjective’ data -available at the census tracts level- to the group of ‘objective’ environmental variables, which are only available at a number of environmental monitoring stations. This combination leads to a mixed environmental index (MEQI), which is more complete and adequate in a socioeconomic context. From the point of view of the computation process, we use kriging to match the monitoring stations registers to the Census data. We follow an inverse process as usual, since it leads to better estimates. In a first step, we krige the environmental variables to the complete surface and finally, we elaborate the environmental index. At last, in order to build the final synthetic index, we do not use Principal Components Analysis -as it is usual in this kind of exercises- but a better one, the Pena Distance method (DP2).
    Keywords: Environmental index; Air pollution; Noise; Subjecive expectations; Kriging; Distance indicators
    JEL: C43 Q53 C21
    Date: 2008–09–24
  23. By: Jonathan Pincus (School of Economics, University of Adelaide); Perry Shapiro
    Abstract: In Shapiro and Pincus (2008), we proposed a method for arriving at just compensation of private owners of urban land, in cases like Kelo v New London, in which government has plans to use eminent domain to `take' private properties, to be assembled into a single parcel for some public purpose. The required quantum of just compensation can be discovered when the public purpose is to be pursued via private use of the assembled land parcel, and when the private user can be selected through an auction of the assembled land. This paper extends the auction mechanism to include properties which lie outside the area `taken' or resumed by government, but which will be affected by the new use made of the assembled area. The auction provides an efficiency test: does the proposed change in use increase the aggregate value of the land to be resumed plus the affected properties? Local externalities are internalised through the auction. We briefly discuss the political economy of the mechanism.
    Date: 2008–09
  24. By: Marte Rønning (Statistics Norway); Edvin Leuven (School of Economics of the University of Amsterdam and the Tinbergen Institute); Hessel Oosterbeek (School of Economics of the University of Amsterdam and the Tinbergen Institute)
    Abstract: Using a comprehensive administrative database we exploit independent quasiexperimental 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.
    Date: 2008–04–20
  25. By: Antonio Merlo (Department of Economics, University of Pennsylvania); Kenneth I. Wolpin (Department of Economics, University of Pennsylvania)
    Abstract: In this paper, we propose a new approach to the empirical study of the relationships among schooling, youth employment and youth crime which provides a comprehensive analysis of the dynamic interactions among these choices and exposure to the criminal justice system. The empirical framework takes the form of a multinomial discrete choice vector autoregression of a youth’s schooling, work and crime decisions as well as arrest and incarceration outcomes. We allow for observable initial conditions, unobserved heterogeneity, the possibility of measurement error and for missing data. We use data from the NLSY97 on black male youths starting from age 14. The estimates indicate an important role for heterogeneity in initial conditions. We also find that stochastic events that arise during one’s youth can be important in determining outcomes as young adults.
    Keywords: crime, schooling, work, VAR
    JEL: K42 J24 J15
    Date: 2008–09–17
  26. By: Gerardo Marletto
    Abstract: Orthodox economics sees transport as a market which can be made more sustainable by improving its self-regulating capacity. To date this static approach has not been able to limit the growing demand for transport and its increasing environmental impact. Better results might be obtained by using evolutionary and institutional economics. Starting from these theories, a sustainable transport policy should be based on three fundamental considerations. First, transport is not a market, but a sum of systems affected by path-dependence and lock-in phenomena. Second, transport is not sustainable because it is locked in environmentally sub-optimal systems. Third, structural changes in technologies and organisations, institutions, and values are needed to establish more sustainable transport systems. We give an example of the use of an institutional/evolutionary approach to sustainable transport policies in the transition from the system of mass motorisation to the new urban mobility system.
    Keywords: Sustainable transportation; Transport policy; Environmental economics; Institutional economics; Evolutionary economics
    JEL: B52 Q58 R40
    Date: 2008
  27. By: Jonathan Pincus (School of Economics, University of Adelaide); Perry Shapiro
    Abstract: The burden of redevelopment projects, whether or not they ultimately benefit the communities in which they are undertaken, is borne disproportionately by those displaced. Neighborhoods are destroyed and residents are made to leave a home they love, compensated only by its market value. The benefits and costs of redevelopment can only be estimated since there are no direct market tests. Here a mechanism, developed as an extension of two recent papers, by Lehavi and Lichts (L2) and by Heller and Hill (H2), provides a market-based efficiency test for a proposed project and a compensation rule that alleviates the disproportionate burden on displaced residents. Assembled property is sold at an auction. The reserve price (the lowest price at which the assembled property will be sold) is set so that all displaced residents receive at least their personal value of their property. A successful bid, one that claims the assembled property, is sufficient proof of efficiency.
    Date: 2008–09
  28. By: Banerjee Tathagata
    Abstract: This study explores the role of incentives—monetary or non-monetary compensation offered to children so that an educational need is fulfilled or perceived cost is brought down—in attaining certain expected educational enrolment and retention outcomes. It draws on a survey conducted in six villages in Gujarat. Incentives themselves may not be that critical in improving access and retention performance; other socio-economic and school-related factors may be more significant in ensuring access and retention. However, incentives may have help in keeping the poorer performers in school.
    Date: 2008–09–16
  29. By: Buscha, Franz (University of Westminster); Maurel, Arnaud (ENSAE-CREST); Page, Lionel (University of Westminster); Speckesser, Stefan (University of Westminster)
    Abstract: Using American panel data from the National Educational Longitudinal Study of 1988 (NELS:88) this paper investigates the effect of working during grade 12 on attainment. We exploit the longitudinal nature of the NELS by employing, for the first time in the related literature, a semiparametric propensity score matching approach combined with difference-in- differences. This identification strategy allows us to address in a flexible way selection on both observables and unobservables associated with part-time work decisions. Once such factors are controlled for, insignificant effects on reading and math scores are found. We show that these results are robust to a matching approach combined with difference-in-difference-in-differences which allows differential time trends in attainment according to the working status in grade 12.
    Keywords: education, evaluation, propensity score matching
    JEL: J24 J22 I21
    Date: 2008–09
  30. By: Blomeyer, Dorothea (ZI Mannheim); Coneus, Katja (ZEW Mannheim); Laucht, Manfred (ZI Mannheim); Pfeiffer, Friedhelm (ZEW Mannheim)
    Abstract: This paper investigates the role of self-productivity and home resources in ability formation from infancy to adolescence. In addition, we study the complementarities between basic cognitive, motor and noncognitive abilities and social as well as academic achievement. Our data are taken from the Mannheim Study of Children at Risk (MARS), an epidemiological cohort study following the long-term outcome of early risk factors. Results indicate that initial risk conditions cumulate and that differences in basic abilities increase during development. Self-productivity rises in the developmental process and complementarities are evident. Noncognitive abilities promote cognitive abilities and social achievement. There is remarkable stability in the distribution of the economic and socio-emotional home resources during the early life cycle. This is presumably a major reason for the evolution of inequality in human development.
    Keywords: initial conditions, home resources, intelligence, persistence, social competencies, school achievement
    JEL: D87 I12 I21 J13
    Date: 2008–09
  31. By: Karen Crabbé; Hylke Vandenbussche
    Abstract: Corporate tax rates in Europe have been falling rapidly; as a consequence tax competition within the EU is fiercer than in the rest of the OECD. This paper analyzes heterogeneity in corporate tax rate changes between EU-15 countries as a function of the proximity to the EU-10 new member states. The average corporate tax rate in the new member states has always been considerably lower than the average in the EU-15 countries. Their entry into the EU eliminated capital barriers, in principle allowing firms to locate in one of the new EU-10 with full access to the European Market. Our results indicate that EU-15 countries physically closer to Central-Europe experienced more tax competition. Next we use a spatial regression framework to more formally test the hypothesis that distance to a low tax region affects countries' tax reaction functions.
    Keywords: Spatial tax competition, Corporate taxes, fiscal reaction function
    JEL: H25 H77 H39
    Date: 2008
  32. By: Jeremiah Hurley (Department of Economics, Centre for Health Economics and Policy Analysis, Department of Clinical Epidemiology and Biostatistics, McMaster University); Michel Grignon (Department of Economics, Centre for Health Economics and Policy Analysis, Department of Health, Aging and Society, McMaster University); Li Wang (Centre for Health Economics and Policy Analysis, Department of Clinical Epidemiology and Biostatistics, McMaster University); Tara McGrath (Accelerated Economics Training Program, Government of Canada)
    Abstract: Distance-related geographic barriers challenge the ability of health systems to allocate health care resources equitably according to need. The paper adapts the concentration-index approach, commonly used for measuring income-related equity, to assess distance-related equity in hospital utilization in the province of Ontario, Canada. The analysis is based on individual-level data from the Canadian Community Health Survey, which provides information on respondents’ hospital utilization, health status, demographic, socio-economic status and location, merged with data on Ontario hospitals, and a geo-coded measure of each respondent’s distance to the nearest general acute-care hospital. We find no evidence of a relationship between distance to the nearest hospital and either the probability of hospitalization or the annual number of hospital nights. Supplementary analyses provide insight into hypothesized pathways between distance and hospitalization. Although having a regular medical doctor is positively associated with distance to the nearest hospital, controlling for this does not affect the estimated distance-hospitalization relationship. Both the size and occupancy rate of the nearest hospital are correlated with distance and are strongly related to the probability of hospitalization, but again controlling for these factors did not affect the estimated relationship between hospital use and distance to the nearest hospital. We do, however, find a strong positive gradient between the probability of hospitalization and distance to the nearest large hospital. This gradient is driven by the fact that, for most of those far from a large hospital, the nearest hospital is small with a low occupancy rate. Calculation of the distance-related horizontal inequity index confirms no distance-related inequity in hospital utilization when distance is measured to the nearest hospital of any size; however, when distance is instead measured to the nearest large hospital, we observe large, pro-distance inequity. These distance-use relationships are not captured by traditional geographic measures based on measures of urbanization/ruralness.
    Keywords: hospital utilization, equity, geography
    Date: 2008
  33. By: Gries, Thomas; Naude, Wim; Matthee, Marianne
    Abstract: Success in international trade depends, amongst other things, on distance from markets. Most new economic geography models focus on the distance between countries. In contrast much less theorizing and empirical analysis have focused on how distances within a country?for instance due to the location behaviour of exporting firms?matter to international trade. In this paper we contribute to the literature on the latter by offering a theoretical model to explain the optimal distance that an export-oriented firm would locate from a port. We present empirical evidence from South Africa in support of the model.
    Keywords: distance, transport costs, manufactured exports
    Date: 2008
  34. By: Thomas J. Miceli (University of Connecticut); Henry J. Munneke (University of Georgia); C. F. Sirmans (Florida State University); Geoffrey K. Turnbull (Georgia State University)
    Abstract: This paper examines the impact of land title systems on property values. The predominant system in the U.S., the recording system, awards title to claimants over current possessors, whereas the Torrens registration system awards title to the current owner. In theory, the registration system maximizes property value, all else equal, but in practice, the systems differ depending on the risk of a claim and administrative costs. A natural experiment in Cook County, Illinois, where both systems have existed since 1897, allows a test of the theory. The results, based on commercial and industrial properties, reveal that parcels tend to self-select into the two systems based on the predictions of the theory.
    Keywords: Land title system, property rights, recording system, Torrens system
    JEL: K11 P14 R14
    Date: 2008–08
  35. By: Mitu, Narcis-Eduard
    Abstract: In the past, governments had more freedom in setting their taxes as the barriers to free movement of capital and people were high. The gradual process of globalization is lowering these barriers and results in rising capital flows and greater manpower mobility. Tax competition exists when governments are encouraged to lower fiscal burdens to either encourage the inflow of productive resources or discourage the exodus of those resources. With tax competition in the era of globalization politicians have to keep tax rates “reasonable” to dissuade workers and investors from moving to a lower tax environment. Most countries started to reform their tax policies to improve their competitiveness. However, the tax burden is just one part of a complex formula describing national competitiveness. The other criteria like total manpower cost, labor market flexibility, education levels, political stability, legal system stability and efficiency are also important.
    Keywords: Tax competition; Positive effects; Negative effects; Flat tax
    JEL: E62 F22 E60
    Date: 2008–09–23

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