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on Urban and Real Estate Economics |
| By: | Alexandre Repkine |
| Abstract: | In this paper we explore spatial effects in a hedonic price function framework for a large sample of apartments in Moscow. We find strong evidence of both spatial lag and spatial autocorrelation. Our results are robust across both the spatial model specifications and the choice of the spatial weight matrices. The fact that the quality attributes’ shadow prices we estimate are not much different from the OLS (ML) estimates suggests that spatial effects are orthogonal to the quality characteristics. One interesting finding is that an increase in the kitchen area contributes much more significantly to the apartment’s price compared a marginal increase in the living area, which is reflecting the traditional role kitchen has been playing in the Russian households as a dining and communication area. House type, time needed to walk to the nearest subway station and subway time to the city center are other important apartment attributes. Methodologically, we believe our study is demonstrating the need to develop spatial econometric techniques for application in the environment where both types of spatial effects are simultaneously present. |
| Keywords: | spatial models, housing market, hedonic price functions |
| JEL: | C21 R12 R21 |
| Date: | 2008–10–25 |
| URL: | http://d.repec.org/n?u=RePEc:eei:rpaper:eeri_rp_2008_16&r=ure |
| By: | Martin Cihák; Plamen Iossifov; Amar Shanghavi |
| Abstract: | We examine the interest rate elasticity of housing prices, advancingthe empirical literature in two directions. First, we take a commonly used cross-country panel dataset and evaluate the housing price equation using a consistent estimator in the presence of endogenous explanatory variables and a lagged dependent variable. Second, we carry-out a novel analysis of determinants of residential housing prices in a cross-section of countries. Our results show that the short-term interest rate, and hence monetary policy, has a sizable impact on residential housing prices. |
| Keywords: | Housing prices , Real estate prices , Interest rate policy , Economic models , |
| Date: | 2008–10–21 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:08/247&r=ure |
| By: | Paul Cheshire (London School of Economics); Stefano Magrini (Department of Economics, University Of Venice Cà Foscari) |
| Abstract: | We try to combine theory with empirical analysis to investigate the drivers of spatial growth processes, welfare and disparities in a context in which people are markedly immobile. Drawing on two of our recent papers (Cheshire and Magrini, 2006 and 2008), we review the evidence on the drivers of differential urban growth in the EU both in terms of population and output growth. The main conclusion from our findings is that one cannot reasonably maintain the assumption of full spatial equilibrium in a European context. This has a number of wider implications. It suggests that i. differences in real incomes in Europe - and more generally where populations are relatively immobile - are likely to persist and indicate real differences in welfare; ii. there is no evidence of a unified European urban system but rather of a set of national systems; iii. there are significant but theoretically consistent, differences in the drivers of population compared to economic growth. |
| Keywords: | Growth, urban system, spatial equilibrium |
| JEL: | O18 R11 R13 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2008_32&r=ure |
| By: | David Card (UC Berkeley); Alexandre Mas (UC Berkeley); Jesse Rothstein (Princeton University) |
| Abstract: | A great deal of urban policy depends on the possibly of creating stable, economically and racially mixed neighborhoods. Many social interaction models - including the seminal Schelling (1971) model - have the feature that the only stable equilibria are fully segregated. These models suggest that if home-buyers have preferences over their neighborhoods' racial composition, a neighborhood with mixed racial composition is inherently unstable, in the sense that a small change in the composition sets off a dynamic process that converges to 0% or 100% minority share. Card, Mas, and Rothstein (2008) outline an alternative "one-sided" tipping model in which neighborhoods with a minority share below a critical threshold are potentially stable, but those that exceed the threshold rapidly shift to 100% minority composition. In this paper we examine the racial dynamics of Census tracts in major metropolitian areas over the period from 1970 to 2000, focusing on the question of whether tipping is "two-sided" or "one-sided." The evidence suggests that tipping behavior is one-sided, and that neighborhoods with minority shares below the tipping point attract both white and minority residents. |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:1067&r=ure |
| By: | West, Martin R. (Brown University); Woessmann, Ludger (Ifo Institute for Economic Research) |
| Abstract: | Nineteenth-Century Catholic doctrine strongly opposed state schooling. We show that countries with larger shares of Catholics in 1900 (but without a Catholic state religion) tend to have larger shares of privately operated schools even today. We use this historical pattern as a natural experiment to estimate the causal effect of contemporary private competition on student achievement in cross-country student-level analyses. Our results show that larger shares of privately operated schools lead to better student achievement in mathematics, science, and reading and to lower total education spending, even after controlling for current Catholic shares. |
| Keywords: | private school competition, student achievement, Catholic schools |
| JEL: | I20 L33 N30 Z12 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3818&r=ure |
| By: | Martina Kauffeld-Monz (Institute for Urban Science and Structural Policy (IfS Berlin), Germany.); Michael Fritsch (Friedrich Schiller University Jena, German Institute for Economic Research (DIW-Berlin), and Max Planck Institute of Economics, Jena, Germany.) |
| Abstract: | The discussion on regional innovation systems emphasizes the duality of local and global links. While the former enable effective knowledge exchange between regional actors, the latter are considered to provide regional systems with knowledge diverse to their knowledge base. Our empirical analysis of 18 German regional innovation networks highlights the importance of public research organizations for inter-regional knowledge exchange. The broker and gatekeeper function of public research organizations may be particularly important in lagging regions that typically suffer from a lack of large firms who often assume the role of "gatekeepers of knowledge". |
| Keywords: | Regional systems of innovation, innovation networks, knowledge broker, gatekeeper |
| JEL: | D83 D85 L14 |
| Date: | 2008–22–24 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2008-089&r=ure |
| By: | Nisha Arunatilake; Priyanka Jayawardena |
| Abstract: | Using the experience of the Educational Quality Inputs (EQI) Scheme in Sri Lanka, the paper examines the distributional aspects of formula-based funding and efficiency of decentralized management of education funds in a developing country setting. The study finds that the EQI fund distribution is largely pro-poor, with the exception of expenditure at the collegial level. The study finds that allocating more funds to more disadvantaged schools alone is insufficient to reduce disparities as the inability of schools to fullly utilize the funds holds back progress. The study findings support the hypothesis that qualified principals, adequate levels of human and physical resources, and state-level monitoring and support is needed for the success of education management at the school level. The study highlights the need to better use information collected from the schools on the EQI scheme to simplify and improve its implementation and effectiveness. |
| Keywords: | Education finance, Sri Lanka, formula-based funding, decentralized management of schools |
| JEL: | I20 I21 I22 I28 I38 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:pmmacr:2008-12&r=ure |
| By: | Antecol, Heather (Claremont McKenna College); Cobb-Clark, Deborah (Australian National University) |
| Abstract: | This paper contributes to the emerging literature on racial and ethnic tension by analyzing the relationship between local socio-economic conditions and the propensity for outsiders to have threatening racial encounters with insiders. We use unique data for a sample of active-duty Army personnel that allow us to first, link personnel to the local communities in which they are located and second, to avoid any selectivity bias associated with endogenous community selection. We find at best mixed evidence that racial hostility is related to economic vulnerability within a community and no evidence that racial conflict can be linked to the level of public expenditure. Crime rates, however, are closely related to the incidence of threatening racial encounters and while a community’s demographic profile is also clearly linked to racial tension, these relationships cannot be easily generalized across minority groups or type of threatening racial encounter. |
| Keywords: | racial and ethnic tension, U.S. military, economics of minorities |
| JEL: | D74 J15 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3828&r=ure |
| By: | Asuka Imaizumi (Graduate School of Economics, University of Tokyo); Kaori Ito (Faculty of Science and Technology, Tokyo University of Science); Tetsuji Okazaki (Faculty of Economics, University of Tokyo) |
| Abstract: | In this paper, the effect of a temporary shock on the industrial agglomeration was investigated, focusing on the case of the 1923 Great Kanto Earthquake. Using the ward and county-level data of Tokyo Prefecture, the persistence of the effect caused by the earthquake was examined. It was confirmed that the effect would finally dissipate, which is consistent with preceding literature. In addition, this paper investigated the persistence differences across industries, specifically the differences between the linkage-intensive industries, and the non-linkage-intensive industries. It was found that the effect of the temporary shock was more persistent in the linkage-intensive industries, which suggests that the there was at least an endogenous portion in the mechanism of industrial agglomeration. |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:tky:fseres:2008cf602&r=ure |
| By: | Diana Barro (Department of Applied Mathematics and SSAV, University of Venice); Antonella Basso (Department of Applied Mathematics and SSAV, University of Venice) |
| Abstract: | In this contribution we carried out a wide simulation analysis in order to study the contagion mechanism induced in a portfolio of bank loans by the presence of business relationships among the positions. To this aim we jointly apply a structural model based on a factor approach extended in order to include the presence of microeconomic relationships that takes into account the counterparty risk, and a network model to describe the business connections among interdependent firms. The network of firms is generated resorting to an entropy spatial interaction model. |
| Keywords: | credit risk, bank loan portfolios, contagion models, entropy spatial models |
| JEL: | D61 C63 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:vnm:wpaper:186&r=ure |
| By: | Arnott, Richard; Inci, Eren |
| Abstract: | In classical traffic flow theory, there are two velocities associated with a given level of traffic flow. Following Vickrey, economists have termed travel at the higher speed congested travel and at the lower speed hypercongested travel. Since the publication of Walters' classic paper (1961, Econometrica 29, 676-699), there has been an on-going debate concerning whether a steady-state hypercongested equilibrium can be stable. For a particular structural model of downtown traffic flow and parking, this paper demonstrates that a steady-state hypercongested equilibrium can be stable. Some other sensible models of traffic congestion conclude that steady-state hypercongested travel cannot be stable, and that queues develop to ration the demand in steady states. Thus, we interpret our result to imply that, when steady-state demand is so high that it cannot be rationed through congested travel, the trip price increase necessary to ration the demand may be generated either through the formation of steady-state queues or through hypercongested travel, and that which mechanism occurs depends on details of the traffic system. |
| Keywords: | traffic congestion; cruising for parking; on-street parking; hypercongestion |
| JEL: | L91 R41 |
| Date: | 2008–11–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:11786&r=ure |
| By: | Christina Paxson (Princeton University); Cecilia E. Rouse (Princeton University) |
| Abstract: | Hurricane Katrina displaced approximately 650,000 people and destroyed or severely damaged 217,000 homes along the Gulf Coast. Damage was especially severe in New Orleans, and the return of displaced residents to this city has been slow. The fraction of households receiving mail (which, in the absence of reliable population estimates, is a good indicator for returns) was 49.5 percent in August 2006, and 66.0 percent in June 2007 (Greater New Orleans Community Data Center, 2007). Low-income minority families appear to have been slower than others to return (William H. Frey and Audrey Singer, 2006). In this paper, we examine the determinants of returning to New Orleans in the 18 months after the hurricane. The data come from a study of low-income parents—mainly African American women—who were enrolled in a community college intervention prior to the hurricane. Although the sample is not representative of the pre-Katrina population of the city, it nonetheless is of great interest. The relatively slow return of low income, primarily African American, residents is a politically charged issue. One (extreme) view is that the redevelopment plans are designed to discourage low-income minority residents from returning. A quite different view is that members of this group have found better opportunities outside of New Orleans, and do not want to return. Because few data sets trace individuals from before to after the hurricane, this debate has taken place largely without the benefit of evidence. |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:1043&r=ure |
| By: | Egle Tafenau |
| Abstract: | In the literature of new economic geography several authors have shown that a benevolent social planner would choose a different spatial distribution of economic activity than the one achieved through market forces. So far little has been done to evaluate the welfare effects of specific redistribution policies. This is the main contribution of the paper. We look at two policy schemes: location permits policy and a tax-subsidy policy in the context of the constructed capital model (due to Baldwin 1999). It is shown that with a tax on final consumption expenditures and a capital subsidy there is more room for welfare improvement than under the location permits policy due to increased variety of goods. Nevertheless, relying on the numerical simulations, no situation is possible where the residents of both regions would gain from the policy. Also compensated Pareto improvements are unachievable. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:mtk:febawb:64&r=ure |
| By: | Behringer, Stefan |
| Abstract: | This paper investigates the effect of spillovers in a model of endogenous technical change resulting from learning or network effects on the existence of a lower bound to market concentration. |
| Keywords: | Market Structure; Endogenous Technical Change; Learning; Spillovers; Research and Development |
| JEL: | O32 D4 L1 |
| Date: | 2008–01–14 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:11797&r=ure |
| By: | Jesse Rothstein (Princeton University and NBER) |
| Abstract: | Non-random assignment of students to teachers can bias value added estimates of teachers’ causal effects. Rothstein (2008) shows that typical value added models indicate large counter-factual effects of 5th grade teachers on students’ 4th grade learning, implying that assignments do not satisfy the imposed assumptions. This paper quantifies the resulting biases in estimates of 5th grade teachers’ causal effects from several value added models, under varying assumptions about the assignment process. Under selection on observables, models for gain scores without controls or with only a single lagged score control are subject to important bias, but models with controls for the full test score history are nearly free of bias. I consider several scenarios for selection on unobservables, using the across-classroom variance of observed variables to calibrate each. Results indicate that even well-controlled models may be substantially biased, with the magnitude of the bias depending on the amount of information available for use in classroom assignments. |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:pri:cepsud:1054&r=ure |
| By: | Terry-Ann Craigie (Michigan State University) |
| Abstract: | This study uses data from the Fragile Families and Child Wellbeing Study (FFCWS) to examine the effects of a father?s presence on the cognitive performance of his pre-school aged child. Cognitive performance is measured by the Peabody Picture Vocabulary Test (PPVT), a well-known indicator of cognitive ability and academic readiness for young children. Like previous studies, the richness of the data is exploited by including numerous covariates in the OLS regression model. In addition, the study also employs a Proxy Variable-OLS Solution to dealing with the problem of omitted variable bias. Subsequently, causal inferences can be made from the empirical findings. The study finds two distinct effects of paternal presence based on whether the child belongs to a stable versus disruptive family structure. The empirical results indicate that cognitive outcomes are statistically similar for children in stable single-parent and stable two-parent family households. However, disruptive family structures, characterized by a father?s partial presence in the home, are shown to have deleterious effects on cognitive performance compared to a stable single-parent family structure where the father has never even been present. One profound implication of these findings is the importance of family stability above family structure in producing positive child outcomes. Moreover, there is suggestive evidence that the effect of disruptive paternal presence is significantly larger for girls than for boys. |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:pri:crcwel:1015&r=ure |
| By: | Oliver Vins; Thomas Bloch |
| Abstract: | Motivated by the recent discussion of the declining importance of deposits as banks' major source of funding we investigate which factors determine funding costs at local banks. Using a panel data set of more than 800 German local savings and cooperative banks for the period from 1998 to 2004 we show that funding costs are not only driven by the relative share of comparatively cheap deposits of bank's liabilities but among other factors especially by the size of the bank. In our empirical analysis we find strong and robust evidence that, ceteris paribus, smaller banks exhibit lower funding costs than larger banks suggesting that small banks are able to attract deposits more cheaply than their larger counterparts. We argue that this is the case because smaller banks interact more personally with customers, operate in customers' geographic proximity and have longer and stronger relationships than larger banks and, hence, are able to charge higher prices for their services. Our finding of a strong influence of bank size on funding costs is also in an international context of great interest as mergers among small local banks - the key driver of bank growth - are a recent phenomenon not only in European banking that is expected to continue in the future. At the same time, net interest income remains by far the most important source of revenue for most local banks, accounting for approximately 70% of total operating revenues in the case of German local banks. The influence of size on funding costs is of strong economic relevance: our results suggest that an increase in size by 50%, for example, from EUR 500 million in total assets to EUR 750 million (exemplary for M&A transactions among local banks) increases funding costs, ceteris paribus, by approximately 18 basis points which relates to approx. 7% of banks' average net interest margin. |
| JEL: | G21 G34 L25 C23 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:fra:franaf:189&r=ure |
| By: | Amanda Geller; Irwin Garfinkel; Carey Cooper; Ronald Mincy |
| Abstract: | Using a population-based, longitudinal family survey (N=4,898), we identify a set of economic, residential, and developmental risks particular to the children of incarcerated parents. We use parental reports of incarceration history, demographic background, and a rich set of child and family outcomes, in a series of multivariate regression models. Children of incarerated parents face more economic and residential stability than their counterparts. Children of incarcerated fathers also display more behavior problems, though other developmental differences are insignificant. Several family differences are magnified when both parents have been incarcerated. We find that incarceration identifies families facing severe and unique hardship. Given the prevalence of incarceration, this means a large population of children suffers unmet material needs, residential instability, and behavior problems. These risks may be best addressed by using the point of incarceration as an opportunity for intervention, and the administration of age-appropriate social services. |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:pri:crcwel:1080&r=ure |
| By: | M. Shahid Ebrahim (Nottingham University Business School) |
| Abstract: | This paper was refined during my sabbatical study at James Madison University (JMU). I appreciate the hospitality of JMU particularly that of Ehsan Ahmed. I have benefited from the critical comments of the participants of the seminars at James Madison University; University of Birmingham; University of Glasgow; the 2006 Conference on Computing in Economics and Finance (in Cyprus); the 2007 IIUM International Conference (in Malaysia); at the 2007 Workshop on Default Risk and Financial Distress (in Rennes, France), the 2007 Product Development and Management Association Conference (in Bangalore, India); the 2008 International Conference on Business and Finance (in Hyderabad, India); the 2008 International AREUEA Conference (in Istanbul, Turkey); the 2008 Workshop of European Network of the Economics of Religion (in Edinburgh, UK); and the 2008 Symposium on Religion, Markets and Society (in Nottingham, UK) on earlier drafts of the paper. I am also grateful to the following individuals for their helpful suggestions: Bruce Brunton, Humayon Dar, Mohammad Omar Farooq, Diana Mitlin, Kelly Morris, Peter Oliver, Barkley Rosser, Peer Smets, Ghulam Sorwar, Rafal Wojakowski and Robert Young. All remaining errors are mine. |
| Keywords: | ASCRA, Asset Bubble, Mutual Bank, Inflation, Mortgage Design,and ROSCA. |
| JEL: | C63 G21 G32 N25 O17 P13 R22 |
| Date: | 2008–10–24 |
| URL: | http://d.repec.org/n?u=RePEc:gra:paoner:08/04&r=ure |
| By: | Paula Fomby (University of Colorado Denver); Cynthia Osborne (University of Texas, Austin) |
| Abstract: | A growing body of research has found support for the idea that children’s behavioral development and school performance may be influenced as much by multiple changes in family composition during childhood as by the quality and character of the families in which children reside at any given point (Cavanagh and Huston 2006; Cavanagh, Schiller, and Riegle-Crumb 2006; Fomby and Cherlin 2007; Heard 2007a; Heard 2007b; Heaton and Forste 2007; Osborne and McLanahan 2007; Wu 1996; Wu and Martinson 1993; Wu and Thomson 2001). Much of the research on instability has focused specifically on the effects for children of experiencing the repeated formation and dissolution of cohabiting and marital unions. Underlying the research on the effects of union instability is the concept that children and their parents or parent-figures form a functioning family system, and repeated disruptions to that system, caused by either the addition or departure of a parent’s partner or spouse, may lead to behaviors with potentially deleterious long-term consequences. |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:pri:crcwel:1077&r=ure |
| By: | Christopher Wildeman (Princeton University) |
| Abstract: | Incarceration diminishes the life-chances of adults, but little is known about how parental incarceration affects children. Effects on early childhood aggressive behaviors are especially significant because of connections between early childhood aggression and future criminality. Using data from the Fragile Families and Child Wellbeing Study, a longitudinal birth cohort study of children born in urban centers at the close of the 20th century, this paper considers the effects of paternal incarceration on children’s aggressive behaviors at age 5. Results show strong effects of paternal incarceration on aggressive behaviors for boys but not girls. Results also show that effects are concentrated among boys living with a father at the time of his incarceration. The use of various modeling strategies and alternate dependent and independent variables demonstrates the robustness of the finding – and shows that effects are largest on physically aggressive acts, precisely the acts most strongly connected with future criminal activity. By increasing boy’s aggression, paternal incarceration may promote the intergenerational transmission of crime and incarceration. In so doing, high levels of paternal incarceration could not only compromise public safety but also provide the groundwork for a permanently disadvantaged class for whom contact with the criminal justice system is normal. |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:pri:crcwel:1014&r=ure |
| By: | Amanda Geller (Columbia University); Irwin Garfinkel (Columbia University); Bruce Western (Harvard University) |
| Abstract: | Incarceration is widespread in the United States, and previous literature has shown significant negative effects of incarceration on later employment, earnings, and relationship stability. Given the high rates of fatherhood among men in jails and prisons, a large number of children are placed at considerable risk when a parent is incarcerated. This paper examines one dimension of the economic risk faced by children of incarcerated fathers: the reduction in the financial support that they receive. We use a population-based sample of urban children to examine the effects of incarceration on this support. Both cross-sectional and longitudinal regression models, as well as a propensity score matching analysis, indicate that men with incarceration histories are significantly less likely to contribute to their families and those that do contribute provide significantly less. Moreover, sensitivity analysis suggests that these differences are unlikely to be a result of unobserved heterogeneity between incarcerated and never-incarcerated fathers. The negative effects of incarceration on fathers’ financial support are due not only to diminished performance in the labor market by formerly incarcerated men, but also to their increased likelihood to live apart from their children. Men contribute far less through child support (formal or informal) than they do when they share their earnings within their household, suggesting that the destabilizing effects of incarceration on family relationships place children at significant economic disadvantage. |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:pri:crcwel:1079&r=ure |