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on Urban and Real Estate Economics |
| By: | William Hoyt (Martin School of Public Policy and Administration and Department of Economics, University of Kentucky); Paul A. Coomes (Department of Economics and College of Business, University of Louisville); Amelia M. Biehl (Department of Economics, University of Southern Indiana) |
| Abstract: | Property tax limitations, as well as other tax and expenditure restrictions on state and local governments in the United States, date back to the late nineteenth century. A surge in property tax limitation legislation occurred in the late 1970s and early 1980s, and its effects on government revenue, school financing, and educational quality have been studied extensively. However, there is surprisingly little literature on how property tax limits affect housing markets. For the first time, we examine the impacts of property tax limitations on housing growth, in addition to their impacts on housing prices. Using state-level data over twenty-three years, we find that property tax limits increase housing prices (indexes) by approximately 1.6%. These limits appear to have little impact on the growth in the housing stock, as measured by the number of permits. Our evidence suggests that this is because while property tax limits reduce property taxes they also increase the price of housing. These two counteracting effects lead to ambiguous impacts on the gross price of housing. |
| JEL: | H71 R31 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:ifr:wpaper:2009-03&r=ure |
| By: | Stephanie Riegg Cellini (George Washington University); Fernando Ferreira (University of Pennsylvania); Jesse Rothstein (Princeton University) |
| Abstract: | This paper analyzes the impact of voter-approved school bond issues on school district balance sheets, local housing prices, and student achievement. We draw on the unique characteristics of California’s system of school finance to obtain clean identification of bonds’ causal effects, comparing districts in which school bond referenda passed or failed by narrow margins. We extend the traditional regression discontinuity (RD) design to account for the dynamic nature of bond referenda, since the probability of future proposals depends on the outcomes of past elections. By law, bond revenues can be used only for school facilities projects. We find that bond funds indeed stick exclusively in the capital account, with no effect on current expenditures or other revenues. Our housing market estimates indicate that California school districts under-invest in school facilities: passing a referendum causes immediate, sizable increases in home prices, implying a willingness-to-pay on the part of marginal homebuyers of $1.50 or more for each $1 of facility spending. These effects do not appear to be driven by changes in the income or racial composition of homeowners, and the school bond impact on test scores cannot explain more than a small portion of the total housing price effect. Our estimates indicate that parents value improvements in other dimensions of school output (e.g., safety) that may be not captured by test scores. |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:pri:cepsud:1101&r=ure |
| By: | Behrens, Kristian; Robert-Nicoud, Frédéric |
| Abstract: | Empirical studies consistently report that labour productivity and TFP rise with city size. The reason is that cities attract the most productive agents, select the best of them, and make the selected ones even more productive via various agglomeration economies. This paper provides a microeconomically founded model of vertical city differentiation in which the latter two mechanisms (`agglomeration' and `selection') operate simultaneously. Our model is both rich and tractable enough to allow for a detailed investigation of when cities emerge, what determines their size, and how they interact through the channels of trade. We then uncover stylised facts and suggestive econometric evidence that are consistent with the most distinctive equilibrium features of our model. We show, in particular, that larger cities are both more productive and more unequal (`polarised'), that inter-city trade is associated with higher income inequalities, and that the proximity of large urban centres inhibits the development of nearby cities. |
| Keywords: | agglomeration; entrepreneur heterogeneity; firm selection; income inequalities; urban systems; urbanization |
| JEL: | F12 R12 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7018&r=ure |
| By: | Pierre Philippe Combes (University of AixMarseille and CEPR); Gilles Duranton (University of Toronto and CEPR); Laurent Gobillon (Institut National d’Etudes Démographiques, PSEINRA, and CREST); Diego Puga (IMDEA, Universidad Carlos III and CEPR); Sébastien Roux (CREST INSEE) |
| Abstract: | Firms are more productive on average in larger cities. Two explanations have been offered: agglomeration economies (larger cities promote interactions that increase productivity) and firm selection (larger cities toughen competition allowing only the most productive to survive). To distinguish between them, we nest a generalised version of a seminal firm selection model and a standard model of agglomeration. Stronger selection in larger cities left-truncates the productivity distribution whereas stronger agglomeration right-shifts and dilates the distribution. We assess the relative importance of agglomeration and firm selection using French establishment-level data and a new quantile approach. Spatial productivity differences in France are mostly explained by agglomeration. |
| Keywords: | agglomeration; firm selection; productivity, cities |
| JEL: | C52 R12 D24 |
| Date: | 2009–02–20 |
| URL: | http://d.repec.org/n?u=RePEc:imd:wpaper:wp2009-02&r=ure |
| By: | Ken Sanford (Graduate Student, Department of Economics, Gatton College of Business and Economics, University of Kentucky); William Hoyt (Martin School of Public Policy and Administration and Department of Economics, University of Kentucky) |
| Abstract: | This analysis examines how differences in state income tax rates, as well as other state and local taxes and public service expenditures, influence the choice of state of residence for households (federal tax filers) moving into multistate metropolitan statistical areas (MSA) using data from the one in twenty sample of the 2000 Census of Population and Housing microdata. MSAs that are on state borders provide a spatial discontinuity – discrete differences in tax rates within a single labor market. These MSAs allow residents to live in one state and work in another state. After controlling for other factors believed to affect household location, differences in state income tax rates have a statistically significant impact on the probability a household locates in the low tax state within an MSA. Complicating the analysis of location choice is the presence of state reciprocity agreements. These bilateral agreements between state governments allow taxpayers to pay income tax based on place of residence rather than their place of work. The theoretical roles of these agreements are discussed and the impacts of these laws are tested. The results suggest that reciprocity agreements alter the role that taxes play in location. |
| JEL: | H73 H71 J61 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:ifr:wpaper:2009-05&r=ure |
| By: | Briant, Anthony; Combes, Pierre-Philippe; Lafourcade, Miren |
| Abstract: | This paper evaluates, in the context of economic geography estimates, the magnitude of the distortions arising from the choice of zoning system, which is also known as the Modifiable Areal Unit Problem (MAUP). We consider three standard economic geography exercises (the analysis of spatial concentration, agglomeration economies, and trade determinants), using various French zoning systems differentiated according to the size and shape of spatial units, which are the two main determinants of the MAUP. While size matters a little, shape does so much less. Both dimensions seem to be of secondary importance compared to specification issues. |
| Keywords: | agglomeration; concentration; gravity; MAUP; wage equation |
| JEL: | C10 C43 O18 R12 R23 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6928&r=ure |
| By: | Reinhart, Carmen; Rogoff, Kenneth |
| Abstract: | The historical frequency of banking crises is quite similar in high- and middle-to-low-income countries, with quantitative and qualitative parallels in both the run-ups and the aftermath. We establish these regularities using a unique dataset spanning from Denmark’s financial panic during the Napoleonic War to the ongoing global financial crisis sparked by subprime mortgage defaults in the United States. Banking crises dramatically weaken fiscal positions in both groups, with government revenues invariably contracting, and fiscal expenditures often expanding sharply. Three years after a financial crisis central government debt increases, on average, by about 86 percent. Thus the fiscal burden of banking crisis extends far beyond the commonly cited cost of the bailouts. Our new dataset includes housing price data for emerging markets; these allow us to show that the real estate price cycles around banking crises are similar in duration and amplitude to those in advanced economies, with the busts averaging four to six years. Corroborating earlier work, we find that systemic banking crises are typically preceded by asset price bubbles, large capital inflows and credit booms, in rich and poor countries alike. |
| Keywords: | bail out; banking; crisis; debt; equity prices; house prices |
| JEL: | E6 F3 N10 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7131&r=ure |
| By: | Buiter, Willem H |
| Abstract: | A fall in house prices due to a change in fundamental value redistributes wealth from those long housing (for whom the fundamental value of the house they own exceeds the present discounted value of their planned future consumption of housing services) to those short housing. In a representative agent model and in the Yaari-Blanchard OLG model used in the paper, there is no pure wealth effect on consumption from a change in house prices if this represents a change in fundamental value. There is a pure wealth effect on consumption from a change in house prices if this reflects a change in the speculative bubble component of house prices. Two other channels through which house prices can affect aggregate consumption are (1) redistribution effects if the marginal propensity to spend out of wealth differs between those long housing and those short housing and (2) collateral or credit effects due to the collateralisability of housing wealth and the non-collateralisability of human wealth. A decline in house prices reduces the scope for mortgage equity withdrawal. For given sequences of future after-tax labour income and interest rates, this may depress consumption in the short run while boosting it in the long run. |
| Keywords: | house prices; speculative bubbles; wealth effect |
| JEL: | E2 E3 E5 E6 G1 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6920&r=ure |
| By: | Combes, Pierre-Philippe; Lafourcade, Miren; Thisse, Jacques-François; Toutain, Jean-Claude |
| Abstract: | This paper uses a unique database that provides value-added, employment, and population levels for the entire set of French departments for the years 1860, 1930, and 2000. These data cover three sectors: agriculture, manufacturing, and services. This allows us to study the evolution of spatial inequalities within France and to test the empirical relevance of economic geography predictions over the long run. The evidence confirms the existence of a bell-shaped evolution of the spatial concentration of manufacturing and services. In contrast, labor productivity has been converging across departments. Last, our study also confirms the presence of strong agglomeration economies during the full time-period. Market potential during the first sub-period (1860-1930), and higher education during the second (1930-2000), together with sectoral diversity, account for the spatial distribution of these gains. |
| Keywords: | agglomeration economies; economic geography; economic history; human capital |
| JEL: | N93 N94 O18 R12 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7017&r=ure |
| By: | Duflo, Esther; Dupas, Pascaline; Kremer, Michael |
| Abstract: | This paper provides experimental evidence on the impact of tracking primary school students by initial achievement. In the presence of positive spillover effects from academically proficient peers, tracking may be beneficial for strong students but hurt weaker ones. However, tracking may help everybody if heterogeneous classes make it difficult to teach at a level appropriate to most students. We test these competing claims using a randomized evaluation in Kenya. One hundred and twenty one primary schools which all had a single grade one class received funds to hire an extra teacher to split that class into two sections. In 60 randomly selected schools, students were randomly assigned to sections. In the remaining 61 schools, students were ranked by prior achievement (measured by their first term grades), and the top and bottom halves of the class were assigned to different sections. After 18 months, students in tracking schools scored 0.14 standard deviations higher than students in non-tracking schools, and this effect persisted one year after the program ended. Furthermore, students at all levels of the distribution benefited from tracking. A regression discontinuity analysis shows that in tracking schools scores of students near the median of the pre-test distribution score are independent of whether they were assigned to the top or bottom section. In contrast, in non-tracking schools we find that on average, students benefit from having academically stronger peers. This suggests that tracking was beneficial because it helped teachers focus their teaching to a level appropriate to most students in the class. |
| Keywords: | Development Economics; Education Economics; Primary School Tracking |
| JEL: | I21 O12 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7043&r=ure |
| By: | Sharon Kukla-Acevedo (Deparment of Political Science, Central Michigan University); Eugenia F. Toma (Martin School of Public Policy and Administration, University of Kentucky) |
| Abstract: | Federal legislation currently holds institutions of higher education accountable for the quality of teachers that they produce. However research has yet to demonstrate that teacher preparation programs (TPPs) have differential effects on the quality of teachers they produce in terms of student achievement. This study uses data from a sample of 2,582 5th grade math students in an urban school district in Kentucky and a school fixed effects design to explore the variation in average TPP effects. The authors find that TPPs are differentially effective in training teachers, which in turn impacts student performance on 5th grade math scores. There is also some indication that these differential effects converge around teachers’ fifth year of teaching. |
| Keywords: | Student achievement; teacher preparation, teacher effects |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:ifr:wpaper:2009-06&r=ure |
| By: | Grönqvist, Erik; Vlachos, Jonas |
| Abstract: | Teachers are increasingly being drawn from the lower parts of the general ability distribution, but it is not clear how this affects student achievement. We track the position of entering teachers in population-wide cognitive and non-cognitive ability distributions using school grades and draft records from Swedish registers. The impact on student achievement caused by the position of teachers in these ability distributions is estimated using matched student-teacher data. On average, teachers' cognitive and non-cognitive social interactive abilities do not have a positive effect on student performance. However, social interactive ability turns out to be important for low aptitude students, whilst the reverse holds for cognitive abilities. In fact, while high performing students benefit from high cognitive teachers, being matched to such a teacher can even be detrimental to their lower performing peers. Hence, the lower abilities among teachers may hurt some students, whereas others may even benefit. High cognitive and non-cognitive abilities thus need not necessarily translate into teacher quality. Instead, these heterogeneities highlight the importance of the student-teacher matching process. |
| Keywords: | Cognitive and non-cognitive ability; Student achievement; Teacher quality |
| JEL: | H4 I21 J4 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7086&r=ure |
| By: | Brülhart, Marius; Sbergami, Federica |
| 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: | agglomeration; dynamic panel estimation; economic growth; urbanisation |
| JEL: | O4 R11 R12 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6941&r=ure |
| By: | Overman, Henry G.; Puga, Diego |
| Abstract: | We provide empirical evidence on the role of labour market pooling in determining the spatial concentration of UK manufacturing establishments. This role arises because large concentrations of employment iron out idiosyncratic shocks and improve establishments' ability to adapt their employment to good and bad times. We measure the likely importance of labour pooling by calculating the fluctuations in employment of individual establishments relative to their sector and averaging by sector. Our results show that sectors whose establishments experience more idiosyncratic volatility are more spatially concentrated, even after controlling for a range of other industry characteristics that include a novel measure of the importance of localized intermediate suppliers. |
| Keywords: | labour market pooling; spatial concentration |
| JEL: | R12 R30 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7174&r=ure |
| By: | Berliant, Marcus; Watanabe, Hiroki |
| Abstract: | We criticize the theories used to explain the size distribution of cities. They take an empirical fact and work backward to obtain assumptions on primitives. The induced theoretical assumptions on consumer behavior, particularly about their inability to insure against the city-level productivity shocks in the model, are untenable. With either self insurance or insurance markets, and either an arbitrarily small cost of moving or the assumption that consumers do not perfectly observe the shocks to firms' technologies, the agents will never move. Even without these frictions, our analysis yields another equilibrium with insurance where consumers never move. Thus, insurance is a substitute for movement. We propose an alternative class of models, involving extreme risk against which consumers will not insure. Instead, they will move, generating a Fréchet distribution of city sizes that is empirically competitive with other models. |
| Keywords: | Zipf's Law; Gibrat's Law; Size Distribution of Cities; Extreme Value Theory |
| JEL: | R12 |
| Date: | 2009–02–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:13518&r=ure |
| By: | Arce, Oscar; López-Salido, J David |
| Abstract: | In this paper we use the notion of a housing bubble as an equilibrium in which some investors hold houses only for resale purposes and not for the expectation of a dividend, either in the form of rents or utility. We provide a life-cycle model where households face collateral constraints that tie their credit capacity to the value of their houses and examine the conditions under which housing bubbles can emerge. In such equilibria, the total housing stock is held by owners that extract utility from their homes, landlords that obtain rents, and investors. We show that an economy with tighter collateral constraints is more prone to bubbles which, in turn, tend to have a larger size but are less fragile in face of fund-draining shocks. Our environment also allows for pure bubbles on useless assets. We find that multiple equilibria in which the economy moves endogenously from a pure bubble to a housing bubble regime and vice versa are possible. This suggests that high asset price volatility may be a natural consequence of asset shortages (or excess funding) that depress interest rates sufficiently so as to sustain an initial bubble. We also examine some welfare implications of the two types of bubbles and discuss some mechanisms to rule out equilibria with housing bubbles. |
| Keywords: | buy-to-let investment; collateral constraints; housing bubbles; switching |
| JEL: | G21 R21 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6932&r=ure |
| By: | Amelia M. Biehl (Department of Economics, University of Southern Indiana); William Hoyt (Martin School of Public Policy and Administration and Department of Economics, University of Kentucky) |
| Abstract: | Prior to 1997, homeowners under 55 were allowed to defer capital gains taxes from a home sale if they bought another house at least as expensive, while those over 55 received a capital gains exclusion regardless of the cost of their new home. The Taxpayer Relief Act of 1997 (TRA97) eliminated this differential tax treatment. We exploit the differential treatment before 1997 to uncover TRA97’s effects. Comparing homeowners under 55 before and after 1997, we find that those who moved after 1997 are twice as likely as to list “seeking less expensive housing” as a reason for moving, 8 percent less likely to own their residences and 9 percent less likely to live in a single family home. |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:ifr:wpaper:2009-04&r=ure |
| By: | Brian Petereson (Indiana University Bloomington) |
| Abstract: | Theory predicts that the effects of search frictions on house prices from temporary movements in demand should be temporary, while the data suggests it is permanent. The latter implies that movements in demand coupled with search frictions create higher volatility in prices than theory would predict, amplifying price changes, leading to bubbles and depressions. To generate permanent price changes from temporary demand shocks, a textbook search model is combined with a behavioral assumption where house buyers and sellers ignore the effects of search frictions on past prices. The estimated model implies that over half of the real price growth from the housing bubble starting in 1998 is due to the behavioral assumption where households are ‘Fooled by Search.’ When trend growth of prices is removed, the behavioral assumption explains almost three-fourths of the housing bubble. The estimated model also provides several other results. (1) There is a large inefficiency in the search process of the housing market: buyers have very little bargaining power relative to their impact on creating sales, i.e. the Hosios condition is not met by an order of magnitude. (2) There is evidence of a rise in the fundamental value of houses from 1998 to 2005 that mirrors the loose monetary policy under the Greenspan Federal Reserve. (3) Analysis of the boom and bust of the housing market from 1975 to 1982 suggests that buyers who are choosing to not enter the housing market are rational. Using the last observation to make a back of the envelope projection for the current crisis, turnover will have to fall to its 1982 level and remain there until 2011 before a recovery can begin, driving house prices down to their real levels of 2002-2003 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:inu:caeprp:2009-004&r=ure |
| By: | Fujita, Masahisa; Thisse, Jacques-François |
| Abstract: | Paul Krugman has clarified the microeconomic underpinnings of both spatial economic agglomerations and regional imbalances at national and international levels. He has achieved this with a series of remarkably original papers and books that succeed in combining imperfect competition, increasing returns, and transportation costs in new and powerful ways.Yet, not everything was brand new in New Economic Geography. To be precise, several disparate pieces of high-quality work were available in urban economics and location theory. Our purpose in this paper is to shed new light on economic geography through the lenses of these two fields of economics and regional science. |
| Keywords: | Economic geography; Location theory; Trade; Urban economics |
| JEL: | F12 L13 R12 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7063&r=ure |
| By: | Calvó-Armengol, Antoni; Patacchini, Eleonora; Zenou, Yves |
| Abstract: | This paper studies whether structural properties of friendship networks affect individual outcomes in education. We first develop a model that shows that, at the Nash equilibrium, the outcome of each individual embedded in a network is proportional to her Katz-Bonacich centrality measure. This measure takes into account both direct and indirect friends of each individual but puts less weight to her distant friends. We then bring the model to the data by using a very detailed dataset of adolescent friendship networks. We show that, after controlling for observable individual characteristics and unobservable network specific factors, the individual's position in a network (as measured by her Katz-Bonacich centrality) is a key determinant of her level of activity. A standard deviation increase in the Katz-Bonacich centrality increases the pupil school performance by more than 7 percent of one standard deviation. |
| Keywords: | centrality measure; network structure; peer influence; school performance |
| JEL: | A14 C31 C72 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7060&r=ure |
| By: | Michaels, Guy; Rauch, Ferdinand; Redding, Stephen J |
| Abstract: | This paper presents new evidence on urbanization using sub-county data for the United States from 1880-2000 and municipality data for Brazil from 1970-2000. We show that the two central stylized features of population growth for cities - Gibrat's Law and a stable population distribution - are strongly rejected when both rural and urban areas are considered. Population growth exhibits a U-shaped relationship with initial population density, and only becomes uncorrelated with initial population density at the high densities found in predominantly urban areas. We provide evidence that the explanation for these patterns lies in different employment growth dynamics in the agricultural and non-agricultural sectors and the process of structural transformation away from the agricultural sector. |
| Keywords: | Gibrat's Law; Structural Transformation; Urbanization |
| JEL: | E20 R11 R12 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7016&r=ure |
| By: | Moretti, Enrico |
| 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. Therefore, the increase in the college premium in real terms may be smaller than the increase in the nominal terms. 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. To understand the implications of this finding for changes in well-being inequality I use a simple general equilibrium model. 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, 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. |
| Keywords: | cost of living; general equilibrium; return to education |
| JEL: | J01 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6997&r=ure |
| By: | Gautier, Pieter A; Zenou, Yves |
| Abstract: | We show how small initial wealth differences between low skilled black and white workers can generate large differences in their labour-market outcomes. This even occurs in the absence of a taste for discrimination against blacks or exogenous differences in the distance to jobs. Because of the initial wealth difference, blacks cannot afford cars while whites can. Car ownership allows whites to reach more jobs per unit of time and this gives them a better bargaining position. As a result, in equilibrium, blacks end up with both higher unemployment rates and lower wages than whites. Furthermore, it takes more time for blacks to reach their jobs even though they travel less miles. Those predictions are consistent with the data. Better access to capital markets or better public transportation will reduce the differences in labour market outcomes. |
| Keywords: | ethnic minorities; job search; multiple job centres; spatial labour markets; Transportation mismatch |
| JEL: | D83 J15 J64 R1 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7061&r=ure |
| By: | Siqi Zheng; Matthew E. Kahn; Hongyu Liu |
| Abstract: | Over the last thirty years, China's major cities have experienced significant income and population growth. Much of this growth has been fueled by urban production spurred by world demand. Using a unique cross-city panel data set, we test several hypotheses concerning the relationship between home prices, wages, foreign direct investment and ambient air pollution across major Chinese cities. Home prices are lower in cities with higher ambient pollution levels. Cities featuring higher per-capita FDI flows have lower pollution levels. |
| JEL: | F21 Q53 R31 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14751&r=ure |
| By: | Daniel F. Heuermann (Institute for Labour Law and Industrial Relations in the EC, University of Trier) |
| Abstract: | Bridging the gap between the literatures on industrial change and human capital externalities we investigate the joint importance of aggregate regional education and job turnover for productivity effects to arise within firms and regional industries. On the level of regional industries we find strong evidence for the mutual dependence of skills and change inasmuch as regional human capital is a crucial ingredient for industrial change to be productivity enhancing, while human capital externalities arise first and foremost in dynamic labor markets. On the firm level, we find human capital externalities to accrue predominantly to growing firms which benefit from sharing, matching, and learning externalities arising from a large supply of human capital in skilled, dynamic labor markets. Despite the joint impact of human capital and industrial change on productivity we find only weak evidence that inter-industry differences in labor market dynamics of highly qualified workers shape the geography of industry location across German regions. |
| Keywords: | Human Capital Externalities, Job Turnover, Industrial Change |
| JEL: | D62 J24 R11 R12 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:iaa:wpaper:200902&r=ure |
| By: | Alan Manning (London School of Economics) |
| Abstract: | This paper shows, using data from both the US and the UK, that average plant size is larger in denser markets. However, many popular theories of agglomeration – spillovers, cost advantages and improved match quality – predict that establishments should be smaller in cities. The paper proposes a theory based on monopsony in labour markets that can explain the stylized fact – that firms in all labour markets have some market power but that they have less market power in cities. It also presents evidence that the labour supply curve to individual firms is more elastic in larger markets. |
| Keywords: | Agglomeration, Labour Markets, Monopsony, monopsony papers |
| JEL: | J21 J42 R23 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:1109&r=ure |
| By: | Okubo, Toshihiro; Picard, Pierre M; Thisse, Jacques-François |
| Abstract: | The aim of this paper is to study the spatial selection of firms once it is recognized that heterogeneous firms typically choose different locations in respond to market integration of regions having different sizes. Specifically, we show that decreasing trade costs leads to the gradual agglomeration of efficient firms in the large region because these firms are able to survive in a more competitive environment. In contrast, high-cost firms seek protection against competition from the efficient firms by establishing themselves in the small region. However, when the spatial separation of markets ceases to be a sufficient protection against competition from the low-cost firms, high-cost firms also choose to set up in the larger market where they have access to a bigger pool of consumers. This leads to the following prediction: the relationship between economic integration and interregional productivity differences first increases and then decreases with market integration. |
| Keywords: | firm heterogeneity; spatial selection; trade liberalization |
| JEL: | F12 H22 H87 R12 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6978&r=ure |
| By: | Farmanesh, Amir |
| Abstract: | This paper presents a spatial analysis on regional dimensions of poverty and economic development across provinces of Iran. It offers the first ever estimation made in developing countries using this strand of "New Economic Geography" (NEG) models and provides a comparison of the results between previously studied developed countries and Iran as a developing country. The goal of this study is to offer an analysis of the effects of agglomeration and dispersion economies on the patterns of regional economic development in Iran. It analyzes the linkages among adjacent provinces as well as effects of agglomeration and dispersion economies on the patterns of Iran's regional economic development through empirical estimation of two of the NEG models. First, it presents an estimation of a "Market Potential Function" (MPF), in which wages are associated with proximity to consumer markets. Second, the paper estimates an augmented MPF derived from the Krugman model of economic geography. The parameters in this model estimate the importance of transportation cost and economies of scale. The estimation results suggest that Iran showed generally good fit to both models and satisfied both MPF and Krugman model specifications. Compared to other similar studies in developed countries, Iran shows smaller returns to scale and consistently higher size of the effect of market potential on wages. |
| Keywords: | New Economic Geography; Spatial agglomeration; Market potential; Market structure; Increasing returns to scale; Transport costs; Iranian economy; Economic development in Iran; Income distribution in the provinces of Iran; Empirical evaluation |
| JEL: | O10 F12 O15 R12 |
| Date: | 2009–01–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:13580&r=ure |
| By: | Andrea de Michelis |
| Abstract: | The global financial crisis that emerged in mid 2007 has caused considerable economic disruptions in the United States and elsewhere, and exposed major flaws in the global financial system. After examining the origins of the crisis, this paper recommends specific policy responses to resolve the immediate problems and discusses how to make the US financial system more resilient and stable in the future.<P>Surmonter la crise financière<BR>La crise financière qui a éclaté à la mi-2007 a provoqué des perturbations économiques considérables aux États-Unis et ailleurs, et révélé des failles majeures dans le système financier mondial. Après une analyse des origines de la crise, ce chapitre préconise des réponses spécifiques pour résoudre les problèmes immédiats et étudie les moyens de rendre le système financier des États-Unis plus résilient et plus stable dans l’avenir. |
| Keywords: | United States, États-Unis, surveillance prudentielle, financial regulation, financial crisis, crise financière, deleveraging, housing finance, financement du logement, financial supervision, réglementation des marchés financiers, market stability regulator, securitisation, subprime mortgage, autorité de contrôle pour la stabilité des marchés financiers, crédit hypothécaire à risques, réduction de l’effet de levier, titrisation |
| JEL: | E44 G20 G21 G28 R21 |
| Date: | 2009–02–24 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:669-en&r=ure |
| By: | Redding, Stephen J |
| Abstract: | This paper reviews the new economic geography literature, which accounts for the uneven distribution of economic activity across space in terms of a combination of love of variety preferences, increasing returns to scale and transport costs. After outlining the canonical core and periphery model, the paper examines the empirical evidence on three of its central predictions: the role of market access in determining factor prices, the related home market effect in which demand has a more than proportionate effect on production, and the potential existence of multiple equilibria. In reviewing the evidence, we highlight issues of measurement and identification, alternative potential explanations, and remaining areas for further research. |
| Keywords: | Home Market Effect; Market Access; Multiple Equilibria; New Economic Geography |
| JEL: | F12 F14 O10 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7126&r=ure |
| By: | Holger Kraft; Claus Munk |
| Abstract: | We provide explicit solutions to life-cycle utility maximization problems simultaneously involving dynamic decisions on investments in stocks and bonds, consumption of perishable goods, and the rental and the ownership of residential real estate. House prices, stock prices, interest rates, and the labor income of the decision-maker follow correlated stochastic processes. The preferences of the individual are of the Epstein-Zin recursive structure and depend on consumption of both perishable goods and housing services. The explicit consumption and investment strategies are simple and intuitive and are thoroughly discussed and illustrated in the paper. For a calibrated version of the model we find, among other things, that the fairly high correlation between labor income and house prices imply much larger life-cycle variations in the desired exposure to house price risks than in the exposure to the stock and bond markets. We demonstrate that the derived closed-form strategies are still very useful if the housing positions are only reset infrequently and if the investor is restricted from borrowing against future income. Our results suggest that markets for REITs or other financial contracts facilitating the hedging of house price risks will lead to non-negligible but moderate improvements of welfare. |
| JEL: | G11 D14 D91 C6 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:fra:franaf:197&r=ure |
| By: | Debaere, Peter; Lee, Joonhyung; Paik, Myungho |
| Abstract: | With a firm-level dataset, we study the location decision of all South Korean multinationals across China's regions between 1992 and 2004, taking into account spatial aspects. Our conditional logit estimates confirm previous studies that stress the agglomeration effects along industry and along national lines in firms' location choice. In particular, South Korean investors target the place where there are more firms irrespective of their nationality and, at the same time, more affiliates from South Korean multinationals. More importantly, we decompose these agglomeration effects into a pure agglomeration effect and an upstream and downstream (backward and forward) linkage effect. We find that the presence of upstream and downstream South Korean affiliates significantly increases the likelihood that a South Korean multinational invests there. At the same time, however, backward and forward linkages with the companies irrespective of their nationality do not seem to matter. As such, our analysis of investors' location choice brings together two perspectives: (backward and forward) linkages and agglomeration along national lines. |
| Keywords: | agglomeration; multinationals |
| JEL: | F1 F2 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7079&r=ure |
| By: | Pietro Alessandrini (Universit… Politecnica delle Marche, Department of Economics, MoFiR); Alberto Zazzaro (Universit… Politecnica delle Marche, Department of Economics, MoFiR) |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wmofir:7&r=ure |
| By: | Besley, Timothy J.; Meads, Neil; Surico, Paolo |
| Abstract: | This paper uses mortgage data to construct a measure of terms on which households access to external finance, and relates it to consumption at both the aggregate and cohort levels. The Household External Finance (HEF) index is based on the spread paid by risky borrowers in the mortgage market. There is evidence that the terms of access to external finance matter more for the consumption of young cohorts in U.K. data. Results are robust to a wide variety of specifications. |
| Keywords: | birth cohorts; external finance; household consumption; pseudo panels; terms of access |
| JEL: | D10 E21 G21 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6934&r=ure |
| By: | Jan K. Brueckner (University of California, Irvine, USA); Erik T. Verhoef (VU University Amsterdam) |
| Abstract: | The recent literature on congestion pricing with large agents contains a remarkable inconsistency: though agents are large enough to recognize self-imposed congestion and exert market power over prices, they do not take into account the impact of their own actions on the magnitude of congestion tolls. When large agents are confronted with tolls derived under this parametric assumption but understand the rule used to generate them, the toll system will no longer guide the market to the social optimum. To address this problem, the present paper derives alternate, manipulable toll rules, which are designed to achieve the social optimum when agents anticipate the full impact of their actions on toll liabilities. |
| Keywords: | Congestion pricing; market power; aviation |
| JEL: | R41 R48 D62 |
| Date: | 2009–02–09 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20090009&r=ure |
| By: | Crabbé, Karen; Vandenbussche, Hylke |
| Abstract: | Tax competition within the EU is fiercer than in the rest of the OECD with tax rates falling rapidly. This paper analyzes tax responses of EU-15 countries to corporate tax changes in the EU-10 new member states as a function of their proximity to these 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, 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 geographically closer to the new member states respond stronger to corporate tax changes in these new member states. We use a theoretical and a spatial regression framework to test the hypothesis that distance to a low tax region intensifies countries' tax reaction functions. |
| Keywords: | corporate taxes; fiscal reaction function; Spatial tax competition |
| JEL: | H25 H39 H77 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7159&r=ure |
| By: | Kala Seetharam Sridhar |
| Abstract: | For a country like India that contains a large number of Urban Agglomerations (UAs), suburbanisation has drawn little attention of the literature. I focus on this sparsely studied issue in this work. Population, household and employment density gradients for India's UAs, using Mills' two-point technique are calculated. Next, population, household and employment gradient regressions are estimated. |
| Keywords: | literature, urban agglomeratinos, India, suburbanisation, density gradient, Mill's two point technique, population gradient, employment, household, regressions, exponential density function, business, UAs, metro area |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:1867&r=ure |
| By: | Alesina, Alberto F; Zhuravskaya, Ekaterina |
| Abstract: | This paper has three goals. The first (and perhaps the most important one) is to provide a new compilation of data on ethnic, linguistic and religious composition at the sub-national level for a large number of countries. This data set allows us to measure segregation of different ethnic, religious and linguistic groups within the same country. The second goal is to correlate measures of segregation with measures of quality of the polity and policymaking. The third is to construct an instrument that helps to overcome the endogeneity problem due to the fact that groups move within country borders, partly in response to policies. Our results suggest that more segregated countries in terms of ethnicity and language, i.e., those where groups live more spatially separately, have a substantially lower quality of government. In contrast, there is no relationship between religious segregation and the government quality. |
| Keywords: | Diversity; Ethnicity; Fractionalization; Language; Quality of government; Religion; Segregation |
| JEL: | H11 J15 O1 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6943&r=ure |
| By: | Pagano, Marco; Volpin, Paolo |
| Abstract: | We present a model in which issuers of structured bonds choose coarse and opaque ratings to enhance the liquidity of their primary market, at the cost of reducing secondary market liquidity or even causing it to freeze. The degree of transparency is inefficiently low if the social value of secondary market liquidity exceeds its private value. We analyze various types of public intervention -- requiring transparency for rating agencies, providing liquidity to distressed banks or supporting secondary market prices -- and find that their welfare implications are quite different. Finally, transparency is greater if issuers restrain the issue size, or tranche it so as to sell the more information-sensitive tranche to sophisticated investors only. |
| Keywords: | default; liquidity; rating; securitization; subprime lending crisis; transparency |
| JEL: | D82 G18 G21 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7105&r=ure |
| By: | William H. Hoyt (Martin School of Public Policy and Administration and Department of Economics, University of Kentucky) |
| Abstract: | A central focus of an extensive literature on fiscal competition has been on how the decentralization of tax and service policy affects efficiency, generally whether public services are inefficiently under- or overprovided. This question has traditionally been addressed in a framework in which the tax base regions compete for mobile capital. Here I am also interested in the impact of fiscal decentralization on both public service provision and tax policy but in a framework with both labor and capital mobility. Rather than limiting the competing regions to taxing only capital or only labor, I consider the endogenous choice of the two tax instruments in the context of two related models. In the first model, while labor is mobile it is also homogeneous. In this model I show that regions will choose to only tax income and not capital when public service costs are proportionate to the population and, by doing so, will provide the efficient level of public services. However, if there are public service costs not proportionate to the population, “fixed costs,” if given the option, regions will tax or subsidize capital as well as tax income. As a result of capital taxation, the public service is underprovided. I extend the model along the lines of Wildasin (AER, 2000) to consider two groups of workers who differ in both mobility and, in my case, human capital (skill). Unlike Wildasin, the difference in income is exogenous and not the result of investment decisions. In this model, I first consider the policies chosen by these regions when they can only tax income. I find that the public service can be either over or underprovided, depending on the relative impact of changes in public services and taxes on the mobility of the two groups. Next, I consider whether, in the absence of fixed costs, regions will want to tax or subsidize capital and find that in general they will with the magnitude and sign of a tax (subsidy) on capital depending on how capital taxation affects the relative mobility of the two groups of workers. |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:ifr:wpaper:2009-01&r=ure |
| By: | Jan K. Brueckner; Erik T. Verhoef (Department of Spacial Economics, VU University, Amsterdam) |
| Abstract: | The recent literature on congestion pricing with large agents contains a remarkable inconsistency: though agents are large enough to recognize self-imposed congestion and exert market power over prices, they do not take into account the impact of their own actions on the magnitude of congestion tolls. When large agents are confronted with tolls derived under this parametric assumption but understand the rule used to generate them, the toll system will no longer guide the market to the social optimum. To address this problem, the present paper derives alternate, manipulable toll rules, which are designed to achieve the social optimum when agents anticipate the full impact of their actions on toll liabilities. |
| Keywords: | Pigouvian taxes; Congestion tolls |
| JEL: | H23 L9 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:080915&r=ure |
| By: | David Wildasin (Martin School of Public Policy and Administration and Department of Economics, University of Kentucky) |
| Abstract: | A review of recent fiscal history can help to understand the mechanisms by which subnational governments adapt their tax, expenditure, and debt policies to an ever-changing economic environment, and on the role of fiscal assistance from higher-level governments in this process. In principle, proposed Federal assistance to states and localities may provide useful macroeconomic stimulus and financial support, but past experience, in the US and elsewhere, highlights the pitfalls in achieving rapid delivery of substantial assistance while simultaneously targeting scarce fiscal resources to the most urgent needs and preserving incentives for prudent financial management by states and localities. |
| JEL: | H7 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:ifr:wpaper:2009-07&r=ure |
| By: | Rangan Gupta (Department of Economics, University of Pretoria); Alain Kabundi (Department of Economics and Econometrics, University of Johannesburg) |
| Abstract: | This paper analyzes the ability of principal component regressions and Bayesian regression methods under Gaussian and double-exponential prior in forecasting the real house price of the United States (US), based on a monthly dataset of 112 macroeconomic variables. Using an in-sample period of 1992:01 to 2000:12, Bayesian regressions are used to forecast real US house prices at the twelve-months-ahead forecast horizon over the out-of-sample period of 2001:01 to 2004:10. In terms of the Mean Square Forecast Errors (MSFEs), our results indicate that a principal component regression with only one factor is best-suited for forecasting the real US house price. Amongst the Bayesian models, the regression based on the double exponential prior outperforms the model with Gaussian assumptions. |
| Keywords: | Bayesian Regressions, Principal Components, Large-Cross Sections |
| JEL: | C11 C13 C33 C53 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:200907&r=ure |
| By: | Reinhart, Carmen; Felton, Andrew |
| Abstract: | This book is a selection of VoxEU.org columns that deal with the ongoing global financial crisis. VoxEU.org is a portal for research-based policy analysis and commentary written by leading economists. It was launched in June 2007 with the aim of enriching the economic policy debate by making it easier for serious researchers to contribute and to make their contributions more accessible to the public. |
| Keywords: | financial crisis monetary policy bank failures |
| JEL: | F42 E5 F41 E6 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:13604&r=ure |
| By: | Martin, Philippe; Mayer, Thierry; Mayneris, Florian |
| Abstract: | This paper analyzes empirically a public policy promoting industrial clusters in France. Cluster policies have become popular in many countries but have not been extensively evaluated empirically. We use data on production and employment for firms that benefited from the policy and on firms that did not, both before and after the policy started. We first show that the policy selected firms in relative decline. Furthermore, our results suggest that the policy had no major effect on their productivity but may have helped them in terms of employment. |
| Keywords: | clusters; localization economies; public policies |
| JEL: | C23 R10 R11 R12 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7102&r=ure |
| By: | Caballero, Ricardo; Farhi, Emmanuel; Gourinchas, Pierre-Olivier |
| Abstract: | In this paper we argue that the persistent global imbalances, the subprime crisis, and the volatile oil and asset prices that followed it, are tightly interconnected. They all stem from a global environment where sound and liquid financial assets are in scarce supply. Our story goes as follows: Global asset scarcity led to large capital flows toward the U.S. and to the creation of asset bubbles that eventually crashed. The crash in the real estate market was particularly complex from the point of view of asset shortages since it compromised the whole financial sector, and by so doing, closed many of the alternative saving vehicles. Thus, in its first phase, the crisis exacerbated the shortage of assets in the world economy, which triggered a partial recreation of the bubble in commodities and oil markets in particular. The latter led to an increase in petrodollars seeking financial assets in the U.S. Thus, rather than the typical destabilizing role played by capital outflows during financial crises, petrodollar flows became a source of stability for the U.S. The second phase of the crisis is more conventional and began to emerge toward the end of the summer of 2008. It became apparent then that the financial crisis would permeate the real economy and sharply slow down global growth. This slowdown worked to reverse the tight commodity market conditions required for a bubble to develop, ultimately destroying the commodity bubble. |
| JEL: | E0 F3 F4 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7064&r=ure |
| By: | Kenneth A. Small (Department of Economics, University of California-Irvine) |
| Abstract: | This paper reviews issues raised by the use of private firms to finance, build, and/or operate highways — issues including cost of capital, level and structure of tolls, and adaptability to unforeseen changes. The public sector’s apparent advantage in cost of capital is at least partly illusory due to differences in tax liability and to constraints on the supply of public capital. The evidence for lower costs of construction or operation by private firms is slim. Private firms are likely to promote more efficient pricing. Effective private road provision depends on well-structured franchise agreements that allow pricing flexibility, restrain market power, enforce a sound debt structure, promote transparency, and foster other social goals. |
| Keywords: | Privatization; Road finance; Toll road; Road pricing |
| JEL: | H44 H54 L91 R42 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:080917&r=ure |
| By: | Dan Bogart (Department of Economics, University of California-Irvine) |
| Abstract: | Transport infrastructure investment increased substantially in Britain between the seventeenth and eighteenth century. This paper argues that the Glorious Revolution of 1688-89 contributed to transportation investment by reducing uncertainty about the security of improvement rights. It shows that road and river investment was low in the 1600s when several undertakers had their rights violated by major political changes or decrees from the King. It also shows that investment permanently increased after the Glorious Revolution when there was a lower likelihood that undertakers had their rights voided by acts. Together the evidence suggests that the political and institutional changes following Glorious Revolution made rights to improve infrastructure more secure and that promoters and investors responded to greater security by proposing and financing more projects. |
| Keywords: | Property rights; Investment under uncertainty; Glorious Revolution; Transport Revolution |
| JEL: | N43 N73 K23 H54 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:080918&r=ure |
| By: | Chris Forman; Avi Goldfarb; Shane Greenstein |
| Abstract: | Did the diffusion of the Internet lead to convergence or divergence of local wages? We examine the relationship between business use of advanced Internet technology and regional variation in US wage growth between 1995 and 2000.We show that business use of advanced Internet technology is associated with wage growth but find no evidence that the Internet contributed to regional wage convergence. Advanced Internet technology is only associated with wage growth in places that were already well off in terms of income, education, population, and industry. Overall, advanced Internet explains one-quarter of the difference in wage growth between these counties and all others. |
| JEL: | O33 R11 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14750&r=ure |
| By: | Cingano, Federico; Rosolia, Alfonso |
| Abstract: | We assess the information spillovers generated by the exchange of job-related information within networks of fellow workers exploiting administrative records covering all employment relationships established in a specific local labor market over 20 years. We recover individual-specific networks of former colleagues for a sample of workers exogenously displaced by firm closures and relate their subsequent unemployment duration to the share of employed contacts at displacement date. Individual-specific networks and the longitudinal dimension of the data allow to account for most plausible sources of omitted variable bias. In particular, identification rests on within-closure within-neighborhood and within-skill comparisons conditional of a wide range of predictors for the displaced and his contacts' employment status, such as lagged wages and labor market attachment. We find that contacts' current employment rate has statistically significant effects on unemployment duration: a one standard deviation increase in the network employment rate reduces unemployment duration by about 8 percent; as a benchmark, a one standard deviation increase in own wage at displacement is associated with a 10 percent lower unemployment duration. These effects are magnified if contacts recently searched for a job and if their current employer is closer, both in space and in skills requirements, to the displaced. We find that stronger ties and lower competition for the available information also speed up re-employment. A number of specification checks and indirect tests suggests the estimated spillover effect of contacts' current employment status is driven by information exchange rather than by other interaction mechanisms. |
| Keywords: | job search; social networks; spillover effects |
| JEL: | D0 J0 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6818&r=ure |
| By: | Aldieri, Luigi; Cincera, Michele |
| Abstract: | This paper aims at assessing the magnitude of R&D spillover effects on large international R&D companies’ productivity growth. In particular, we investigate the extent to which R&D spillover effects are intensified by both geographic and technological proximities between spillover generating and receiving firms. We also control for the firm’s ability to identify, assimilate and absorb the external knowledge stock. The results estimated by means of panel data econometric methods (system GMM) indicate a positive and significant impact of both types of R&D spillovers and of absorptive capacity on productivity performance. |
| Keywords: | absorptive capacity; firms’ productivity growth; Geographic and technological R&D spillovers |
| JEL: | O33 O47 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7113&r=ure |