nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2009‒03‒14
25 papers chosen by
Steve Ross
University of Connecticut

  1. The productivity advantages of large cities: Distinguishing agglomeration from firm selection By Combes, Pierre-Philippe; Duranton, Gilles; Gobillon, Laurent; Puga, Diego; Roux, Sébastien
  2. The Housing Crisis and Bankruptcy Reform: The Prepackaged Chapter 13 Approach By Posner, Eric A; Zingales, Luigi
  3. Beyond Incentives: Do Schools use Accountability Rewards Productively? By Marigee Bacolod; John DiNardo; Mireille Jacobson
  4. In search of an appropriate tax base for local Leviathans By Göbel, Jürgen
  5. The Time-Series Properties on Housing Prices: A Case Study of the Southern California Market By Rangan Gupta; Stephen M. Miller
  6. The train has left the station: Do markets value intra-city access to inter-city rail connections? By Ahlfeldt, Gabriel M.
  7. The Effect of New Business Formation on Employment - The Dominance of Density By Alexandra Schroeter
  8. Collateral Damage: The Impact of Work Stoppages on Student Performance in Ontario By David Johnson
  9. Agglomeration economies and the location of Taiwanese investment in China By Chen, George Shih-Ku
  10. What Proportion of Children Stay in the Same Location as Adults, and How Does This Vary Across Location and Groups? By Timothy J. Bartik
  11. Reduced-Class Distinctions: Effort, Ability, and the Education Production Function By Philip Babcock; Julian R. Betts
  12. Effective Schools for Low Income Children: a Study of Chile’s Sociedad de Instrucción Primaria By Francisco Henríquez; Alejandra Mizala; Andrea Repetto
  13. Determinants of Taiwanese investment in China: An agglomeration economies-based perspective By Chen, George Shih-Ku
  14. The Aftermath of Financial Crises By Reinhart, Carmen; Rogoff, Kenneth
  15. Spatial inequalities explained: evidence from Burkina Faso By Johannes Gräb; Michael Grimm
  16. Value-Added to What? How a Ceiling in the Testing Instrument Influences Value-Added Estimation By Cory Koedel; Julian Betts
  17. The use and misuse of computers in education : evidence from a randomized experiment in Colombia By Barrera-Osorio, Felipe; Linden, Leigh L.
  18. Regional Infrastructure and Firm Investment. Theory and Empirical Evidence for Italy By Francesco Aiello; Alfonsina Iona; Leone Leonida
  19. Public expenditure on infrastructure and economic growth across Brazilian states By Frederico G. Jayme Jr.; Guilherme Jonas C. da Silva; Ricardo S. Martins
  20. Do Financial Incentives Help Low-Performing Schools Attract and Keep Academically Talented Teachers? Evidence from California By Jennifer L. Steele; Richard J. Murnane; John B. Willett
  21. Common and Spatial Drivers in Regional Business Cycles By Artis, Michael J; Dreger, Christian; Kholodilin, Konstantin
  22. Are Workers with A Long Commute Less Productive? An Empirical Analysis of Absenteeism By Jos van Ommeren; Eva Gutièrrez-i-Puigarnau
  23. Permanent and Transitory Dynamics in House Prices and Consumption: Cross-Country Evidence By Fabio C. Bagliano; Claudio Morana
  24. How can the power of Leviathans be measured? By Göbel, Jürgen
  25. No more cutting class ? reducing teacher absence and providing incentives for performance By Rogers, F. Halsey; Vegas, Emiliana

  1. By: Combes, Pierre-Philippe; Duranton, Gilles; Gobillon, Laurent; Puga, Diego; Roux, Sébastien
    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; cities; firm selection; productivity
    JEL: C52 D24 R12
    Date: 2009–03
  2. By: Posner, Eric A; Zingales, Luigi
    Abstract: The housing crisis threatens to destroy hundreds of billions of dollars of value by causing homeowners with negative equity to walk away from their houses. A house in foreclosure is worth 30 to 50 percent less than a house that a homeowner either retains or sells on the market, and a foreclosed house damages neighboring property values as well. We advocate a reform of Chapter 13 that would allow homeowners to strip down the value of their mortgages in a prepackaged bankruptcy. Such a plan would give homeowners an incentive to keep or resell their homes, thus reducing the market value loss of homes while protecting the effective value of creditors’ interests. Two further key elements of the plan are that it uses prices based on the average house price in a particular ZIP code, which reduces moral hazard; and it is automated, requiring only a rubber stamp by a bankruptcy judge or other official, thus preserving judicial resources. Other plans, including that of the Obama administration, are compared.
    Keywords: bankruptcy; chapter 13; housing
    JEL: K35
    Date: 2009–03
  3. By: Marigee Bacolod; John DiNardo; Mireille Jacobson
    Abstract: "Accountability mandates" -- the explicit linking of school funding, resources, and autonomy to student performance on standardized exams -- have proliferated in the last 10 years. In this paper, we examine California's accountability system, which for several years financially rewarded schools based on a deterministic function of test scores. The sharp discontinuity in the assignment rule -- schools that barely missed their target received no funding -- generates "as good as random" assignment of awards for schools near their eligibility threshold and enables us to estimate the (local average) treatment effect of California's financial award program. This design allows us to explore an understudied aspect of accountability systems -- how schools use their financial rewards. Our findings indicate that California's accountability system significantly increased resources allocated to some schools. In the 2000 school year, the average value of the award was about 60 dollars per student and 50 dollars in 2001. Moreover, we find that the total resources flowing to districts with schools that received awards increased more than dollar for dollar. This resource shift was greatest for districts with schools that qualified for awards in the 2000 school year,the first year of the program, increasing total per pupil revenues by roughly 5 percent. Despite the increase in revenues, we find no evidence that these resources increased student achievement. Schools that won awards did not purchase more instructional material, such as computers, which may be inputs into achievement. Although the awards were likely paid out as teacher bonuses, we cannot detect any effect of these bonuses on test scores or other measures of achievement. More worrisome, we also find a practical effect of assigning the award based in part on the performance of "numerically significant subgroups" within a school was to reduce the relative resources of schools attended by traditionally disadvantaged students.
    JEL: H0 I0 I2 J0 J24
    Date: 2009–03
  4. By: Göbel, Jürgen
    Abstract: The impact of local fiscal policy depends on the choice of the tax base. In this paper, we take four criteria to evaluate tax bases, namely: efficiency, simplicity, flexibility, and fairness. The results of such an evaluation depend on how we describe the involved agents. We construct a two stage model of a local economy with three types of agents: Leviathans, households, and housing firms. Each Leviathan seeks to maximize the surplus of his local fiscal budget. Each household seeks to maximize its life-time utility from three types of goods: composite private goods, housing, and local public goods. Each housing firm seeks to maximize its profits. In this model, we analyze the characteristics of four distinct tax bases: land rent, housing capital rent, housing sales, and housing property. In particular, we analyze the responses of the households, the housing firms, and the housing prices on a change of a specific tax rate. The results are used to evaluate each tax base with respect to our four criteria.
    Keywords: Leviathan; tax base; exit option; sensitivity analysis
    JEL: H21 H11 R51
    Date: 2009–02–28
  5. By: Rangan Gupta (Department of Economic, University of Pretoria); Stephen M. Miller (College of Business, University of Las Vegas, Nevada)
    Abstract: We examine the time-series relationship between housing prices in eight Southern California metropolitan statistical areas (MSAs). First, we perform cointegration tests of the housing price indexes for the MSAs, finding seven cointegrating vectors. Thus, the evidence suggests that one common trend links the housing prices in these eight MSAs, a purchasing power parity finding for the housing prices in Southern California. Second, we perform temporal Granger causality tests revealing intertwined temporal relationships. The Santa Anna MSA leads the pack in temporally causing housing prices in six of the other seven MSAs, excluding only the San Luis Obispo MSA. The Oxnard MSA experienced the largest number of temporal effects from other MSAs, six of the seven, excluding only Los Angeles. The Santa Barbara MSA proved the most isolated in that it temporally caused housing prices in only two other MSAs (Los Angels and Oxnard) and housing prices in the Santa Anna MSA temporally caused prices in Santa Barbara. Third, we calculate out-of-sample forecasts in each MSA, using various vector autoregressive (VAR) and vector error-correction (VEC) models, as well as Bayesian, spatial, and causality versions of these models with various priors. Different specifications provide superior forecasts in the different MSAs. Finally, we consider the ability of theses time-series models to provide accurate out-of-sample predictions of turning points in housing prices that occurred in 2006:Q4. Recursive forecasts, where the sample is updated each quarter, provide reasonably good forecasts of turning points.
    Keywords: Housing prices, Forecasting
    JEL: C32 R31
    Date: 2009–02
  6. By: Ahlfeldt, Gabriel M.
    Abstract: This paper analyzes the impact of access to inter-city rail connections on property prices using hedonic, difference-in-difference and time-difference estimation strategies. We investigate the reorganization of the rail system in post-unification Berlin, Germany, which provides much variation in accessibility. Evidence does not support the existence of localized effects. Neither in proximity to stations nor at city-level are there significant price adjustments. No significant price effect is revealed on distance to stations, even when allowing for a complementary relationship. An increase in the attractiveness of central locations coinciding with the final announcement of the train schedule is not attributable to the intervention.
    Keywords: Property prices; transport innovation; inter-city connection; railroad; Berlin
    JEL: R0
    Date: 2009–03–09
  7. By: Alexandra Schroeter (Friedrich Schiller University Jena, Faculty of Economics and Business Administration)
    Abstract: Empirical analyses show that the employment effects of start-ups are highest in agglomerations, whereas moderately congested areas exhibit only modest effects, and weak or even no significant effects could be found in rural regions. This paper will set out to show that these discrepancies arise from specific characteristics of urban areas. The magnitude of the employment effects of entry in agglomerations can, therefore, be regarded as a further kind of agglomeration benefit which has not been discussed in the literature yet. In particular, it is explained how the distinct characteristics of urban areas contribute to the emergence of high-quality start-ups that are known to cause larger employment effects than other types of new businesses. In addition, this paper argues that the relatively intense competition in urban areas further stimulates the economic effects of new business formation in agglomerations.
    Keywords: Entrepreneurship, new business formation, regional development, entrepreneurship policy
    JEL: M13 O1 O18 R11
    Date: 2009–03–05
  8. By: David Johnson (Wilfrid Laurier University)
    Abstract: This study concludes that (i) stoppages can be shown to have a strong negative impact on student learning outcomes in Grade 6; the overall impact of stoppages on Grade 3 pupils appears to be much smaller, perhaps zero, although there is a noticeable, negative effect on achievement in mathematics; and, work stoppages have much greater adverse effects on students in both Grade 3 and Grade 6 in schools where more students come from disadvantaged backgrounds.
    Keywords: elementary teacher strikes or lockouts, education, work stoppages
    JEL: H75 I21
    Date: 2009–03
  9. By: Chen, George Shih-Ku
    Abstract: We investigate the effect of agglomeration economies on Taiwanese greenfield investors' location choice in China from 1996 to 2005. Using a nested logit model, we find that Taiwanese investors first select a region in China where he or she wants to invest, before selecting the best province within that region. Furthermore, we find evidence that, since 2000, market access, industrial linkages and monitoring costs have become important agglomeration forces driving Taiwanese investors' location choice in China. Finally, we discover that the nature of agglomeration economies varies extensively for Taiwanese investors across different industries. Taken together, these findings suggest that the Chinese government must formulate region-wide development strategies and industry-specific policies if it wants to attract more Taiwanese investment in the near future.
    Keywords: Agglomeration economies; China; Nested logit model; Taiwanese investment
    JEL: F23
    Date: 2009–01–05
  10. By: Timothy J. Bartik (W.E. Upjohn Institute for Employment Research)
    Abstract: This paper provides new information on what proportion of individuals spend their adult work lives in their childhood metropolitan area or state. I also examine how this proportion varies across different demographic groups, and with the size and growth rate of the metropolitan area. I find that the proportion of individuals who spend most of their adulthood in their childhood metropolitan area is surprisingly high. Furthermore, this proportion does not go down as much as one might think for smaller or slower-growing metropolitan areas, or for college-educated persons. These findings imply that state and local investments in children may pay off for the state or local area that makes these investments. A surprisingly large proportion of the individuals who benefit from these childhood investments will remain in the same state or local area as adults, thereby boosting the local economy.
    Keywords: children, education, adults, location, demographics, bartik
    JEL: R23 J61 R11
    Date: 2009–02
  11. By: Philip Babcock; Julian R. Betts
    Abstract: Do smaller classes boost achievement mainly by helping teachers impart specific academic skills to students with low academic achievement? Or do they do so primarily by helping teachers engage poorly behaving students? The analysis uses the grade 3 to 4 transition in San Diego Unified School District as a source of exogenous variation in class size (given a California law funding small classes until grade 3). Grade 1 report cards allow separate identification of low-effort and low-achieving students. Results indicate that elicitation of effort or engagement, rather than the teaching of specific skills, may be the dominant channel by which small classes influence disadvantaged students.
    JEL: I2 I21 I22
    Date: 2009–03
  12. By: Francisco Henríquez; Alejandra Mizala; Andrea Repetto
    Abstract: This paper analyzes the success of Chile’s Sociedad de Instrucción Primaria (SIP) in providing high quality primary school education to low income children. The paper shows that SIP students’ results in national standardized tests are not due to selection or observables. Interviews with principals of SIP schools and of schools that compete with them suggest that differences may be related to having student achievement as the primary goal, a clear and shared methodology, the systematic use of the information provided by teachers’ and students’ evaluations, the selection of directors and teachers through competition, and the assignment of resources to leveling children that lag behind, among other factors.
    Date: 2009
  13. By: Chen, George Shih-Ku
    Abstract: We investigate the impact of agglomeration economies on the distribution of Taiwanese investment in China for the period 1996-2005. We find that the uneven distribution of Taiwanese investment can be explained by agglomeration economies related to industrial linkages, labour-market pooling and monitoring costs. Furthermore, we find evidence that the nature of agglomeration forces attracting Taiwanese investment not only differs across regions but also changes over time. Importantly, we find mild evidence that this investment is affected by a market crowding effect, or that the benefit from agglomeration decreases once the market size exceeds a critical threshold.
    Keywords: Agglomeration economies; China; Taiwanese investment
    JEL: F23
    Date: 2009–01–05
  14. By: Reinhart, Carmen; Rogoff, Kenneth
    Abstract: This paper examines the depth and duration of the slump that invariably follows severe financial crises, which tend to be protracted affairs. We find that asset market collapses are deep and prolonged. On a peak-to-trough basis, real housing price declines average 35 percent stretched out over six years, while equity price collapses average 55 percent over a downturn of about three and a half years. Not surprisingly, banking crises are associated with profound declines in output and employment. The unemployment rate rises an average of 7 percentage points over the down phase of the cycle, which lasts on average over four years. Output falls an average of over 9 percent, although the duration of the downturn is considerably shorter than for unemployment. The real value of government debt tends to explode, rising an average of 86 percent in the major post-World War II episodes. The main cause of debt explosions is usually not the widely cited costs of bailing out and recapitalizing the banking system. The collapse in tax revenues in the wake of deep and prolonged economic contractions is a critical factor in explaining the large budget deficits and increases in debt that follow the crisis. Our estimates of the rise in government debt are likely to be conservative, as these do not include increases in government guarantees, which also expand briskly during these episodes.
    Keywords: duration; financial crisies; real estate; unemployment
    JEL: E44 F30 N20
    Date: 2009–03
  15. By: Johannes Gräb; Michael Grimm
    Abstract: Empirical evidence suggests that regional disparities in incomes are often very high, that these disparities do not necessarily disappear as economies grow and that these disparities are itself an important driver of growth. We use a novel approach based on multilevel modeling to decompose the sources of spatial disparities in incomes among households in Burkina Faso. We show that spatial disparities are not only driven by the spatial concentration of households with particular endowments but to a large extent also by disparities in community endowments. Climatic differences across regions do also matter, but to a much smaller extent.
    Keywords: spatial inequality, poverty, multilevel modeling, decomposition, Sub-Saharan Africa
    JEL: C21 I32 O12 R12
    Date: 2009
  16. By: Cory Koedel; Julian Betts
    Abstract: Value-added measures of teacher quality may be sensitive to the quantitative properties of the student tests upon which they are based. This paper focuses on the sensitivity of value-added to test-score-ceiling effects. Test-score ceilings are increasingly common in testing instruments across the country as education policy continues to emphasize proficiency-based reform. Encouragingly, we show that over a wide range of test-score-ceiling severity, teachers' value-added estimates are only negligibly influenced by ceiling effects. However, as ceiling conditions approach those found in minimum-competency testing environments, value-added results are significantly altered. We suggest a simple statistical check for ceiling effects.
    JEL: I2 I21 I22 J08 J33 J45
    Date: 2009–03
  17. By: Barrera-Osorio, Felipe; Linden, Leigh L.
    Abstract: This paper presents the evaluation of the program Computers for Education. The program aims to integrate computers, donated by the private sector, into the teaching of language in public schools. The authors conduct a two-year randomized evaluation of the program using a sample of 97 schools and 5,201 children. Overall, the program seems to have had little effect on students'test scores and other outcomes. These results are consistent across grade levels, subjects, and gender. The main reason for these results seems to be the failure to incorporate the computers into the educational process. Although the program increased the number of computers in the treatment schools and provided training to the teachers on how to use the computers in their classrooms, surveys of both teachers and students suggest that teachers did not incorporate the computers into their curriculum.
    Keywords: Tertiary Education,Primary Education,Secondary Education,Teaching and Learning,Education For All
    Date: 2009–02–01
  18. By: Francesco Aiello (University of Calabria); Alfonsina Iona (Aston University); Leone Leonida (Queen Mary, University of London)
    Abstract: We model the channels through which public expenditure on infrastructure influences firm value and shapes its investment decisions via both adjustment costs and marginal profitability of capital. We test these hypotheses by using a large panel of Italian firms. Empirical results show that infrastructure interacts with revenues and costs in shaping firm's profitability of capital and influences its adjustment costs. Finally we find that infrastructure expenditure contributes to reduce the economic gap between the North and the South of Italy. These effects vary across regions and sectors.
    Keywords: Regional infrastructure, Firm's value, Corporate investment
    JEL: D21 D62 D92
    Date: 2009–03
  19. By: Frederico G. Jayme Jr. (Cedeplar-UFMG); Guilherme Jonas C. da Silva (Cedeplar-UFMG); Ricardo S. Martins (Cedeplar-UFMG)
    Abstract: This paper aims at analyzing theoretically and empirically the role of infrastructure expenditure on economic growth in Brazil from 1986 to 2003. The hypothesis is that public infrastructure expenditures in transport are central to foster sustainable growth in Brazil. Theoretical and empirical literature highlights the fact that this type of investment fosters economic growth and the multiplier by means of its effects on productivity. By using a panel data model to Brazilian states, conclusions highlight the fact that infrastructure investments are one of the demand constraints to growth in Brazil.
    Keywords: Investments, Public Policies, Economic Growth, Brazil
    JEL: H54 O40 E62
    Date: 2009–02
  20. By: Jennifer L. Steele; Richard J. Murnane; John B. Willett
    Abstract: This study capitalizes on a natural experiment that occurred in California between 2000 and 2002. In those years, the state offered a competitively allocated $20,000 incentive called the Governor's Teaching Fellowship (GTF) aimed at attracting academically talented, novice teachers to low-performing schools and retaining them in those schools for at least four years. Taking advantage of data on the career histories of 27,106 individuals who pursued California teaching licenses between 1998 and 2003, we use an instrumental variables strategy to estimate the unbiased impact of the GTF on the decisions of recipients to begin working in low-performing schools within two years after licensure program enrollment. We estimate that GTF recipients would have been less likely to teach in low-performing schools than observably similar counterparts had the GTF not existed, but that acquiring a GTF increased their probability of doing so by 28 percentage points. Examining retention patterns, we find that 75 percent of both GTF recipients and non-recipients who began working in low-performing schools remained in such schools for at least four years.
    JEL: I2 I22 I28
    Date: 2009–03
  21. By: Artis, Michael J; Dreger, Christian; Kholodilin, Konstantin
    Abstract: We examine real business cycle convergence for 41 euro area regions and 48 US states. Results obtained by a panel model with spatial correlation indicate that the relevance of common business cycle factors is rather stable over the past two decades in the euro area and the US. Ongoing business cycle convergence often detected in cross-country data is not confirmed at the regional level. The degree of synchronization across the euro area is similar to that to be found for the US states. Thus, the lack of convergence does not seem to be an impediment to a common monetary policy.
    Keywords: Business cycle convergence; Spatial correlation; spatial panel model
    JEL: C51 E32 E37
    Date: 2009–03
  22. By: Jos van Ommeren (VU University Amsterdam); Eva Gutièrrez-i-Puigarnau (VU University Amsterdam)
    Abstract: We hypothesize, and test for, a negative effect of the length of the commute on worker’s productivity, by examining whether the commute has a positive effect on worker’s absenteeism. Our estimates for Germany indicate that commuting distance induces absenteeism with an elasticity of about 0.07. On average, absenteeism would be about 16 percent less if all workers would have a negligible commute. These results are consistent with urban efficiency wage models.
    Keywords: absenteeism; commuting; productivity
    JEL: R23 J22 J24
    Date: 2009–02–19
  23. By: Fabio C. Bagliano (Department of Economics and Public Finance "G. Prato", University of Torino); Claudio Morana (Department of Economics and Quantitative Methods, University of Eastern Piedmont)
    Abstract: In this paper a small-scale macroeconomic system is estimated in the framework of a common trends model, in order to explore the dynamic interactions between real house prices, consumption expenditure and output in the US and major European economies. The results point to important differences across countries, with long-run house price effects on consumption only for France, Germany and the US. However, some interactions between house prices and consumption are detected in all countries at shorter horizons. Evidence of international comovements in the common trend component of house price dynamics is also found.
    Keywords: house prices, consumption, common trends
    JEL: C32 E21
    Date: 2008–12
  24. By: Göbel, Jürgen
    Abstract: In certain respects, it seems expedient to describe a government as a homogeneous and self-interested entity, called ’Leviathan’. To optimize fiscal constraints, we need to know how powerful a Leviathan really is. This paper presents a new approach to measure the power of Leviathans. This new approach defines fiscal power in terms of income deviation. It supposes that there exists a positive connection between fiscal power and intergovernmental grants. To examine the approach empirically, we use data on U.S. counties in the period 1999-2002. Equations of fiscal power are estimated on the full and on stratified samples. Overall, the results support the new approach. Nonetheless, further research on the highly significant control variables would be needed to derive recommendations for more efficient fiscal constraints.
    Keywords: Leviathan; measurement; income deviation; grants
    JEL: H11 H72 H30
    Date: 2009–02–28
  25. By: Rogers, F. Halsey; Vegas, Emiliana
    Abstract: Expanding and improving basic education in developing countries requires, at a minimum, teachers who are present in the classroom and motivated to teach, but this essential input is often missing. This paper describes the findings of a series of recent World Bank and other studies on teacher absence and incentives for performance. Surprise school visits reveal that teachers are absent at high rates in countries such as India, Indonesia, Uganda, Ecuador, and Zambia, reducing the quality of schooling for children, especially in rural, remote, and poor areas. More broadly, poor teacher management and low levels of teacher accountability afflict many developing-country education systems. The paper presents evidence on these shortcomings, but also on the types of incentives, management, and support structures that can improve motivation and performance and reduce avoidable absenteeism. It concludes with policy options for developing countries to explore as they work to meet Education for All goals and improve quality.
    Keywords: Tertiary Education,Primary Education,Education For All,Teaching and Learning,Secondary Education
    Date: 2009–02–01

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