nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2009‒07‒11
38 papers chosen by
Steve Ross
University of Connecticut

  1. Fiscal amenities, school finance reform and the supply side of the Tiebout market By Byron F. Lutz
  2. Simulating Wages and House Prices Using the NEG* By Bernard Fingleton
  3. House price fluctuations and residential sorting By Haavio, Markus; Kauppi, Heikki
  4. House Price Fluctuations and Residential Sorting By Markus Haavio; Heikki Kauppi
  5. A model of urban demography By Hiroshi Aiura; Yasuhiro Sato
  6. Monetary Policy and Housing Sector Dynamics in a Large-Scale Bayesian Vector Autoregressive Model By Rangan Gupta; Marius Jurgilas; Alain Kabundi; Stephen M. Miller
  7. The Link between Output, Inflation, Monetary Policy and Housing Price Dynamics By Demary, Markus
  8. Reducing foreclosures: no easy answers By Christopher Foote; Kristopher Gerardi; Lorenz Goette; Paul S. Willen
  9. The Effects of a Refinery on Property Values – The Case of Sweden. By Winstrand, Jakob
  10. Identifying spatial efficiency-equity tradeoffs in territorial development policies : evidence from Uganda By Lall, Somik V.; Schroeder, Elizabeth; Schmidt, Emily
  11. Why do creative industries cluster? An analysis of the determinants of clustering of creative industries By Luciana Lazzeretti; Rafael Boix; Francesco Capone
  12. Combating Negative Peer Effects: Evidence from Judicial and School Resource Interventions By Mark L. Hoekstra; Scott Carrell
  13. Racial Inequality and Segregation Measures: Some Evidence from the 2000 Census By Rajiv Sethi
  14. Business Aviation in Germany: An empirical and model-based analysis By Berster, Peter; Gelhausen, Marc Christopher; Wilken, Dieter
  16. Analysing the impact of public capital stock using the NEG wage equation: a panel data approach By Bernard Fingleton; Miguel Gómez-Antonio
  17. Moral and Social Constraints to Strategic Default on Mortgages By Luigi Guiso; Paola Sapienza; Luigi Zingales
  18. How Much Are We Willing To Pay to Send Poor Adolescents to School? Simulating Changes to Mexico`s Oportunidades in Urban Areas By Viviane Azevedo; Cesar Bouillon; Patricia Yanez-Pagans
  19. Anticipatory effects of curriculum tracking By Kristian Koerselman
  20. Forecasting with Spatial Panel Data By Baltagi, Badi H.; Bresson, Georges; Pirotte, Alain
  21. Crime, City and Space: A Case of Mumbai Megapolis By Abdul Shaban
  22. Down from the Mountain: Skill Upgrading and Wages in Appalachia By Bollinger, Christopher R.; Ziliak, James P.; Troske, Kenneth
  23. Agglomeration externalities and technical efficiency in French pig production By Solène Larue; Laure Latruffe
  24. Repeat Sales Indexes: Estimation Without Assuming that Errors in Asset Returns Are Independently Distributed By Campbell, Rachel; Graddy, Kathryn; Hamilton, Jonathan
  25. Using Genetic Lotteries within Families to Examine the Causal Impact of Poor Health on Academic Achievement By Jason M. Fletcher; Steven F. Lehrer
  26. Industrial district effects and innovation in the Tuscan shipbuilding industry By Luciana Lazzeretti; Francesco Capone
  27. Conditional Cash Penalties in Education: Evidence from the Learnfare Experiment By Thomas Dee
  28. What explains the quantity and quality of local inventive activity? By Gerald Carlino; Robert Hunt
  29. Estimating the Firm's Labor Supply Curve in a "New Monopsony" Framework: School Teachers in Missouri By Ransom, Michael R.; Sims, David P.
  30. Beynond the Tipping Point: A Multidisciplinary Perspective on Urbanization and Development By Beall, Jo; Guha-Khasnobis, Basudeb; Kanbur, Ravi
  31. Transportation and development: insights from the U.S., 1840-1860 By Berthold Herrendorf; James A. Schmitz; Arilton Teixeira
  32. The performance of local government in the execution of public works By Guccio, Calogero; Pignataro, Giacomo; Rizzo, Ilde
  33. The German spatial poverty divide: poorly endowed or bad luck? By Timm Bönke; Carsten Schröder
  34. The Effect of Adolescent Health on Educational Outcomes: Causal Evidence using ‘Genetic Lotteries’ between Siblings By Fletcher, Jason M.; Lehrer, Steven F.
  35. The Culture of Fear and Control in Costa Rica (I): Crime Statistics and Law Enforcement By Sebastian Huhn
  36. Minnesota Farm Real Estate Sales: 1990-2008 By Taff, Steven J.
  37. Age at Migration and Social Integration By Aslund, Olof; Böhlmark, Anders; Nordström Skans, Oskar
  38. Inequality and Specialization: The Growth of Low-Skill Service Jobs in the United States By David H. Autor; David Dorn

  1. By: Byron F. Lutz
    Abstract: This study asks if local governments which provide a high level of public services per tax dollar attract housing capital. The first portion of the paper examines large shifts in property tax burdens induced by an unusual school finance reform in the state of New Hampshire. The estimates suggest that, in most of the state, communities with a reduced tax burden experience a large increase in residential construction. In the area of the state near the region's primary urban center (Boston), however, the shock clears through a price adjustment--i.e. by capitalizing into property values. The differing responses are attributed to differing housing supply elasticities. Furthermore, the shock induced communities with a lowered tax burden to enact more stringent land use regulations. The second portion of the paper uses a national sample and exploits variation in education spending levels arising from 1980s era school finance reforms. The results confirm the findings from New Hampshire--fiscal amenities have a significant impact on the location of residential capital and the impact is largest outside of dense, urban areas. These results, which are interpreted through the lens of a simple theoretical model, have important implications for a host of issues, including the equity and efficiency of local public goods provision, assessing who bears the burden of local taxation, and land use issues such as the location and pace of residential development and the causes of land use regulation.
    Date: 2009
  2. By: Bernard Fingleton (Department of Economics, University of Strathclyde)
    Abstract: The paper incorporates house prices within an NEG framework leading to the spatial distributions of wages, prices and income. The model assumes that all expenditure goes to firms under a monopolistic competition market structure, that labour efficiency units are appropriate, and that spatial equilibrium exists. The house price model coefficients are estimated outside the NEG model, allowing an econometric analysis of the significance of relevant covariates. The paper illustrates the methodology by estimating wages, income and prices for small administrative areas in Great Britain, and uses the model to simulate the effects of an exogenous employment shock.
    Keywords: new economic geography, real estate prices, spatial econometrics
    JEL: C21 C31 O18 R12 R31
    Date: 2009–05
  3. By: Haavio, Markus (Bank of Finland); Kauppi, Heikki (University of Turku)
    Abstract: Empirical evidence suggests that local jurisdictions are internally more heterogeneous than standard sorting models predict. We develop a dynamic multi-region model, with fluctuating regional house prices, where an owner-occupying household’s location choice depends on its current wealth and its current ‘match’ and involves both consumption and investment considerations. The relative weights of the consumption and investment motives in the location choice determine the equilibrium pattern of residential sorting, with a strong investment (consumption) motive implying sorting according to match (wealth). The model predicts a negative relation between size of house price fluctuations and residential sorting in the match dimension. Also movers should be more sorted than stayers. These predictions are consistent with evidence from US metropolitan areas when income, age and education are used as proxies for the match.
    Keywords: residential sorting; house prices; incomplete markets; owner-occupation; household mobility
    JEL: D31 D52 R13 R21 R23
    Date: 2009–06–10
  4. By: Markus Haavio (Bank of Finland); Heikki Kauppi (Department of Economics, University of Turku)
    Abstract: Empirical evidence indicates local jurisdictions are internally more heterogeneous than standard sorting models predict. We develop a dynamic multi-region model, with fluctuating regional house prices, where an owner-occupying household's location choice depends on its current wealth and its current ``match'' and involves both consumption and investment considerations. The relative strength of the consumption motive and the investment motive in the location choice determines the equilibrium pattern of residential sorting, with a strong investment (consumption) motive implying sorting according to the match (wealth). The model predicts a negative relation between the size of house price fluctuations and residential sorting in the match dimension. Also, movers should be more sorted than stayers. These predictions are consistent with evidence from US metropolitan areas when income, age and education are used as proxies for the match.
    Keywords: residential sorting, house prices, incomplete markets, owner-occupation, household mobility
    JEL: D31 D52 R13 R21 R23
    Date: 2009–05
  5. By: Hiroshi Aiura (Faculty of Economics, Oita University (Japan)); Yasuhiro Sato (Graduate School of Economics, Osaka University (Japan))
    Abstract: This paper develops an overlapping generations model that involves endogenous determination of fertility and explicit city structure. We provide conditions under which there exists a unique steady state, which can replicate spatial features of demography observed in Japanese cities. We also provide comparative steady state analysis by calibration.
    Keywords: city structure, land rent, fertility, demography
    JEL: J11 R11 R23
    Date: 2009–06
  6. By: Rangan Gupta (Department of Economics, University of Pretoria); Marius Jurgilas (Financial Stability Directorate, Bank of England); Alain Kabundi (Department of Economics and Econometrics, University of Johannesburg); Stephen M. Miller (College of Business, University of Las Vegas, Nevada)
    Abstract: Our paper considers the channel whereby monetary policy, a Federal funds rate shock, affects the dynamics of the US housing sector. The analysis uses impulse response functions obtained from a large-scale Bayesian Vector Autoregression (LBVAR) model that incorporates 143 monthly macroeconomic variables over the period of 1986:01 to 2003:12, including 21 variables relating to the housing sector at the national and four census regions. We find at the national level that housing starts, housing permits, and housing sales fall in response to the tightening of monetary policy. Housing sales reacts more quickly and sharply than starts and permits and exhibits more duration. Housing prices show the weakest response to the monetary policy shock. At the regional level, we conclude that the housing sector in the South drives the national data. The responses in the West differ the most from the other regions, especially for the impulse responses of housing starts and permits.
    Keywords: Monetary policy, Housing sector dynamics, Large-Scale BVAR models
    JEL: C32 R31
    Date: 2009–06
  7. By: Demary, Markus
    Abstract: This study analyses empirically the link between real house prices and key macro variables like prices, output and interest rates for ten OECD countries. We find out that a monetary policy shock lowers real house prices in all ten countries, where the interest rate shock explains between 12 and 24 percent of the fluctuations in house prices. Impulse responses indicate that house prices rise after an output shock in nine of ten countries. But we also find evidence that real estate prices have a large impact on these key macroeconomic variables. We find out that the house price shock is a germane aggregate demand shock because it raises output and prices and leads to increasing money market rates in all countries. The story behind this finding is that increasing house prices lead to an increase in households' net worth which leads to increasing consumption expentitures and thereby stimulates aggregate demand. This stimulus on aggregate demand leads to increasing output and inflationary pressures on which the central bank reacts by tightening monetary policy. We find out that 12 to 20 percent of output fluctuations and around 10 to 20 percent of price fluctuations can be traced back to the housing demand shock. Moreover, we find that these housing demand shocks are a key driver of money market rates. We conclude that this channel is empirically relevant.
    Keywords: Inflation; Monetary Policy; Housing Prices; Vectorautoregressions
    JEL: C32 E32 E31 E44
    Date: 2009–05–08
  8. By: Christopher Foote; Kristopher Gerardi; Lorenz Goette; Paul S. Willen
    Abstract: This paper takes a skeptical look at a leading argument about what is causing the foreclosure crisis and what should be done to stop it. We use an economic model to focus on two key decisions: the borrower's choice to default on a mortgage and the lender's subsequent choice whether to renegotiate or modify the loan. The theoretical model and econometric analysis illustrate that unaffordable loans, defined as those with high mortgage payments relative to income at origination, are unlikely to be the main reason that borrowers decide to default. In addition, this paper provides theoretical results and empirical evidence supporting the hypothesis that the efficiency of foreclosure for investors is a more plausible explanation for the low number of modifications to date than contract frictions related to securitization agreements between servicers and investors. While investors might be foreclosing when it would be socially efficient to modify, there is little evidence to suggest they are acting against their own interests when they do so. An important implication of our analysis is that policies designed to reduce foreclosures should focus on ameliorating the immediate effects of job loss and other adverse life events rather than modifying loans to make them more affordable on a long-term basis.
    Keywords: Foreclosure ; Mortgage loans ; Mortgage-backed securities
    Date: 2009
  9. By: Winstrand, Jakob (Department of Economics)
    Abstract: This study estimates the impact of the non-aesthetic view and odor caused by Preemraff, a refinery on the Swedish west coast, on house values in the surrounding area. To carry out the analysis a spatial hedonic house price model was applied to transaction data for the period 1994 - 1996, enriched with information whether Preemraff was visible or not from the property. The results indicate that house prices increase as distance to Preemraff increases, but that the effect is small. The estimated price elasticity with respect to distance in the direction the prevailing wind blows is 0.071 and 0.162 in the opposite direction. This suggests that there is an effect of the odor on house prices, though the magnitude of the effect is small. Further estimates indicate that the negative effect of a view of Preemraff from a house is relatively strong in the proximity of the refinery, -24.6 % at a distance of 1000 meters. However, at larger distances the visibility of Preemraff declines and already 2000 meters from Preemraff the positive effect ofhaving a view overshadows the negative effect of the visible refinery. The estimates also imply that the premium for a sea front in a parish non-adjacent to Preemraff is about 139.6 % whereas in an adjacent parish the premium is 47.7 %. The corresponding premiums for a sea view are 69.0 % and 23.7 %.
    Keywords: Refinery; hedonic house price model; spatial correlation; heterogeneous directional effects
    JEL: Q51 Q53
    Date: 2009–06–29
  10. By: Lall, Somik V.; Schroeder, Elizabeth; Schmidt, Emily
    Abstract: In many countries, place specific investments in infrastructure are viewed as integral components of territorial development policies. But are these policies fighting market forces of concentration? Or are they adding net value to the national economy by tapping underexploited resources? This paper contributes to the debate on the spatial allocation of infrastructure investments by examining where these investments will generate the highest economic returns"spatial efficiency", and identifying whether there re tradeoffs when infrastructure coverage is made more equitable across regions"spatial equity". The empirical analysis focuses on Uganda and is based on estimating models of firm location choice, drawing on insights from the new economic geography literature. The main findings show that establishments in the manufacturing industry gain from being in areas that offer a diverse mix of economic activities. In addition, availability of power supply, transport links connecting districts to markets, and the supply of skilled workers attract manufacturing activities. Combining all these factors gives a distinct advantage to existing agglomerations along leading areas around Kampala and Jinja. Infrastructure investments in these areas are likely to produce the highest returns compared with investments elsewhere. Public infrastructure investments in other locations are likely to attract fewer private investors, and will pose a spatial efficiencyequity tradeoff. To better integrate lagging regions with the national economy, lessons from the WDR2009"Reshaping Economic Geography"calling for investments in health and education in lagging areas are likely to be more beneficial.
    Keywords: Transport Economics Policy&Planning,E-Business,Banks&Banking Reform,Non Bank Financial Institutions,Economic Theory&Research
    Date: 2009–06–01
  11. By: Luciana Lazzeretti (Department of Bussines Economics, University of Florence); Rafael Boix (Institut d'Estudis Regionals i Metropolitans de Barcelona); Francesco Capone (Department of Bussines Economics, University of Florence)
    Abstract: Creative industries tend to concentrate mainly around large- and medium-sized cities, forming creative local production systems. The text analyses the forces behind clustering of creative industries to provide the first empirical explanation of the determinants of creative employment clustering following a multidisciplinary approach based on cultural and creative economics, evolutionary geography and urban economics. A comparative analysis has been performed for Italy and Spain. The results show different patterns of creative employment clustering in both countries. The small role of historical and cultural endowments, the size of the place, the average size of creative industries, the productive diversity and the concentration of human capital and creative class have been found as common factors of clustering in both countries.
    Keywords: creative industries, creative local production systems, creative clusters, agglomeration economies
    JEL: L22 R12 L82
    Date: 2009–04
  12. By: Mark L. Hoekstra; Scott Carrell
    Abstract: Recent empirical work on peer effects in education has primarily focused on identification. However, little is known about the extent to which social and education policy can mitigate the negative spillovers caused by disruptive children. This paper addresses this question by examining the causal effects from two different policy responses: judicial intervention following the reporting of domestic violence by a parent and additional counseling resources in the school. We find that children from homes with as-yet unreported domestic violence cause large negative classroom externalities. However, these negative peer effects disappear completely once the parent reports the violence to the court. Our results also show that one additional school counselor increases student math and reading achievement by 1.1 percentile points. Collectively, our results offer encouraging evidence that policymakers have the ability to counteract the negative peer effects caused by children from troubled families.
    JEL: J12 D62 I21
    Date: 2009–01
  13. By: Rajiv Sethi
    Abstract: This paper examines the extent to which income differences across the racial groups can account for observed residential segregation. The authors adopt an approach to the decomposition of segregation measures that combines the method of indirect standardization with the idea that some degree of segregation is the outcome of purely random processes. The authors use the dissimilarity index as a measure of segregation and data on race and income from US metropolitan areas for 2000. The study finds that the role played by racial income inequality in accounting for segregation is modest but varies significantly across the cities. The role of racial income inequality as a determinant of segregation will increase over time. For those cities, where the share of black households is relatively small, it may be useful to adjust existing measures of dissimilarity to better capture the role of non-income factors in determining segregation. [CDE-DSE WP no.177]
    Keywords: US; racial inequality; segregation measures; residential segregation; dissimilarity index; racial income inequality; racial income disparity.
    Date: 2009
  14. By: Berster, Peter; Gelhausen, Marc Christopher; Wilken, Dieter
    Abstract: The primary role of international airports is to serve the general public with scheduled and charter services, typically provided by airlines. Of secondary importance is their task to provide direct air transport access to the regional industry and to firms who operate their own fleets. In Düsseldorf (DUS), a major international airport in Germany with about 230 Thousand air transport movements (ATMs) in 2007, about 15 Thousand ATMs belonged to business aviation segment. Due to the complexity of slot allocation procedures and growing runway capacity problems at many international airports, business aviation has a growing problem at these airports to realise the demand for flights. However, neighbouring regional airports could play a complementary role and take over this traffic segment. Therefore, the objective of the paper is to describe and quantify the distribution of the growing business aviation between airports and show potential solutions and further avenues of how to accommodate business aviation at both major and near-by secondary airports. Analysis is supported by means of a new business aviation airport choice model based on a logit approach. This model differs significantly from other airport choice models for regular and tourism traffic in terms of the decision-relevant parameters: Factors such as accessibility of the airport, efficient passenger handling and the length of the runway of secondary airports play an important role, whereas price-related variables are less important to travellers of the business aviation segment. The model enables to develop promising strategies for secondary airports taking over a growing share of the business aviation segment in the case of a neighbouring international airport which suffers from congestion, thereby enhancing the overall level of service in consequence of airport cooperation.
    Keywords: Business aviation on main and satellite airports; airport capacity problems; business aviation development; business aviation airport choice model; air traffic distribution between main and satellite airports
    JEL: C53 C25 R41
    Date: 2009
  15. By: Germà Bel; Xavier Fageda
    Abstract: This paper examines factors determining prices that airports charge to airlines. Using data for 100 large airports in Europe, we find that they charge higher prices when they move more passengers. Additionally, competition from other transport modes and other nearby airports imposes some discipline on the pricing behavior of airports. Low-cost carriers and airlines with a high market share seem to have a stronger countervailing power. Finally, we find that private airports not regulated charge higher prices than public or regulated airports. From our analysis, we can infer that market power of each airport is dependent upon its specific characteristics.
    Keywords: Privatization; regulation, pricing; air transportation; airports
    Date: 2009–06–09
  16. By: Bernard Fingleton (Department of Economics, University of Strathclyde); Miguel Gómez-Antonio (Universidad Complutense de Madrid)
    Abstract: This paper examines the relationship between the level of public infrastructure and the level of productivity using panel data for the Spanish provinces over the period 1984-2004, a period which is particularly relevant due to the substantial changes occurring in the Spanish economy at that time. The underlying model used for the data analysis is based on the wage equation, which is one of a handful of simultaneous equations which when satisfied correspond to the short-run equilibrium of New Economic Geography theory. This is estimated using a spatial panel model with fixed time and province effects, so that unmodelled space and time constant sources of heterogeneity are eliminated. The model assumes that productivity depends on the level of educational attainment and the public capital stock endowment of each province. The results show that although changes in productivity are positively associated with changes in public investment within the same province, there is a negative relationship between productivity changes and changes in public investment in other regions.
    Keywords: spatial economics, public infrastructure, productivity, panel data, economic geography
    JEL: H54 R11 R15 C21
    Date: 2009–05
  17. By: Luigi Guiso; Paola Sapienza; Luigi Zingales
    Abstract: We use survey data to study American households’ propensity to default when the value of their mortgage exceeds the value of their house even if they can afford to pay their mortgage (strategic default). We find that 26% of the existing defaults are strategic. We also find that no household would default if the equity shortfall is less than 10% of the value of the house. Yet, 17% of households would default, even if they can afford to pay their mortgage, when the equity shortfall reaches 50% of the value of their house. Besides relocation costs, the most important variables in predicting strategic default are moral and social considerations. Ceteris paribus, people who consider it immoral to default are at 77% less likely to declare their intention to do so, while people who know someone who defaulted are 82% more likely to declare their intention to do so. The willingness to default increases nonlinearly with the proportion of foreclosures in the same ZIP code. That moral attitudes toward default do not change with the percentage of foreclosures is likely to derive from a contagion effect that reduces the social stigma associated with default as defaults become more common.
    JEL: D12 G18 G21 G33
    Date: 2009–07
  18. By: Viviane Azevedo; Cesar Bouillon; Patricia Yanez-Pagans
    Abstract: Although Mexico’s Conditional Cash Transfer Program Oportunidades has increased overall school enrollment, many adolescents do not attend school, especially in urban areas. This paper simulates the effects of changes in program design using a simple parametric method based on a simultaneous probability model of school attendance and child labor. The paper also provides alternative non parametric simulation results by extending Todd and Wolpin’s (2006) method to incorporate changes in working hours when attending school. The results indicate that eliminating or reducing school subsidies for primary education and increasing transfer for older students is a cost-effective way to raise overall school enrollment in urban areas. Increasing school attendance of 16-year-olds to 80 percent or more, however, would require a quadrupling of scholarships. This suggests that complementary interventions are needed.
    Keywords: School attendance and work, Conditional cash transfers, Simulation, Oportunidades
    JEL: I20 J22
    Date: 2009–06
  19. By: Kristian Koerselman (Department of Economics and Statistics, Abo Akademi University)
    Abstract: Curriculum tracking, the separation of secondary school students into academic and vocational tracks, correlates positively with pretracking achievement in both British and international data. I argue that this correlation is caused by the incentives emanating from the track placement decision. Using test score data collected in TIMSS 1995 and 2003, and in PIRLS 2001 and 2006, I investigate the effect of tracking on the early achievement distribution empirically, amongst others by means of quantile regression. The evidence presented in this paper implicates that previous valueadded estimates of the net impact of tracking may be biased.
    Keywords: curriculum tracking, ability streaming, anticipatory effects, high-stakes testing
    JEL: I21 I28 J08 J24
    Date: 2009–05
  20. By: Baltagi, Badi H. (Syracuse University); Bresson, Georges (University of Paris 2); Pirotte, Alain (University of Paris 2)
    Abstract: This paper compares various forecasts using panel data with spatial error correlation. The true data generating process is assumed to be a simple error component regression model with spatial remainder disturbances of the autoregressive or moving average type. The best linear unbiased predictor is compared with other forecasts ignoring spatial correlation, or ignoring heterogeneity due to the individual effects, using Monte Carlo experiments. In addition, we check the performance of these forecasts under misspecification of the spatial error process, various spatial weight matrices, and heterogeneous rather than homogeneous panel data models.
    Keywords: forecasting, BLUP, panel data, spatial dependence, heterogeneity
    JEL: C33
    Date: 2009–06
  21. By: Abdul Shaban
    Abstract: The present study has been an attempt to examine spatial distribution of various forms of crimes in Mumbai city (Municipal Corporation) and find out their correlates. More specifically the attempts have been made to find out ‘hotspots’ of various forms of crimes, to analysed the types of crimes which occur in close spatial association with each other, to interrelate the spatial dimensions to other criminogenic factors, to examine whether recent emphasis on development has drastically changed the character of crimes and its causes where space has its role to play, and to study implication of space-induced crimes to law and order in the city.
    Keywords: mumbai, India, dowry deaths, crimes, criminogenic factors, law and order,unemployment, textile mills, labour unions, murder rates, population
    Date: 2009
  22. By: Bollinger, Christopher R. (University of Kentucky); Ziliak, James P. (University of Kentucky); Troske, Kenneth (University of Kentucky)
    Abstract: Despite evidence that skilled labor is increasingly concentrated in cities, whether regional wage inequality is predominantly due to differences in skill levels or returns is unknown. We compare Appalachia, with its wide mix of urban and rural areas, to other parts of the U.S., and find that gaps in both skill levels and returns account for the lack of high wage male workers. For women, skill shortages are important across the distribution. Because rural wage gaps are insignificant, our results suggest that widening wage inequality between Appalachia and the rest of the U.S. owes to a shortage of skilled cities.
    Keywords: wage inequality, region
    JEL: J31 J4
    Date: 2009–06
  23. By: Solène Larue; Laure Latruffe
    Abstract: The objective of the paper is to assess the effects of spatial agglomeration on the technical efficiency of French pig farms. We use a two-stage method with the first stage consisting of calculating the efficiency scores of pig activity with the non-parametric Data Envelopment Analysis (DEA) method, and the second stage being a regression of these scores on agglomeration variables. Data consist of 936 French pig producers in 2004. Results suggest that these farms were as much affected by positive agglomeration externalities (in the form of knowledge spillovers due to the density of farms, and arising from their closeness to downstream markets) as any other businesses. Our analysis also sheds light on the specificity of the sector, namely that environment pressures can force pig farmers to be more efficient, an effect that may be counteracted when legal dispositions relating to manure spreading are too stringent.
    Keywords: technical efficiency, Data Envelopment Analysis, agglomeration, environmental regulation, hog production, France
    JEL: Q12 R3
    Date: 2009
  24. By: Campbell, Rachel; Graddy, Kathryn; Hamilton, Jonathan
    Abstract: This paper proposes an alternative specification for the second stage of the Case-Shiller repeat sales method. This specification is based on serial correlation in the deviations from the mean one-period returns on the underlying individual assets, whereas the original Case-Shiller method assumes that the deviations from mean returns by the underlying individual assets are i.i.d. The methodology proposed in this paper is easy to implement and provides more accurate estimates of the standard errors of returns under serial correlation. The repeat sales methodology is generally used to construct an index of prices or returns for unique, infrequently traded assets such as houses, art, and musical instruments which are likely to be prone to exhibit serial correlation in returns. We demonstrate our methodology on a dataset of art prices and on a dataset of real estate prices from the city of Amsterdam.
    Keywords: art; index; real estate; repeat sales
    JEL: C13 C29 G12
    Date: 2009–06
  25. By: Jason M. Fletcher; Steven F. Lehrer
    Abstract: While there is a well-established, large positive correlation between mental and physical health and education outcomes, establishing a causal link remains a substantial challenge. Building on findings from the biomedical literature, we exploit specific differences in the genetic code between siblings within the same family to estimate the causal impact of several poor health conditions on academic outcomes. We present evidence of large impacts of poor mental health on academic achievement. Further, our estimates suggest that family fixed effects estimators by themselves cannot fully account for the endogeneity of poor health. Finally, our sensitivity analysis suggests that these differences in specific portions of the genetic code have good statistical properties and that our results are robust to reasonable violations of the exclusion restriction assumption.
    JEL: C33 I12 I21
    Date: 2009–07
  26. By: Luciana Lazzeretti (Department of Bussines Economics, University of Florence); Francesco Capone (Department of Bussines Economics, University of Florence)
    Abstract: The aim of the present work is to investigate innovative processes within a geographical cluster, and thus contribute to the debate on the effects of industrial clusters on innovation capacity. In particular, we would like to ascertain whether the advantages of industrial districts in promoting innovation, as already revealed by literature (diffusion of knowledge, social capital and trust, efficient networking), are also keys to success in the Tuscan shipbuilding industry of pleasure and sporting boats. First, we verify the existence of clusters of shipbuilding in Tuscany, using a specific methodology. Next, in the identified clusters, we analyse three innovative networks financed in a policy to support innovation, and examine whether the typical features of a cluster for promoting innovation are at work, using a questionnaire administered to 71 actors. Finally, we develop a performance analysis of the cluster firms and ascertain whether their different behaviours also lead to different performances. The analysis results show that our case records effects of industrial clustering on innovation capacity, such as the important role given to trust and social capital, the significant worth put in interfirm relations and in each partner’s specific competencies, or even the distinctive performance of firms belonging to a cluster.
    Keywords: geographical clusters, industrial districts, innovation, technological transfer, shipbuilding industry.
    JEL: L22 O32 L62
    Date: 2009–05
  27. By: Thomas Dee
    Abstract: Wisconsin’s influential Learnfare initiative is a conditional cash penalty program that sanctions a family’s welfare grant when covered teens fail to meet school attendance targets. In the presence of reference-dependent preferences, Learnfare provides uniquely powerful financial incentives for student performance. However, a 10-county random-assignment evaluation suggested that Learnfare had no sustained effects on school enrollment and attendance. This study evaluates the data from this randomized field experiment. In Milwaukee County, the Learnfare procedures were poorly implemented and the random-assignment process failed to produce balanced baseline traits. However, in the nine remaining counties, Learnfare increased school enrollment by 3.7 percent (effect size = 0.08) and attendance by 4.5 percent (effect size = 0.10). The hypothesis of a common treatment effect sustained throughout the six-semester study period could not be rejected. These effects were larger among subgroups at risk for dropping out of school (e.g., baseline dropouts, those over age for grade). For example, these heterogeneous treatment effects imply that Learnfare closed the enrollment gap between baseline dropouts and school attendees by 41 percent. These results suggest that well-designed financial incentives can be an effective mechanism for improving the school persistence of at-risk students at scale.
    JEL: I2 I3
    Date: 2009–07
  28. By: Gerald Carlino; Robert Hunt
    Abstract: The authors geocode a data set of patents and their citation counts, including citations from abroad. This allows them to examine both the quantity and quality of local inventions. They also refine their data on local academic R&D to explore effects from different fields of science and sources of R&D funding. Finally, they incorporate data on congressional earmarks of funds for academic R&D. ; With one important exception, results using citation-weighted patents are similar to those using unweighted patents. For example, estimates of the returns to density (jobs per square mile) are only slightly changed when using citation-weighted patents as the dependent variable. But estimates of returns to city size (urbanization effects) are quite sensitive to the choice of dependent variable. ; Local human capital is the most important determinant of per capita rates of patenting. A 1 percent increase in the adult population with a college degree increases the local patenting rate by about 1 percent. ; With few exceptions, there is little variation across fields of science in the contribution of academic R&D to patenting rates. The exceptions are computer and life sciences, where the effects are smaller. There is greater variation in the contribution of R&D funded by different sources-academic R&D funded by the federal government generates smaller increases in patenting rates than R&D funded by the university itself. This effect is somewhat stronger for federally funded applied R&D than for basic R&D. The authors also find small negative effects for cities with greater exposure to academic R&D allocated by congressional earmarks. ; They discuss the implications of these results for policy and future research.
    Date: 2009
  29. By: Ransom, Michael R. (Brigham Young University); Sims, David P. (Brigham Young University)
    Abstract: In the context of certain dynamic models, it is possible to infer the elasticity of labor supply to the firm from the elasticity of the quit rate with respect to the wage. Using this property, we estimate the average labor supply elasticity to public school districts in Missouri. We take advantage of the plausibly exogenous variation in pre-negotiated district salary schedules to instrument for actual salary. Instrumental variables estimates lead to a labor supply elasticity estimate of about 3.7, suggesting the presence of significant market power for school districts, especially over more experienced teachers. The presence of monopsony power in this labor market may be partially explained by institutional features of the teacher labor market.
    Keywords: labor monopsony, teachers
    JEL: J42 J63
    Date: 2009–06
  30. By: Beall, Jo; Guha-Khasnobis, Basudeb; Kanbur, Ravi
    Abstract: By many estimates, the world has just crossed the point where more than half the worldâs population is urban, a trend driven by rapid urbanization in developing countries. Urban centers offer economies of scale in terms of productive enterprise and public investment. Cities are social melting pots, centers of innovation and drivers of social change. However, cities are also marked by social differentiation, poverty, conflict and environmental degradation. These are all issues that not only matter to cities but also lie at the heart of development. As such the time is right to consider afresh the relationship between cities and development. This paper introduces a significant new collection of multidisciplinary papers focused on urbanization and its implications for development. It raises four questions: (i) What is so special about the urban context? (ii) Why is urbanization and urban growth important to development at the present conjuncture? (iii) What are the strengths and limitations of our current state of knowledge about urbanization and development from the policy perspective and finally, (iv) how can a multidisciplinary perspective on the urban context add value to development research and policy?
    Keywords: Food Security and Poverty, International Development, International Relations/Trade,
    Date: 2009–06–04
  31. By: Berthold Herrendorf; James A. Schmitz; Arilton Teixeira
    Abstract: We study the effects of large transportation costs on economic development. We argue that the Midwest and the Northeast of the U.S. is a natural case because starting from 1840 decent data is available showing that the two regions shared key characteristics with today’s developing countries and that transportation costs were large and then came way down. To disentangle the effects of the large reduction in transportation costs from those of other changes that happened during 1840?1860, we build a model that speaks to the distribution of people across regions and across the sectors of production. We find that the large reduction in transportation costs was a quantitatively important force behind the settlement of the Midwest and the regional specialization that concentrated agriculture in the Midwest and industry in the Northeast. Moreover, we find that it led to the convergence of the regional per capita incomes measured in current regional prices and that it increased real GDP per capita. However, the increase in real GDP per capita is considerably smaller than that resulting from the productivity growth in the nontransportation sectors.
    Keywords: Transportation ; Middle West ; Developing countries
    Date: 2009
  32. By: Guccio, Calogero; Pignataro, Giacomo; Rizzo, Ilde
    Abstract: This paper aims at analysing the procurement of public works paying attention to the level of government involved. Such an issue has not received so far attention in the literature on fiscal federalism nor in the public works procurement literature. We focus the attention upon the execution stage of public works: indeed, their efficient provision and their capability to deliver the planned benefits are severely affected by the problems arising at the execution stage because of the incompleteness of the underlying contract. The main result is that local governments seem to be less efficient in the management of the execution process, suffering from longer delays than central government. This phenomenon is more severe for small municipalities and when the contract is mainly financed with external resources.
    Keywords: public procurement; local government; soft budget
    JEL: H57 H77 H72
    Date: 2009–06
  33. By: Timm Bönke (Freie Universität Berlin); Carsten Schröder (University of Kiel)
    Abstract: We study inter-temporal changes in poverty for Germany from year 1978 to 2003, and we employ the bootstrap method to test for statistical significance of results. All results are decomposed by household type and region. Poverty estimates are particularly high for single parents. Most striking, however, is the poverty divide between the old and newly-formed German Federal States, with poverty being significantly higher in the latter. We conduct a nonlinear Oaxaca-Blinder decomposition to quantify the separate contribution of regional differences in households’ characteristics to the probability of being poor.
    Keywords: Poverty, decomposition, expenditure patterns, necessities, Oaxaca-Blinder decomposition, bootstrap, equivalence scale.
    JEL: H53 I38
    Date: 2009
  34. By: Fletcher, Jason M.; Lehrer, Steven F.
    Abstract: There has been growing interest in using specific genetic markers as instrumental variables in attempts to assess causal relationships between health status and socioeconomic outcomes, including human capital accumulation. In this paper we use a combination of family fixed effects and genetic marker instruments to show strong evidence that inattentive symptoms of ADHD in childhood and depressive symptoms as an adolescent are linked with years of completed schooling. Our estimates suggest that controlling for family fixed effects is important but these strategies cannot fully account for the endogeneity of poor mental heath. Finally, our results demonstrate that the presence of comorbid conditions present immense challenges for empirical studies that aim to estimate the impact of specific health conditions.
    Keywords: Education Outcomes, Depression, Genetic Markers, ADHD, Obesity, Family Fixed Effects, and Instrumental Variables
    JEL: I20 I12 C31
    Date: 2009–06–26
  35. By: Sebastian Huhn (GIGA Institute of Latin American Studies)
    Abstract: The Costa Rican talk of crime is fundamentally based on the assumption that crime rates have increased significantly in recent years and that there is today a vast and alarming amount of crime. On the basis of this assumption, fear of crime, the call for the “iron fist,” and drastic law enforcement actions are continually increasing. While crime statistics are the logical basis for the hypothesis on the far-reaching extent of delinquency, they are used in a problematic way in the talk of crime. In this paper I discuss Costa Rican crime statis-tics, their development, and their utilization in the talk of crime against the background of criminological theory. The theses of the paper are that a) the informative value of crime statistics regarding Costa Rican reality is far more questionable than the common utiliza-tion of them implies and b) when they are used as argumentation, these crime statistics do not provide evidence of the oft-proclaimed rising crime wave.
    Keywords: Costa Rica, violence, crime, social order, crime statistics, public discourse
    Date: 2009–07
  36. By: Taff, Steven J.
    Abstract: This report is a summary of the data contained on the farmland sales portion of the Minnesota Land Economics (MLE) web site ( ) as of May 20, 2009. It is formally reissued each Spring, as new sales data become available. We no longer distribute a separate farm real estate report in the Minnesota Agricultural Economist (now the Minnesota Applied Economist: The present document consists largely of graphs and tables summarizing sales over the past eighteen years. It provides averages at the multi-county region and at the statewide levels of aggregation. Individual transaction data are available for downloading and analysis at the MLE web site. An electronic version of the current report in fully navigable portable document format (pdf) is also available: .pdf.
    Keywords: Land Economics/Use,
    Date: 2009–06
  37. By: Aslund, Olof (IFAU); Böhlmark, Anders (SOFI, Stockholm University); Nordström Skans, Oskar (IFAU)
    Abstract: The paper studies childhood migrants and examines how age at migration affects their ensuing integration at the residential market, the labor market, and the marriage market. We use population-wide Swedish data and compare outcomes as adults among siblings arriving at different ages in order to ensure that the results can be given a causal interpretation. The results show that the children who arrived at a higher age had substantially lower shares of natives among their neighbors, coworkers and spouses as adults. The effects are mostly driven by higher exposure to immigrants of similar ethnic origin, in particular at the marriage market. We also find some effects on educational attainment, employment rates and wages, although these effects are much more limited in magnitude. We also analyze children of migrants and show that parents' time in the host country before child birth matters, which implies that the outcomes of the social integration process are inherited. Inherited integration has a particularly strong impact on the marriage patterns of females.
    Keywords: immigration, integration, segregation, age at migration, siblings
    JEL: J12 J15 J13 J01
    Date: 2009–06
  38. By: David H. Autor; David Dorn
    Abstract: After a decade in which wages and employment fell precipitously in low-skill occupations and expanded in high-skill occupations, the shape of U.S. earnings and job growth sharply polarized in the 1990s. Employment shares and relative earnings rose in both low and high-skill jobs, leading to a distinct U-shaped relationship between skill levels and employment and wage growth. This paper analyzes the sources of the changing shape of the lower-tail of the U.S. wage and employment distributions. A first contribution is to document a hitherto unknown fact: the twisting of the lower tail is substantially accounted for by a single proximate cause--rising employment and wages in low-education, in-person service occupations. We study the determinants of this rise at the level of local labor markets over the period of 1950 through 2005. Our approach is rooted in a model of changing task specialization in which `routine' clerical and production tasks are displaced by automation. We find that in labor markets that were initially specialized in routine-intensive occupations, employment and wages polarized after 1980, with growing employment and earnings in both high-skill occupations and low-skill service jobs.
    JEL: E24 J24 J31 J62 O33
    Date: 2009–07

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