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on Urban and Real Estate Economics |
| By: | David C. Maré (Motu Economic and Public Policy Research); Daniel J. Graham (Centre for Transport Studies, Imperial College, London) |
| Abstract: | This paper analyses the relationship between firms’ multi-factor productivity and the effective employment density of the areas where they operate. Quantifying these agglomeration elasticities is of central importance in the evaluation of the wider economic benefits of transport investments. We estimate agglomeration elasticities using the Statistics New Zealand prototype Longitudinal Business Database: a firm-level panel covering the period 1999 to 2006. We estimate that an area with 10 percent higher effective density has firms with productivity that is 0.69 percent higher, once we control for the industry specific production functions and sorting of more productive firms across industries and locations. We present separate estimates of agglomeration elasticities for specific industries and regions, and examine the interaction of agglomeration with capital, labour, and other inputs. |
| Keywords: | Agglomeration, urban density, transport evaluation, productivity |
| JEL: | L25 R12 R3 R40 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:mtu:wpaper:09_06&r=ure |
| By: | Guiso, Luigi; Sapienza, Paola; Zingales, Luigi |
| 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. |
| Keywords: | foreclosure; moral constraint; mortgage; social constraint; strategic default |
| JEL: | D12 G18 G21 G33 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7352&r=ure |
| By: | Rajiv Sethi (Department of Economics,Barnard College,Columbia University and the Institute for Advanced Study); Rohini Somanathan (Department of Economics, Delhi School of Economics, Delhi, India) |
| Abstract: | How much of the observed segregation between black and white Americans can be attributed to income disparities between the two groups? We 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. Using the dissimilarity index as a measure of segregation and data on race and income from US metropolitan areas for 2000, we nd that the role played by racial income inequality in accounting for segregation is modest but varies signicantly across cities. Our work suggests that for cities that are relatively small or for those where the share of black households in the total population is small, it may be useful to adjust existing measures of dissimilarity to better capture the role of non-income factors in determining segregation. |
| Keywords: | Residential Segregation, Racial Income Disparities, Dissimilarity Index. |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:cde:cdewps:177&r=ure |
| By: | Randall Reback (Barnard College, Columbia University) |
| Abstract: | Recent empirical research has found that children’s non-cognitive skills play a critical role in their own success, that young children’s behavioral and psychological disorders can severely harm their future outcomes, and that disruptive students harm the behavior and learning of their classmates. Yet relatively little is known about wide-scale interventions designed to improve children’s behavior and mental health. This is the first nationally representative study of the provision, financing, and impact of school-site mental health services for young children. Elementary school counselors are school employees who provide mental health services to all types of students, typically meeting with students one-on-one or in small groups. It is particularly challenging to estimate the impact of these counselors on student outcomes, given counselors’ non-random assignment to schools. First, cross-state differences in policies provide descriptive evidence that students in states with more aggressive elementary counseling policies make greater test score gains and are less likely to report internalizing or externalizing problem behaviors compared to students with similar observed characteristics in similar schools in other states. Next, difference-in-differences estimates exploiting both the timing and the targeted-grade-levels of states’ counseling policy changes provide evidence that elementary counselors substantially influence teachers’ perceptions of school climate. The adoption of state-funded counselor subsidies or minimum counselorstudent ratios reduces the fraction of teachers reporting that their instruction suffers due to student misbehavior and reduces the fractions reporting problems with students physically fighting each other, cutting class, stealing, or using drugs. These findings imply that there may be substantial public and private benefits derived from providing additional elementary school counselors. |
| Keywords: | education, counselors, student behavior, mental health |
| JEL: | I22 I10 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:brn:wpaper:0904&r=ure |
| By: | Randall Reback (Barnard College, Columbia University) |
| Abstract: | Children’s non-cognitive skills, mental health, and behavior are important predictors of future earnings and educational attainment. Their behavior in the classroom also affects their peers’ behavior and achievement. There is limited prior evidence, however, concerning the impact of school resources on student behavior. Some elementary schools employ counselors whose primary purpose is to help improve students’ behavior, mental health, and non-cognitive skill acquisition. This paper estimates regression discontinuity models exploiting Alabama’s unique financing system for school counselors. Alabama fully subsidizes counselor appointments for all elementary schools, with the number of appointments based on schools’ prior year enrollments using discrete enrollment cutoffs. The results suggest that greater counselor subsidies reduce the frequency of disciplinary incidents but do not strongly influence mean student achievement test scores. Increases in counselors moderate relatively severe behavioral problems without necessarily improving systemic behavior affecting classroom learning. |
| Keywords: | education, counselors, mental health, discipline, regression discontinuity |
| JEL: | I22 I10 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:brn:wpaper:0903&r=ure |
| By: | Llano, Carlos (Departamento de Análisis Económico, Facultad de Ciencias Económicas y Empresariales, Universidad Autónoma de Madrid); Polasek, Wolfgang (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria); Sellner, Richard (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria) |
| Abstract: | Completing data sets that are collected in heterogeneous units is a quite frequent problem. Chow and Lin (1971) were the first to develop a united framework for the three problems (interpolation, extrapolation and distribution) of predicting times series by related series (the 'indicators'). This paper develops a spatial Chow-Lin procedure for cross-sectional and panel data and compares the classical and Bayesian estimation methods. We outline the error covariance structure in a spatial context and derive the BLUE for the ML and Bayesian MCMC estimation. Finally, we apply the procedure to Spanish regional GDP data between 2000-2004. We assume that only NUTS-2 GDP is known and predict GDPat NUTS-3 level by using socio-economic and spatial information available at NUTS-3. The spatial neighborhood is defined by either km distance, travel-time, contiguity and trade relationships. After running some sensitivity analysis, we present the forecast accuracy criteria comparing the predicted with the observed values. |
| Keywords: | Interpolation, Spatial panel econometrics, MCMC, Spatial Chow-Lin, Missing regional data, Spanish provinces, 'Polycentric-periphery' relationship |
| JEL: | C11 C15 C52 E17 R12 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:ihs:ihsesp:241&r=ure |
| By: | Yuliya Demyanyk; Iftekhar Hasan |
| Abstract: | In this article we analyze financial and economic circumstances associated with the U.S. subprime mortgage crisis and the global financial turmoil that has led to severe crises in many countries. We suggest that the level of cross-border holdings of long-term securities between the United States and the rest of the world may indicate a direct link between the turmoil in the securitized market originated in the United States and that in other countries. We provide a summary of empirical results obtained in several Economics and Operations Research papers that attempt to explain, predict, or suggest remedies for financial crises or banking defaults; we also extensively outline the methodologies used in them. The intent of this article is to promote future empirical research for preventing financial crises. |
| Keywords: | Subprime mortgage ; Financial crises |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwp:0904&r=ure |
| By: | Marco Alderighi (University of Valle d'Aosta, Italy.); Claudio A. Piga (Dept of Economics, Loughborough University) |
| Abstract: | This paper investigates the properties of two types of cost restrictions that guarantee the existence of an equilibrium in pure strategies in Bayesian spatial competition models with heterogenous firms. |
| Keywords: | Localized competition; market effciency, cost heterogeneity. |
| JEL: | L11 D61 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:lbo:lbowps:2009_09&r=ure |
| By: | Oliver Falck (Ifo Institute for Economic Research, Munich.); Michael Fritsch (University of Jena, School of Economics and Business Administration, and Max Planck Institute of Economics, and German Institute for Economic Research (DIW)); Stephan Heblich (Max Planck Institute of Economics, Jena; Entrepreneurship, Growth, and Public Policy Group) |
| Abstract: | An emerging literature on the geography of bohemians argues that a region's lifestyle and cultural amenities explain, at least partly, the unequal distribution of highly qualified people across space, which in turn, explains geographic disparities in economic growth. However, to date, there has been little or no empirical attempt to identify a causal relation. To identify the causal impact of bohemians on economic growth, we apply an instrumental variable approach using as an exogenous instrument the geographic distribution of bohemians prior to the Industrial Revolution in Germany. This distribution was primary the result of competition for prestige between courts and not of economic prosperity. Accordingly, the instrument is independent of today's regional economic development. Focusing on the concentration of highly skilled people today that is explained by the proximity to exogenous concentrations of bohemians, the observed local average treatment effect supports the hypothesis of a positive impact of bohemians on regional economic development. |
| Keywords: | Regional Growth, Human Capital, Bohemians, Instrumental Variables |
| JEL: | R11 J24 C31 |
| Date: | 2009–07–06 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2009-049&r=ure |
| By: | Russell Smyth; Ingrid Nielsen; Qingguo Zhai; Tiemin Liu; Yin Liu; C.Y. Tang; Zhihong Wang; Zuxiang Wang; Juyong Zhang |
| Abstract: | We examine the relationship between atmospheric pollution, water pollution, traffic congestion, access to parkland and personal well-being using a survey administered across six Chinese cities in 2007. In contrast to existing studies of the determinants of well-being by economists, which have typically employed single item indicators to measure well-being, we use the Personal Well-Being Index (PWI). We also employ the Job Satisfaction Survey (JSS) to measure job satisfaction, which is one of the variables for which we control when examining the relationship between environmental surroundings and personal well-being. Previous research by psychologists has shown the PWI and JSS to have good psychometric properties in western and Chinese samples. A robust finding is that in cities with higher levels of atmospheric pollution and traffic congestion, respondents report lower levels of personal well-being ceteris paribus. We find that a one standard deviation increase in suspended particles or sulphur dioxide emissions is roughly equivalent to a 12-13 percent reduction in average monthly income in the six cities. This result suggests that the personal well-being of China’s urban population can be enhanced if China were to pursue a more balanced growth path which curtailed atmospheric pollution. |
| Keywords: | China, Environment, Pollution, Personal Well-Being. |
| JEL: | A13 D60 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:2008-32&r=ure |
| By: | stone, joe/a.; bania, neil |
| Abstract: | Applying a Barro-style model of endogenous growth to a fifty-year panel of states from 1957 to 2007, We examine the extent to which expenditures on public education and infrastructure— together with the taxes necessary to support them— enhance or impede the steady-state growth of state and local economies, as measured by per capita personal income. Our findings suggest that the independent effect of tax expenditures on either public infrastructure or education alone is significantly negative, but the complementary effect of each on the other is positive enough to make their combined effect significantly positive— except at large scales, where we find diseconomies, consistent with the ‘growth hill’ predicted by theory. Policy effects are identified empirically using a recursive structure with very long lags, GMM/instrumental variables, and controls for both fixed and time-varying heterogeneity. Results are robust to a variety of alternative specifications. |
| Keywords: | growth human capital public infrastructure |
| JEL: | H4 H72 H00 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:16173&r=ure |
| By: | Dieter Gerdesmeier (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Barbara Roffia (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Hans-Eggert Reimers (Hochschule Wismar, Postfach 1210, D-23952 Wismar, Germany.) |
| Abstract: | This paper contributes to the literature on the properties of money and credit indicators for detecting asset price misalignments. After a review of the evidence in the literature on this issue, the paper discusses the approaches that can be considered to detect asset price busts. Considering a sample of 17 OECD industrialised countries and the euro area over the period 1969 Q1 – 2008 Q3, we construct an asset price composite indicator which incorporates developments in both the stock price and house price markets and propose a criterion to identify the periods characterised by asset price busts, which has been applied in the currency crisis literature. The empirical analysis is based on a pooled probit-type approach with several macroeconomic monetary, financial and real variables. According to statistical tests, credit aggregates (either in terms of annual changes or growth gap), changes in nominal long-term interest rates and investment-to-GDP ratio combined with either house prices or stock prices dynamics turn out to be the best indicators which help to forecast asset price busts up to 8 quarters ahead. JEL Classification: E37, E44, E51. |
| Keywords: | Asset prices, house prices, stock prices, financial crisis, asset price busts, probit models, monetary aggregates, credit aggregates. |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:200901068&r=ure |
| By: | Kenmei Tsubota (Institute of Economic Research, Kyoto University) |
| Abstract: | TThis paper examines the role of trade union and the type of wage bargainings in economic geography model. In our setting, wage bargaining is held between immobile workers and mobile entrepreneurs who decide the location of their firm. It is shown that stronger trade unions in both regions would put a stronger pressure toward agglomeration of firms. This is due to the fact that the stronger bargaining power of trade union makes home market effect larger. Under core-periphery distribution of firms, this effect can act the role as anchorage of firms. Stronger trade unions in home region can keep the firms remain in their region. Moreover, we extend to several employment environments, which are the outside option of workers. We show that differences in bargaining structures and employment environments could affect the stability of symmetrically distributed firms, namely symmetry break point. We show that while unemployment rate acts as a centripetal force, not only the degree of bargaining power of trade union but also unemployment benefit can play as a centrifugal force. A key message of the paper is that generous unemployment benefit and higher trade union make the distribution of firms more uneven and sustainable. |
| Keywords: | Labour market rigidity, Regional Unemployment, Location of firms, Anchorage effect of trade union |
| JEL: | F15 F16 J50 R12 R38 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:kyo:wpaper:675&r=ure |
| By: | Albert Solé-Ollé (Universitat de Barcelona); Paula Salinas (Universitat de Barcelona) |
| Abstract: | Several arguments derived from fiscal federalism theory suggest that decentralization may lead to improved levels of efficiency in the provision of public goods and services. The aim of this study is to examine this hypothesis by evaluating the effects of decentralization on educational outcomes in Spain. These are measured using a survival rate, defined as the ratio between the number of students who enrolled in upper-secondary (non-compulsory) education and the number of students enrolled in the final year of lower-secondary (compulsory) education during the previous academic year. We use a panel data set comprising the 50 provinces of Spain for the years 1978 to 2005, a period that covers the entire process of decentralization. Since education competences were devolved to the regions at different points in time, we can estimate the effects of these reforms by applying the differences-in-differences method and by using the non-decentralized autonomous regions as the comparison group. We find that decentralization in Spain had a positive impact on educational outcomes when pupils on vocational training programmes are not taken into account, and that the richer the region is the more marked the effect becomes. However, this improvement in educational outcomes is achieved at the expense of enrolment in vocational training programmes. These effects might reflect a better match between population preferences and educational policies consequent upon decentralization. |
| Keywords: | Decentralization, Policy Evaluation, Education |
| JEL: | H11 H43 H52 I28 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2009/7/doc2009-10&r=ure |
| By: | Brügger, Beatrix (University of Lausanne); Lalive, Rafael (University of Lausanne); Zweimüller, Josef (University of Zurich) |
| Abstract: | This paper studies the role of culture in shaping unemployment outcomes. The empirical analysis is based on local comparisons across a language barrier in Switzerland. This Röstigraben separates cultural groups, but neither labor markets nor political jurisdictions. Local contrasts across the language border identify the role of culture for unemployment. Our findings indicate that differences in culture explain differences in unemployment duration on the order of 20%. Moreover, we find that horizontal transmission of culture is more important than vertical transmission of culture and that culture is about as important as strong changes to the benefit duration. |
| Keywords: | culture, cultural transmission, unemployment duration, regional unemployment |
| JEL: | J21 J64 Z10 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4283&r=ure |
| By: | Dominika Kalinowska; Karl W. Steininger |
| Abstract: | The authors apply a computable general equilibrium (CGE) modeling framework to carry out a two-country comparison for Austria and Germany assessing the impact of road charging (RC). The pricing policy measure is introduced for the private motorized transport mode and applies to the overall road network. To derive and compare distributional effects of passenger car RC, the mode-specific travel demand of private households is integrated into the CGE model. Furthermore, the modeling framework accounts for different household categories with respect to disposable net income and the corresponding travel demand profiles introduced in terms of behavioral mobility parameters as well as household travel expenditures. Comparing the country-specific results, we find country-specific differences in the impact of RC on household categories, as well as similarities. The differences that we find indicate the importance of particular parameters for the evaluation of infrastructure pricing policy reforms. We can relate differences to prevalent country-specific differences in sociodemographic characteristics, land use structure, territorial population distribution, as well as macroeconomic indicators. To add substance to the two-country impact assessment, a sensitivity analysis is carried out, introducing different RC revenue use schemes. We find differences in distributional effects under equity concerns to be closely related to the revenue use pattern as well as to country- and household-specific travel demand profiles. |
| Keywords: | Computable general equilibrium model, redistributive effects, road charging |
| JEL: | D58 H23 R48 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp907&r=ure |