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on Urban and Real Estate Economics |
| By: | Fry, J. M. |
| Abstract: | Using methods originating from statistical physics we model bubbles in English house prices. It is found that there was a nationwide housing bubble 2002-2007. Typically prices were 30-40% over-valued and fell around 20%. London is atypical in that the level of over-pricing was lower, only around 20%, and experienced a drop in prices of only around 15%. There is some suggestion of contagious effects, with the bubble in London affecting prices in Yorkshire and the North. |
| Keywords: | financial crashes; super-exponential growth; illusion of certainty; contagion; housing-bubble; Enlish house prices |
| JEL: | C53 C0 R11 C1 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17687&r=ure |
| By: | Matthias Cinyabuguma (UMBC); Virginia McConnell (UMBC) |
| Abstract: | This paper suggests a cause of low density in urban development or urban sprawl that has not been given much attention in the literature. There have been a number of arguments put forward for market failures that may account for urban sprawl, including incomplete pricing of infrastructure, environmental externalities, and unpriced congestion. The problem analyzed here is that urban growth creates benefits for an entire urban area, but the costs of growth are borne by individual neighborhoods. An externality problem arises because existing residents perceive the costs associated with the new residents locating in their neighborhoods, but not the full benefits of new entrants which accrue to the city as a whole. The result is that existing residents have an incentive to block new residents to their neighborhoods, resulting in cities that are less dense than is optimal, or too sprawling. The paper models several different types of urban growth, and examines the optimal and local choice outcomes under each type. In the first model, population growth is endogenous and the physical limits of the city are fixed. The second model examines the case in which population growth in the region is given, but the city boundary is allowed to vary. We show that in both cases the city will tend to be larger and less dense than is optimal. In each, we examine the sensitivity of the model to the number of neighborhoods and to the size of infrastructure and transportation costs. Finally, we examine optimal subsidies and see how they compare to current policies such as impact fees on new development. |
| Keywords: | Externalities, Urban Growth, Optimality, Policies, Taxation |
| JEL: | H23 R11 D60 H2 |
| Date: | 2009–08–24 |
| URL: | http://d.repec.org/n?u=RePEc:umb:econwp:09106&r=ure |
| By: | Zhang, Junfu (Clark University) |
| Abstract: | This paper presents a Schelling-type checkerboard model of residential segregation formulated as a spatial game. It shows that although every agent prefers to live in a mixed-race neighborhood, complete segregation is observed almost all of the time. A concept of tipping is rigorously defined, which is crucial for understanding the dynamics of segregation. Complete segregation emerges and persists in the checkerboard model precisely because tipping is less likely to occur to such residential patterns. Agent-based simulations are used to illustrate how an integrated residential area is tipped into complete segregation and why this process is irreversible. This model incorporates insights from Schelling's two classical models of segregation (the checkerboard model and the neighborhood tipping model) and puts them on a rigorous footing. It helps us better understand the persistence of residential segregation in urban America. |
| Keywords: | residential segregation, tipping, checkerboard model |
| JEL: | C72 C73 D62 R13 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4413&r=ure |
| By: | Ronald Jean Degen (International School of Management Paris) |
| Abstract: | This paper examines the financial crisis in 2007-9 that was more severe than previous crashes, including the dot-com crash of 2001 and the market crash of 1987 (with the exception of the Great Depression of 1929). This severity was due to excessively risky speculative bets taken by the executives of financial institutions. When the ?housing bubble? burst, these speculative bets, which were based on the U.S. housing market and the subprime mortgages, triggered the financial systemic failures of the U.S. in June 2007 (the subprime mortgage crisis) and September 2008 (the shadow-banking crisis). The systemic financial failure of September 2008 (the shadow-banking crisis) was greatly amplified by excessively risky speculations and this led to a rapid deterioration of the entire global economy. This paper examines the potential for moral hazard in the financial system leading up to this crisis, and attempts to determine if this was a motivating factor in these risky bets. |
| Keywords: | moral hazard, financial crisis of 2007-9, burst of the housing bubble, subprime mortgages crisis, shadow-banking crisis |
| JEL: | L0 M0 M1 |
| Date: | 2009–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:pil:wpaper:46&r=ure |
| By: | Judith K. Hellerstein; Melissa McInerney; David Neumark |
| Abstract: | We study the relationship between Hispanic employment and location-specific measures of the distribution of jobs. We find that it is only the local density of jobs held by Hispanics that matters for Hispanic employment, that measures of local job density defined for Hispanic poor English speakers or immigrants are more important, and that the density of jobs held by Hispanic poor English speakers are most important for the employment of these less-skilled Hispanics than for other Hispanics. This evidence is consistent with labor market networks being an important influence on the employment of less-skilled Hispanics, as is evidence from other sources. We also find that in MSAs where the growth rates of the Hispanic immigrant population have been highest, which are also MSAs with historically low Hispanic populations, localized job density for low-skilled jobs is even more important for Hispanic employment than in the full sample. We interpret this evidence as consistent with the importance of labor market networks, as strong labor market networks are likely to have been especially important in inducing Hispanics to migrate, and because of these networks employment in these “new immigrant†cities is especially strongly tied to the local availability of jobs. |
| JEL: | J1 J61 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15398&r=ure |
| By: | Mohamad Fahmi (Department of Economics, Padjadjaran University) |
| Abstract: | Public schools in Indonesia are widely perceived have better inputs and to be superior to private schools. Public schools also benefit advantages of high-scoring peer effect as entry to some junior secondary public schools in urban area is based on national score test in elementary school. In this paper, I attempt to confirm the perception of superiority of public school in Indonesia by comparing the yearly earnings of four types of schools group; Public, Private Secular, Private Islam, and Private Christian. I use a large-scale longitudinal observation of individual and household level on socioeconomic and health survey, Indonesia Family Life Survey (IFLS) 2000 to estimate the effectiveness junior secondary education in Indonesia. To correct for sample selection bias, I use the two-step method proposed by Bourguignon et al. As a result of insignificant all selectivity bias coefficients, I use the OLS estimation to calculate the earnings decompositions. The insignificant selection bias coefficients suggest that the OLS estimation is unbiased. I use the Blinder-Oaxaca decomposition with Reimers’ decomposition technique to estimate earning differential between public and three types of private school graduates. The results of earnings decomposition from OLS estimation, suggest that earning of people who graduate from public school are 25 per cent and 35.2 per cent higher than their counterparts from private nonreligious and private Islam. On the other hand, student who schooled at private Christian school enjoys 0.28 per cents higher earnings that public. |
| Keywords: | Parent choice, Education, School effectiveness, earnings, Indonesia |
| JEL: | J31 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:unp:wpaper:200914&r=ure |
| By: | Anas, Alex; Timilsina, Govinda R.; Zheng, Siqi |
| Abstract: | Using a nested multinomial logit model of car ownership and personal travel in Beijing circa 2005, this paper compares the effectiveness of different policy instruments to reduce traffic congestion and CO2 emissions. The study shows that a congestion toll is more efficient than a fuel tax in reducing traffic congestion, whereas a fuel tax is more effective as a policy instrument for reducing gasoline consumption and emissions. An improvement in car efficiency would also reduce congestion, fuel consumption, and CO2 emissions significantly; however, this policy benefits only richer households that own a car. Low-income households do better under the fuel tax policy than under the efficiency improvement and congestion toll policies. The congestion toll and fuel tax require the travel cost per mile to more than triple. The responsiveness of aggregate fuel and CO2 are, approximately, a 1 percent drop for each 10 percent rise in the money cost of a car trip. |
| Keywords: | Transport Economics Policy&Planning,Airports and Air Services,Roads&Highways,Transport and Environment,Transport in Urban Areas |
| Date: | 2009–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5068&r=ure |
| By: | John Kiff |
| Abstract: | Klyuev (2008) concluded that the Canadian market for housing finance is highly advanced and sophisticated, but financing options were somewhat limited, particularly at terms longer than five years. This paper argues that the paucity of longer-term loans is caused by a five-year maturity cap on government-guaranteed deposit insurance, and a prepayment penalty limit on residential mortgage loans in the Interest Act. That said, the availability and cost of residential loans for prime borrowers are comparable to those in the United States. |
| Keywords: | Bank regulations , Banking sector , Borrowing , Canada , Cross country analysis , Financial systems , Housing , Interest rates , Loans , United States , |
| Date: | 2009–06–19 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:09/130&r=ure |
| By: | Tscharaktschiew, Stefan; Hirte, Georg |
| Abstract: | Households in real cities are heterogeneous regarding their size and composition. An aspect usually neglected in urban models used to study economic and policy issues that arise in today's cities. We develop an urban general equilibrium model that takes a more complex household structure explicitly into account. The model is based on the single consumer type model of Anas and Xu (1999) or Anas and Rhee (2006) and treats the interactions of urban product, labor and land markets as well as linkages between city firms and different consumer types living in different household structures. Households differ not only in endowments, preferences and their valuation in regard to different travel modes, but also in size and the composition regarding their members. The implementation of a more complex household structure then allows studying a broad range of further urban economic issues, which treat different household structures differently |
| Keywords: | urban economics; general equilibrium; household structure; location choice |
| JEL: | R13 R12 R20 R14 |
| Date: | 2009–06–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17697&r=ure |
| By: | Jérôme Vicente (LEREPS - Laboratoire d'Etudes et de Recherche sur l'Economie, les Politiques et les Systèmes Sociaux. - Université des sciences socailes de Toulouse); Raphaël Suire (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes I - Université de Caen) |
| Abstract: | One of the most convincing explanations papers generally provide concerning clusters in knowledge-based economies refers to the geographically bounded dimension of knowledge spillovers. Here we shall underline that location decision externalities precede local knowledge spillovers in the explanation of cluster aggregate efficiency, which thus requires us to focus on the sequential process of location and the nature of interdependences in location decision-making. To that end, we mean to associate cluster emergence with the formation of locational norms, and to study the critical parameters of their stability. These parameters relate to the type of decision externalities among more or less cognitively distant firms, which influences the weight and the resulting ambivalent role of knowledge spillovers at the aggregate level of clusters. We suggest two theoretical propositions which we test within a simple and general norm location dynamics modeling framework. We then proceed to discuss the results so obtained by comparing them with an emerging related literature based on the life cycle and viability of clusters |
| Keywords: | clusters, location under decision externalities, cognitive distance, knowledge spillovers |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-00418539_v1&r=ure |
| By: | Rikard H. Eriksson |
| Abstract: | This paper aims to shed some light on the influence of geographical proximity on both intra- and inter-industry spillovers by elaborating on the geographical dimension of both localised spillovers and inter-firm knowledge flows. By means of a unique longitudinal micro-database with information on all plants and employees in Sweden, both plant-specific agglomeration measurements and labour markets at various distances from each of the 8,313 plants in the sample were created. OLS-regressions were run to account for what type of co-located activities that is most beneficial to productivity growth of plants between 2001 and 2003; how different types of knowledge flows – in and out from the plant – affect performance, and finally; how geographical proximity influences the effects of both localised spillovers and knowledge flows. The empirical results indicate that it is not possible to establish whether either intra- or inter-industry spillovers are most beneficial unless the geographical dimension is considered. This is because neither too much nor too little proximity (measured as both geographical and cognitive proximity) between co-located activities is likely to produce significant localised spillovers. This seems also to be the case when assessing more directly the impacts of inter-plant knowledge flows via labour mobility – only knowledge flows that are complementary to the existing knowledge base of plants, and neither characterised by too much nor too little geographical proximity, affect plant performance positively. Concerning the outflows of skills, the results indicate that it is less harmful for the dispatching plant if the former employee remains within the local milieu as compared to leaving for a job in another part of the economy. |
| Keywords: | Agglomerations; Knowledge Spillovers; Labour Mobility; Plant Performance; Geographical Pro |
| JEL: | R11 Q12 O18 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:aal:abbswp:09-01&r=ure |
| By: | Hott, Christian (Swiss National Bank) |
| Abstract: | A comparison of fundamental house prices with actual prices indicates that house prices fluctuate more than fundamentally justified. This fact is very hard to explain with standard rational agent models. This paper develops a housing market model that allows to examine the price effects of various kinds of agents’ expectations. In this framework I we show that the consideration of behavioural aspects like herding behaviour, speculation and momentum trading can help to explain actual house price fluctuations. Following the different approaches, agents overreact to fundamentals and are influenced by past price movements and returns. |
| Keywords: | House Prices; Bubbles; Investor Behaviour |
| JEL: | G11 G12 R21 |
| Date: | 2009–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:snbwpa:2009_005&r=ure |
| By: | Kranich, Jan |
| Abstract: | This paper proposes a model of urban agglomeration in conjunction with imperfect competition and endogenous product R\&D of firms. The quality of differentiated manufacturing goods is a result of R\&D services provided by research firms. Sectoral interactions are subject to spatially dependent transaction costs and (knowledge) spillover externalities. The paper analyzes the existence of fundamental city patterns with respect to R\&D intensity and the degree of localization in knowledge production. The model features three equilibrium formations: a monocentric, a mixed, and a perfectly integrated pattern, whereas the R\&D intensity always increases towards the city center. However, product quality and the corresponding R\&D expenditures of firms are not necessarily increasing with the city size; a result, which also renders decisive implications of local innovation policy. |
| Keywords: | Bid-rent, Land Use, R\&D, Externalities |
| JEL: | R1 R14 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:han:dpaper:dp-430&r=ure |
| By: | Morimitsu Kurino (Max Planck Institute of Economics, Jena, Germany) |
| Abstract: | Many real-life applications of house allocation problems are dynamic. For example, in the case of on-campus housing for college students, each year freshmen apply to move in and graduating seniors leave. Each student stays on campus for a few years only. A student is a "newcomer" in the beginning and then becomes an "existing tenant". Motivated by this observation, we introduce a model of house allocation with overlapping agents. In terms of dynamic mechanism design, we examine two representative static mechanisms of serial dictatorship (SD) and top trading cycles (TTC), both of which are based on an ordering of agents and give an agent with higher order an opportunity to obtain a better house. We show that for SD mechanisms, the ordering that favors existing tenants is better than the one that favors newcomers in terms of Pareto efficiency. Meanwhile, this result holds for TTC mechanisms under time-invariant preferences in terms of Pareto efficiency and strategy-proofness. We provide another simple dynamic mechanism that is strategy-proof and Pareto efficient. |
| Keywords: | house allocation, overlapping agents, dynamic mechanism, top trading cycles, serial dictatorship |
| JEL: | C71 C78 D71 D78 |
| Date: | 2009–09–25 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2009-075&r=ure |
| By: | Salotti, Simone |
| Abstract: | This article investigates how wealth and capital gains affected household consumption in the USA in the period 1989-2004. The empirical evidence brought so far by a large literature that investigates the role of wealth shocks on consumption is mixed, due to the low quality of the data more readily available. We use a statistical matching procedure to create our own unique dataset, merging data from the Consumer Expenditure Survey and the Survey of Consumer Finances. The high quality data that result from this operation allow us to perform a detailed analysis on the mechanism of the wealth effect. We divide between durables and non durables consumption, and we also investigate the roles of the different components of household wealth, both gross and net. Our estimates indicate that there is a significant tangible wealth effect, and its economic importance lies in the low range of the estimates of the previous empirical literature. Decomposing tangible wealth in the house of residence and other real estate leads us to conclude that both contribute to the total wealth effect, but the former is quantitatively more important. On the contrary, financial wealth seems to have no significant effects on consumption. This last finding tends to confirm the evidence found in a number of previous studies that use both micro and macro-level data. Interestingly, the effects of tangible wealth on consumption disappears in 2004, maybe because US households perceived that the rising property prices due to the housing bubble were not permanent, thus they did not modify savings. The estimation of the model with a Pooled OLS on the repeated cross sections confirms the initial findings, and, allowing for some interaction terms, permits a better understanding of the role played by aged people. The importance of tangible wealth is confirmed by this final estimation. |
| Keywords: | Consumption; Household Wealth; Wealth Effect; Statistical Matching |
| JEL: | D12 E21 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17732&r=ure |
| By: | Kolko, Jed (Public Policy Institute of California); Neumark, David (University of California, Irvine) |
| Abstract: | We assess a prominent argument for local economic policies that favor locally-owned businesses – namely, that locally-owned firms are more likely to internalize the costs to the community of decisions to reduce employment and hence help to insulate cities from adverse economic shocks. We test this argument by examining how establishment-level employment responses to economic shocks are affected by establishment ownership. We find evidence hat some types of local ownership do insulate regions from economic shocks, although the clearest benefits do not come from small, independent businesses, but instead from corporate headquarters and, to a lesser extent, from small, locally-owned chains. |
| Keywords: | employment stability, employment shocks, local ownership |
| JEL: | R11 R38 J23 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4415&r=ure |
| By: | Nicolas Debarsy (CERPE - Centre de Recherches en Economie Régionale et Politique Economique - Université de Namur); Cem Ertur (LEO - Laboratoire d'économie d'Orleans - CNRS : UMR6221 - Université d'Orléans) |
| Abstract: | This paper derives several Lagrange Multiplier statistics and the correspondinglikelihood ratio statistics to test for spatial autocorrelation in a fixed effectspanel data model. These tests allow discriminating between the two main typesof spatial autocorrelation which are relevant in empirical applications, namelyendogenous spatial lag versus spatially autocorrelated errors. In this paper, fivedifferent statistics are suggested. The first one, the joint test, detects the presenceof spatial autocorrelation whatever its type. Hence, it indicates whetherspecific econometric estimation methods should be implemented to account forthe spatial dimension. In case they need to be implemented, the other four testssupport the choice between the different specifications, i.e. endogenous spatiallag, spatially autocorrelated errors or both. The first two are simple hypothesistests as they detect one kind of spatial autocorrelation assuming the otherone is absent. The last two take into account the presence of one type of spatialautocorrelation when testing for the presence of the other one. We use themethodology developed in Lee and Yu (2008) to set up and estimate the generallikelihood function. Monte Carlo experiments show the good performance ofour tests. Finally, as an illustration, they are applied to the Feldstein-Horiokapuzzle. They indicate a misspecification of the investment-saving regressiondue to the omission of spatial autocorrelation. The traditional saving-retentioncoefficient is shown to be upward biased. In contrast our results favor capitalmobility. |
| Keywords: | Testing ; Spatial ; Autocorrelation ; Fixed ; Effects ; Panel Data Model |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00414133_v1&r=ure |
| By: | Pau Rabanal; Oriol Aspachs-Bracons |
| Abstract: | Since Spain joined the EMU, two main important factors behind the housing boom appear to be the decrease of nominal interest rates and demographic factors. In this paper we estimate a New Keynesian model of a currency area, using data for Spain and the rest of the EMU to study the importance of those factors. We also examine the role of different rigidities and find that labor market frictions are crucial to explain main features of the data. On the other hand, financial frictions that impose a collateral constraint on borrowing do not appear to be relevant. |
| Date: | 2009–09–21 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:09/203&r=ure |
| By: | Andrabi, Tahir; Das, Jishnu; Khwaja, Asim Ijaz; Zajonc, Tristan |
| Abstract: | Evaluations of educational programs commonly assume that what children learn persists over time. The authors compare learning in Pakistani public and private schools using dynamic panel methods that account for three key empirical challenges to widely used value-added models: imperfect persistence, unobserved student heterogeneity, and measurement error. Their estimates suggest that only a fifth to a half of learning persists between grades and that private schools increase average achievement by 0.25 standard deviations each year. In contrast, estimates from commonly used value-added models significantly understate the impact of private schools’ on student achievement and/or overstate persistence. These results have implications for program evaluation and value-added accountability system design. |
| Keywords: | Education For All,Tertiary Education,Secondary Education,Primary Education,Teaching and Learning |
| Date: | 2009–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5066&r=ure |
| By: | John A. Maluccio; Alexis Murphy; Ferdinando Regalia |
| Abstract: | We combine administrative and survey data to examine the effect of a conditional cash transfer program on grade progression in Nicaragua from 1999–2003, putting the spotlight on initial supply side conditions and the extent to which they conditioned program effectiveness. Our principal findings are that the program had a substantial effect on grade progression and that these increased over time, even after the original intervention group stopped receiving demand-side transfers. Half of the estimated program effect on progression is accounted for by a reduction in the dropout and repetition rates of beneficiary children who were already in school when the program began. Supply side conditions were important and several of them led to heterogeneous program impacts. The program was more effective in areas with autonomous schools, suggesting flexibility at the school level better enabled schools to respond to changing demand conditions. At the same time, it was also more effective in intervention areas with poor initial supply conditions as measured by indicators of grade availability and distance to school. These were the areas with lower enrollments and grade progression before the program, and thus more room for improvement. With the analysis of child schooling in hand, we then turn to assess the “effect” of the program on school supply conditions. It is precisely in the intervention areas with poor initial school supply conditions, that the program was relatively more effective in improving school supply as measured by grade availability, number of sessions per day and number of teachers. The results suggest that initial school supply conditions do not represent insurmountable obstacles for the implementation of a conditional cash transfer program, as long as these constraints are identified at the planning stage and mechanisms put in place to deal with them during the execution stage. Our results also underscore the importance of carefully considering the integrated (demand and supply) nature of conditional-cash-transfer programs, something often overlooked in the design of these interventions and, particularly, in the impact evaluation literature. |
| Keywords: | impact evaluation, conditional cash transfer, schooling, supply side |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:mdl:mdlpap:0908&r=ure |
| By: | Ramos, Raul (University of Barcelona); Surinach, Jordi (University of Barcelona); Artís, Manuel (University of Barcelona) |
| Abstract: | The paper analyses the link between human capital and regional economic growth in the European Union. Using various indicators of human capital calculated from census microdata, we conclude that the recent economic performance of European regions is associated with an increase in overeducation. In fact, measures of educational mismatch seem to be more strongly connected to regional economic performance than do other traditional measures of human capital stock. |
| Keywords: | regional economic growth, human capital, educational mismatch, overeducation |
| JEL: | O18 O47 R23 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4453&r=ure |
| By: | Caitlin Knowles Myers; Grace Close; Laurice Fox; John William Meyer; Madeline Niemi |
| Abstract: | Higher retail prices are frequently cited as a cost of living in poor, minority neighborhoods. However, the empirical evidence, which primarilycomes from the grocery gap literature on food prices, has been mixed. This study uses new data on retail gasoline prices in three major U.S.cities to provide evidence on the relationship between neighborhood characteristics and consumer prices. We find that gasoline prices do not varygreatly with neighborhood racial composition, but that prices are higher in poor neighborhoods. For a 10 percentage point increase in the percentof families with incomes below the poverty line relative to families with incomes between 1 and 2 times the poverty line, retail gasoline prices are estimated to increase by an average of 0.70 percent. This differential is reduced to 0.22 percent once we add controls for costs, competition, and demand. Finally, we provide evidence that the remaining, small, price differential for poor neighborhoods is likely the result of traditional price discrimination in response to less competition and/or more inelastic demand in these locations. |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:mdl:mdlpap:0906&r=ure |
| By: | Kato, Takao (Department of Economics, Aarhus School of Business); Shu, Pian (Department of Economics, Aarhus School of Business) |
| Abstract: | Using weekly data for defect rates (proportion of defective output) for all weavers in a Chinese textile firm during a 12 months (April 2003 - March 2004) period, we provide some of the first rigorous evidence on the presence and nature of peer effects in the manufacturing workplace. First, a worker is found to put in more effort and improve her performance when she is working with more able teammates. Second, by exploiting the well-documented fact that an exogenouslyformed strong divide between urban resident workers and rural migrant workers exists in firms in Chinese cities, we provide novel evidence on the interplay between social networks (urban resident group and rural migrant group) and peer effects. Specifically, we find that a worker puts in more effort when she is working with more able outgroup teammates but not when working with more able ingroup teammates, pointing to intergroup competition as a powerful source of the peer effects. Such peer effects across the social network, combined with the presence of incentive to outperform teammates at this firm, are largely consistent with recent experimental evidence on the important role that group identities play in facilitating altruistic behaviors. |
| Keywords: | peer effects in the workplace; social networks; intergroup competition |
| JEL: | J24 |
| Date: | 2009–08–07 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:aareco:2009_012&r=ure |
| By: | Hott, Christian (Swiss National Bank) |
| Abstract: | The willingness of banks to provide funding for real estate purchases depends on the creditworthiness of their borrowers. Beside other factors, the creditworthiness of borrowers depends on the development of real estate prices. Real estate prices, in turn, depend on the demand for homes which is influenced by the willingness of banks to provide funding for real estate purchases. In this paper I develop a theoretical model which describes and explains this circular relationship. Using this model, I show how different kinds of expectation formations can lead to fluctuations of real estate prices. Furthermore, I show that banks make above average profits in the upswing phase of the real estate cycle but suffer high losses when the market turns. |
| Keywords: | Credit Cycle; Real Estate Prices; Bubbles |
| JEL: | E51 G12 G21 |
| Date: | 2009–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:snbwpa:2009_008&r=ure |
| By: | Nuno Crespo; Maria Paula Fontoura |
| Abstract: | There is scant evidence on the determinant factors of structural similarity between geographical spaces; moreover, it has been produced considering only the national level. The present study provides evidence on this topic at the regional level, based on the analysis of 275 Portuguese counties. The results obtained confirm the importance of several explanatory factors, suggesting that the structural similarity between Portuguese counties increases with geographical proximity, the existence of a shared boundary, the similarity of factor endowments in terms of physical and human capital and the similarity in terms of economic centrality and market dimension. Key words: productive structure, Portugal, structural similarity, factor endowments, economic geography |
| JEL: | R11 R12 R30 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:ise:isegwp:wp282009&r=ure |
| By: | Andersson, Fredrik (U.S. Department of the Treasury); Burgess, Simon (University of Bristol); Lane, Julia (National Science Foundation) |
| Abstract: | Substantial immigrant segregation in the United States, combined with the increase in the share of the U.S. foreign-born population, have led to great interest in the causes and consequences of immigrant concentration, including those related to the functioning of labor markets. This paper provides robust evidence that both the size and the quality of an immigrant enclave affects the labor market outcomes of new immigrants. We develop new measures of the quality, or information value, of immigrant networks by exploiting data based on worker earnings records matched to firm and Census information. We demonstrate the importance of immigrant employment links: network members are much more likely than other immigrants to be employed in the same firm as their geographic neighbors. Immigrants living with large numbers of employed neighbors are more likely to have jobs than immigrants in areas with fewer employed neighbors. The effects are quantitatively important and robust under alternative specifications. For example, in a high value network – one with an average employment rate in the 90th percentile – a one standard deviation increase in the log of the number of contacts in the network is associated with almost a 5% increase in the employment rate. Earnings, conditional on employment, increase by about 0.7%. |
| Keywords: | social networks, immigrant enclaves, labor market intermediaries |
| JEL: | J61 J20 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4423&r=ure |
| By: | Brücker, Herbert (IAB, Nürnberg); Fachin, Stefano (University of Rome La Sapienza); Venturini, Alessandra (University of Turin) |
| Abstract: | This paper examines the impact of the immigration of foreigners on domestic labour mobility. Since David Card's seminal study on the regional labour market impact of the Mariel Boatlift it is controversial whether domestic labour mobility equilibrates economic conditions across cities and regions. However, there is little or no evidence that natives leave destinations where migrants tend to cluster. In this paper we reconcile the existing evidence by taking another route. We analyze whether the immigration of foreigners replaces domestic mobility from poor to rich regions. We focus on Italy, which is characterized by market differences in earnings between the North and the South. Based on a panel cointegration approach we exploit the variance of international and internal migration over time for identifying potential displacement effects. The main finding is that, conditional on unemployment and wage differentials, the share of foreign workers in the labour force of the destination regions discourages internal labour mobility significantly. As a consequence, spatial correlation studies which use the variance of the foreigner share across region for identifying the wage and employment effects of immigration, tend to understate the actual immigration impact. |
| Keywords: | international migration, domestic migration, labour markets, panel cointegration, Italy |
| JEL: | F22 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4438&r=ure |
| By: | Schindler, Felix; Rottke, Nico; Füss, Roland |
| Abstract: | This paper conducts tests of the random walk hypothesis and market efficiency for 14 national public real estate markets. Random walk properties of equity prices influence the return dynamics and determine the trading strategies of investors. To examine the stochastic properties of local real estate index returns and to test the hypothesis that public real estate stock prices follow a random walk, the single variance ratio tests of Lo and MacKinlay (1988) as well as the multiple variance ratio test of Chow and Denning (1993) are employed. Weak-form market efficiency is tested directly using non-parametric runs tests. Empirical evidence shows that weekly stock prices in major securitized real estate markets do not follow a random walk. The empirical findings of return predictability suggest that investors might be able to develop trading strategies allowing them to earn excess returns compared to a buy-and-hold strategy. |
| Keywords: | Securitized real estate,weak-form market efficiency,random walk hypothesis,variance ratio tests,runs test,trading strategies |
| JEL: | G12 G14 G15 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:09054&r=ure |
| By: | Kai Kohlberger (Financial Services Authority); Richard Johnson (Financial Services Authority) |
| Abstract: | This paper describes economic research conducted for the second stage of the Mortgage Effectiveness Review. Mortgage Conduct of Business (MCOB) regulation came into effect in the UK on 31 October 2004. This paper tests one of the intended long-term benefits of MCOB regulation to consumers – ‘Do consumers take out suitable and good value mortgages?’ – focusing on the mortgage market for borrowers with impaired credit histories. The rate of mortgage arrears and repossessions has typically been higher among these borrows than in the prime market. Also, such mortgages are almost exclusively available through advisers that customers rely on to identify the best option for them.1 We use arrears, or shortfalls on two consecutive monthly mortgage bills by borrowers, as a measure of how suitable the mortgage contracts were when they were originated. We did not detect a systematic effect of MCOB on arrears rates in the sample. There was no visible step change in arrears rates around the time of MCOB and we estimate in our preferred regression model an effect of MCOB that is very small and close to zero. The sign on the MCOB variable is also not stable to changes in the controls used. We interpret this finding as a lack of consistent evidence for an effect of MCOB on the rate of arrears. Since arrears rates were used as a measure for suitability, this means that we could not identify an appreciable impact of MCOB on suitability. |
| Keywords: | mortgages, financial regulation, suitability |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:fsa:occpap:35&r=ure |
| By: | Malighetti, G; Martini, G; Paleari, S; Redondi, R |
| Abstract: | In this paper we study the relationship between airport efficiency and two factors: an airport’s centrality in the EU network, and the intensity of competition from alternative airports in the same catchment area. We apply a two-stage econometric model based on the Simar & Wilson (2007) bootstrap procedure to a balanced sample of 57 European airports. We also design and compute our own measures of airport centrality and competition. The results show that efficiency is positively related to centrality in the European network, as measured by a weighted sum of minimal paths passing through the airport in question. The intensity of competition between airports also has a positive effect on efficiency. Our analysis suggests that air transportation policies should focus on increasing competition within important catchment areas (e.g., by investing in infrastructure facilitating access to alternative airports) and enhancing the connectivity of the EU network (e.g., by subsidizing new point-to-point connections between airports with capacity to spare). |
| Keywords: | air transportation; efficiency; network centrality; inter – airports competition. |
| JEL: | L93 L11 L59 |
| Date: | 2009–01–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17673&r=ure |
| By: | Stefano Magrini (Department of Economics, University Of Venice Cà Foscari); Margherita Gerolimetto (University Of Venice Cà Foscari) |
| Abstract: | In this paper we present a new procedure for nonparametric regression in case of spatially dependent data. In particular, we extend usual local linear regression (along the lines of Martins-Filho and Yao, 2009) and propose a two-step method where information on spatial dependence is incorporated in the error covariance matrix, estimated nonparametrically. The finite sample performance of our proposed procedure is then shown via Monte Carlo simulations for various data generating processes. |
| Keywords: | nonparametric smoothing, spatial dependence |
| JEL: | C14 C21 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2009_20&r=ure |
| By: | Mohamad Fahmi (Department of Economics, Padjadjaran University) |
| Abstract: | I reestimate Bedi and Garg estimation of differential earnings of public-private junior secondary school in Indonesia. I replicate Bedi and Garg method by using Bedi and Garg’s sample data and creating a new sample data base on the original updated IFLS1 data (Indonesia Family Life Survey 1 codename IFLS1-RR). I use the same methodology as Bedi and Garg with the latest Stata command to confirm Bedi and Garg’s major conclusion. Using selmlog and decompose Stata techniques, I find the evidence that contradictive with Bedi and Garg’s conclusion as the public schools graduated earn higher than other graduates from private schools. |
| Keywords: | School effectiveness, earnings, Indonesia |
| JEL: | J31 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:unp:wpaper:200913&r=ure |
| By: | Zhao Chen; Ming Lu; Hiroshi Sato |
| Abstract: | An entry barrier in the labor market can be an important source of wage inequality. This paper finds that social networks, father's education and political status, and urban household registration status (hukou identity), as well as their own education, experience, age, and gender, help people enter high-wage industries. When contrasting coastal and inland samples, after instrumenting social networks by household political identity (based on classifications during the land reform in the 1950s), we find that social networks are more helpful for entering high-wage industries. The implication of this paper is: breaking industrial entry barriers in the urban labor market is an essential policy in order to control inter-industrial wage inequality in urban China. |
| Keywords: | inter-industrial wage differentials, industry monopoly, entry barrier, labor market, social networks, CHIPS data |
| JEL: | J31 J42 Z1 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:hst:ghsdps:gd09-084&r=ure |
| By: | Paul Frijters; Xin Meng (School of Economics and Finance, Queensland University of Technology) |
| Abstract: | China is not merely growing at double the rate of the European countries during the Industrial Revolution, it is also urbanising at double the speed. Using a unique dataset of rural-to-urban migrants in 15 major Chinese cities, we give preliminary answers to some of the most pressing policy questions: how many migrants are there and what are their attributes? Are they dissatisfied or are their kids doing worse than the kids of others? Are they discriminated on the labour market and, if so, what are the mechanisms via which this discrimination works and where are the market forces to undo the discrimination? |
| Keywords: | migration, economic growth, urbanisation, Tiebout, political economy, discrimination |
| Date: | 2009–09–28 |
| URL: | http://d.repec.org/n?u=RePEc:qut:pfrijt:2009&r=ure |
| By: | De Giorgi, Giacomo (Stanford University); Pellizzari, Michele (Bocconi University); Woolston, William Gui (Stanford University) |
| Abstract: | We study how class size and composition affect the academic and labor market performances of college students, two crucial policy questions given the secular increase in college enrollment. We rely on the random assignment of students to teaching classes. Our results suggest that a one standard deviation increase in the class-size would result in a 0.1 standard deviation deterioration of the average grade. Further, the effect is heterogenous as female and higher income students seem almost immune to the size of the class. Also, the effects on performance of class composition in terms of gender and ability appears to be inverse U-shaped. Finally, a reduction of 20 students (one standard deviation) in one's class size has a positive effect on monthly wages of about 80 Euros (115 USD) or 6% over the average. |
| Keywords: | class size, heterogeneity, experimental evidence, academic performance, wages |
| JEL: | A22 I23 J30 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4443&r=ure |
| By: | Kalb, Alexander |
| Abstract: | In this paper we investigate the determinants of local governments' technical efficiency in road maintenance for a panel of German counties using a broad variety of estimation approaches. More specifically, we calculate efficiency indices using non-parametric (DEA) and parametric (stochastic frontier analysis) reference technologies, and examine how these efficiency indices can be explained by estimating and comparing four different regression models. The results of our analysis show that (controlling for numerous characteristics of the counties) the disposable income of the counties' citizens, intergovernmental grants (for county roads), and the payments to the counties influence efficiency negatively. Concerning political variables we find weak evidence that efficiency decreases with an increasing share of seats of left-wing parties in the county council; the hypothesis that efficiency decreases with the degree of political concentration in the county council could not be confirmed. |
| Keywords: | Technical efficiency,road maintenance,stochastic frontier analysis,data envelopment analysis,German counties |
| JEL: | H11 R30 R51 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:09047&r=ure |
| By: | Matei, Ani; Savulescu, Carmen |
| Abstract: | The concerns on enhancing the efficiency of public administration, in particular the local government, are moreover present in the concerns of local authorities and specialised literature. Those concerns become more important taking into consideration the conditions of the actual economic crisis. Approached concurrently with public sector performance, enhancing the efficiency may have various resources. Among those resources it is worth to mention “better regulation” concerning public administration and reducing the administrative expenditures. Those two resources are not disjunctive, they are characterised by direct link and determination. Structured on three chapters, the paper focuses on a model aimed to determine the impact of reducing the administrative expenditures on the efficiency of local public services. This model inscribes in the efforts aiming to measure the efficiency in the public sector, efforts visible in the specialised literature. |
| Keywords: | efficiency;administrative expenditures |
| JEL: | H70 H83 |
| Date: | 2009–04–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17640&r=ure |
| By: | Barlevy, Gadi (Federal Reserve Bank of Chicago); Neal, Derek (University of Chicago) |
| Abstract: | We propose an incentive pay scheme for educators that links educator compensation to the ranks of their students within appropriately defined comparison sets, and we show that under certain conditions our scheme induces teachers to allocate socially optimal levels of effort to all students. Because this scheme employs only ordinal information, our scheme allows education authorities to employ completely new assessments at each testing date without ever having to equate various assessment forms. Thus, our scheme removes incentives for teachers to teach to a particular assessment form and eliminates any opportunities to influence reward pay by corrupting the equating process or the scales used to report assessment results. Having shown that cardinal measures of achievement growth over time are not a necessary ingredient of incentive systems for educators, we note that education authorities can employ our scheme as a means of providing incentives for educators while employing a separate system for measuring growth in student achievement that involves no stakes for educators. This approach creates no incentives for educators to take actions that contaminate the measurement of student progress. |
| Keywords: | compensation, education, tournaments |
| JEL: | J33 I20 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4383&r=ure |
| By: | Fredriksson, Per (University of Louisville); Mamun, Khawaja (John F. Welch College of Business, Sacred Heart University) |
| Abstract: | This paper investigates whether reputation-building strategies guide U.S. governors’ responses to changes in federal cigarette taxes (i.e. vertical tax interactions). Using 1975-2000 state cigarette tax data, we find that reputation-building strategies affect the nature of vertical tax externalities. Lame duck governors exhibit a more negative response to changes in the federal cigarette tax. Thus, by reducing the state tax base and by causing a decline in the state tax, an increase in the federal tax rate reduces state tax revenues in states headed by lame ducks. |
| Keywords: | Vertical Tax Interactions; Fiscal Federalism; Reputation-building; Electoral Accountability; Political Institutions |
| JEL: | H71 H77 D72 D78 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:she:wpaper:2009002&r=ure |
| By: | Federico Perali (Department of Economics (University of Verona)); Stefania Lovo (Department of Economics (University of Verona)) |
| Abstract: | This paper develops a regional dynamic general equilibrium model calibrated using two regional SAMs for the Italian region Valle D’Aosta for the years 1963 and 2002. A historical calibration procedure is performed over the 40 years period and a validation exercise ensures that the modelled tendencies closely approximate the actual observed growth patterns of the main regional macroeconomic variables. The dynamic general equilibrium model provides an original and powerful tool for historical counterfactual analysis not available using standard dynamic general equilibrium models. The model is used to compare the growth path followed by the region during the period of interest with different scenarios intended to rank the social desirability of alternative behaviours of the regional administration. |
| Keywords: | historical calibration, historical validation, regional dynamic general equilibrium model, historical counterfactual analysis |
| JEL: | C68 R13 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:ver:wpaper:58/2009&r=ure |
| By: | Mari Rege, Torbjørn Skardhamar, Kjetil Telle and Mark Votruba (Statistics Norway) |
| Abstract: | We estimate the effect of exposure to plant closure on crime using an individual-level panel data set containing criminal charges for all unmarried and employed Norwegian men below the age of 40. Men originally employed in plants that subsequently closed are 14 percent more likely to be charged of a crime than comparable men in stable plants. There is no difference in charge rates prior to closure, supporting a causal interpretation of our result. Within crime categories, we find no effect of plant closure on property crime, perhaps because closure has a small and insignificant effect on subsequent earnings. We estimate an effect of plant closure on categories of non-acquisitive crime, suggesting a role for mental distress or idleness. A role for idleness is supported by evidence that the effects of plant closure on crime tend to be more pronounced for crimes committed during the week than on weekends. |
| Keywords: | crime; plant closure; plant downsizing; displacement |
| JEL: | J12 J63 J65 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:593&r=ure |
| By: | Lewer, Joshua J. (Bradley University); Pacheco, Gail (Auckland University of Technology); Rossouw, Stephanié (Auckland University of Technology) |
| Abstract: | This paper contributes to the immigration literature by generating two unique non-economic quality of life (QOL) indices and testing their role on recent migration patterns. Applying the generated quality of life indices in conjunction with other independent welfare measures to an extended gravity model of immigration for 16 OECD destination countries from 1991 to 2000 suggests an insignificant role for QOL in the immigration process. The panel results suggest that other economic variables such as the stock of immigrants from the source country already living in the OECD destination country, population size, relative incomes, and geographic factors all significantly drive the flow of immigration for the sample. |
| Keywords: | immigration, quality of life, gravity model |
| JEL: | F22 C51 D63 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4385&r=ure |
| By: | M. Niaz Asadullah; Uma Kambhampati; Florencia Lopez Boo |
| Abstract: | This study documents the size and nature of “boy-girl” and “Hindu-Muslim” gaps in children’s school participation and attainments in India. Individual-level data from two successive rounds of the National Sample Survey suggest that considerable progress has been made in decreasing the Hindu-Muslim gap. Nonetheless, the gap remains sizable even after controlling for numerous socioeconomic and parental covariates, and the Muslim educational disadvantage in India today is greater than that experienced by girls and Scheduled Caste Hindu children. A gender gap still appears within as well as between communities, though it is smaller within Muslim communities. While differences in gender and other demographic and socio-economic covariates have recently become more important in explaining the Hindu-Muslim gap, those differences altogether explain only 25 percent to 45 percent of the observed schooling gap. |
| Keywords: | gender inequality, India, religion, social disparity |
| JEL: | I21 J16 Z12 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:idb:wpaper:4637&r=ure |