|
on Urban and Real Estate Economics |
| By: | Ben-David, Itzhak (Ohio State University) |
| Abstract: | During the housing boom, many subprime home buyers were not able to make a mort- gage down payment and therefore were at risk of being rationed from the market. To resolve the issue, some buyers, sellers and intermediaries artificially expanded the scope of transactions by including items that cannot be collateralized. As a result, observed house prices were higher and mortgages larger, ultimately relaxing buyers' financial constraints. I estimate that between 2005 and 2008, up to 16% of highly leveraged (greater than 95% loan-to-value) transactions in Cook County, Illinois were inflated (with prices higher by 6% to 15%). Inated transactions are more likely in low-income neighborhoods and when intermediaries have a high stake in the transaction. Although borrowers were twice as likely to default, their mortgage rates were not higher. |
| JEL: | D12 D18 G21 L85 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:ohidic:2009-1&r=ure |
| 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 the endogenous determination of fertility and an explicit city structure in order to analyze fully the social and natural changes in city populations. We provide conditions under which the model exhibits the spatial features of demography observed in large Japanese cities. We also show by calibration that the low cost of obtaining human capital in Tokyo metropolitan area played a significant role in establishing its urban primacy in Japan. |
| Keywords: | urbanization, demography, migration, monocentric city |
| JEL: | J11 R11 R14 R23 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:0918r&r=ure |
| By: | Nadauld, Taylor D. (Ohio State University); Sherlund, Shane M. (Federal Reserve Board) |
| Abstract: | We analyze the structure and attributes of subprime mortgage-backed securitization deals originated between 1997 and 2007. Our data set allows us to link loan-level data for over 6.7 million subprime loans to the securitization deals into which the loans were sold. We show that the securitization process, including the assignment of credit ratings, provided incentives for securitizing banks to purchase loans of poor credit quality in areas with high rates of house price appreciation. Increased demand from the secondary mortgage market for these types of loans appears to have facilitated easier credit in the primary mortgage market. To test this hypothesis, we identify an event which represents an external shock to the relative demand for subprime mortgages in the secondary market. We show that following the SEC's adoption of rules reducing capital requirements on certain broker dealers in 2004, five large deal underwriters disproportionately increased their purchasing activity relative to competing underwriters in ZIP codes with the highest realized rates of house price appreciation but lower average credit quality. We show that these loans subsequently defaulted at marginally higher rates. Finally, using the event as an instrument, we demonstrate a causal link between the demand for mortgages in the secondary mortgage market and the supply of subprime credit in the primary mortgage market. |
| JEL: | G21 G24 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:ohidic:2009-9&r=ure |
| By: | Aslund, Olof (IFAU); Edin, Per-Anders (IFAU); Fredriksson, Peter (IFAU); Grönqvist, Hans (SOFI, Stockholm University) |
| Abstract: | Immigrants typically perform worse than other students in the OECD countries. We examine to what extent this is due to the population characteristics of the neighborhoods that immigrants grow up in. We address this issue using a governmental refugee placement policy which provides exogenous variation in the initial place of residence in Sweden. The main result is that, for a given share of immigrants in a neighborhood, immigrant school performance is increasing in the number of highly educated adults sharing the subject’s ethnicity. A standard deviation increase in the fraction of highly educated adults in the assigned neighborhood increases compulsory school GPA by 0.9 percentile ranks. This magnitude corresponds to a tenth of the gap in student performance between refugee immigrant and native-born children. We also provide tentative evidence that the overall share of immigrants in the neighborhood has a negative effect on GPA. |
| Keywords: | peer effects, ethnic enclaves, immigration, school performance |
| JEL: | J15 I20 Z13 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4521&r=ure |
| By: | Edoardo Di Porto (LABOR, Centre for Employment Studies); Federico Revelli (University of Torino) |
| Abstract: | This paper explores for the first time the consequences of centrally imposed local tax limitations on the modelling and estimation of spatial auto-correlation in local fiscal policies, and compares three spatial interaction estimators: a) the conventional maximum likelihood estimator that ignores censoring; b) a spatial Tobit estimator; c) a discrete hazard estimator. Implementation of the above empirical approaches on the case of local vehicle taxation in Italy provides a reasonably coherent picture in terms of the direction and size of the spatial interaction process, and offers a plausible spatial interpretation of the race to the top in provincial vehicle taxes. |
| Keywords: | vehicle taxation, spatial auto-correlation, censored data |
| JEL: | C23 C25 H72 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2009/10/doc2009-26&r=ure |
| By: | Will Dobbie; Roland G. Fryer, Jr |
| Abstract: | Harlem Children’s Zone (HCZ), which combines community investments with reform minded charter schools, is one of the most ambitious social experiments to alleviate poverty of our time. We provide the first empirical test of the causal impact of HCZ on educational outcomes, with an eye toward informing the long-standing debate whether schools alone can eliminate the achievement gap or whether the issues that poor children bring to school are too much for educators alone to overcome. Both lottery and instrumental variable identification strategies lead us to the same story: Harlem Children’s Zone is effective at increasing the achievement of the poorest minority children. Taken at face value, the effects in middle school are enough to close the black-white achievement gap in mathematics and reduce it by nearly half in English Language Arts. The effects in elementary school close the racial achievement gap in both subjects. We conclude by presenting four pieces of evidence that high-quality schools or high-quality schools coupled with community investments generate the achievement gains. Community investments alone cannot explain the results. |
| JEL: | I20 J01 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15473&r=ure |
| By: | Elias Oikarinen (Department of Economics, Turku School of Economics) |
| Abstract: | This article provides new empirical evidence on the dynamics of price movements and transaction volume in the housing market using data from Finland. While the previous related literature studies the reactions of sales volume and prices to an interest rate shock only, we investigate the responses to income and credit shocks as well. Based on an estimated vector-error correction model, the response of prices to demand shocks is found to be substantially slower than that of sales. The effect of a demand shock on sales peaks within a quarter from the shock. The results show that the differences in the reaction patterns to demand shocks can create the kind of strong positive co-movement between price movements and sales and the kind of negative correlation between price level and sales that has been found in a number of housing markets. It is also found that the direct predictive ability of the fundamentals with respect to housing price growth and sales is overwhelmed by the predictive power of the lagged observations on price changes and sales themselves. |
| Keywords: | Housing, dynamics, sales, transactions, prices |
| JEL: | R21 R31 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:tkk:dpaper:dp56&r=ure |
| By: | Yamamura, Eiji |
| Abstract: | This paper uses individual data from Japan to explore how the circumstances of where a person resides is related to the degree of their investment in social capital. Controlling for unobserved area-specific fixed effects and various individual characteristics, I found; (1) Not only that homeownership and length of residence are positively related to investment in social capital, but also that rates of homeowners and long-time residents in a locality increase in an individual’s investments in social capital. (2) The effects of local neighborhood homeownership and local length of residence are distinctly larger than that of an individual’s. |
| Keywords: | Social Capital; homeownership; length of residence |
| JEL: | D71 R11 R23 |
| Date: | 2009–11–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:18440&r=ure |
| By: | Andrabi, Tahir (Pomona College); Das, Jishnu (World Bank); Khwaja, Asim Ijaz (Harvard University); Zajonc, Tristan (Harvard University) |
| 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. |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp09-034&r=ure |
| By: | Fabien CANDAU |
| Abstract: | Is Agglomeration Desirable ? |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:tac:wpaper:3&r=ure |
| By: | Benny Geys (Wissenschaftszentrum Berlin für Sozialforschung (WZB)); Federico Revelli (University of Torino) |
| Abstract: | This paper investigates the economic and political determinants of the local tax mix using panel data of 289 Flemish municipalities over the period 1995-2002 and estimating a system of five reduced-form tax revenue-share equations (income, property, business, user fees and other own revenues). The analysis highlights a number of important economic determinants of the observed tax mix while political variables turn out to play a relatively minor role. Finally, the analysis uncovers virtually no evidence of inter-municipal dependence in the determination of the local tax mix. |
| Keywords: | Tax mix, Local government, Flemish municipalities, Decentralisation |
| JEL: | C33 D72 H71 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2009/10/doc2009-17&r=ure |
| By: | Katie Fitzpatrick; Jeff Thompson |
| Abstract: | This paper explores the interaction between the federal Earned Income Tax Credit (EITC) and the cost-of-living faced by single mothers. After the 1993 EITC expansion, we identify up to a 10 percentage point increase in labor force participation for single mothers in the lowest cost areas but no discernable response in the highest cost areas. We conclude that the EITC’s welfare-enhancing properties are undermined by the interaction of the program’s fixed national rules and geographic variation in wages and cost-of-living. In addition, our findings suggest that the EITC does little to reduce joblessness in many of the nation’s largest cities. <p></p> |
| Keywords: | EITC; Cost-of-Living; Tax reform; Labor supply |
| JEL: | H24 H31 I31 J22 R23 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:uma:periwp:wp204&r=ure |
| By: | Martins, Alexandre; Pinto, Hugo |
| Abstract: | The article discusses the central conclusions of the study "Evaluation of Regional Fiscal Framework: Business Location and Local Finance" (Barreira, 2008). A reflection on some of the core principles of local finance, equity and benefit, shows that there are inconsistencies in the case of the Algarve. The region has generated tax revenue above the national average in which the property taxes have a disproportionate weight. This situation underlines the dependency of municipalities in the Algarve to the real estate activities around tourism. The number of companies registered does not adequately represent the level of economic activities carried out in the region. Many firms have the headquarters situated in other regions and fracture the desired balance between the recipient and taxpayer. The paper shows that a correction of this problem could increase the weight of the Algarve's economy in the national total and significantly increase the regional tax revenues. |
| Keywords: | Local Finance; Algarve; Benefit; Tax Revenue |
| JEL: | R11 H3 |
| Date: | 2009–11–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:18515&r=ure |
| By: | John M. Hartwick (Queen`s University) |
| Abstract: | We report on the nature of a utility optimizing transfer from one regional government to another when local public goods are present. Computer examples reveal that small differences in regional endowments result in large differences in equilibrium outcomes for two regions, under optimal transfers. The scale effect (lower tax charge per person for the same public good in more populous regions) leads to the small region generally providing transfers to the larger region. |
| Keywords: | intergovernmental transfers, local public goods, inter-regional resource allocation |
| JEL: | H41 H77 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:qed:wpaper:1221&r=ure |
| By: | Marcelin Joanis (Université de Sherbrooke, GREDI and CIRANO) |
| Abstract: | While electoral accountability should be stronger when responsibilities are clearly assigned to one political office, the involvement of higher tiers of government is often associated with policies specifically designed to improve local accountability. This paper investigates the impact of centralization on local electoral accountability in the context of California's school finance system. Results show that voters are responsive to differences in dropout rates and pupil-teacher ratios, and that incumbents are less likely to be reelected when a districts degree of centralization is high. The No Child Left Behind Act of 2001 appears to have sharpened local electoral accountability. |
| Keywords: | centralization, accountability, school nance, local elections, shared responsibility,No Child Left Behind. |
| JEL: | H75 H77 D72 I2 |
| Date: | 2009–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:shr:wpaper:09-21&r=ure |
| By: | Eric Girardin; Konstantin A. Kholodilin |
| Abstract: | In this paper, we make multi-step forecasts of the annual growth rates of the real GRP for each of the 31 Chinese provinces simultaneously. Beside the usual panel data models, we use panel models that explicitly account for spatial dependence between the GRP growth rates. In addition, the possibility of spatial effects being different for different groups of provinces (Interior and Coast) is allowed. We find that both pooling and accounting for spatial effects helps substantially improve the forecast performance compared to the benchmark models estimated for each of the provinces separately. It was also shown that effect of accounting for spatial dependence is even more pronounced at longer forecasting horizons (the forecast accuracy gain as measured by the root mean squared forecast error is about 8% at 1-year horizon and exceeds 25% at 13- and 14-year horizon). |
| Keywords: | Chinese provinces, forecasting, dynamic panel model, spatial autocorrelation, group-specific spatial dependence |
| JEL: | C21 C23 C53 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp938&r=ure |
| By: | Wenli Li; Michelle J. White |
| Abstract: | In this paper we examine the relationship between homeowners’ bankruptcy decisions and their mortgage default decisions and the relationship between homeowners’ bankruptcy decisions and lenders’ decisions to foreclose. In theory, both relationships could be either substitutes or complements. Bankruptcy and default tend to be substitutes because homeowners’ budgets are limited and, if they spend less on payments to unsecured lenders, then they have more money to pay their mortgages. But bankruptcy and default may also be complements if homeowners use bankruptcy to reduce the cost of defaulting on their mortgages. Bankruptcy and foreclosure similarly may be either substitutes or complements. In fact we show that both relationships are complementary, although homeowners reacted to the 2005 bankruptcy reform by treating them as substitutes. We also show that bankruptcies, defaults and foreclosures all tend to spread, i.e., higher bankruptcy rates in the neighborhood raise homeowners’ probability of filing, higher default rates raise homeowners’ probability of defaulting, and higher foreclosure rates raise homeowners’ probability of foreclosure. We provide estimates of the size of these effects. The paper argues that these relationships have important public policy implications. In particular, foreclosures have very high social costs, and some of these costs are external to both borrowers and lenders. As a result, there is a social gain from discouraging bankruptcies, since fewer bankruptcies mean fewer defaults and foreclosures. We show that these considerations shift optimal bankruptcy law in a pro-creditor direction, because pro-creditor bankruptcy policies reduce the number of filings and therefore reduce foreclosures. But the same considerations shift other policies that affect bankruptcy in a pro-debtor direction. This is because pro-debtor shifts in, for example, wage garnishment policy reduce the number of bankruptcy filings and therefore reduce foreclosures. |
| JEL: | G18 G2 K35 R21 R31 R51 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15472&r=ure |
| By: | Tom Broekel; Thomas Brenner |
| Abstract: | A growing body of work emphasizes the importance of regional factors for regional innovativeness. In this paper, about seventy variables approximating the social-economic characteristics of regions are aggregated to twelve regional factors. In four industry-specific set-ups their influence on firms’ innovativeness is tested. The study confirms that inter-industrial differences exist in the importance of these factors. In the empirical analyses a log-linear model is compared with a linear approach. While both are theoretically problematic it is shown that the log-linear model performs better in the empirical assessment. |
| Keywords: | regional innovation performance, regional innovativeness, knowledge production function, industry comparison, German regions |
| JEL: | O18 R11 R12 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:0917&r=ure |
| By: | Nobuo Akai (Osaka University); Motohiro Sato (Hitotsubashi University) |
| Abstract: | This paper considers a simple dynamic decentralized leadership model with local borrowing and regional productivity enhancing investment. The central government is benevolent but cannot commit. The local governments strategically act while accounting for the ex post motive of the central government. We then investigate inefficiency in the subgame perfect equilibrium. We analyze the effect of central control on local borrowings. It is revealed that the central control is of no use. The model is extended to the case with residential mobility which gives different policy implications. |
| Keywords: | soft budget, local borrowing, local investment |
| JEL: | H71 H72 H73 H77 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2009/10/doc2009-20&r=ure |
| By: | Eva Gutiérrez-i-Puigarnau; Jos van Ommeren |
| Abstract: | We examine the effect of commuting on labour supply patterns. A labour supply model is introduced which shows that commuting distance increases daily workhours, whereas the effect on total labour supply is ambiguous. This paper addresses these issues empirically using the socio-economic panel data for Germany between 1997 and 2007. Endogeneity of commuting distance is accounted for by using employer-induced changes in commuting distance. In line<br /> with the theoretical model developed, we find that commuting distance has a slight positive effect on daily workhours. Further, we find a similar effect on weekly labour supply, but no effect on workdays. Distinguishing between males and females, it appears that the effects on labour supply are mainly through the behaviour of females, but the effects for females are still small. |
| Keywords: | Commuting, congestion tax, labour supply |
| JEL: | J22 R41 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp222&r=ure |
| By: | Albert Solé-Ollé (Universitat de Barcelona); Pilar Sorribas-Navarro (Universitat de Barcelona) |
| Abstract: | The aim of this paper is to analyze whether Spanish municipalities adjust in response to budget shocks and (if so) which elements of the budget they are more likely to adjust. The methodology we use to answer these questions is a vector error-correction model (VECM), estimated with data from a panel of Spanish municipalities during the period 1988-2006. Our results confirm, first, that municipalities do indeed make adjustments in response to fiscal shocks (i.e., the deficit is stationary in the long run). Second, we find that most of the adjustment to a revenue shock is borne by the municipalities themselves as they proceed to cut expenditures, with a minor role being played by grant financing. By contrast, adjustments to expenditure shocks are shared on largely equal terms by the municipality –through the raising of taxes– and higher tiers of government –through the raising of grants. These results suggest that the viability of the local finance system is feasible with different institutional arrangements. |
| Keywords: | Fiscal adjustment, intergovernmental transfers, local government. |
| JEL: | H70 H72 H77 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2009/11/doc2009-7&r=ure |
| By: | Angelucci, Manuela (University of Arizona); De Giorgi, Giacomo (Stanford University); Rangel, Marcos A. (Harris School, University of Chicago); Rasul, Imran (University College London) |
| Abstract: | We present evidence on whether and how a household's behavior is influenced by the presence and characteristics of its extended family. Using data from the PROGRESA program in Mexico, we exploit information on the paternal and maternal surnames of heads and spouses in conjunction with the Spanish naming convention to identify the inter and intra generational family links of each household to others in the same village. We then exploit the randomized research design of the PROGRESA evaluation data to identify whether the treatment effects of PROGRESA transfers on secondary school enrolment vary according to the characteristics of extended family. We find PROGRESA only raises secondary enrolment among households that are embedded in a family network. Eligible but isolated households do not respond. The mechanism through which the extended family influences household schooling choices is the redistribution of resources within the family network from eligibles that receive de facto unconditional cash transfers from PROGRESA, towards eligibles on the margin of enrolling children into secondary school. |
| Keywords: | extended family network, PROGRESA, resource sharing, schooling |
| JEL: | I21 J12 O12 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4497&r=ure |
| By: | Battu, Harminder (University of Aberdeen); Zenou, Yves (Stockholm University) |
| Abstract: | Where a community or group is socially excluded from a dominant group, some individuals of that group may identify with the dominant culture and others may reject that culture. The aim of this paper is to investigate this issue by empirically analyzing the potential trade-off for ethnic minorities between sticking to their own roots and labour market success. We find that the social environment of individuals and attachments to culture of origin has a strong association with identity choice. Our results also suggest that those non-whites who have preferences that accord with being "oppositional" do experience an employment penalty. |
| Keywords: | social networks, identity, ethnic minorities, white’s norm |
| JEL: | J15 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4517&r=ure |
| By: | Akli Berri (INRETS, Department of Transport Economics and Sociology (DEST)) |
| Abstract: | This paper evaluates transport consumption inequalities among French households, investigates their temporal dynamics, and estimates the redistributive effects of taxes on different commodity categories. A decomposition by expenditure component of the Gini inequality index is applied, using household-level data from five expenditure surveys conducted between the end of the 1970’s and the early 2000’s. The results highlight the effect of car social diffusion. Indeed, the relative contribution to global inequality of car use items, especially fuels, decreased regularly over time, reflecting the more and more widespread use of the car. Moreover, fuel taxes become regressive (i.e. they affect the poor more than the rich), while the progressive character of taxes on the remaining car use commodities weakens over time. Therefore, the design of policy measures to reduce car use and thus attenuate its nuisances for the environment should also account for the imperative of equity. Increasing car use costs, notably fuel prices, through an increase of uniform taxes would be particularly inequitable. In particular, the least wealthy of car-dependent households living in low-densely populated zones would face a heavy burden that they cannot avoid. Area-specific measures may be more appropriate. The case of local public transport underlines the necessity of accounting for disparities in terms of availability of alternatives to the car. Taxes on these services appear to be neutral at national level (i.e. neither progressive nor regressive), but this result hides a diversity of situations in terms of supply of these transport means according to the degree of urbanization and population density. Effectively, these taxes prove to be regressive when focusing on the Greater Paris region, a large urban area very well endowed with public transport infrastructure. Hence, a distinction by degree of urbanization is to be considered. |
| Keywords: | Inequality, transport consumption, household expenditure surveys, Gini index, decomposition by component, redistributive effects of taxes |
| JEL: | D12 H23 H24 R41 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2009-145&r=ure |
| By: | Bandiera, Oriana (London School of Economics); Larcinese, Valentino (London School of Economics); Rasul, Imran (University College London) |
| Abstract: | Over the last decade, many countries have experienced dramatic increases in university enrolment, which, when not matched by compensating increases in other inputs, have resulted in larger class sizes. Using administrative records from a leading UK university, we present evidence on the effects of class size on students’ test scores. We observe the same student and faculty members being exposed to a wide range of class sizes from less than 10 to over 200. We therefore estimate non-linear class size effects controlling for unobserved heterogeneity of both individual students and faculty. We find that (i) at the average class size, the effect size is -0.108; (ii) the effect size is however negative and significant only for the smallest and largest ranges of class sizes and zero over a wide range of intermediate class sizes; (iii) students at the top of the test score distribution are more affected by changes in class size, especially when class sizes are very large. We present evidence to rule out class size effects being due solely to the non-random assignment of faculty to class size, sorting by students onto courses on the basis of class size, omitted inputs, the difficulty of courses, or grading policies. The evidence also shows the class size effects are not mitigated for students with greater knowledge of the UK university system, this university in particular, or with greater family wealth. |
| Keywords: | class size, heterogeneity, university education |
| JEL: | A20 D23 I23 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4496&r=ure |
| By: | De Paola, Maria; Scoppa, Vincenzo |
| Abstract: | We analyse peer effects among students of a middle-sized Italian public university. We explain students’ average grade in exams passed during their Second Level Degree course on the basis of their pre-determined measures of abilities, personal characteristics and peer group abilities. Thanks to a rich administrative dataset, we are able to build a variety of definitions of peer groups, describing different kinds of students’ interaction, based on classes attended together or exams taken in the same session. Self-selection problems are handled through Two-Stage Least Squares estimations using as an instrument, the exogenous assigning of students to different teaching classes in the compulsory courses attended during their First Level Degree course. We find statistically significant positive peer group effects, which are robust to the different definitions of peer group and to different measures of abilities. |
| Keywords: | Peer effects; Student performance; Educational production function; instrumental variables |
| JEL: | I21 Z13 J24 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:18428&r=ure |
| By: | Marco Pagano (Università di Napoli Federico II, CSEF, EIEF and CEPR); Paolo Volpin (London Business School and CEPR) |
| Abstract: | This paper examines the role of credit rating agencies in the subprime crisis, which was at the outset of the 2007-08 financial turmoil. The focus of the paper is on two aspects of ratings that contributed to the boom and bust of the market for asset-backed securities: rating inflation and coarse information disclosure. The paper discusses how regulation can be designed to mitigate these problems in the future. The suggestion is that regulators should require rating agencies to be paid by investors rather than by issuers (or at least constrain the way they are paid by issuers) and force greater disclosure of information about the underlying pool of securities. |
| Keywords: | credit rating agencies, securitization, default, liquidity, crisis, transparency |
| JEL: | D82 G18 G21 |
| Date: | 2009–11–06 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:239&r=ure |
| By: | Frank Neffke; Martin Henning; Martin Ron Boschma |
| Abstract: | The question of how new regional growth paths emerge has been raised by many leading economic geographers. From an evolutionary perspective, there are strong reasons to believe that regions are most likely to branch into industries that are technologically related to the preexisting industries in the region. Employing a new indicator of technological relatedness between manufacturing industries, we analyze the economic evolution of 70 Swedish regions during the period 1969-2002 using detailed plant-level data. Our analyses show that the long-term evolution of the economic landscape in Sweden is subject to strong path dependencies. Industries that were technologically related to pre-existing industries in a region had a higher probability to enter the region, as compared to unrelated industries. And unrelated industries had a higher probability to exit the region. Moreover, we found that industrial profiles of Swedish regions showed a high degree of technological coherence. Despite substantial structural change, this coherence was very persistent over time. Our methodology also proved useful when focusing on the economic evolution of one particular region. Our analysis showed that the Linköping region increased its industrial coherence during 30 years, due to the entry of industries that were closely related to its regional portfolio on the one hand, and the exit of industries that were technologically peripheral to its regional portfolio on the other hand. In sum, we find systematic evidence that the rise and fall of industries is strongly conditioned by industrial relatedness at the regional level. |
| Keywords: | technological relatedness, related variety, regional branching, regional diversification |
| JEL: | R11 N94 O14 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:0916&r=ure |
| By: | Sebastian Klüsener (Max Planck Institute for Demographic Research, Rostock, Germany) |
| Abstract: | For studying both individual-level and small-scale contextual influences on the effects of family policies on fertility, Multilevel Event History methods are the state-of-the-art. But in many countries, these methods cannot be applied because the available individual-level data are inadequate. This paper uses an alternative methodological framework that can be of help in these cases. It utilizes small-scale macro data, which is analyzed with Exploratory Data, Cluster, and Spatial Panel Model Analysis techniques. In a case study on the western German city of Bremen, the potential of this approach, as well as its limitations, are investigated. The study analyzes the impact of the parental leave reform of 1986 and the child benefit reform of 1996 on fertility levels in different city quarters (Stadtteile) of Bremen. The results indicate that both family policy reforms had, at least in the short-term, a significant impact on fertility levels. These positive effects were stronger in economically disadvantaged quarters. The findings also suggest that the reforms affected the timing more than the quantum of fertility. With regard to the methodological framework, we can conclude that the Spatial Analysis with small-scale macro data is a useful alternative when there is no individual-level data available for carrying out a Multilevel Event History Analysis. |
| Keywords: | Bremen, Germany, family policies, fertility trends, methodology, spatial analysis |
| JEL: | J1 Z0 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:dem:wpaper:wp-2009-027&r=ure |
| By: | Robert Baumann (Department of Economics, College of the Holy Cross); Bryan Engelhardt (Department of Economics, College of the Holy Cross); Victor Matheson; Taylor Ciavarra (Department of Economics, College of the Holy Cross) |
| Abstract: | We estimate the impact sporting events have on local crime rates using the technique developed in Arellano and Bond (2001). For events, we consider the presence of MLB, NBA, NFL, and NHL franchises as well as whether a city held one of the respective championships, the Olympics, or World Cup matches. We find little to no evidence that sporting events are correlated with either property or violent crime. |
| Keywords: | Crime, Sports Economics, Economic Impact |
| JEL: | L83 O18 R53 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:hcx:wpaper:0913&r=ure |
| By: | Andrés Rodríguez-Pose (IMDEA Ciencias Sociales); Vassilis Tselios (University of Newcastle upon Tyne) |
| Abstract: | Relatively little attention has been paid to the role that externalities play in determining the pecuniary returns to migration. This paper addresses this gap, using microeconomic data for more than 100,000 individuals living in the European Union (EU) for the period 1994-2001 in order to analyse whether the individual economic returns to education vary between migrants and non-migrants and whether any observed differences in earnings between migrants and locals are affected by household and/or geographical (regional and interregional) externalities. The results point out that while education is a fundamental determinant of earnings, European labour markets – contrary to expectations – do not discriminate in the returns to education between migrants and non-migrants. The paper also finds that household, regional, and interregional externalities influence the economic returns to education, but that they do so in a similar way for local, intranational, and supra-national migrants. The results are robust to the introduction of a large number of individual, household, and regional controls. |
| Keywords: | individual earnings; migration; educational attainment; externalities; household; regions; Europe |
| Date: | 2009–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:imd:wpaper:wp2009-15&r=ure |
| By: | Frenette, Marc |
| Abstract: | Do students know the education required to achieve their career objectives? Is this information related to their education pathways? To address these questions, the Youth in Transition Survey (YITS), Cohort A is used to compare high school students' perceptions of the level of education they will require for the job they intend to hold at age 30, with the level required according to professional job analysts at Human Resources and Skills Development Canada (HRSDC). The focus is on students intending to work in a job which requires a university degree, and examine the correlation between the knowledge of educational requirements and subsequent university enrolment. The results suggest that about three out of four students intending to work in a job requiring a university degree are aware of the education they will require. Evidence suggests that knowledge of educational requirements is related to academic performance and socio-economic background. Differences by intended occupation are quite small. Moreover, students who know that a university degree is required are more likely to attend university, even after accounting for differences in academic performance, sex, and socioeconomic background. In fact, the knowledge of educational requirements is as strongly related to university attendance as other well-documented correlates such as sex, academic performance and parental education. Finally, higher university attendance rates are observed when students learn earlier (rather than later), that a university degree is required for their intended job. |
| Keywords: | Education, training and learning, Children and youth, Educational attainment, Education |
| Date: | 2009–10–29 |
| URL: | http://d.repec.org/n?u=RePEc:stc:stcp3e:2009320e&r=ure |
| By: | Madhur, Srinivasa (Asian Development Bank); Wignaraja, Ganeshan (Asian Development Bank); Darjes, Peter (Asian Development Bank) |
| Abstract: | Against the backdrop of growing momentum for regional cooperation and integration (RCI) in Asia, this paper examines the link between regional roads and Asian Development Bank (ADB) support between 1966 and 2008. The novel methodology used in this paper includes an Asia-wide definition of regional roads that fall on the Asian Highway (AH) network. The AH network is a system of about 140,000 kilometers (km) of standardized roads crisscrossing many Asian countries and with linkages to Europe. The United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) conducts research on Asian roads and works with member countries to identify financing sources for AH network development. In relation to assessing ADB's contribution to regional roads, three tasks are attempted in this paper: (i) an identification of ADB-financed regional roads and other kinds of roads in ADB's portfolio, (ii) an estimation of ADB's contribution to the AH network, and (iii) the development of a map where ADB’s contribution to regional road construction and infrastructure can be easily juxtaposed with the AH network. The paper finds that regional highways have been a notable and growing part of ADB's road portfolio since the 1990s, particularly in ADB’s subregional programs such as the Greater Mekong Subregion (GMS) and Central Asia Regional Economic Cooperation (CAREC) programs. It also finds that ADB road investment has made a significant contribution to the AH network, representing about two thirds of the network’s core roads. While parts of the AH network have been completed, substantial gaps still exist, including an estimated $43.8 billion required for priority projects. As part of its mandate to promote better integration of Asian infrastructure, ADB may have a role to play in addressing the financing, planning, and institutional development of the AH network. Furthermore, strengthened coordination among ADB, UNESCAP, and other actors can enhance both the AH network and the process of regional road development in Asia. |
| Keywords: | Asian highway; regional roads; regional cooperation; infrastructure development; multilateral development bank |
| JEL: | F15 N75 R42 |
| Date: | 2009–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbrei:0037&r=ure |
| By: | Kristof DE WITTE; Nicky ROGGE |
| Abstract: | Students’ evaluations of teacher performance (SETs) are increasingly used by universities and colleges for teaching improvement and decision making (e.g., promotion or tenure). However, SETs are highly controversial mainly due to two issues: (1) teachers value various aspects of excellent teaching differently, and, to be fair, (2) SETs should be determined solely by the teacher’s actual performance in the classroom, not by other influences (related to the teacher, the students or the course) which are not under his or her control. To account for these two issues, this paper constructs SETs using a specially tailored version of the popular non-parametric Data Envelopment Analysis (DEA) approach. In particular, in a so-called ‘Benefit of the doubt’ model we account for different values and interpretations that teachers attach to ‘good teaching’. Within this model, we reduce the impact of measurement errors and a-typical observations, and account explicitly for heterogeneous background characteristics arising from teacher, student and course characteristics. To show the potentiality of the method, we examine teacher performance for the Hogeschool Universiteit Brussel (located in Belgium). Our findings suggest that heterogeneous background characteristics play an important role in teacher performance. |
| Keywords: | Teacher performance, Data envelopment analysis, Conditional efficiency, Education. |
| JEL: | C14 C25 I21 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces09.13&r=ure |
| By: | Vincenzo Caponi (Department of Economics, Ryerson University, Toronto, Canada) |
| Abstract: | This paper presents a general equilibrium model of regional unemployment dispersion based on the Mortensen and Pissarides (1999) framework. The model economy presented here has centralized institutions, such as a single central government and central unions, but regional labor markets with differences productivity. The model assumes that unions dislike wage dispersion across regions and the government dislikes population imbalance across the regions. The set up of the model is used to interpret the economic features of the Italian economy between the mid seventies and the end of the past century. By means of calibration using Italian data collected in the year 2000 the paper shows that the model economy explains the important regional dualism between the North and the South of Italy in terms of unemployment. Moreover, the model indicates that the interaction between unions and the government also generates low wage rates in the high productivity regions accompanied by low unemployment rates, even when the Northern worker is the median worker that determines the unions policies. |
| Keywords: | Italy, Regional Dualism, Mezzogiorno. |
| JEL: | E24 J51 J60 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:rye:wpaper:wp007&r=ure |
| By: | Geert Leemans |
| Abstract: | In the course of 2008, the Flemish Agency for Infrastructure in Education (AGIOn) evaluated the quality of school buildings in Flanders using a monitoring system based on international experience. The results showed that most school buildings satisfy the basic requirements of habitability and safety, but they often fall short when it comes to the new pedagogical and social challenges of the 21st century.<P>Contrôle de la qualité des bâtiments scolaires dans la communauté flamande de Belgique<BR>Au cours de l’année 2008, l’Office flamand pour l’infrastructure scolaire (AGIOn) a évalué la qualité des bâtiments scolaires en Flandres, en utilisant un système de contrôle basé sur l’expérience internationale. Les résultats ont démontré que la plupart des bâtiments scolaires répondent aux exigences de base en matière d’habitabilité et de sécurité, mais ne sont pas à la hauteur en ce qui concerne les défis pédagogiques et sociaux du XXI<sup>e</sup> siècle. |
| Keywords: | Belgium, educational buildings, educational architecture, school security, school building programme |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:oec:eduaac:2009/8-en&r=ure |
| By: | Olof Åslund (Uppsala University); Anders Böhlmark (Institute for social research (SOFI) and CReAM); Oskar Nordström Skans (IFAU, IZA and Uppsala University) |
| 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. There are also non-trivial effects on employment, but a more limited impact on education and wages. 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: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:200927&r=ure |
| By: | Brusset, Xavier |
| Abstract: | We offer a shipper and a carrier the choice among three contracts in which to frame their relationship. Both can also take recourse in the transport spot market. Demand and price on the spot market are dependent exogenous stochastic processes. We model the outcome of this endogenous choice of contract. The results, given in closed form, are different from those presented in the literature. Using numeric instances, we show how a choice is made and which contract would be preferred. Comparison on the variance of the economic returns are offered. The conclusions are applicable when the carrier is not capacity constrained. |
| Keywords: | transport; stochastic process; MPC; minimum purchase commitment; quantity flexibility; relational contract |
| JEL: | L14 C02 C73 C72 |
| Date: | 2009–01–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:18392&r=ure |
| By: | Sally Kwak (Department of Economics, University of Hawaii at Manoa); James Mak (Department of Economics, University of Hawaii at Manoa) |
| Abstract: | Economic theory suggests that switching from a general property tax to a split-rate tax increases land use efficiency and stimulates urban core development while preserving the environment and reducing urban sprawl. Under split-rate property taxation, land is typically taxed at a significantly higher rate than improvements (buildings). Since the mid-1960s, Hawaii lawmakers have experimented with the split-rate system to encourage economic growth and effect land reform. Recently, Kauai County has adopted the unusual practice of taxing improvements at a higher rate than on land. Kauai’s “inverted” split rate property tax provides tax relief to residents who own and occupy modest homes and simultaneously exports taxes to the tourist industry and visitors. This paper chronicles and explains the rationale behind Hawaii state and county experiments with split rate property taxation. |
| Keywords: | Property taxes, split rate property taxation, tourist taxes |
| JEL: | H |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:200915&r=ure |
| By: | Jansson, Kjell (Royal Institute of Technology Stockholm); Pyddoke, Roger (VTI) |
| Abstract: | Gross contracts appear to be the most common contract form for procured public transport in Sweden and elsewhere. This contract form, it has been argued, gives weak incentives for operators to deliver the desired quality level. Therefore many procuring public transport authorities amend contracts with quality incentives. This paper is probably one of the first studies to examine how such quality incentives influence quality outcomes with focus on cancelled departures and delays. The main findings are that the introduction of quality incentives are correlated with both increases and decreases in measured quality outcomes. We do not think, however, that the incentives in themselves have negative effects but hypothesize that the results are driven by underlying cost changes for achieving desired quality objectives that exceed the possible revenues from the incentives. In interviews with the Stockholm public transport authority (SL) and some operators, two central observations surface. The first is that there are causes for quality failures that are not solely the responsibility of operators and that these are therefore not fully reached by the incentives, and the second is that the operators believe that they have exhausted what they can do under the current contracts. |
| Keywords: | procured; public transport; gross contract; net contract; quality; incentive |
| JEL: | R48 |
| Date: | 2009–10–29 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:vtiwps:2009_013&r=ure |
| By: | Kurt Schmidheiny (Universitat Pompeu Fabra); Marius Brülhart (Université de Lausanne) |
| Abstract: | It is well understood that the two most popular empirical models of location choice-conditional logit and Poisson - return identical coefficient estimates when the regressors are not individual specific. We show that these two models differ starkly in terms of their implied predictions. The conditional logit model represents a zero-sum world, in which one region's gain is the other regions' loss. In contrast, the Poisson model implies a positive-sum economy, in which one region's gain is no other region's loss. We also show that all intermediate cases can be represented as a nested logit model with a single outside option. The nested logit turns out to be a linear combination of the conditional logit and Poisson models. Conditional logit and Poisson elasticities mark the polar cases and can therefore serve as boundary values in applied research. |
| Keywords: | firm location, residential choice, conditional logit, nested logit, Poisson count model |
| JEL: | C25 R3 H73 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2009/10/doc2009-14&r=ure |
| By: | Alejandrina Salcedo; Todd Schoellman; Michèle Tertilt |
| Abstract: | Living arrangements have changed enormously over the last two centuries. While the average American today lives in a household of only three people, in 1850 household size was twice that figure. Further, both the number of children and the number of adults in a household have fallen dramatically. We develop a simple theory of household size where living with others is beneficial solely because the costs of household public goods can be shared. In other words, we abstract from intra-family relations and focus on households as collections of roommates. The model's mechanism is that rising income leads to a falling expenditure share on household public goods, which endogenously makes household formation less beneficial and privacy more attractive. To assess the magnitude of this mechanism, we first calibrate the model to match the relationship between household size, consumption patterns, and income in the cross-section at the end of the 20th century. We then project the model back to 1850 by changing income. We find that our proposed mechanism can account for 37 percent of the decline in the number of adults in a household between 1850 and 2000, and for 16 percent of the decline in the number of children. |
| JEL: | D1 E1 J11 N30 O1 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15477&r=ure |
| By: | Petra Ens (Georg-August-Universität Göttingen) |
| Abstract: | Literature has long learned about the welfare improving effect of equalization in tax competition environments. By setting incentives to local authorities, public spending becomes efficient in spite of relying on a mobile resource as the tax base. This paper proves that this result cannot hold when local players have influence on the shape of the transfer system. A bargaining concerning equalization may change the incentives arising from equalization. |
| Keywords: | tax competition, fiscal equalization, nash bargaining, cooperation |
| JEL: | H10 H71 H77 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2009/10/doc2009-16&r=ure |
| By: | Iyer, Rajkamal (MIT); Khwaja, Asim Ijaz (Harvard University); Luttmer, Erzo F. P. (Harvard University); Shue, Kelly (Harvard University) |
| Abstract: | The current banking crisis highlights the challenges faced in the traditional lending model, particularly in terms of screening smaller borrowers. The recent growth in online peer-to-peer lending marketplaces offers opportunities to examine different lending models that rely on screening by multiple peers. This paper evaluates the screening ability of lenders in such peer-to-peer markets. Our methodology takes advantage of the fact that lenders do not observe a borrower's true credit score but only see an aggregate credit category. We find that lenders are able to use available information to infer a third of the variation in creditworthiness that is captured by a borrower's credit score. This inference is economically significant and allows lenders to lend at a 140-basis-points lower rate for borrowers with (unobserved to lenders) better credit scores within a credit category. While lenders infer the most from standard banking "hard" information, they also use non-standard (subjective) information. Our methodology shows, without needing to code subjective information that lenders learn even from such "softer" information, particularly when it is likely to provide credible signals regarding borrower creditworthiness. Our findings highlight the screening ability of peer-to-peer markets and suggest that these emerging markets may provide a viable complement to traditional lending markets, especially for smaller borrowers. |
| JEL: | D53 D80 G21 L81 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp09-031&r=ure |
| By: | Jackline Wahba (University of Southampton); Yves Zenou (Stockholm University, Research Institute of Industrial Economics (IFN)) |
| Abstract: | The aim of this paper is to investigate whether return migrants are more likely to become entrepreneurs than non-migrants. We develop a theoretical search model that puts forward the trade off faced by returnees since overseas migration provides an opportunity for human and physical capital accumulation but, at the same time, may lead to a loss of social capital back home. We test the predictions of the model using data from Egypt. We find that, even after controlling for the endogeneity of the temporary migration decision, an overseas returnee is more likely to become an entrepreneur than a non-migrant. Although migrants lose their original social networks whilst overseas, savings and human capital accumulation acquired abroad over-compensate for this loss. Our results also suggest that social networks have no significant impact on becoming entrepreneurs for returnees but matter for nonmigrants. |
| Keywords: | Social capital, entrepreneurship, selection, savings. |
| JEL: | L26 O12 O15 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:200930&r=ure |
| By: | Stulz, Rene M. (Ohio State University) |
| Abstract: | Many observers have argued that credit default swaps contributed significantly to the credit crisis. Of particular concern to these observers are that credit default swaps trade in the largely unregulated over-the-counter market as bilateral contracts involving counterparty risk and that they facilitate speculation involving negative views of a firm's financial strength. Some observers have suggested that credit default swaps would not have made the crisis worse had they been traded on exchanges. I conclude that credit default swaps did not cause the dramatic events of the credit crisis, that the over-the-counter credit default swaps market worked well during much of the first year of the credit crisis, and that exchange trading has both advantages and costs compared to over-the-counter trading. Though I argue that eliminating over-the-counter trading of credit default swaps could reduce social welfare, I also recognize that much research is needed to understand better and quantify the social gains and costs of derivatives in general and credit default swaps in particular. |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:ohidic:2009-16&r=ure |