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on Urban and Real Estate Economics |
| By: | Yasuo Kawawaki (Ph.D., Osaka School of International Public Policy, Osaka University) |
| Abstract: | Housing wealth and financial wealth are the most important asset categories in households' portfolios, and they are the joint outcomes of one decision process by households. This paper investigates how the investment decision for housing and financial wealth of households are interrelated with the model based on Hochguertel and van Soest (2001) using the cross-sectional data drawn from the survey on Japanese metropolitan households. I use a bivariate regression model for housing demand and financial demand assuming lower limitation constraints on housing demand, in which the financial demand is switched to the different function according to the housing demand constraint is binding or not (Type 4 Tobit Model). It is found that the effect of the increase in renters' income or age on their financial demand is not clear implying that part of their financial demand spills over to housing demand, and it is also found that young homeowners use part of their home mortgage debts to hold financial assets (Excess Mortgage Demand) in the recent low interest rate condition. |
| Keywords: | Housing Wealth, Financial Wealth, Switching Regression Model, Type4 Tobit, Excess Mortgage Demand |
| JEL: | C31 C34 D31 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:osp:wpaper:09j009&r=ure |
| By: | Pedro S. Martins |
| Abstract: | How do teacher incentives affect student achievement? Here we examine the effects of the recent introduction of teacher performance-related pay and tournaments in Portugal's public schools. Specifically, we conduct a difference-in-differences analysis based on population matched student-school panel data and two complementary control groups: public schools in autonomous regions that were exposed to lighter versions of the reform; and private schools, which are subject to the same national exams but whose teachers were not affected by the reform. We find that the focus on individual teacher performance decreased student achievement, particularly in terms of national exams, and increased grade inflation. |
| Keywords: | Tournaments, Public Sector, Matched School-Student Data |
| JEL: | I21 M52 I28 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:cgs:wpaper:29&r=ure |
| By: | Atila Abdulkadiroglu; Joshua Angrist; Susan Dynarski; Thomas J. Kane; Parag Pathak |
| Abstract: | Charter schools are publicly funded but operate outside the regulatory framework and collective bargaining agreements characteristic of traditional public schools. In return for this freedom, charter schools are subject to heightened accountability. This paper estimates the impact of charter school attendance on student achievement using data from Boston, where charter schools enroll a growing share of students. We also evaluate an alternative to the charter model, Boston's pilot schools. These schools have some of the independence of charter schools, but operate within the school district, face little risk of closure, and are covered by many of same collective bargaining provisions as traditional public schools. Estimates using student assignment lotteries show large and significant test score gains for charter lottery winners in middle and high school. In contrast, lottery-based estimates for pilot schools are small and mostly insignificant. The large positive lottery-based estimates for charter schools are similar to estimates constructed using statistical controls in the same sample, but larger than those using statistical controls in a wider sample of schools. The latter are still substantial, however. The estimates for pilot schools are smaller and more variable than those for charters, with some significant negative effects. |
| JEL: | H52 I21 I28 J24 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15549&r=ure |
| By: | Deborah A. Cobb-Clark; Mathias G. Sinning |
| Abstract: | This paper examines the effect of neighborhood diversity on the nativity gap in homevalue appreciation in Australia. Specifically, immigrant homeowners experienced a 41.7 percent increase in median home values between 2001 and 2006, while the median value of housing owned by the native-born increased by 59.4 percent over the same period. We use a semi-parametric decomposition approach to assess the relative importance of the various determinants of home values in producing this gap. We find that the differential returns to housing wealth are not related to changes in the nature of the houses or the neighborhoods in which immigrants and native-born homeowners live. Rather, the gap stems from the fact that over time there were differential changes across groups in the hedonic prices (i.e., returns) associated with the underlying determinants of home values. |
| Keywords: | international migration, home-ownership, decomposition analysis |
| JEL: | F22 D31 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:auu:dpaper:624&r=ure |
| By: | Hajime Tomura |
| Abstract: | This paper uses a small-open economy model for the Canadian economy to examine the optimal Taylor-type monetary policy rule that stabilizes output and inflation in an environment where endogenous boom-bust cycles in house prices can occur. The model shows that boom-bust cycles in house prices emerge when credit-constrained mortgage borrowers expect that future house prices will rise and this expectation is neither shared by savers nor realized ex-post. These boom-bust cycles replicate the stylized features of housing-market boom-bust cycles in industrialized countries. In an environment where mortgage borrowers are occasionally over-optimistic, the central bank should be less responsive to inflation, more responsive to output, and slower to adjust the nominal policy interest rate. This optimal monetary policy rule dampens endogenous boom-bust cycles in house prices, but prolongs inflation target horizons due to weak policy reactions to inflation fluctuations after fundamental shocks. |
| Keywords: | Credit and credit aggregates; Financial stability; Inflation targets |
| JEL: | E44 E52 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:09-32&r=ure |
| By: | Raul Ramos (AQR-IREA, Universitat de Barcelona); Jordi Suriñach (AQR-IREA, Universitat de Barcelona); Manuel Artís (AQR-IREA, Universitat de Barcelona) |
| Abstract: | This paper analyses the differential impact of human capital, in terms of different levels of schooling, on regional productivity and convergence. The potential existence of geographical spillovers of human capital is also considered by applying spatial panel data techniques. The empirical analysis of Spanish provinces between 1980 and 2007 confirms the positive impact of human capital on regional productivity and convergence, but reveals no evidence of any positive geographical spillovers of human capital. In fact, in some specifications the spatial lag presented by tertiary studies has a negative effect on the variables under consideration. |
| Keywords: | Regional convergence, productivity, human capital composition, geographical spillovers. |
| JEL: | O18 O47 R23 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:xrp:wpaper:xreap2009-15&r=ure |
| By: | Patacchini, Eleonora; Zenou, Yves |
| Abstract: | This paper studies whether conformism behavior affects individual outcomes in crime. We present a social network model of peer effects with ex-ante heterogeneous agents and show how conformism and deterrence affect criminal activities. We then bring the model to the data by using a very detailed dataset of adolescent friendship networks. A novel social network-based empirical strategy allows us to identify peer effects for different types of crimes. We find that conformity plays an important role for all crimes, especially for petty crimes. This suggests that, for juvenile crime, an effective policy should not only be measured by the possible crime reduction it implies but also by the group interactions it engenders. |
| Keywords: | linear-in-means model; social networks; social norms; spatial autoregressive model |
| JEL: | A14 C21 D85 K42 Z13 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7565&r=ure |
| By: | Dante Contreras; Patricia Medrano |
| Abstract: | This paper uses alternative measures of neighborhood quality to study its impact on student performance in school. The Chilean voucher-based education system allows us to test separately for neighborhood and traditional in-classroom peer effects, which have been traditionally empha- sized by the literature. We use the Human Development Index reported by United Nations, and the relative number of books in public libraries at the county level, to measure neighborhood quality. We ?nd that a 5 basis point increase in the HDI Index, is related to an increase of 1 to 4 points in the SIMCE test, depending on the speci?cation. The e?ect is equivalent to half a year increase in mothers education (one additional year achieves a 7 point increase in SIMCE scores). Interestingly, the e?ect remains when we look at the sample of random movers. |
| JEL: | O18 Z13 J18 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:udc:wpaper:wp302&r=ure |
| By: | Rusche, Karsten; Oberst, Christian |
| Abstract: | For more than ten years the concept of European Metropolitan Regions is fixed in the German regional planning system. This article uses the shift-share-technique to assess the economic performance of the eleven German metropolitan areas based on a national comparison. Firstly, there is a clear differentiation of different sets of metropolitan regions. Secondly, four categories of regions are implemented to analyze intraregional growth patterns. Here the category of agglomerations around the metropolitan core is identified as the growth foci in German employment. The Hinterland of the metropolitan regions as kind of edge regions between agglomeration and rural areas is characterized by relatively low economic performance. |
| Keywords: | metropolitan regions; employment growth; shift-share analysis; agglomeration economies |
| JEL: | O11 O18 R11 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:18887&r=ure |
| By: | Degen, Kathrin; Fischer, Andreas M |
| Abstract: | This study examines the behavior of Swiss house prices to immigration flows for 85 districts from 2001 to 2006. The results show that the nexus between immigration and house prices holds even in an environment of low house price inflation and modest immigration flows. An immigration inflow equal to 1% of an area’s population is coincident with an increase in prices for single-family homes of about 2.7%: a result consistent with previous studies. The overall immigration effect for single-family houses captures almost two-thirds of the total price increase. |
| Keywords: | house prices; immigration |
| JEL: | F22 J61 R21 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7583&r=ure |
| By: | De Martí, Joan; Zenou, Yves |
| Abstract: | We analyze a model of network formation with agents that belong to different communities and an endogenous cost structure. Both individual benefits and costs depend on direct as well as indirect connections. Benefits of an indirect connection decrease with distance in the network, while the cost of a link depends on the type of agents involved in it as well as the rest of linkage decisions of both of them. Two individuals from the same community always face a low linking cost. The cost of forming a relationship for two individuals belonging to different communities diminishes with the rate of exposure of each of them to the other community. As a result, our model introduces endogenous social distances that rely on individual positions in the network. We derive a number of results with regard to equilibrium networks: (i) socialization among the same type of agents might be weak even if the within-type link cost is very low; (ii) oppositional identity patterns can arise for a wide range of parameters; (iii) integrated networks can be socially preferable to segregated networks. |
| Keywords: | bridges; ethnic minorities; identity; Network formation; social norms; structural holes |
| JEL: | A14 D85 J15 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7566&r=ure |
| By: | Maarten Janssen; Paul Pichler; Simon Weidenholzer |
| Abstract: | A large variety of markets, such as retail markets for gasoline or mortgage markets, are characterized by a small number of firms offering a fairly homogenous product at virtually the same cost, while consumers, being uninformed about this cost, sequentially search for low prices. The present paper provides a theoretical examination of this type of market, and confronts the theory with data on retail gasoline prices. We develop a sequential search model with incomplete information and characterize a perfect Bayesian equilibrium in which consumers follow simple reservation price strategies. Firms strategically exploit consumers being uninformed about their production cost, and set on average higher prices compared to the standard complete information model. Thus, consumer welfare is lower. Using data on the gasoline retail market in Vienna (Austria), we further argue that incomplete information is a necessary feature to explain observed gasoline prices within a sequential search framework. |
| JEL: | D40 D83 L13 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:vie:viennp:0914&r=ure |
| By: | Gylfi Zoega (Department of Economics, Mathematics & Statistics, Birkbeck) |
| Abstract: | A medium-term relationship exists between share prices, normalised by labour productivity, and the rate of unemployment in the OECD countries. A similar relationship appears to exist between unemployment and house prices. This helps explain decadal changes in mean unemployment, such as the shift to higher mean unemployment in the Continental European countries in the 1970s and 1980s that coincided with a fall in the level of share prices, as well as differences in mean unemployment between countries. |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:bbk:bbkefp:0917&r=ure |
| By: | Sébastien TERRA (INSEE Auvergne) |
| Abstract: | In this paper, we provide a new framework to assess the validity of Zipf 's Law for cities. Zipf 's Law states that, within a country, the distribution of city sizes follows a Pareto distribution with a Pareto index equal to 1. We adopt a two-step approach where we formally test if the distribution of city sizes is a Pareto distribution and then we estimate the Pareto index. Through Monte Carlo experiments, we investigate the nite sample performances of this testing procedure and we compare the small-sample properties of a new estimator (the minimum variance unbiased estimator) to those of commonly used estimators. The minimum variance unbiased estimator turns out to be more efficient and unbiased. We use this two-step approach to examine empirically the validity of Zipf 's Law on a sample of 115 countries. Zipf 's Law is not rejected in most countries (62 out of 115, or 53.9%). |
| Keywords: | Minimum variance unbiased estimator, Monte Carlo study, Pareto distribution, Zipf 's Law, developing countries |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:cdi:wpaper:1102&r=ure |
| By: | Yang, Zaigui |
| Abstract: | This paper uses an overlapping generations model to investigate the urban public pension in China. It examines the effects of the replacement rates and population growth rate on the capital-labor ratio, pension benefits, consumption and utility, and finds the optimal replacement rate. It is shown that raising the individual account benefit replacement rate only induces the increase in the individual account benefits. Raising the social pool benefit replacement rate induces the increase in the social pool benefits and retirement-period consumption, while the decrease in the capital-labor ratio, individual account benefits, working-period consumption and utility. The fall in the population growth rate leads to the increase in the capital-labor ratio, social pool benefits, individual account benefits, working-period consumption and utility, and leads to a decrease in the retirement-period consumption. The optimal social pool benefit replacement rate depends on the individual discount factor, social discount factor, capital share of income and population growth rate, and it decreases in the case of falling population growth rates. It will do more good than harm to raise the individual account benefit replacement rate, reduce the social pool benefit replacement rate and strictly implement China's population policy. |
| Keywords: | Urban public pension; Replacement rate; Population growth rate |
| JEL: | H55 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:18846&r=ure |
| By: | Johan Almenberg; Artashes Karapetyan |
| Abstract: | We identify a consumer bias with regard to different sources of debt-financing. Less salient debt may generate psychological benefits.This should be weighed against the possible economic costs of a suboptimal capital structure, but low levels of financial literacy make it unlikely that all households perceive the full economic costs. As a result there is a bias in favour of less salient debt. In a market with limited scope for arbitrage this consumer bias is likely to generate inefficiencies. We examine such a market in both theory and practice. The predictions of our model are given strong support by market data. |
| Keywords: | Household finance, mental accounting, co-op, capital structure |
| JEL: | D12 G14 G21 G32 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:zur:iewwpx:453&r=ure |
| By: | Marcelin Joanis |
| Abstract: | This paper sets out a simple dynamic probabilistic voting model in which a government allocates a fixed budget across electoral districts that differ in their loyalty to the ruling party. The model predicts that the geographic pattern of spending depends on the way the government balances long-run ‘machine politics’ considerations and the more immediate concern to win over swing voters. Empirical results obtained from a panel of electoral districts in Québec provide robust evidence that districts which display loyalty to the incumbent government receive disproportionately more spending, especially close to an election, at odds with the standard ‘swing voter’ view. <P>Cet article développe un modèle dynamique simple de vote probabiliste dans lequel un gouvernement répartit un budget fixe entre des circonscriptions électorales qui diffèrent selon leur degré de loyauté au parti au pouvoir. Le modèle prédit que la répartition géographique des dépenses dépend de la manière dont le gouvernement assure l’équilibre entre des considérations de long terme de type « machine électorale » et des considérations plus immédiates de victoire dans les circonscriptions pivot. Des résultats empiriques obtenus à partir d’un panel de circonscriptions électorales au Québec montrent que les circonscriptions qui sont loyales au parti au pouvoir reçoivent plus que leur part de dépenses, particulièrement à l’approche d’une élection, contrairement à la vision théorique traditionnelle prédisant plus de dépenses dans les circonscriptions pivot. |
| Keywords: | partisan loyalty, swing voters, political competition, local public goods, distributive politics, long-run relationships. , loyauté partisane, électeurs pivot, concurrence électorale, biens publics locaux, clientélisme politique, relations de long terme. |
| JEL: | D72 H41 H54 |
| Date: | 2009–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2009s-46&r=ure |
| By: | Matthew A Cole; Robert J R Elliott; Jing Zhang |
| Abstract: | In this paper we investigate the relationship between economic growth and industrial pollution emissions in China using data for 112 major cities between 2001 and 2004. Using disaggregated data we separate FDI inflows from Hong Kong, Macao and Taiwan from those of other foreign economies. We examine two industrial water pollution indicators (wastewater and petroleum-like matter) and four industrial air pollution indicators (waste gas, sulphur dioxide, soot and dust). Our results suggest that most air and water emissions rise with increases in economic growth at current income levels. The share of output of domestic and foreign owned firms increases several pollutants in a statistically significant manner while output of firms from Hong Kong, Macao and Taiwan either reduces pollution or is statistically insignificant. |
| Keywords: | FDI, economic growth, pollution, cities |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:bir:birmec:09-15&r=ure |
| By: | André Martínez; Aldo Musacchio |
| Abstract: | In this paper, we contribute to the discussion of what determines country risk by arguing that an important explanatory factor is the impact that commodities have on the capacity to pay. We use a newly created data base with state-level fiscal and risk premium data for Brazil states between 1891 and 1930 to show that Brazilian states with natural endowments that allowed them to export commodities that were in high demand ended up having higher revenues per capita and, thus, lower cost of capital. We also explain that the variation in revenues per capita across states was both a product of the variation in natural endowments and a commodity boom that had asymmetric effects among states. We end by running instrumental variable estimates using indices of export prices for each state to instrument for revenues per capita. Our IV estimates confirm our results that states with commodities that had higher price increases had lower risk premia. |
| Keywords: | State public debt, fiscal decentralization, endowments, public revenue. |
| JEL: | H71 H74 N26 N46 N96 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:bdm:wpaper:2009-12&r=ure |