nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2010‒02‒05
23 papers chosen by
Steve Ross
University of Connecticut

  1. Cities and Growth: Earnings Levels Across Urban and Rural Areas: The Role of Human Capital By Beckstead, Desmond; Brown, W. Mark; Guo, Yusu; Newbold, Bruce
  2. The Effect of Employment Protection on Worker Effort: Evidence from Public Schooling By Brian A. Jacob
  3. The Determinants of Economic Growth in European Regions By Jesus Crespo-Cuaresma; Gernot Doppelhofer; Martin Feldkircher
  4. Private education provision and public finance : the Netherlands By Patrinos, Harry Anthony
  5. Does the Interest Risk Premium Predict Housing Prices? By Gogas, Periklis; Pragidis, Ioannis
  6. Interurban Passenger Transport: Economic Assessment of Major Infrastructure Projects By Ginés de Rus
  7. High-Speed Inter-City Transport System in Japan Past, Present and the Future By Katsuhiro Yamaguchi
  8. The Wealth of Older Americans and the Sub-Prime Debacle The Wealth of Older Americans and the Sub-Prime Debacle By Barry Bosworth; Rosanna Smart
  9. The Importance of Labour Mobility for Spillovers across Industries By Johannes Pöschl; Neil Foster
  10. Estimating the Agglomeration Benefits of Transport Investments: Some Tests for Stability By Daniel J. Graham; Kurt Van Dender
  11. Can Mangroves Minimize Property Loss during Big Storms? An Analysis of House Damage due to the Super Cyclone in Orissa By Saudamini Das
  12. How Transport Costs Shape the Spatial Pattern of Economic Activity By Jacques-François Thisse
  13. Structural Interactions in Spatial Panels By Bhattacharjee, A.; Holly, S.
  14. Competition or Cooperation in Public Transport By OECD
  15. The Prospects for Inter-Urban Travel Demand By Yves Crozet
  16. International Air Passenger Transport in the Future By David Gillen
  17. Cut Loose: State and Local Layoffs of Public Employees in the Current Recession By Matt Sherman; Nathan Lane
  18. When to Invest in High-Speed Rail Links and Networks? By Chris Nash
  19. The competitive impact of hypermarket retailers on gasoline prices By Zimmerman, Paul R.
  20. Understanding Interactions in Social Networks and Committees By Bhattacharjee, A.; Holly, S.
  21. Spatial competition between health care providers: effects of standardization By Kuchinke, Björn A.; Zerth, Jürgen; Wiese, Nadine
  22. Knowledge diffusion and knowledge transfer: two sides of the medal By Klarl, Torben
  23. Long-Distance Passenger Rail Services in Europe: Market Access Models and Implications for Germany By Thorsten Beckers; Christian von Hirschhausen; Fabian Haunerland; Matthias Walter

  1. By: Beckstead, Desmond; Brown, W. Mark; Guo, Yusu; Newbold, Bruce
    Abstract: Using 2001 Census data, this paper investigates the extent to which the urban-rural gap in the earnings of employed workers is associated with human capital composition and agglomeration economies. Both factors have been theoretically and empirically linked to urban-rural earnings differences. Agglomeration economies-the productivity enhancing effects of the geographic concentration of workers and firms-may underlie these differences as they may be stronger in larger urban centres. But human capital composition may also drive the urban-rural earnings gap if workers with higher levels of education and/or experience are more prevalent in cities. The analysis finds that up to one-half of urban-rural earnings differences are related to human capital composition. It also demonstrates that agglomeration economies related to city size are associated with earnings levels, but their influence is significantly reduced by the inclusion of controls for human capital.
    Keywords: Education, training and learning, Business performance and ownership, Labour, Educational attainment, Regional and urban profiles, Wages, salaries and other earnings
    Date: 2010–01–25
  2. By: Brian A. Jacob
    Abstract: This paper studies the effect of employment protection on worker productivity and firm output in the context of a public school system. In 2004, the Chicago Public Schools (CPS) and Chicago Teachers Union (CTU) signed a new collective bargaining agreement that gave principals the flexibility to dismiss probationary teachers (defined as those with less than five years of experience) for any reason, and without the elaborate documentation and hearing process typical in many large, urban school districts. Results suggest that the policy reduced annual teacher absences by roughly 10 percent and reduced the prevalence of teachers with 15 or more annual absences by 20 percent. The effects were strongest among teachers in elementary schools and in low-achieving, predominantly African-American high schools, and among teachers with highpredicted absences. There is also evidence that the impact of the policy increased substantially after its first year.
    JEL: I20 I21 I28 J3 J45 J5 J63
    Date: 2010–01
  3. By: Jesus Crespo-Cuaresma; Gernot Doppelhofer; Martin Feldkircher
    Abstract: We use Bayesian Model Averaging (BMA) to evaluate the robustness of determinants of economic growth in a new dataset of 255 European regions in the period 1995-2005. We use three different specifications based on (i) the cross-section of regions, (ii) the cross-section of regions with country fixed effects, and (iii) the cross-section of regions with a spatial autoregressive (SAR) structure. Our results indicate that the income convergence process between countries is dominated by the catching-up process of regions in Central and Eastern Europe (CEE), whereas convergence within countries is mostly a characteristic of regions in old EU member states. We find robust evidence of asymmetric growth performance within countries, with a growth bonus in regions containing capital cities which is particularly sizeable in CEE countries, as well as a robust positive effect of education. The results are robust if we allow for spatial spillovers a priori. In this setting, we also find robust evidence of positive spillovers leading to growth clusters.
    Keywords: model uncertainty, Bayesian Model Averaging (BMA), spatial autoregressive model, determinants of economic growth, urban agglomerations, European regions
    JEL: C11 C15 C21 R11 O52
    Date: 2009–09
  4. By: Patrinos, Harry Anthony
    Abstract: One of the key features of the Dutch education system is freedom of education -- freedom to establish schools and organize teaching. Almost 70 percent of schools in the Netherlands are administered by private school boards, and all schools are government funded equally. This allows school choice. Using an instrument to identify school choice, it is shown that the Dutch system promotes academic performance. The instrumental variables results show that private school attendance is associated with higher test scores. Private school size effects in math, reading, and science achievement are 0.17, 0.28, and 0.18.
    Keywords: Tertiary Education,Education For All,Secondary Education,Primary Education,Teaching and Learning
    Date: 2010–01–01
  5. By: Gogas, Periklis (Democritus University of Thrace, Department of International Economic Relations and Development); Pragidis, Ioannis (Democritus University of Thrace, Department of International Economic Relations and Development)
    Abstract: In this paper we examine the predictability power of long term risk premium over Housing prices in U.S.A. of a period of 19 years (1991-2009). For reasons that are cited clearly in the text, the interest rate risk premium is preferred over yield curve. Under a probit framework, it is tested whether recent housing pricing bust could have been predicted. We employ adaptive expectations for the formation of the agents’ short-term interest rate expectations. The ability to forecast such price changes is of great importance to investors and analysts of the housing market and for the design of financial institutions’ mortgage policy in a more prudential path.
    Keywords: Housing prices; risk premium; probit; forecasting
    JEL: D58 D74 E31 G21 G32 H20 R20
    Date: 2010–01–26
  6. By: Ginés de Rus
    Abstract: The future of interurban public transport will be significantly affected by public sector decisions concerning investment in infrastructure, particularly the construction of new high-speed rail lines in medium-distance corridors where cars, buses, airplanes and conventional trains are the competing modes of transport. The distribution of traffic between the alternative modes of transport depends on the generalized prices, which fundamentally consist of costs, time and government’s pricing decisions. High-speed rail investment, financed by national governments and supranational institutions such as the European Union (EU), has drastically changed the previous equilibrium in the affected corridors. This paper discusses the economic rationale for allocating public money to the construction of high-speed rail infrastructure and how the present institutional design affects the selection of projects by national and regional governments, with deep long-term effects in these corridors and beyond.
    Keywords: infrastructure, high speed rail, Intermodal competition, incentives, project evaluation
    Date: 2009–12
  7. By: Katsuhiro Yamaguchi
    Abstract: With the advent of Shinkansen in 1964, a unique inter-city transport network in which high-speed railway and air transport developed simultaneously, emerged in Japan, and modal choice between them based on price and speed has been manifested. Looking ahead, the next generation high-speed transport, the Maglev, is on the horizon. In order to capture the full impacts of the Maglev technology, simulation analysis with a dynamic spatial nested logit model was conducted. From this, we identified a significant opportunity for the Maglev Super-express between Tokyo, Nagoya and Osaka, but with net benefitsexceeding net costs only with an annual economic growth of approximately 2% - 3% achieved in the next 65 years in Japan. If such economic condition were realized, the total air transport market would also continue to grow despite strong competition from the Shinkansen/Maglev system. Another point of interest is Maglev’s impact on reducing global warming. CO2 emission from Maglev is one-third of air transport. Introduction of Maglev Super-express in inter-city transport, however, also attracts passengers from Shinkansen that has five times lower CO2 emission intensity. Indeed, our simulation analysis shows that total CO2 emissions from high-speed inter-city transport increases when Maglev Super-express is introduced. Increase in total CO2 emission from electricity users including Maglev Super-express could be mitigated by energy conversion sector’s effort to reduce CO2 content of electric power supply, for instance, by increasing utilization of nuclear energy. Further research in assessing possible impact of capacity constraint in existing network, not considered in this paper, would facilitate deeper understanding of the future high-speed inter-city transport system.
    Date: 2009–12
  8. By: Barry Bosworth; Rosanna Smart
    Abstract: This study explores the consequences of the housing price bubble and its collapse for the wealth of older households. We utilize micro survey data to follow the rise in home values to 2007, observing which households enjoyed home price appreciation and how they responded in terms of equity withdrawal. We then use the SCF survey data on wealth holdings from 2007 in combination with national price indexes to simulate the magnitude and distribution of wealth loss from the 2008-2009 financial crisis. The collapse of the housing market triggered a broad decline of asset prices that greatly reduced the wealth of all households. While older households mitigated their real estate and equity losses with relatively stable fixed-value assets and pension programs, no demographic group was left unscathed. Prior to the financial crisis, our study and others had concluded that the current baby-boom cohort of near retirees were surprisingly well-prepared for retirement compared with similarly aged households over the past quarter century. Unless there is a strong recovery of asset values in the next few years, that favorable assessment is no longer true.
    Date: 2009–11
  9. By: Johannes Pöschl (The Vienna Institute for International Economic Studies, wiiw); Neil Foster (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: This paper addresses the link between productivity and labour mobility. The hypothesis tested in the paper is that technology is transmitted across industries through the movement of skilled workers embodying human capital. The embodied knowledge is then diffused within the new environment creating spillovers and leading to productivity improvements. A theoretical framework is presented wherein productivity growth is modelled through knowledge acquisition with respect to labour mobility. The empirical estimates confirm the existence of positive cross-sectoral knowledge spillovers and indicate that labour mobility has beneficial effects on industry productivity. Due to the fact that labour mobility is closely linked to input-output relations this finding provides evidence suggesting that part of the estimated productivity effects of domestic rent spillovers are in fact due to knowledge spillovers resulting from labour mobility.
    Keywords: knowledge spillovers, labour mobility, productivity, manufacturing, industry, human capital, growth
    JEL: J24 J60 O47
    Date: 2009–10
  10. By: Daniel J. Graham; Kurt Van Dender
    Abstract: The case for including agglomeration benefits within transport appraisal rests on an assumed causality between access to economic mass and productivity. Such causality is difficult to establish empirically because estimates may be subject to sources of bias from endogeneity and confounding. They may also be sensitive to the range of sample variance in agglomeration being used. The purpose of this paper is to demonstrate some of the key difficulties that the researcher faces in estimating agglomeration economies and to show how these can affect the calculation of agglomeration benefits for the appraisal of transport projects. The results show a high degree of sensitivity to treatment for unobserved heterogeneity and to differences in the sample variance of agglomeration. A key conclusion is that we are unable to distinguish agglomeration effects from other potential explanations for productivity increases, most notably functional heterogeneity. Consequently, the agglomeration effects of transport investments cannot be interpreted causally.
    Keywords: transport, agglomeration, causality, heterogeneity, confounding
    JEL: R12 R42
    Date: 2009–12
  11. By: Saudamini Das
    Abstract: This paper estimates the storm protection benefits due to mangroves during the super cyclone of 1999 in Orissa. By combining GIS data with census information, the paper examines the mangrove mediated effects on residential property in the Kendrapada district of Orissa.
    Keywords: village level data, hurricane, rural households, socio-economic factors, plantation, Averted damages, Mangroves, house, Storm Protection, Wind damages, Property loss, Orissa, cyclone, census, residential property, kendrapada, district, benefits, GIS data
    Date: 2010
  12. By: Jacques-François Thisse
    Abstract: By its very nature, transport is linked to trade. Trade being one of the oldest human activities, the transport of commodities is, therefore, a fundamental ingredient of any society. People get involved in trade because they want to consume goods that are not produced within reach. The Silk Road provides evidence that shipping high-valued goods over long distances has been undertaken because of this very precise reason. But why is it that not all goods are produced everywhere? The reason is that regions are specialized in the production of certain products. The first explanation for specialization that comes to mind is that nature supplies specific environments needed to produce particular goods. According to Diamond (1997), spatial differences in edible plants, with abundant nutrients, and wild animals, capable of being domesticated to help man in his agricultural and transport activities, explain why only a few regions have become independent centers of food production. Though relevant for explaining the emergence of civilization in a few areas, we must go further to understand why, in the wake of the Industrial Revolution, interregional and international trade has grown so rapidly.
    Date: 2009–12
  13. By: Bhattacharjee, A.; Holly, S.
    Abstract: Traditionally, research has been devoted almost exclusively to estimation of underlying structural models without adequate attention to the drivers of diffusion and interaction across cross section and spatial units. We review some new methodologies in this emerging area and demonstrate their use in measurement and inferences on cross section and spatial interactions. Limitations and potential enhancements of the existing methods are discussed, and several directions for new research are highlighted.
    Keywords: Cross Sectional and Spatial Dependence; SpatialWeights Matrix; Interactions and Di¤usion; Monetary Policy Committee; Generalised Method of Moments.
    JEL: E42 E43 E50 E58
    Date: 2010–01–22
  14. By: OECD
    Abstract: Transport, especially public transport has been at the centre of professional attention from time to time. Although the effect of transport innovation shortly appears and it works high effectively in public transport (as you think of the innovation of bus transport and its dynamic progression) the attention is not due to these results, but due to problems of public transport and to strains in its social contradictions. (Sometimes the transport innovation starts already in public transport sector system, for example innovation of subway and high speed train.) Economic crisis especially highlights social contradictions, when the market is decreasing and enterprises are struggling to survive or to hold monopoly status. New enterprises could go on the market or the existing ones could stay in competition only if they are able to influence and convince passengers to choose them “by getting on”. The third that benefits is often the individual transport, and behind the automobile industry with extended power and influence. My hypothesis is that public transport sector is economically very different to classical categories of market sector, while personal utility and real value do not determine the whole market (included supplies and demands) but the phenomena of pseudo market does it. The sustainability of public transport does not depend on the individual in the sense of passenger, but on the community and on the options of common weal of it. The Institution of Transport Sciences ((KTI)), which celebrated its 70th anniversary in 2008, has been focusing on the market of public transport in the last 8 years, because strain of the market has been realized. The classical orientation of the institute, which was automobile transport and road research, has been widened with railway transport, transport policy and economics research.
    Date: 2009–12
  15. By: Yves Crozet
    Abstract: The great difference between our journeys and activity schedules and those of our forebears lies in the much longer distances we travel. By road, and even more so by rail and air, nowadays we can cover hundreds or even thousands of miles in a few hours. Inter-urban mobility is directly affected by these developments. Where international travel by coach and sailing ship used to take weeks, and intercontinental journeys sometimes even longer, we now count the time in hours. The transport revolution has played a major part in the economic history of the last two centuries (Niveau and Crozet, 2000), but it must be emphasized that the change has been gradual. Over two hundred years have passed between the stage-coach and the high-speed train, the clipper and the jet, during which technological progress and the higher speeds it enables have spread relatively slowly. Even with key technological revolutions like the railways, the automobile and the aeroplane, it took several decades for them to become available to the population at large. From this slow percolation of technological progress into the way we live has arisen the idea that steadily increasing mobility is a structural given of modern society. Further, faster seems to have become the general rule, to such an extent that even space travel, so we are told, will become more widely available in the relatively near future. A few very wealthy people have already become the world's first space tourists. It is the self-evident nature of this long-term trend towards increased mobility that we wish to examine in this report, since a number of factors could well undermine the relatively classic assumption that past trends will continue into the future.
    Date: 2009–12
  16. By: David Gillen
    Abstract: The objective of this paper is relatively straightforward, suggesting “what international air passenger travel will look like in five, ten or fifteen years and why?” This requires answering two questions; what will be the principal determinants of the growth in international air travel and what impact will each of these drivers have on the growth rate? An imbedded question is does history have anything to teach us or are there new forces at work? Canvassing the current aviation trade press finds two schools of thought, one taking the position that this a deep recession but a recession nonetheless and once world economies start recovering air traffic will go back to the typical growth of 4-5 percent annually. A second school is less sanguine, taking the position that it will not be business as usual when economies stop sinking and move to recovery. Any economic recovery is going to involve fundamental changes in institutions, rethinking polices regarding government participation in economies and changes in economic leadership in the world. There is also the hydra of protectionism most prominent now in the US but certainly being practiced elsewhere, and what will happen to foreign ownership restrictions that prior to 2009 were being seen as hurting rather than helping world airlines. All of this will change international aviation going forward.
    Date: 2009–12
  17. By: Matt Sherman; Nathan Lane
    Abstract: In the current recession, millions of Americans have lost their jobs. Unemployment has increased nationwide to levels not witnessed since the 1980s. This issue brief tallies more than 110,000 jobs that have been shed from state and local governments in the last two years and breaks them down by state (and metropolitan area where available). Without the stimulus passed in February of this year, there would have been many more layoffs at the the state and local level.
    Keywords: economic stimulus, fiscal stimulus, recession, ARRA, unemployment
    JEL: H H2 H25 H3 I I1 I18 E E2 E24 E6 E62 E64
    Date: 2009–09
  18. By: Chris Nash
    Abstract: Definitions of high speed rail (HSR) differ, but a common one is rail systems which are designed for a maximum speed in excess of 250 kph (UIC, 2008). These speeds invariably involve the construction of new track, although trains used on them can also use existing tracks at reduced speeds. A number of countries have upgraded existing track for higher speed, with tilting technology on routes with a lot of curves. However such trains do not normally run at speeds above 200 km p h. Their rationale is to upgrade services at relatively low cost in countries which have sufficient capacity to cope with increased divergence of speeds on routes shared with all forms of traffic. Most of the countries which adopted this strategy initially, such as Britain and Sweden, are now considering building HSR. The only form of totally new technology that has come close to being implemented is maglev.
    Date: 2009–12
  19. By: Zimmerman, Paul R.
    Abstract: Hypermarkets are large retail suppliers of general merchandise or grocery items that also sell gasoline, often at very low margins. Using panel data for 1998-2002, this paper estimates the impact of hypermarkets on average state-level retail gasoline prices. The empirical results suggest a robust, economically (and statistically) significant effect of increased competition from hypermarkets. Furthermore, the results also suggest that refiners’ lower the delivered wholesale prices charged to their affiliated lessee-dealer and open-dealer stations in response to increased hypermarket competition, which in turn translates to lower retail (street) prices. The presence of a state motor fuel sales-below-cost (SBC) law may lessen the price-reducing effects from hypermarket competition by 40-67 percent while independently imparting no other offsetting price reductions. Finally, using recently published estimates of the short-run own price elasticity of demand for gasoline, consumer welfare is estimated to have increased in the neighborhood of $488 million over the sample period.
    Keywords: Dealer tank wagon; Hypermarkets; Motor fuel SBC laws; Petroleum; Vertical integration
    JEL: L11 L71 L22
    Date: 2009–06–18
  20. By: Bhattacharjee, A.; Holly, S.
    Abstract: While much of the literature on cross section dependence has focused mainly on estimation of the regression coefficients in the underlying model, estimation and inferences on the magnitude and strength of spill-overs and interactions has been largely ignored. At the same time, such inferences are important in many applications, not least because they have structural interpretations and provide useful interpretation and structural explanation for the strength of any interactions. In this paper we propose GMM methods designed to uncover underlying (hidden) interactions in social networks and committees. Special attention is paid to the interval censored regression model. Our methods are applied to a study of committee decision making within the Bank of England’s monetary policy committee.
    Keywords: Committee decision making; Social networks; Cross section and spatial interaction; Generalised method of moments; Censored regression model; Expectation-Maximisation Algorithm; Monetary policy; Interest rates
    JEL: D71 D85 E43 E52 C31 C34
    Date: 2010–01–22
  21. By: Kuchinke, Björn A.; Zerth, Jürgen; Wiese, Nadine
    Abstract: In the international health care literature there is a broad discussion on impacts of competition in health care markets. But aspects of standardization in regional health care markets with no price competition received comparatively little attention. We use a typical Hotelling-framework (reference case) to analyze a regional health care market with two health care providers competing in (vertical) quality after the scope of medical treatment is set (horizontal quality). We conclude, that in the reference case both health care provider will use vertical quality to separate from each other. In the next step (standardization case) we introduce one health care provider to be the standard leader in vertical quality. In the standardization case a more homogeneous supply can be expected. But, there is a higher possibility that the standard follower has to leave the regional health care market. --
    Date: 2009
  22. By: Klarl, Torben
    Abstract: Understanding the way in which knowledge is technically produced and transferred, and how its diffusion path can be characterized is of fundamental importance for the performance of an economy. Although this fact seems to be plausible ex ante, the relevant literature so far has paid less attention investigating the microeconomic link between knowledge transfer and knowledge diffusion in a comprehensive approach. The aim of this paper is to highlight the link between knowledge transfer, knowledge diffusion and network effects in a stochastic environment, because the adoption decision of new knowledge should be treated as a stochastic event. For this reason, a new knowledge diffusion model in the line of Bass (1969) has been put forward, which integrates knowledge diffusion and knowledge transfer. The advantage of the proposed model is twofold. From a theoretical point of view, not only the so-called unimodal diffusion phenomena can be modelled, but also bimodal diffusion phenomena can be obtained. From an empirical point of view, the model which incorporates heteroscedastic errors and mean reverting behaviour can be theoretically estimated directly within a standard SUR context. --
    Keywords: Knowledge diffusion,knowledge transfer,SUR
    JEL: C50 C51 C61 D89
    Date: 2009
  23. By: Thorsten Beckers; Christian von Hirschhausen; Fabian Haunerland; Matthias Walter
    Abstract: This paper focuses on classifying market access for long-distance passenger rail services in Europe into three main models and discusses the advantages and disadvantages of each of these models. The “Tendered Concessions” model aims to introduce competition for the market by which operators are selected in a tendering procedure. The “Monopolistic Network Operator” model aims to sustain network effects by granting a concession to one operator. The “Open Market” model enhances operators’ entrepreneurship by providing opportunities to plan services based on open access to the network. We present the strengths and opportunities, risks and threats without favoring any one model. Classifying the many design options and their different impacts will help to structure the ongoing policy discussion. The paper also gives an overview of the organization of long-distance passenger railway markets in selected European countries, and discusses the development of Germany’s longdistance rail passenger services in particular.
    Date: 2009–12

This nep-ure issue is ©2010 by Steve Ross. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.