nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2010‒02‒27
fourteen papers chosen by
Steve Ross
University of Connecticut

  1. Consumption and saving decisions in the face of choices about housing and pensions. By Wakefield, M.J.
  2. Are
 friendly? By Carl Gaigné; Stéphane Rioux; Jacques-François Thisse
  3. Specialization and growth in Italy: what spatial econometric analysis tells us. By Rita De Siano; Marcella D'Uva
  4. Metropolitan Cities under Transition: The Example of Hamburg/Germany By Amelie Boje; Ingrid Ott; Silvia Stiller
  5. Forecasting the US Real House Price Index: Structural and Non-Structural Models with and without Fundamentals By Rangan Gupta; Alan Kabundi; Stephen M. Miller
  6. Drivers and barriers to educational success - evidence from the longitudinal study of young people in England. By Chowdry, H.; Crawford, C.; Goodman, A.
  7. Agglomeration Premium and Trading Activity of Firms By Gabor Bekes; Peter Harasztosi
  8. Ethnic Concentration and Language Fluency of Immigrants in Germany By Danzer, Alexander M.; Yaman, Firat
  9. What drives gasoline taxes?. By Dunkerley, Fay; Glazer, Amihai; Proost, Stefan
  10. Longer-Term Impacts of Mentoring, Educational Services, and Incentives to Learn: Evidence from a Randomized Trial By Rodriguez-Planas, Nuria
  11. Do the selected Trans European transport investments pass the cost benefit test?. By Proost, Stefan; Dunkerley, Fay; van der Loo, Saskia; Adler, Nicole; Bröcker, Johannes; Korzhenevych, Artem
  12. Unpacking the Causes of Ethnic Segregation across Workplaces By Bygren, Magnus
  13. The 'Boston' School Choice Mechanism By Fuhito Kojima; M. Utku Ünver
  14. The Effect of Enclave Residence on the Labour Force Activities of Immigrants in Canada By Tu, Jiong

  1. By: Wakefield, M.J.
    Abstract: This thesis presents analyses of households' decisions regarding housing and pension wealth accumulation, in forward-looking models. The first of three chapters on housing presents a model of housing demand over the life cycle, and examines its sensitivity to prices and borrowing constraints. Demand responses can be unusual: when the price of housing goes up, the demand for starter homes may increase if enough people "downsize" their homes. The next chapter involves carefully matching a life cycle model of consumption and housing choices, to recent episodes in the U.K., and using this structure to understand why house prices and consumption growth are strongly positively correlated. The model provides a good match to data on home ownership and consumption growth. The analysis gives a firmer theoretical footing to the claim that wealth effects from house prices are unlikely to have been the main driver of the correlation with consumption growth. The third housing chapter presents a model in which the prices of two types of home are endogenous. A perfect foresight set up is used, and transitions between steady states following shocks to income and mortgage markets, are studied. The findings suggest that credit shocks are more promising than income shocks as a potential explanation of large house price fluctuations and housing transactions level that covary positively with prices. The final substantive chapter uses a difference-in-differences strategy to evaluate the effect on private pension coverage of a recent U.K. reform to private pensions and pension contribution limits The reform is seen to have had a positive effect on pension coverage for lower earners. This pattern is consistent with forward-looking responses to the financial incentives involved.
    Date: 2009–04
  2. By: Carl Gaigné (INRA-ESR - Unité d'économie et de sociologie rurales - INRA); Stéphane Rioux (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines); Jacques-François Thisse (CORE - Université Catholique de Louvain)
    Abstract: There is a large consensus among international institutions and national governments to favor urban-containment policies - the compact city - as a way to reduce the ecological footprint of cities. This approach overlooks the following basic trade-off: the concentration of activities decreases the ecological footprint stemming from commodity shipping between cities, but it increases emissions of greenhouse gas by inducing longer worktrips. What matters for the ecological footprint of cities is the mix between urban density and the global pattern of activities. As expected, when both the intercity and intraurban distributions of activities are given, a higher urban density makes cities more environmentally friendly and raises global welfare. However, once we account for the fact that cities may be either monocentric or polycentric as well as for the relocation of activities between cities, the relationship between density and the ecological footprints appears to be much more involved. Indeed, because changes in urban density affect land rents and wages, firms are incited to relocate, thus leading to new commuting patterns. We show policies that favor the decentralization of jobs in big cities may reduce global pollution and improve global welfare.
    Keywords: greenhouse gas; commuting costs; transport costs; cities; urban containment policy
    Date: 2010
  3. By: Rita De Siano; Marcella D'Uva (-)
    Abstract: This paper investigates the determinants of Italian regional specialization in the period 1995-2006. In particular, it tests and evaluates the presence of spatial autocorrelation in sectoral specialization patterns by the use of spatial econometrics tools. Results show positive effects of neighbouring regions specialization for advanced industry and services sectors and hence a progressive synchronization of economic cycles. By contrast, sectors traditionally considered backward, evidence the presence of a core-periphery structure. The introduction of spatial effects in the general regression model increases the number of significant explicative variables. In accordance with the findings from New Economic Geography openness and market access positively affect regional specialization in most of the considered sectors.
    Keywords: Specialization, Regional growth, Spatial Econometrics.
    JEL: C13 C21 R11 R12
    Date: 2010–01–29
  4. By: Amelie Boje (University of Aberdeen); Ingrid Ott (Institute of Economics, Leuphana University of Lüneburg, Germany); Silvia Stiller (Hamburg Institute of International Economics (HWWI))
    Abstract: In the intermediate and long run energy prices and hence transportation costs are expected to increase significantly. According to the reasoning of the New Economic Geography this will strengthen the spreading forces and thus affect the economic landscape. Other influencing factors on the regional distribution of economic activity include the general trends of demographic and structural change. In industrialized countries, the former induces an overall reduction of population and labor force whereas the latter implies an ongoing shift to the tertiary sector and increased specialization. Basically, cities provide better conditions to cope with these challenges than rural regions. Since the general trends affect all economic spaces similarly, city-specific factors also have to be considered in order to derive the impact of rising energy costs on future urban development. With respect to Hamburg regional peculiarities include the overall importance of the harbor as well as the existing composition of the industry and the service sector. The analysis highlights that rising energy and transportation costs will open up a range of opportunities for the metropolitan region.
    Keywords: urban development; regional specialization; structural change; demographic change; transportation costs.
    JEL: R11 J11
    Date: 2010–02
  5. By: Rangan Gupta (Department of Economics, University of Pretoria); Alan Kabundi (Department of Economics and Econometrics, University of Johannesburg); Stephen M. Miller (Department of Economics, University of Nevada, Las Vegas)
    Abstract: We employ a 10-variable dynamic structural general equilibrium model to forecast the US real house price index as well as its turning point in 2006:Q2. We also examine various Bayesian and classical time-series models in our forecasting exercise to compare to the dynamic stochastic general equilibrium model, estimated using Bayesian methods. In addition to standard vector-autoregressive and Bayesian vector autoregressive models, we also include the information content of either 10 or 120 quarterly series in some models to capture the influence of fundamentals. We consider two approaches for including information from large data sets – extracting common factors (principle components) in a Factor-Augmented Vector Autoregressive or Factor-Augmented Bayesian Vector Autoregressive models or Bayesian shrinkage in a large-scale Bayesian Vector Autoregressive models. We compare the out-of-sample forecast performance of the alternative models, using the average root mean squared error for the forecasts. We find that the small-scale Bayesian-shrinkage model (10 variables) outperforms the other models, including the large-scale Bayesian-shrinkage model (120 variables). Finally, we use each model to forecast the turning point in 2006:Q2, using the estimated model through 2005:Q2. Only the dynamic stochastic general equilibrium model actually forecasts a turning point with any accuracy, suggesting that attention to developing forward-looking microfounded dynamic stochastic general equilibrium models of the housing market, over and above fundamentals, proves crucial in forecasting turning points.
    Keywords: compensating variation, nonlinear income effects, discrete choice
    JEL: Q51 R21
    Date: 2009–12
  6. By: Chowdry, H.; Crawford, C.; Goodman, A.
    Abstract: This study examined why young people from poor families have lower attainment in school, are more likely to become NEET (Not in Education, Employment or Training) after compulsory education, and are more likely to participate in a range of risky behaviours whilst teenagers. The Longitudinal Study of Young People in England is combined with school and neighbourhood information to document the links between lower socio-economic position and poorer outcomes: identifying the key factors amongst parental education and material resources; school and neighbourhood peer groups; and the attitudes and beliefs of young people and their parents that help sustain those links.
    Date: 2009–04–30
  7. By: Gabor Bekes (Institute of Economics - Hungarian Academy of Sciences); Peter Harasztosi (Phd Student - Central Europan University)
    Abstract: Firms may benefit from proximity to each other due to the existence of several externalities. The productivity premia of firms located in agglomerated regions an be attributed to savings and gains from external economies. However, the capacity to absorb information may depend on activities of the firm, such as involvement in international trade. Importers, exporters and two-way traders are likely to employ a different bundle of resources and be organised differently so that they would appreciate inputs and information from other firms in a different fashion and intensity. Getting a better understanding of such external economies by looking at various types of firms is the focus of present paper. Using Hungarian manufacturing data from 1992-2003, we confirm that firms perform better in agglomerated areas and show that traders gain more in terms of productivity than non-traders when agglomeration rises. Firms that are stable participants of international trade gain 16 % in terms of total factor productivity growth as agglomeration doubles while non-traders may not benefit from agglomeration at all. Results also suggest that traders' productivity premium is most apparent in urbanised economies.
    Keywords: agglomeration, international trade, firm heterogeneity
    JEL: F14 R12 R30
    Date: 2010–01
  8. By: Danzer, Alexander M. (Royal Holloway, University of London); Yaman, Firat (University of Texas at Austin)
    Abstract: Studies that investigate the effect of the regional ethnic composition on immigrant outcomes have been complicated by the self-selection of ethnic minorities into specific neighbourhoods. We analyse the impact of own-ethnic concentration on the language proficiency of immigrants by exploiting the fact that the initial placement of guest-workers after WWII was determined by labour demanding firms and the federal labour administration and hence exogenous to immigrant workers. Combining several data sets, we find a small but robust and significant negative effect of ethnic concentration on immigrants' language ability. Simulation results of a choice model in which location and learning decisions are taken simultaneously confirm the presence of the effect. Immigrants with high learning costs are inclined to move to ethnic enclaves, so that the share of German-speakers would increase only modestly even under the counterfactual scenario of a regionally equal distribution of immigrants across Germany.
    Keywords: enclave, ethnic concentration, language proficiency, immigrants, Instrumental variable, random utility model
    JEL: J61 R23 F22
    Date: 2010–02
  9. By: Dunkerley, Fay; Glazer, Amihai; Proost, Stefan
    Abstract: Gasoline taxes are the most important tax on car use. The question naturally arises as to what tax would be adopted by a government that responds to the preferences of the public. To address that issue, we begin with the standard Downsian model, where policy is determined by the median voter. This model predicts that as long as the median voter is not a car user, he wants high taxes on road use and a road capacity that maximizes net tax revenues. When he becomes a driver himself, he wants road user taxes that are lower and only increase to control congestion, as well as more road capacity. We then use panel data for 28 countries and find support for our theory. When the median voter becomes a driver, the gasoline tax drops on average by 20%.
    Date: 2010
  10. By: Rodriguez-Planas, Nuria (Universitat Autònoma de Barcelona)
    Abstract: This paper is the first to use a randomized trial in the US to analyze the short- and long-term educational and employment impacts of an after-school program, the Quantum Opportunity Program, that offered disadvantaged high-school youth: mentoring, educational services, and financial rewards with the objective to improve high-school graduation and post-secondary schooling enrollment. Average impacts reveal that the hefty beneficial educational outcomes quickly faded away. Heterogeneity matters. While encouraging results are found for the younger youth; detrimental long-lived outcomes for males suggest that extrinsic rewards may be crowding out intrinsic motivation. Evidence by sites' funding source, which led to implementation differences, supports this hypothesis.
    Keywords: short-, medium- and long-term effects, after-school programs, intrinsic and extrinsic motivation, educational and employment outcomes
    JEL: C93 I21 I22 I28 J24
    Date: 2010–02
  11. By: Proost, Stefan; Dunkerley, Fay; van der Loo, Saskia; Adler, Nicole; Bröcker, Johannes; Korzhenevych, Artem
    Abstract: This paper assesses the economic justification for the selection of priority projects defined under the auspices of the Trans-European transport network. In analyzing the current list of 30 priority projects, we apply three different transport models to undertake a cost-benefit comparison. We find that many projects do not pass the cost-benefit test and only a few of the economically justifiable projects would need European subsidies to make them happen. Two remedies are proposed to minimize the inefficiencies in future project selection. The first remedy obliges each member state or group of states to perform a cost-benefit analysis (followed by a peer review) and to make the results public prior to ranking priority projects. The second remedy would require federal funding to be available only for projects with important spillovers to other countries, in order to avoid pork barrel behaviour.
    Date: 2010
  12. By: Bygren, Magnus (Stockholm University Linnaeus Center for Integration Studies - SULCIS)
    Abstract: Using a large sample of employees-within-workplaces, the author investigates the relative role of random and systematic sorting for ethnic segregation across workplaces. If employees, in a counterfactual world, were randomly allocated to workplaces, the level of ethnic segregation across workplaces would just be halved. The remainder of segregation - systematic segregation - is upheld because employees that are recruited to workplaces tend to be similar to those already employed there, not because underrepresented groups within workplaces are systematically screened out of them. This homosocial inflow of employees appears largely to be sustained by employers’ tendency to select new employees from a pool of workplaces where its employees have been employed previously.
    Keywords: workplaces; segregation; ethnicity; simulation
    JEL: C15 J10 J20
    Date: 2010–02–15
  13. By: Fuhito Kojima (Stanford University); M. Utku Ünver (Boston College)
    Abstract: The Boston mechanism is a popular student placement mechanism in school choice programs around the world. We provide two characterizations of the Boston mechanisms. We introduce two new axioms, respect of preference rankings and rank-respecting Maskin monotonicity. A mechanism is the Boston mechanism for some priority if and only if it respects preference rankings and satisfies consistency, resource monotonicity, and rank-respecting Maskin monotonicity. In environments where each type of object has exactly one unit, as in house allocation, a characterization is given by respect of preference rankings, individual rationality, population monotonicity, and rank-respecting Maskin monotonicity.
    Keywords: Mechanism design, matching, school choice, market design, Boston mechanism
    JEL: C78 D78
    Date: 2010–02–04
  14. By: Tu, Jiong (Human Resources and Skills Development Canada - Labour Program)
    Abstract: It has been well documented that immigrants' clustering of residence in large cities has been associated with the creation of a number of ethnic enclaves. The intensive exposure to own-ethnic population could affect immigrant labour market involvement positively or negatively. However, no extant Canadian research has provided empirical evidence on the sign of these enclave effects. In this paper, I use the 1981-2001 Censuses to estimate the impact of residence in ethnic enclaves on male immigrants' labour force participation rate and employment probability. For recent immigrants who arrived in Canada within the preceding ten years, the intensity of enclave residence is negatively associated with their labour force participation rate, but positively related to their employment probability in all censuses. However, living in an enclave has no significant effect on the labour force activity of older immigrants who have lived in Canada for more than twenty years. Since immigrants could be attracted to areas with more job opportunities and hence enlarge the size of an enclave, the estimated effects from probit regressions might be positively biased. I then use instrumental variable (IV) method to address this endogeneity problem, and the IV estimates are consistent with the probit regression results.
    Keywords: immigrant, ethnicity, enclave, labour force participation, employment, Canada
    JEL: F22 J15 J21 J61
    Date: 2010–02

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