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on Urban and Real Estate Economics |
| By: | Andrew Coleman; Grant M. Scobie (The Treasury) |
| Abstract: | The housing market is both large and complex. This paper develops a simple model that captures the essential features of the supply and demand for housing, and which is used to evaluate the impact of a range of policy interventions. Increases in the stock of housing would reduce rents and house prices. A reduction in tax concessions for landlords would raise rents and moderate house prices. Additional subsidies for owner-occupancy would tend to reduce rents and raise house prices. Significant reductions in rents and house prices would follow a fall in the cost of housing, through, for example lower regulatory and consent costs. Falling real interest rates result in lower rents, higher house prices and lower owner-occupancy rates. Despite the widespread attention owner-occupancy rates have attracted, the paper concludes that they are not a particularly helpful guide to the state of the housing market. Typically they are quite insensitive to policy interventions, a result that follows from the integrated view of both the rental and ownership market, adopted in this study. |
| Keywords: | Housing markets; New Zealand; rental and owner-occupancy; elasticities; rents; house prices; policy simulations |
| JEL: | R21 R31 R38 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:nzt:nztwps:09/05&r=ure |
| By: | Jaison R. Abel; Ishita Dey; Todd M. Gabe |
| Abstract: | We estimate a model of urban productivity in which the agglomeration effect of density is enhanced by a metropolitan area's stock of human capital. Estimation accounts for potential biases due to the endogeneity of density and industrial composition effects. Using new information on output per worker for U.S. metropolitan areas along with a measure of density that accounts for the spatial distribution of population, we find that a doubling of density increases productivity by 2 to 4 percent. Consistent with theories of learning and knowledge spillovers in cities, we demonstrate that the elasticity of average labor productivity with respect to density increases with human capital. Metropolitan areas with a human capital stock one standard deviation below the mean realize no productivity gain, while doubling density in metropolitan areas with a human capital stock one standard deviation above the mean yields productivity benefits that are about twice the average. |
| Keywords: | Urban economics ; Labor productivity ; Labor market ; Population ; Demography |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:440&r=ure |
| By: | Roberto Basile (Institute for Studies and Economic Analysis, Rome); Luigi Benfratello (Department of Economics and Public Finance "G. Prato", University of Torino); Davide Castellani (Department of Economics, Finance and Statistics, University of Perugia) |
| Abstract: | This paper addresses two important methodological issues in the analysis of industrial location: spatial dependence and nonlinearities. To this end, we estimate a semi-parametric spatial autoregressive negative binomial model using data on the number of inward greenfield FDI occurred over the 2003-2007 period in 249 European regions. Results support the view that multinational firms’ location choices are very spatially dependent, even controlling for a large number of regional characteristics. A spatial lag model with a non-parametric spatial filter allows us to purge the residuals from spatial dependence and yields sensible changes in the magnitude of some estimated coefficients. We also provide robust evidence of nonlinearities. In particular, we find that the effect of agglomeration economies fades down as the density of economic activities reaches some limit value. |
| Keywords: | Multinational firms, greenfield FDI, count data, spatial econometrics, semiparametric econometrics |
| JEL: | C14 C21 F14 F23 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:tur:wpaper:10&r=ure |
| By: | Javier Andrés Domingo (University of Valencia, Spain); José Emilio Boscá (University of Valencia, Spain); Javier Ferri (University of Valencia, Spain) |
| Abstract: | Mortgage market deregulation in the early 1980s coincided in time with a sharp break in the cyclical behavior of many variables related to housing and to the labor market. This paper analyses the joint dynamics of labor market variables, output and housing prices in a search model with efficient bargaining and financial frictions. In a setting of household heterogeneity, only mortgaged-backed loans are available for impatient households, whose borrowing cannot exceed a proportion of the expected value of their real estate holdings. This feature of the credit market, together with search and matching frictions in the labor market, establish a strong link between credit constraints and consumption that significantly affects labor market outcomes: hours, wages and vacancies. The model is also able to explain the comovements of housing prices with output, productive investment and consumption. Our analysis confirms that the response of labor market variables to technology shocks has been substantially affected by the changes in the nature and tightness of imperfections in credit markets that occurred in the early 1980s. Allowing for a housing price shock, in addition to the technology shock, the model is also able to explain the observed reduction in the correlation of housing prices with both output and private investment. |
| Keywords: | general equilibrium, borrowing constraints, search frictions, housing prices |
| JEL: | E24 E32 E44 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:iei:wpaper:1001&r=ure |
| By: | Karl Case (Wellesley College); John Cotter (University College Dublin); Stuart Gabriel (UCLA) |
| Abstract: | This paper investigates the risk-return relationship in determination of housing asset pricing. In so doing, the paper evaluates behavioral hypotheses advanced by Case and Shiller (1988, 2002, 2009) in studies of boom and post-boom housing markets. The paper specifies and tests a housing asset pricing model (H-CAPM), whereby expected returns of metropolitan-specific housing markets are equated to the market return, as represented by aggregate US house price time-series. We augment the model by examining the impact of additional risk factors including aggregate stock market returns, idiosyncratic risk, momentum, and Metropolitan Statistical Area (MSA) size effects. Further, we test the robustness of H-CAPM results to inclusion of controls for socioeconomic variables commonly represented in the house price literature, including changes in employment, affordability, and foreclosure incidence. Consistent with the traditional CAPM, we find a sizable and statistically significant influence of the market factor on MSA house price returns. Moreover we show that market betas have varied substantially over time. Also, we find the basic housing CAPM results are robust to the inclusion of other explanatory variables, including standard measures of risk and other housing market fundamentals. Additional tests of the validity of the model using the Fama-MacBeth framework offer further strong support of a positive risk and return relationship in housing. Our findings are supportive of the application of a housing investment risk-return framework in explanation of variation in metro-area cross-section and time-series US house price returns. Further, results strongly corroborate Case-Shiller behavioral research indicating the importance of speculative forces in the determination of U.S. housing returns. |
| Keywords: | asset pricing, house price returns, risk factors |
| JEL: | G10 G11 G12 |
| Date: | 2010–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:ucd:wpaper:201005&r=ure |
| By: | Wayne R. Archer; Brent C. Smith |
| Abstract: | House price volatility; lender and borrow perception of price trends, loan and property features; and the borrower’s put option are integrated in a model of residential mortgage default. These dimensions of the default problem have, to our knowledge, not previously been considered altogether within the same investigation framework. We rely on a sample of individual mortgage loans for twenty counties in Florida, over the period 2001 through 2008, third quarter, with housing price performance obtained from repeat sales analysis of individual transactions. The results from the analysis strongly confirm the significance of the borrower’s put as an operative factor in default. At the same time, the results provide convincing evidence that the experience in Florida is in part driven by lenders and purchasers exhibiting euphoric behavior such that in markets with higher price appreciation there is a willingness to accept recent prior performance as an indicator of future risk. This connection illustrates a familiar moral hazard in the housing market due to the limited information about future prices. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedrwp:10-02&r=ure |
| By: | Olivier Parent; James P. Lesage |
| Abstract: | A space-time filter is set forth for spatial panel data situations that include random effects. We propose a general spatial dynamic specification that encompasses several spatiotemporal models previously used in the panel data literature. We apply the model to the case of highway induced travel demand. The theory of induced travel demand asserts that increased highway capacity will induce growth in traffic for a number of reasons. Our model allows us to quantify the spatial spillover impacts of increased highway capacity at one location in the network on travel times in neighboring locations and in future time periods. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:cin:ucecwp:2010-01&r=ure |
| By: | Julian P. Christ |
| Abstract: | This paper contributes with empirical findings to European co-inventorship location and geographical coincidence of co-patenting networks. Based on EPO co-patenting information for the reference period 2000-2004, we analyze the spatial configuration of 44 technology-specific co-inventorship networks. European co-inventorship (co-patenting) activity is spatially linked to 1259 European NUTS3 units (EU25+CH+NO) and their NUTS1 regions by inventor location. We extract 7.135.117 EPO co-patenting linkages from our own relational database that makes use of the OECD RegPAT (2009) Files. The matching between International Patent Classification (IPC) subclasses and 44 technology fields is based on the ISI-SPRU-OST-concordance. We confirm the hypothesis that the 44 co-inventorship networks differ in their overall size (nodes, linkages, self-loops) and that they are dominated by similar groupings of regions. The paper offers statistical evidence for the presence of highly localized European co-inventorship networks for all 44 technology fields, as the majority of linkages between NUTS3 units (counties and districts) are within the same NUTS1 regions. Accordingly, our findings helps to understand general presence of positive spatial autocorrelation in regional patent data. Our analysis explicitly accounts for different network centrality measures (betweenness, degree, eigenvector). Spearman rank correlation coefficients for all 44 technology fields confirm that most co-patenting networks co-locate in those regions that are central in several technology-specific co-patenting networks. These findings support the hypothesis that leading European regions are indeed multi-field network nodes and that most research collaboration is taking place in dense co-patenting networks. |
| Keywords: | co-patenting, co-inventorship, networks, linkages, co-location, RegPAT |
| JEL: | C8 O31 O33 R12 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:old:wpaper:y:2010:i:31:p:1-40&r=ure |
| By: | Stefano Corradin; José L. Fillat; Carles Vergara-Alert |
| Abstract: | We study a model of portfolio choice, in which housing prices are predictable and adjustment costs must be paid when there is a housing transaction. We show that two state variables affect the agent's decisions: (i) his wealth-house ratio; and (ii) the time-varying expected growth rate of housing prices. The agent buys (sells) his housing assets only when the wealth-house ratio reaches an optimal upper (lower) boundary. These boundaries are time-varying and depend on the expected growth rate of housing prices. Finally, we use household level data from the PSID and SIPP surveys to test and support the main implications of the model, as well as portfolio rules and holdings of housing asset. |
| Keywords: | Housing - Prices |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbqu:qau10-02&r=ure |
| By: | Torberg Falch (Institutt for Samfunnsøkonomi (Department of Economics), Norges Teknisk- Naturvitenskaplige Universitet (NTNU) (Norwegian University of Science and Technology)); Justina A.V. Fischer (University of Hamburg, Institute for Public Finance) |
| Abstract: | Using a panel of international student test scores 1980 – 2000 (PISA and TIMSS), panel fixed effects estimates suggest that government spending decentralization is conducive to student performance. The effect does not appear to be mediated through levels of educational spending. |
| Keywords: | Fiscal Decentralization; Student Achievement; Federalism; PISA; TIMSS; Education; School Quality |
| JEL: | C33 H2 I2 H40 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:hce:wpaper:031&r=ure |
| By: | Nicole Schneeweis; Martina Zweimüller |
| Abstract: | In the Austrian (as well as the German) education system students have to choose between different school tracks at the age of 10. We argue that early tracking creates inefficiencies because the earlier the track choice has to be made, the more it is influenced by factors other than innate ability. Recent evidence suggests that the relative age of a student within a grade is related to his or her achievement, and that this effect is decreasing over grades. Thus, age-related achievement differences probably translate into age-related differences in track choice if track choice has to be made early. In this paper we estimate the effect of observed age on the track choice after grade 4 using register data for a major Austrian city for the period 1984-2006. Since observed age at track choice is endogenous, we exploit the exogenous variation in birth month to identify the causal effect of age. We find a strong and sig- nificant positive effect of age on track choice in grades 5-8. Since after grade 8, students again have to make a track choice, we use additional data from PISA 2003 and 2006 to show that the effect is long-lasting in urban areas. Therefore, the education system fails to provide a mechanism that leads to an efficient allocation of students to tracks. |
| Keywords: | Early tracking, school choice, age effect, instrumental variables, birth month |
| JEL: | I21 I28 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2009_11&r=ure |
| By: | Gabriel Ahlfeldt (Department of Geography and Environment, London School of Economics (LSE), University of London) |
| Abstract: | This article investigates the 2008 referendum held in opposition against the "Mediaspree", a major urban development project in Berlin that has been perceived as a threat of displacement of local residents and culture. Using precinct level data we find a high degree of localized resistance around the project area, conditional on socio-demographic characteristics. Comparison to local appreciation rates shows that in an environment of very low owner occupancy public (re)development projects are opposed the more residents associate an increase in area valuation. This effects is, however, not strong enough to explain the localized resistance. Considering a micro-level data set on music nodes, our results suggest that resistance is rather attributable to a feared loss of specific cultural amenities and neighborhood character. |
| Keywords: | Cultural Amenities, Urban Development, Displacement, Hedonic Modeling, Mediaspree |
| JEL: | Z10 R20 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:hce:wpaper:032&r=ure |
| By: | Paul Calem; Christopher Henderson; Jonathan Liles |
| Abstract: | Depository institutions may use information advantages along dimensions not observed or considered by outside parties to "cream-skim," meaning to transfer risk to naive, uninformed, or unconcerned investors through the sale or securitization process. This paper examines whether "cream-skimming" behavior was common practice in the subprime mortgage securitization market prior to its collapse in 2007. Using Home Mortgage Disclosure Act data merged with data on subprime loan delinquency by ZIP code, the authors examine the bank decision to sell (securitize) subprime mortgages originated in 2005 and 2006. They find that the likelihood of sale increases with risk along dimensions observable to banks but not likely observed or considered by investors. Thus, in the context of the subprime lending boom, the evidence supports the cream-skimming view. |
| Keywords: | Risk management ; Mortgage-backed securities ; Subprime market ; Fraud |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:10-8&r=ure |
| By: | Matteo Luciani (Dipartimento di Economia, Sapienza University of Rome Italy) |
| Abstract: | DThis paper estimates a Structural Dynamic Factor Model on a panel of 102 US quarterly series. We model economic comovements by means of 5 underlying structural shocks (oil price, productivity, aggregate demand, monetary policy, and housing demand). The results of the benchmark model (impulse responses and variance decompositions) are in line with those predicted by economic theory and usually estimated by the empirical literature. We show that while over the whole sample the contribution of the housing demand shock is negligible, after the early eighties' liberalizations in housing finance, the housing demand shock has become a substantial source of business cycle fluctuations. The model is then used to analyze the causes of the 2008 recession: results indicate that we cannot exclude that monetary policy played a non negligible role in leading the way for the downturn in residential investment and the ensuing recession.\\ JEL Classification: C32, E32, E52, R2 |
| Keywords: | Structural Factor Model, Business Cycle, Monetary Policy, Housing.; Structural Factor Model, Business Cycle, Monetary Policy, Housing |
| JEL: | C32 E32 E52 R2 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:dsc:wpaper:7&r=ure |
| By: | Riccardo Massari (Sapienza, University of Rome, Roma); M. Grazia Pittau (Sapienza, University of Rome, Roma); Roberto Zelli (Sapienza, University of Rome, Roma) |
| Abstract: | This paper examines how spatial price differentials affect income distribution in Italy. The distribution of household income is “reshuffled” after controlling for the purchasing power of households residents in different regions, but only when housing price variations are included in the PPP index. Poor households living in Southern Italy alleviate their relative condition, but concentration of poverty still holds in the Southern part of the country. |
| Keywords: | Income distribution, inequality, regional purchasing power parity, Italy. |
| JEL: | E31 D31 D63 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2010-166&r=ure |
| By: | Dorofeenko, Victor (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria); Lee, Gabriel S. (IREBS, University of Regensburg, Regensburg, Germany, and Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria); Salyer, Kevin D. (Department of Economics, University of California, Davis, USA) |
| Abstract: | This paper analyzes the role of uncertainty in a multi-sector housing model with financial frictions. We include time varying uncertainty (i.e. risk shocks) in the technology shocks that affect housing production. The analysis demonstrates that risk shocks to the housing production sector are a quantitatively important impulse mechanism for the business cycle. Also, we demonstrate that bankruptcy costs act as an endogenous markup factor in housing prices; as a consequence, the volatility of housing prices is greater than that of output, as observed in the data. The model can also account for the observed countercyclical behavior of risk premia on loans to the housing sector. |
| Keywords: | Agency costs, credit channel, time-varying uncertainty, residential investment, housing production, calibration |
| JEL: | E4 E5 E2 R2 R3 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:ihs:ihsesp:249&r=ure |
| By: | Roland G. Fryer, Jr |
| Abstract: | This paper describes a series of school-based randomized trials in over 250 urban schools designed to test the impact of financial incentives on student achievement. In stark contrast to simple economic models, our results suggest that student incentives increase achievement when the rewards are given for inputs to the educational production function, but incentives tied to output are not effective. Relative to popular education reforms of the past few decades, student incentives based on inputs produce similar gains in achievement at lower costs. Qualitative data suggest that incentives for inputs may be more effective because students do not know the educational production function, and thus have little clue how to turn their excitement about rewards into achievement. Several other models, including lack of self-control, complementary inputs in production, or the unpredictability of outputs, are also consistent with the experimental data. |
| JEL: | I20 J15 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15898&r=ure |
| By: | Martha A. Starr; Cynthia Bansak |
| Abstract: | There has been much debate in recent years about whether the Federal Reserve should have taken action against the housing-price bubble as it was forming. One argument in favor of using monetary policy to offset asset-price bubbles is that it may be impossible after the bubble bursts to ease policy hard enough or fast enough to offset a strong contraction. While the fall in housing prices since 2006 has clearly increased unemployment and depressed growth, much less is known about how the costs have been distributed across households of different means. This paper uses data from the Census Bureau's annual American Community Survey (ACS) to examine this question. We first lay out the mechanisms via which a housing-market bust would be expected to affect households, in terms of incomes, employment, assets, and ability to service debt. We then use the ACS data to analyze how the house-price bust has affected households with different characteristics, differentiating between communities in which home prices did and did not boom and bust. Our results suggest that costs of the bubble have tended to fall on households less able to endure periods of financial distress. This lends further support to the argument that monetary policy oriented to social welfare should tackle bubbles ex ante rather than ex post. |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:amu:wpaper:2010-02&r=ure |
| By: | Melinda Smahó (Hungarian Academy of Sciences Centre for Regional Studies, West-Hungarian Research Institute) |
| Abstract: | Economic growth and development theories have neglected the role of knowledge and space for a long time. However, it is widely accepted that knowledge has played a more and more important role in economic development, and – due to its spatial characteristics – also in regional development. The aim of this paper is to explore the role and some spatial characteristics of knowledge, as well as their impact on regional development, also in regard to border regions. After some theoretical considerations, the paper investigates some features and cross-border cooperations of knowledge holders in the Austrian-Hungarian border region. |
| Keywords: | knowledge, universities, cross-border cooperation, Austrian-Hungarian border region |
| Date: | 2010–01–22 |
| URL: | http://d.repec.org/n?u=RePEc:wfo:wpaper:y:2010:i:355&r=ure |
| By: | Sandra Vinciguerra; Koen Frenken; Marco Valente |
| Abstract: | We model the evolution of infrastructure networks as a preferential attachment process. We assume that geographical distance and country borders provide barriers to link formation in infrastructure networks. The model is validated against empirical data on the European Internet infrastructure network covering 209 cities. We successfully simulate the average path length and average clustering coefficient of the observed network. Furthermore, the simulated network shows a significant correlation with the observed European Internet infrastructure network. We end with a discussion on the future uses of preferential attachment models in the light of the literature on world cities and global cities. |
| Keywords: | internet infrastructure, network, simulation, preferential attachment |
| JEL: | C63 O18 R1 L96 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1006&r=ure |
| By: | Burke, Sandy C.; Edelman, Mark |
| Abstract: | The research reported in this paper directly compares and contrasts urban and counterurban migrants to assess economic, social, and counterurban models of migration. The research utilizes a unique study that not only located recent in-migrants but also located and surveyed out-migrants who had left the same areas thus allowing a direct comparison of two opposing migration streams. The findings show that the city and the countryside each have push and pull factors that influence migration decisions. The counterurban model is supported for nonmetro bound movers as they seek less congestion and the related aspects of a simpler pace of life, less crime, a pleasant environment, and lower housing costs. In addition to the recognized metropolitan pull factors of employment and income, this analysis shows that social relationships, entertainment amenities, and technological capabilities have important roles to play in migration decisions into metropolitan areas. These were additional factors that differentiated metro bound migrants from those going in the nonmetro direction and may become even more important in the future as technological innovations increase. There clearly are economic, family, community, and amenity factors at work in migration decisions. This research shows support for economic models in migration decisions and social ties also were reasons for moving. Our research found, however, that the most significant factors differentiating nonmetro movers from those who were metropolitan bound was in the areas of amenities and lifestyle. Nonmetropolitan migrants were seeking a counterurban lifestyle and metropolitan migrants were attracted by city amenities and activities. |
| Date: | 2009–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genres:13036&r=ure |
| By: | Luis J. Álvarez (Banco de España); Guido Bulligan (Banca d’Italia); Alberto Cabrero (Banco de España); Laurent Ferrara (Banque de France); Harald Stahl (Deutsche Bundesbank) |
| Abstract: | The recent burst of the house price bubble in the United States and its spillover effects on real economies worldwide has rekindled the interest in the role of housing in the business cycle. In this paper, we investigate the relationships between housing cycles among the four major euro area countries (Germany, France, Italy and Spain) over the sample 1980Q1-2008Q4. Our main findings are that GDP cycles show a high degree of comovement across these four countries, reflecting trade linkages, but much weaker ones for housing market cycles, where idiosyncratic factors play a major role. House prices are even less related than quantities across countries. We also find much stronger relationships in the common monetary policy period. |
| Keywords: | Housing cycles, synchronisation measures, euro area countries |
| JEL: | E32 R21 R32 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:bde:opaper:1001&r=ure |
| By: | Randal Verbrugge (U.S. Bureau of Labor Statistics); Thesia I. Garner (U.S. Bureau of Labor Statistics) |
| Abstract: | Previous research (Verbrugge, 2008a) demonstrated that housing rents and ex ante user costs diverge markedly for extended periods of time, a finding with profound implications for income and inflation measurement. But the primary data sources in that study were various indexes, based upon largely disjoint data sources, constructed using different aggregation techniques, and each subject to various criticisms. This raised doubts about the quality of the comparison. The relationship between user costs and rents might well be much tighter at the micro level; after all, house prices and rents (and their growth rates) can vary dramatically within cities, and rents are notoriously sticky. Furthermore, the use of indexes precludes both cross-sectional and dollar cost comparisons. In this study, we use Consumer Expenditure Interview Survey (CE) data to examine the relationship between user costs and rents at the individual unit level, in dollars, using unit-level information on house value, rent, taxes, and the like. This allows us to accurately estimate unit-specific user costs and to control for unobservables like structure and neighborhood quality. We also make the point that in theory, after-tax user costs should equal net rent, i.e., expected rental income, rather than gross rent. Our findings are striking. In keeping with most previous research, we find tremendous divergence between conventional measures of user costs and net rents, thus ruling out index construction errors as a possible explanation. This divergence does not result from a faulty rent measure: we find that reported rents are sensible, in that they move similarly to official rent indexes, and are not simply out-of-pocket expenses. Instead, and most perplexing, we find a surprisingly close correspondence between net rents and a particular estimate of user costs, one implicitly assuming zero transactions costs and constructed using an appreciation measure that is both theoretically suspect and empirically a poor predictor of actual appreciation. |
| Keywords: | user costs; house price appreciation; forecasting; rental equivalence |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:bls:wpaper:ec090050&r=ure |
| By: | Thomas Hemmelgarn (European Commission); Gaetan Nicodeme (European Commission) |
| Abstract: | The 2008 financial crisis is the worst economic crisis since the Great Depression of 1929. It has been characterised by a housing bubble in a context of rapid credit expansion, high risk-taking and exacerbated financial leverage, ending into deleveraging and credit crunch when the bubble burst. This paper discusses the interactions between tax policy and the financial crisis. In particular, it reviews the existing evidence on the links between taxes and many characteristics of the crisis. Finally, it examines some possible future tax options to prevent such crises. |
| Keywords: | Taxation, financial crisis, banking crisis, fiscal incentives |
| JEL: | E62 F21 F30 G10 H20 H30 H50 H60 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:tax:taxpap:0020&r=ure |
| By: | Ghosh, Gaurav (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Carriazo, Fernando (Economic Research Service, U.S. Department of Agriculture) |
| Abstract: | We empirically compare the accuracy and precision of representative Least Squares, Maximum Likelihood and Bayesian methods of estimation. Using an approach similar to the jackknife, each method is repeatedly applied to subsamples of a data set on the property market in Bogotá, Colombia to generate multiple estimates of the underlying explanatory spatial hedonic model. The estimates are then used to predict prices at a fixed set of locations. A nonparametric comparison of the estimates and predictions suggests that the Bayesian method performs best overall, but that the Likelihood method is most suited to estimation of the independent variable coefficients. Significant heterogeneity exists in the specific test results. |
| Keywords: | Spatial Econometrics; Bayesian Statistics; Hedonic Valuation |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:ris:fcnwpa:2009_009&r=ure |
| By: | Juan Alcacer (Harvard Business School, Strategy Unit); Wilbur Chung (R.H. Smith School of Business, University of Maryland) |
| Abstract: | Geographically concentrated industry activity creates pools of skilled labor and specialized suppliers, and increases opportunities for knowledge spillovers. The strategic value of these agglomeration economies may vary by firm, depending upon the relative value of each economy, and upon firm and agglomeration economy traits. To better determine when a firm will be attracted to agglomeration economies, we develop a three-layer framework. The first layer assesses the relative importance of skilled labor, suppliers, and knowledge spillovers. The second layer considers whether firms can benefit from geographic concentration without co-locating. The final layer examines why some firms are more inclined to co-locate than others based upon firm and agglomeration economy traits. We test our framework on the U.S. location choices of new manufacturing entrants between 1985 and 1994 and find that firms are far more attracted to skilled labor and specialized suppliers than they are to potential knowledge spillovers, even in R&D intensive industries. We also find that leading firms will be more attracted to pools of labor, suppliers, and potential knowledge spillovers when their own contributions are less fungible, and cannot be easily leveraged for strategic advantage by proximate competitors. |
| Keywords: | agglomeration economies, location choice, firm strategy |
| JEL: | R30 R12 L21 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:hbs:wpaper:10-071&r=ure |
| By: | Judith K. Hellerstein; Melissa McInerney; David Neumark |
| Abstract: | We specify and implement a test for the presence and importance of labor market network based on residential proximity in determining the establishments at which people work. Using matched employer-employee data at the establishment level, we measure the importance of these network effects for groups broken out by race, ethnicity, and various measures of skill. The evidence indicates that these types of labor market networks do exist and play an important role in determining the establishments where workers work, that they are more important for minorities and the less-skilled, especially among Hispanics, and that these networks appear to be race-based. |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:hst:ghsdps:gd09-132&r=ure |
| By: | Florida, Richard (Martin Prosperity Institute); Mellander, Charlotta (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Stolarick, Kevin (Martin Prosperity Institute) |
| Abstract: | Where do musicians locate, and why do creative industries such as music continue to cluster? This paper analyzes the economic geography of musicians and the recording industry in the U.S. from 1970 to 2000 to shed light on the locational dynamics of music and creative industries more broadly. We examine the role of scale and scope economies in shaping the clustering and concentration of musicians and music industry firms. We argue that these two forces are bringing about a transformation in the geography of both musicians and music industry firms, evidenced in a shift away from regionally clustered, genrespecific music scenes, such as Memphis or Detroit, toward larger regional centers like New York City and Los Angeles which offer large markets for music employment and concentration of other artistic and cultural endeavors which increase demand for musicians. We use population and income to probe for scale effects, and concentrations of other creative and artistic industries to test for scope effects, while including a range of control variables in our analysis. We use lagged variables to determine if certain places are consistently more successful at fostering concentations of musicians and the music industry and test for path dependency. We find some role for scale and scope effects and that both musicians and the music industry are concentrating in a relatively small number of large regional centers. |
| Keywords: | musicians; recording industry; agglomerations |
| JEL: | R11 R12 Z11 |
| Date: | 2010–02–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0219&r=ure |
| By: | Roberto Basile (ISAE - Institute for Studies and Economic Analyses); Alessandro Girardi (ISAE - Institute for Studies and Economic Analyses) |
| Abstract: | Economic theory emphasizes that risk sharing makes it possible to exploit benefits from comparative advantages and economies of scale. Unlike previous studies we reject the assumption of parameter homogeneity across geographical units in measuring risk sharing. The estimated regional-specific index of risk sharing is then used as a covariate in a model of industrial specialization for the EU15 regions. By estimating a number of nonparametric additive spatial autocovariance models, allowing for nonlinearities and spatial dependence, we show that industrial specialization is positively affected by risk sharing measures even controlling for other relevant regressors. |
| Keywords: | Risk sharing, specialization, European regions, non-parametric methods, spatial econometrics. |
| JEL: | E21 F15 O40 C14 C31 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:isa:wpaper:122&r=ure |
| By: | Orla Doyle (UCD Geary Institute); Louise McEntee (UCD Geary Institute); Kelly A. McNamara (UCD Geary Institute) |
| Abstract: | Socioeconomic inequalities in children’s skills and capabilities begin early in life and can have detrimental effects on future success in school. The present study examines the relationships between school readiness and sociodemographic inequalities using teacher reports of the Short Early Development Instrument in a disadvantaged urban area of Ireland. It specifically examines socioeconomic (SES) differences in skills within a low SES community in order to investigate the role of relative disadvantage on children’s development. Differences across multiple domains of school readiness are examined using Monte-Carlo permutation tests. The results show that child, family and environmental factors have an impact on children’s school readiness, with attendance in centre-based childcare having the most consistent relationship with readiness for school. In addition, the findings suggest that social class inequalities in children’s skills still exist within a disadvantaged community. These results are discussed in relation to future intervention programmes. |
| Keywords: | School readiness, Socioeconomic inequalities, Monte-Carlo permutation tests |
| Date: | 2010–02–15 |
| URL: | http://d.repec.org/n?u=RePEc:ucd:wpaper:201014&r=ure |
| By: | Frank Neffke; Martin Henning |
| Abstract: | This article studies path dependent regional structural change using a quantitative framework. Based on an inter-relatedness indicator, the degree to which local skill-bases exist and force local economies onto a path-dependent development trajectory is studied. The main question is into which local industries new plants enter, while distinguishing between the plants of entrepreneurs and firms. Using a dataset on Swedish individuals and municipalities, it is found that entrepreneurs tend to reinforce established local industrial specializations, whereas new plants of already existing firms do less so. Moreover, outside actors deepen local economy's core specialization more than do local actors. |
| Keywords: | structural change, economic geography, path dependence, entrepreneurship, skill-relatedness, human capital |
| JEL: | R11 O18 J62 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1005&r=ure |
| By: | Beck, Thorsten; Kibuuka, Katie; Tiongson, Erwin |
| Abstract: | Household credit, especially for mortgages, has doubled over the past years in the new European Union member countries, raising concerns about the economic and social consequences of household indebtedness in the event of a macroeconomic crisis. Using household survey data for 2005, 2006, and 2007 for both old and new European Union members, this paper assesses the determinants of access to mortgage finance. It also examines whether mortgage holders were more likely to suffer financial distress compared with non-mortgage holders in the period before the global financial crisis. The analysis does not find any systematic evidence that mortgage holders are financially more vulnerable than renters or outright owners; in fact, the incidence of financial vulnerability generally fell between 2005 and 2007, possibly reflecting the strong income growth experienced by these countries over this period. In addition, although tenure status is more difficult to explain in the new European Union member countries, the analysis finds that many of the same drivers of tenure status in the older member countries generally drive tenure status in the newer member countries as well. Finally, there is no evidence that access to mortgage credit is based on expected income in the old or in the new European Union member countries. |
| Keywords: | Access to Finance,Debt Markets,Bankruptcy and Resolution of Financial Distress,Emerging Markets,Housing Finance |
| Date: | 2010–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5202&r=ure |
| By: | Brian Knight; Nathan Schiff |
| Abstract: | This paper investigates competition between jurisdictions in the context of cross-border shopping for state lottery tickets. We first develop a simple theoretical model in which consumers choose between state lotteries and face a trade-off between travel costs and the price of a fair gamble, which is declining in the size of the jackpot and the odds of winning. Given this trade-off, the model predicts that per-resident sales should be more responsive to prices in small states with densely populated borders, relative to large states with sparsely populated borders. Our empirical analysis focuses on the multi-state games of Powerball and Mega Millions, and the identification strategy is based upon high-frequency variation in prices due to the rollover feature of lottery jackpots. The empirical results support the predictions of the model. The magnitude of these effects is large, suggesting that states do face competitive pressures from neighboring lotteries, but the effects vary significantly across states. |
| Keywords: | Gambling industry ; Consumer behavior |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbcw:10-1&r=ure |
| By: | Klaus Nowotny (WIFO) |
| Abstract: | Being at the heart of today's working life, commuting is of central interest to geographers, policy makers, transport planners and economists alike. This article analyses aggregate commuting using various groups of variables. A special focus is on the questions whether and how the provision of local public goods, such as educational institutions or health care facilities, and local amenities affect commuting decisions on the aggregate level and to what extent commuting can be explained by labour market characteristics at the source and target units. The empirical investigation analyses aggregate commuting flows between municipalities of an Austrian province using censored regression and count data models. |
| Keywords: | commuting, gravity model, censored regression |
| Date: | 2010–02–22 |
| URL: | http://d.repec.org/n?u=RePEc:wfo:wpaper:y:2010:i:359&r=ure |
| By: | Manuel Adelino; Kristopher Gerardi; Paul Willen |
| Abstract: | In this note we discuss the findings in Piskorski, Seru, and Vig (2010) as well as the authors' interpretation of their results. First, we find that small changes to the set of covariates used by Piskorski, Seru, and Vig significantly reduce the magnitude of the differences in foreclosure rates between securitized and nonsecuritized loans. Second, we argue that early payment defaults (EPD) are not a valid instrument for the securitization status of the loans and that the empirical implementation chosen by the authors for using EPD is not a valid instrumental variables approach. Finally, we discuss the use of foreclosure rates as a measure of renegotiation and argue that explicitly using modification rates of delinquent mortgages is a better way of studying renegotiation activity. On balance, the evidence in Piskorski, Seru, and Vig indicates that there are at most small differences in the outcomes of delinquent loans, but whether those differences reflect accounting issues, willingness to renegotiate, or unobserved heterogeneity remains an open question. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2010-08&r=ure |
| By: | Yolanda K. Kodrzycki; Ana Patricia Muñoz with Lynn Browne; DeAnna Green; Marques Benton; Prabal Chakrabarti; Richard Walker; Bo Zhao |
| Abstract: | As part of the Federal Reserve Bank of Boston's commitment to supporting efforts to revitalize the economy of Springfield, Massachusetts, this paper explores the causes of and potential remedies for the city's low resident employment rates. When compared to the state as a whole and to other midsize New England cities, the share of employed city residents is low, particularly for residents of downtown Springfield and its nearby neighborhoods. By analyzing the availability of jobs across Springfield's various neighborhoods and in nearby towns and cities, this paper's goal is to learn why so few Springfield residents are employed, and thus to identify policy priorities to increase employment. This study finds that solving Springfield's low resident employment rates will require a combination of new job creation, improved informational and physical access to jobs, and strengthening the citizenry's job skills. |
| Keywords: | Economic conditions - Massachusetts ; Job creation - Massachusetts ; Unemployment - Massachusetts |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbpp:09-11&r=ure |
| By: | Florida, Richard (Martin Prosperity Institute); Mellander, Charlotta (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Gulden, Tim (Center for International and Security Studies at the University of Maryland School of Public Policy) |
| Abstract: | This research provides new data and insight metropolitan areas worldwide. It summarizes new data, derived from satellite images of the world at night, to provide systematic estimates of the economic activity generated by cities and metropolitan areas worldwide. It identifies 681 global metropolitan areas each with more than 500,000 people. Taken as a whole, these large global metropolitan regions house 24 percent of world population but produce 60 percent of global output, measured as light emissions. Asia leads the way in global economic urbanization according to our findings, followed by North America, the emerging economies, and Europe. |
| Keywords: | Metro regions; Globalization; Urbanization; Nighttime lights |
| JEL: | O18 R10 |
| Date: | 2010–02–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0218&r=ure |
| By: | Sauro Mocetti (Bank of Italy); Carmine Porello (Bank of Italy) |
| Abstract: | This paper investigates the relationship between native internal mobility and immigration in Italy, in order to gain a better understanding of the impact of immigration on local labour markets and to gauge the consequences for the socio-demographic composition of the local population. Native mobility is examined both with respect to residential displacements across regions and the demographic evolution of local labour markets. Endogeneity issues related to immigrant geographical distribution are addressed using proximity to “gateways” as the instrumental variable. We find that immigration is positively associated with inflows of highly-educated natives, suggesting the existence of potential complementarities. The impact is concentrated among young adults and is higher in more urbanized areas. We also find a displacement of low-educated natives; in particular, immigrant concentration in the northern regions has partially substituted the traditional South-North mobility of less-skilled natives. |
| Keywords: | Immigration, native mobility, distance |
| JEL: | J61 O15 R23 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_748_10&r=ure |
| By: | Alessandro Tampieri |
| Abstract: | This paper studies how social background a¤ects schooling attainment and job opportunities from a theoretical perspective. We analyse the interaction between a school and an employer when students attend school and then go to the job market. Students di¤er in ability and belong to different social groups. Our results suggest that the employer makes use of social background in the recruitment decisions: this favours advantaged students, as they are more likely to have high ability. In turn, the school optimally provides disadvantaged students with less teaching than advantaged students, given the same level of ability. |
| Keywords: | Social Background; Ability |
| JEL: | C73 I21 J24 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:lec:leecon:09/26&r=ure |
| By: | Thomas A. Garrett; Lesli S. Ott |
| Abstract: | We use monthly time-series data for 20 large U.S. cities to test the deterrence hypothesis (arrests reduce crimes) and the resource reallocation hypothesis (arrests follow from an increase in crime). We find (1) weak support for the deterrence hypothesis, (2) much stronger support for the resource reallocation hypothesis, and (3) differences in city-level estimates suggest much heterogeneity in the crime and arrest relationship across regions. |
| Keywords: | Crime ; Cities and towns |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2010-011&r=ure |
| By: | Fay Dunkerley (Center for Economic Studies, KULeuven); Amihai Glazer (Department of Economics, University of California-Irvine); Stef Proost (Center for Economic Studies, KULeuven) |
| 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%. |
| Keywords: | Gasoline taxes; Median voter theory; Political economy |
| JEL: | H23 R48 Q48 L98 Q52 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:091005&r=ure |
| By: | Erwin OOGHE; Erik SCHOKKAERT |
| Abstract: | Introducing school accountability may create incentives for efficiency. However, if the performance measure used does not correct for pupil characteristics, it will lead to an inequitable treatment of schools and create perverse incentives for cream-skimming. We apply the theory of fair allocation to show how to integrate empirical information about the educational production function in a coherent theoretical framework. The requirements of rewarding performance and correcting for pupil characteristics are incompatible if we want the funding scheme to be applicable for all educational production functions. However, we characterize an attractive subsidy scheme under specific restrictions on the educational production function. This subsidy scheme uses only information which can be controlled easily by the regulator. We show with Flemish data how the proposed funding scheme can be implemented. Correcting for pupil characteristics has a strong impact on the subsidies (and on the underlying performance ranking) of schools. |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces09.22&r=ure |
| By: | Tim Besley (Institute for Fiscal Studies and Monetary Policy Committee, Bank of England and London School of Economics); Hannes Mueller |
| Abstract: | <p><p>This paper exploits data on the pattern of violence across regions and over time to estimate the impact of the peace process in Northern Ireland on house prices. We begin with a linear model that estimates the average treatment effect of a conflict-related killing on house prices .showing a negative correlation between house prices and killings. We then develop an approach based on an economic model where the parameters of the statistical process are estimated for a Markov switching model where conflict and peace are treated as a latent state. From this, we are able to construct a measure of the discounted number of killings which is updated in the light of actual killings. This model naturally suggests a heterogeneous effect of killings across space and time which we use to generate estimates of the peace dividend. The economic model suggests a somewhat different pattern of estimates to the linear model. We also show that there is some evidence of spillover effects of violence in adjacent regions.</p></p> |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:09/18&r=ure |
| By: | Casey B. Mulligan; Luke Threinen |
| Abstract: | Estimates of the marginal product of capital can help forecast economic growth, test competing business cycle theories, and perform cost-benefit analysis. This paper presents annual and quarterly estimates of the marginal product of capital in the U.S. separately for the residential and non-residential sectors. The two sectors had positively correlated marginal products until the 2000s, when the residential marginal product fell during the housing boom, and rose during the housing bust. By the end of 2009, the residential MPK was back to the level of the 1990s. Although off its lows, the non-residential MPK is still below its historical average. |
| JEL: | E22 O47 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15897&r=ure |
| By: | Elinder, Mikael (Research Institute of Industrial Economics (IFN)) |
| Abstract: | This paper presents a detailed analysis of voters’ responses to municipality and regional-level unemployment and economic growth, using panel data on 284 municipalities and 9 regions, covering Swedish general elections from 1982 to 2002. The preferred specification suggests that a reduction in regional unemployment by one percentage point is associated with an increase in the support for the national government by about 1.7 percentage points. The effect of growth, at the regional level, is substantial in size, but statistically insignificant. At the municipality level, unemployment has a smaller effect than at the regional level and growth has no effect on government support. |
| Keywords: | Elections; Voting; Local Economic Conditions |
| JEL: | H11 R11 R12 R58 |
| Date: | 2010–01–05 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0821&r=ure |
| By: | Andrea Amaral; Margarida Abreu; and Victor Mendes |
| Abstract: | We use a spatial Probit model to study banking crises and show that the probability of a systemic banking crisis depends on contagion and that this effect may result from business connections between institutions or from similarities between banking systems. |
| Keywords: | Spatial Probit, banking crises, contagion. |
| JEL: | C21 C25 G21 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:ise:isegwp:wp32010&r=ure |
| By: | Stefano Colombo (DISCE, Università Cattolica) |
| Abstract: | Using a spatial model with two separated markets, we study how taxation alters the incentive to prey of an incumbent firm facing a potential entrance by another firm. We show that for intermediate levels of the transportation costs, the higher are taxes the lower are the expected gains from the predatory strategy. We also show that under some conditions setting a positive level of taxes may induce a duopolistic equilibrium instead of a monopolistic one, and this ultimately increases welfare. |
| Keywords: | Taxation; Predation; Spatial model. |
| JEL: | D43 L11 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:ctc:serie3:ief0092&r=ure |
| By: | Kurtis Swope (United States Naval Academy); Pamela Schmitt (United States Naval Academy); John Cadigan (Gettysburg College); Robert Shupp (Michigan State University) |
| Abstract: | Conventional wisdom as well as economic theory suggests it is more costly to reassemble fragmented land due to transactions costs and strategic bargaining costs. Both costs are expected to increase with the number of sellers. Inefficient allocation of land resources may result including property entropy (Parisi 2002), urban sprawl (Miceli and Sirmans 2007) and deteriorating inner cities. Given the difficulty of observing actual values attached by buyers and sellers to land, little empirical evidence exists to support the conventional wisdom and theoretical work. We use experimental methods to examine transactions costs and strategic bargaining costs in a land-assembly market game with one buyer, one to four sellers, and complementary exchanges. The buyer’s final earnings vary inversely with the number of sellers, ceteris paribus, indicating an incentive to purchase consolidated land. Delay costs reduce holdout, but result in lower payoffs for both buyers and sellers. Competition between sellers reduces holdout and the buyer’s total purchase price. |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:usn:usnawp:24&r=ure |
| By: | González-Val, Rafael; Ramos, Arturo; Sanz-Gracia, Fernando |
| Abstract: | This paper analyses in detail the features offered by a function which is practically new to Urban Economics, the q-exponential, in describing city size distributions. We highlight two contributions. First, we propose a new and simple procedure for estimating their parameters. Second, and more importantly, we explain the characteristics associated with two traditional graphic methods (Zipf plots and cumulative density functions) for discriminating between functions. We apply them to the lognormal and q-exponential, justifying them as the best functions for explaining the entire distribution, and that the relationship between them is of complementarity. |
| Keywords: | city size distribution; q-exponential; lognormal |
| JEL: | C16 C13 R00 |
| Date: | 2010–04–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:21921&r=ure |
| By: | Sigrid Roehrs (University of Zurich); David Stadelmann (University of Fribourg) |
| Abstract: | Mobility may undermine local income redistribution in federal systems,because rich taxpayers can evade high taxes by moving to low tax jurisdictions. By analyzing a model of local income redistribution with endogenous voting, income heterogeneity and an exogenously given degree of mobility we focus explicitly on the link between redistribution and mobility. Our findings suggest a nonlinear relationship between redistribution and mobility: high and low degrees of mobility permit major income redistribution as income sorting is absent, while a medium degree of mobility leads to high differences in tax rates between jurisdictions and thus to income sorting and less redistribution. |
| Keywords: | Redistribution, political economy, locational equilibrium, taxes, tax havens |
| JEL: | H23 H71 H73 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2010/2/doc2010-4&r=ure |
| By: | Timothy J. Bartik (W.E. Upjohn Institute for Employment Research); George Erickcek (W.E. Upjohn Institute for Employment Research) |
| Abstract: | This paper estimates that Michigan's MEGA tax credit program to attract and retain businesses has large employment and fiscal benefits. MEGA provides discretionary tax credits to businesses, with the tax credit tied to the personal income taxes paid by employees on the new or retained jobs. We estimate the economic effects of MEGA using the Upjohn Institute's REMI model, and the research literature on how business location decisions respond to taxes. We estimate the fiscal effects of MEGA based on the research literature on how government spending and revenue respond to state personal income and population. The estimates suggest a lower bound to MEGA's effectiveness of being decisive in a little over 8 percent of the MEGA projects. Even with this modest success rate, MEGA is estimated to have fiscal benefits that offset about two-thirds of its gross fiscal costs. The net fiscal costs per job created of MEGA average less than $4,000 per job-year, which is less than the labor market benefits of job creation. |
| Keywords: | State and local economic development policy, tax incentives, fiscal impact analysis, labor market benefits, regional multipliers |
| JEL: | R11 R23 R30 R58 H70 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:upj:weupjo:10-164&r=ure |
| By: | Bo Zhao |
| Abstract: | This paper examines the potential impact of local-option taxes on meals, general sales, income, and payroll on revenue-raising capacity in Massachusetts municipalities. It finds that, while new local-option taxes would generate considerable additional revenues from untapped sources, revenue capacity is not evenly distributed across municipalities. Indeed, local-option taxes are likely to exacerbate fiscal disparities, because municipalities with low existing revenue-raising capacity often lack the tax bases for new local-option taxes. Policymakers could consider increasing equalizing state aid to offset these fiscal disparities. If more aid is not forthcoming, this paper proposes that the state change aid formulas to reflect differences across municipalities in local-option tax capacity, and to better target fiscally distressed communities. These strategies - explored in the Massachusetts context - could also be useful in other states. |
| Keywords: | Taxation - Massachusetts ; Local finance - Massachusetts |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbcw:10-2&r=ure |
| By: | John Micklewright (Depatment of Quantitative Social Science - Institute of Education, University of London.); Sylke V. Schnepf (School of Social Sciences, University of Southampton, UK.); Chris Skinner (School of Social Sciences, University of Southampton, UK.) |
| Abstract: | We analyse response patterns to an important survey of school children, exploiting rich auxiliary information on respondents’ and non-respondents’ cognitive ability that is correlated both with response and the learning achievement that the survey aims to measure. The survey is the Programme for International Student Assessment (PISA), which sets response thresholds in an attempt to control data quality. We analyse the case of England for 2000 when response rates were deemed high enough by the PISA organisers to publish the results, and 2003, when response rates were a little lower and deemed of sufficient concern for the results not to be published. We construct weights that account for the pattern of non-response using two methods, propensity scores and the GREG estimator. There is clear evidence of biases, but there is no indication that the slightly higher response rates in 2000 were associated with higher quality data. This underlines the danger of using response rate thresholds as a guide to data quality. |
| Keywords: | Non-response, bias, school survey, data linkage, PISA |
| JEL: | I21 |
| Date: | 2010–03–24 |
| URL: | http://d.repec.org/n?u=RePEc:qss:dqsswp:1004&r=ure |
| By: | John Cotter (School of Business, University College Dublin); Richard Roll (UCLA) |
| Abstract: | Real Estate Investment Trusts (REITs) are the only truly liquid assets related to real estate investments. We study the behavior of U.S. REITs over the past three decades and document their return characteristics. REITs have somewhat less market risk than equity; their betas against a broad market index average about .65. Decomposing their covariances into principal components reveals several strong factors. REIT characteristics differ to some extent from those of the S&P/Case-Shiller (SCS) residential real estate indexes. This is partly attributable to methods of index construction. Our examination of REITs suggests that investment in real estate is far more risky than what might be inferred from the widely-followed SCS series. |
| Date: | 2010–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:ucd:wpaper:201008&r=ure |
| By: | Lindsey, Robin (University of Alberta, Department of Economics); Wang, Judith (University of Alberta, Department of Economics); Yang, Hai (Hong Kong University of Science and Technology) |
| Abstract: | Nonlinear pricing (a form of second-degree price discrimination) is widely used in transportation and other industries but it has been largely overlooked in the road-pricing literature. This paper explores the incentives for a profit-maximizing toll-road operator to adopt some simple nonlinear pricing schemes when there is congestion and collecting tolls is costly. Users are assumed to differ in their demands to use the road. Regardless of the severity of congestion, an access fee is always profitable to implement either as part of a two-part tariff or as an alternative to paying a toll. Use of access fees for profit maximization can increase or decrease welfare relative to usage-only pricing. Hence a ban on access fees could reduce welfare. |
| Keywords: | congestion pricing; two-part pricing; private roads; toll collection costs |
| JEL: | D42 R41 |
| Date: | 2010–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:albaec:2010_003&r=ure |
| By: | McCarthy, Yvonne (Central Bank and Financial Services Authority of Ireland); McQuinn, Kieran (Central Bank and Financial Services Authority of Ireland) |
| Abstract: | This paper uses information contained within the Survey on Income and Living Conditions (SILC) to examine the ability of Irish households to sustain their mortgage repayments. We calculate mortgage repayment to income (MRTI) ratios for a representative sample of Irish households and examine the distribution of this ratio. In particular, we stratify information on marital, work and educational status along with household composition according to this MRTI. We also examine the distribution of information on household mortgages such as the source, the interest rate paid, the age and tenure, and the monthly repayment of the mortgage according to the same ratio. Finally, the distributional implications for the MRTI of a significant unemployment and interest rate shock are also examined. |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:cbi:wpaper:2/rt/10&r=ure |
| By: | Farzana Afridi (Indian Statistical Institute, New Delhi; Institute of Economic Growth) |
| Abstract: | This paper assesses the effect of transition from monthly distribution of free food grains to the daily provision of free cooked meals to school children on enrollments and attendance in a rural area of India. School panel data allow a difference-in-differences estimation strategy to address possible endogeneity of program placement. The results suggest that program transition had a significant impact on improving the daily participation rates of children in lower grades. The average monthly attendance rate of girls in grade 1 was more than 12 percentage points higher while there was a positive but insignificant effect on grade 1 boys' attendance rate. The impact on enrollment levels was insignificant. |
| Keywords: | school meals, attendance, enrollment |
| JEL: | I21 I28 I38 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:ind:isipdp:10-02&r=ure |
| By: | Kroon, L.G.; Huisman, D. (Erasmus Econometric Institute) |
| Abstract: | Disruptions of a railway system are responsible for longer travel times and much discomfort for the passengers. Since disruptions are inevitable, the railway system should be prepared to deal with them effectively. This paper explains that, in case of a disruption, rescheduling the timetable, the rolling stock circulation, and the crew duties is so complex that solving them manually is too time consuming in a time critical situation where every minute counts. Therefore, algorithmic support is badly needed. To that end, we describe models and algorithms for real-time rolling stock rescheduling and real-time crew rescheduling that are currently being developed and that are to be used as the kernel of decision support tools for disruption management. Furthermore, this paper argues that a stronger passenger orientation, facilitated by powerful algorithmic support, will allow to mitigate the adverse effects of the disruptions for the passengers. The latter will contribute to an increased service quality provided by the railway system. This will be instrumental in increasing the market share of the public transport system in the mobility market. |
| Date: | 2009–12–17 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:eureir:1765017524&r=ure |
| By: | Nils Braakmann (Institute of Economics, Leuphana University of Lüneburg, Germany) |
| Abstract: | This paper provides first evidence on the social returns to education from both firm-level and regional human capital. Using panel data from German social security, both at an individual and aggregated at the plant and regional level, I estimate earnings functions incorporating measures of regional and firm-level human capital while controlling for various types of unobserved heterogeneity, demand shocks, regional physical capital and other regional and firm-level confounders. The results suggest negligibly small external returns to the firm-level shares of high-skilled workers. On the regional level, the results show no support for external returns to education, except for skilled workers. |
| Keywords: | Human capital externalities, social returns to education, error-component model |
| JEL: | D62 J24 J31 R11 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:143&r=ure |
| By: | Pfeiffer, Friedhelm (ZEW Mannheim); Seiberlich, Ruben R. (University of Konstanz) |
| Abstract: | Disconnectedness among youth can have several dimensions. From a socio-economic viewpoint, failure in school, unemployment and the lack of an intimate relationship are among the most important ones. In our samples from SOEP youth questionnaires, approximately 13% of young people in Germany between the ages of 17 and 19 are disconnected. The percentage of disconnected youths has been on the rise since 2001. There is evidence that an adverse family background is the most important variable for being disconnected in young adulthood. Macroeconomic factors also contribute to disconnectedness. Recessions are followed by increases in the number of disconnected youth. |
| Keywords: | disconnected youth, unemployment, school failure, life adversity |
| JEL: | D87 I12 I21 J13 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4855&r=ure |
| By: | Paul Besseling; Maarten van 't Riet |
| Abstract: | Should one calculate user benefits from changes in door-to-door journeys or from changes in the use of separate links of the network? Quite often, the second approach is deemed wrong, as consumers are supposed to demand journeys, not parts of journeys. However, we show that for a quite general economic model and under fairly general assumptions regarding the network, both approaches are equivalent. The cost-benefit analysis practitioner can exploit this result. The links approach reveals on what part of the networks user benefits and/or losses are generated. This additional piece of information might help to optimize the project design. |
| Keywords: | Cost-benefit analysis; transport networks |
| JEL: | D61 H54 R42 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:130&r=ure |
| By: | Maria De Paola; Vincenzo Scoppa; Rosanna Nisticò (Dipartimento di Economia e Statistica, Università della Calabria) |
| Abstract: | In this paper we carry out an evaluation of the effectiveness of monetary incentives in enhancing student performance using a randomized experiment involving undergraduate students enrolled at a Southern Italian University. Students participating at the experiment were assigned to three different groups: a high reward group, a low reward group and a control group. Rewards were assigned following a tournament rule to the 30 best performing students in each treated group. Findings suggest that financial rewards increase student performance both in terms of number of credits earned and grades obtained at exams. High ability students react strongly while the effect is null for low ability students. When the “intention-to-treat” effects are adjusted for non-participation using IV, it emerges a stronger impact of the treatment on student performance. |
| Keywords: | Education Production Function, Student Effort, Incentives, Merit Scholarship, Higher Education, Randomized Evaluation |
| JEL: | I21 J31 D82 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:clb:wpaper:201006&r=ure |
| By: | Atif R. Mian; Amir Sufi |
| Abstract: | We show that household leverage as of 2006 is a powerful statistical predictor of the severity of the 2007 to 2009 recession across U.S. counties. Counties in the U.S. that experienced a large increase in household leverage from 2002 to 2006 showed a sharp relative decline in durable consumption starting in the third quarter of 2006 – a full year before the official beginning of the recession in the fourth quarter of 2007. Similarly, counties with the highest reliance on credit card borrowing reduced durable consumption by significantly more following the financial crisis of the fall of 2008. Overall, our statistical model shows that household leverage growth and dependence on credit card borrowing as of 2006 explain a large fraction of the overall consumer default, house price, unemployment, residential investment, and durable consumption patterns during the recession. Our findings suggest that a focus on household finance may help elucidate the sources macroeconomic fluctuations. |
| JEL: | E2 E3 R2 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15896&r=ure |
| By: | Jeffrey A. Groen (U.S. Bureau of Labor Statistics); Anne E. Polivka (U.S. Bureau of Labor Statistics) |
| Abstract: | This paper examines the decision of Hurricane Katrina evacuees to return to their pre- Katrina areas and documents how the composition of the Katrina-affected region changed over time. Using data from the Current Population Survey, we show that an evacuee’s age and the severity of damage in an evacuee’s county of origin are important determinants of whether an evacuee returned during the first year after the storm. Blacks were less likely to return than whites, but this difference is primarily related to the geographical pattern of storm damage rather than to race per se. The difference between the composition of evacuees who returned and the composition of evacuees who did not return is the primary force behind changes in the composition of the affected areas in the first two years after the storm. Katrina is associated with substantial shifts in the racial composition of the affected areas (namely a decrease in the percentage of residents who are black) and an increasing presence of Hispanics. Katrina is also associated with an increase in the percentage of older residents, a decrease in the percentage of residents with low income/education, and an increase in the percentage of residents with high income/education. |
| Keywords: | Hurricane Katrina; Geographic Mobility; Return Migration; Disasters |
| JEL: | J61 Q54 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:bls:wpaper:ec090060&r=ure |
| By: | Silva, Olmo (London School of Economics) |
| Abstract: | In this paper I survey the recent economics of education literature in order to identify which education policies can effectively improve the quality of primary schooling, as measured by pupil test-based achievements. Particular attention is devoted to the experience of England, a country which has made substantial investments over the past decade aimed at improving its primary education. Evidence suggests that broadly scoped resource-based programmes deliver less than more targeted policies. Additionally, a growing body of research shows that interventions that enhance choice and competition among education-service providers, and motivate teachers through pecuniary rewards, have some scope in raising education standards. I conclude my survey by discussing some broad concerns with modes of education provision centred on choice and competition, mainly pupil segregation along the lines of ability and family background. |
| Keywords: | primary schools, resources, choice and competition, incentives |
| JEL: | I20 I28 H52 J24 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp5&r=ure |
| By: | Bettina Klaus; Olivier Bochet; Markus Walzl |
| Abstract: | We consider multiple-type housing markets. To capture the dynamic aspect of trade in such markets, we study a dynamic recontracting process similar to the one introduced by Serrano and Volij (2008). First, we analyze the set of recurrent classes of this process as a (non-empty) solution concept. We show that each core allocation always constitutes a singleton recurrent class and provide examples of non-singleton recurrent classes consisting of blocking-cycles of individually rational allocations. For multiple-type housing markets stochastic stability never serves as a selection device among recurrent classes. Next, we propose a method to compute the limit invariant distribution of the dynamic recontracting process. Furthermore, we discuss how the limit invariant distribution is inuenced by the relative coalitional stability and accessibility of the different stochastically stable allocations. We illustrate our finndings with several examples. In particular, we demonstrate that some core allocations are less likely to be final allocations of the dynamic process than cycles composed of non-core allocations. |
| Keywords: | core; indivisible goods; limit invariant distribution; stochastic stability |
| JEL: | D63 D70 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:lau:crdeep:10.02&r=ure |
| By: | Peter C. B. Phillips (Yale University, University of Auckland, University of York & Singapore Management University); Jun Yu (School of Economics,Singapore Management University) |
| Abstract: | A recursive regression methodology is used to analyze the bubble characteristics of various financial time series during the subprime crisis. The methods provide a technology for identifying bubble behavior and consistent dating of their origination and collapse. Seven relevant financial series are investigated, including three financial assets (the Nasdaq index, home price index and asset-backed commercial paper), two commodities (the crude oil price and platinum price), one bond rate (Baa), and one exchange rate (Pound/USD). Statistically significant bubble characteristics are found in all of these series. The empirical estimates of the origination and collapse dates suggest an interesting migration mechanism among the financial variables: a bubble first emerged in the equity market during mid-1995 lasting to the end of 2000, followed by a bubble in the real estate market between January 2001 and July 2007 and in the mortgage market between November 2005 and August 2007. After the subprime crisis erupted, the phenomenon migrated selectively into the commodity market and the foreign exchange market, creating bubbles which subsequently burst at the end of 2008, just as the effects on the real economy and economic growth became manifest. Our empirical estimates of the origination and collapse dates support strongly the general features of the scenario of this crisis put forward in a recent study by Caballero, Farhi and Gourinchas (2008). |
| Keywords: | Financial bubbles, Crashes, Date stamping, Explosive behavior, Mildly explosive process, Subprime crisis, Timeline |
| JEL: | C15 G12 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:siu:wpaper:18-2009&r=ure |
| By: | I. Semih Akçomak; Bas ter Weel |
| Abstract: | This research shows that social capital is important in explaining why crime is so heterogeneous across space. Social capital is considered as a latent construct composed of a variety of indicators, such as blood donations, voter turnout, voluntary contributions to community well-being, and trust. To isolate exogenous variation in social capital, three historical variables are used as instruments: the fraction of foreigners, the number of schools and the fraction of Protestants in 1859. The historical information provides heterogeneity across municipalities in these three variables. In an application to Dutch municipalities the 2SLS estimates suggest that the exogenous component of social capital is signicantly and negatively correlated with current crime rates, after controlling for a range of contemporaneous socio-economic indicators. Next, the robustness analysis shows why some social capital indicators are more useful than the others in applied economic research. |
| Keywords: | Social capital; Crime; the Netherlands |
| JEL: | A13 A14 K42 Z13 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:136&r=ure |
| By: | Olof Åslund (Uppsala University); John Östh (Uppsala University); Yves Zenou (Stockholm University, Research Institute of Industrial Economics (IFN) and CREAM) |
| Abstract: | We study the impact of job proximity on individual employment and earnings. The analysis exploits a Swedish refugee dispersal policy to obtain exogenous variation in individual locations. Using very detailed data on the exact location of all residences and workplaces in Sweden, we find that having been placed in a location with poor job access in 1990-91 adversely affected employment in 1999. Doubling the number of jobs in the initial location in 1990-91 is associated with 2.9 percentage points higher employment probability in 1999. Considering that the 1999 employment rate was 43 percent among the refugees, this is a considerable effect. The analysis suggests that residential sorting leads to underestimation of the impact of job access. |
| Keywords: | Job access, endogenous location, natural experiment. |
| JEL: | J15 J18 R23 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:200925&r=ure |
| By: | Toni Darbas; Neil MacLeod; Fiachra Kearney; Timothy F Smith; Simone Grounds (CSIRO Sustainable Ecosystems, Australia) |
| Abstract: | Peri-urban development pressure on and near Australian coastlines is resulting in the conversion of agricultural land for rural-residential use. The impact of larger and more diverse human populations upon the ecological assets remaining in agricultural landscapes has consequently become a policy concern. This paper contributes to these policy debates by integrating the results of parallel social and ecological research projects commissioned to improve natural resource management in peri-urbanising regions. The research was undertaken in the case study region of South East Queensland, the region supporting Australia’s most rapid population growth. Our results indicate that both social and ecological communities cross a fragmentation threshold due to peri-urban development whereby they become ecologically simple and socially heterogeneous in a coupling that cedes a poor diagnosis for biodiversity retention. |
| Keywords: | stored soil water, dryland grain cropping, extension, social systems, RD&E, differentiation |
| JEL: | Q56 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:cse:wpaper:2010-03&r=ure |
| By: | Piero Cipollone (Bank of Italy and INVALSI); Pasqualino Montanaro (Bank of Italy); Paolo Sestito (Bank of Italy) |
| Abstract: | Students’ competencies are influenced by a host of factors, including the individual school’s effectiveness. Measuring this contribution is extremely difficult. One way of circumventing the problem is by focusing on changes in competencies over time, i.e. value-added measures. Using the results of an INVALSI survey of high schools, this paper implements these measures for Italy, in an attempt to identify a general pattern of value-added among schools. Purging the sample of measurement errors – which require the exclusion of schools with too few students tested – and taking into account the selection bias implied by the non-compulsory nature of schools’ participation in the survey, we find that the positive gap in favour of general programs (licei) when looking at the level of competencies tends to vanish (in maths and science) when focusing on value-added measures. By contrast, in the maths and science field schools located in the Southern regions are characterized not only by a lower starting level of competencies but also by a lower value-added. For maths at least, there is also a general tendency for teachers’ turnover to have a negative effect on student improvements. |
| Keywords: | education, value-added |
| JEL: | I20 I21 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_754_10&r=ure |
| By: | Orla Doyle (Geary Institute, University College Dublin); Sarah Finnegan (Geary Institute, University College Dublin); Kelly A. McNamara (Geary Institute, University College Dublin) |
| Abstract: | Differential ratings by multiple informants are an important issue in survey design. Although much research has focused on differential reports of child behaviour, discrepancies between parent and teacher reports of children’s school readiness are less explored. |
| Date: | 2010–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:ucd:wpaper:201011&r=ure |