nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2010‒07‒31
28 papers chosen by
Steve Ross
University of Connecticut

  1. How polycentric is a monocentric city? The role of agglomeration economies By Ahlfeldt, Gabriel M.; Wendland, Nicolai
  2. The Phantom of the Opera: Cultural Amenities, Human Capital, and Regional Economic Growth By Falck, Oliver; Fritsch, Michael; Heblich, Stephan
  3. Local Housing Market Cycle and Loss Given Default: Evidence from Sub-Prime Residential Mortgages By Yanan Zhang; Lu Ji; Fei Liu
  4. A Model of Housing Stock for Canada By David Dupuis; Yi Zheng
  5. Testing Nonlinear New Economic Geography Models By Bode, Eckhardt; Mutl, Jan
  6. Does housing really lead the business cycle? By Luis J. Álvarez; Alberto Cabrero
  7. Bubbles in South African House Prices and their Impact on Consumption By Sonali Das; Rangan Gupta; Patrick T Kanda
  8. Expectations-Driven Cycles in the Housing Market By Luisa Lambertini; Caterina Mendicino; Maria Tereza Punzi
  9. Housing policy toward the rental sector in Italy: a distributive assessment By Massimo Baldini; Teresio Poggio
  10. Urban transport governance reform in Barcelona By Daniel Albalate; Germà Bel; Joan Calzada
  12. The Determinants of Success in Primary Education in Spain By Brindusa Anghel; Antonio Cabrales
  13. Regulatory Schemes and Political Capture in a Local Public Sector By Gagnepain, Philippe; Ivaldi, Marc
  14. Inequality in pupils' educational attainment: How much do family, sibling type and neighbourhood matter? By Nicoletti C; Rabe B
  15. School insertion of foreign students of first and second generation in Italy By Paola Bertolini; Michele Lalla; Valentina Toscano
  16. The gains from early intervention in Europe: Fiscal surveillance and fiscal planning using cash data By Andrew Hughes Hallett; Moritz Kuhn; Thomas Warmedinger
  17. The tax treatment of company cars, commuting and optimal congestion taxes By De Borger B.; Wuyts B.
  18. Capital Transfers and Equalization: An Application to Spanish Regions By Ana Herrero-Alcalde; Jorge Martinez-Vazquez; Encarnación Murillo-García
  19. Dynamic models of residential segregation : an analytical solution By Sebastian Grauwin; Florence Goffette-Nagot; Pablo Jensen
  20. The Economic Benefit of Data-Communication Technology on the New York Metroplex Area By Enea, Gabriele; Figurelli, Lucrezio; Giuntella, Giovanni Osea
  21. Measuring Regional Inequality by Internet Car Price Advertisements: Evidence for Germany By Konstantin A. Kholodilin; Boriss Siliverstovs
  22. Short and long-run time-of-use price elasticities in Swiss residential electricity demand By Massimo Filippini
  23. Interactions between local and migrant workers at the workplace By Gil S. Epstein; Yosef Mealem
  24. Aid and Universal Primary Education By Rohen D'AIGLEPIERRE; Laurent WAGNER
  25. Why Does Intermarriage Increase Immigrant Employment? The Role of Networks By Furtado, Delia; Theodoropoulos, Nikolaos
  26. Endogenous gentrification and housing price dynamics By Veronica Guerrieri; Daniel Hartley; Erik Hurst
  27. Matching and network effects.. By Fafchamps, Marcel; Goyal, Sanjeev; Leij, Marco J. van der
  28. The Effects of School Quality in the Origin on the Payoff to Schooling for Immigrants By Chiswick, Barry R.; Miller, Paul W.

  1. By: Ahlfeldt, Gabriel M.; Wendland, Nicolai
    Abstract: Can the demise of the monocentric economy across cities during the 20th century be explained by decreasing transport costs to the city center or are other fundamental forces at work? Taking a hybrid perspective of classical bid-rent theory and a world where clustering of economic activity is driven by (knowledge) spillovers, Berlin, Germany, from 1890 to 1936 serves as a case in point. We assess the extent to which firms in an environment of decreasing transport costs and industrial transformation face a trade-off between distance to the CBD and land rents and how agglomeration economies come into play in shaping their location decisions. Our results suggest that an observable flattening of the traditional distance to the CBD gradient may mask the emergence of significant agglomeration economies, especially within predominantly service-based inner city districts.
    Keywords: Transport Innovations; Land Values; Location Productivity; Agglomeration Economies; Economic History; Berlin
    JEL: N9 N7 R33 O12
    Date: 2010–07
  2. By: Falck, Oliver (Ifo Institute for Economic Research); Fritsch, Michael (University of Jena); Heblich, Stephan (Max Planck Institute for Economics)
    Abstract: We analyze the extent to which endogenous cultural amenities affect the spatial equilibrium share of high-human-capital employees. To overcome endogeneity, we draw on a quasi-natural experiment in German history and exploit the exogenous spatial distribution of baroque opera houses built as a part of rulers' competition for prestigious cultural amenities. Robustness tests confirm our strategy and strengthen the finding that proximity to a baroque opera house significantly affects the spatial equilibrium share of high-human-capital employees. Then, a cross-region growth regression shows that these employees induce local knowledge spillovers and shift a location to a higher growth path.
    Keywords: cultural amenities, regional economic growth, human capital, Bohemians
    JEL: H41 R11 J24
    Date: 2010–07
  3. By: Yanan Zhang; Lu Ji; Fei Liu
    Abstract: This paper studies the impact of housing market cycles on loss given default (LGD). Previous studies have shown that the current loan-to-value ratio (CLTV) is the most important determinant of LGD. This paper establishes another linkage which is between the house price cycles before the time of mortgage origination and LGD. The empirical analysis is based on a large loan-level sub-prime residential mortgage loss dataset from 1998 to 2009. Results show that house price history has a long memory in explaining LGD. Its explanatory power far exceeds the original LTV and other loan characteristics. This paper offers a countercyclical view of LGD risk. The model can be combined with a default probability model to serve as a regulatory prudential tool. Such a tool provides a solution to the inherent procyclical bias in BASEL II capital requirements, and can contribute to the safety and soundness of banking institutions.
    Date: 2010–07–16
  4. By: David Dupuis; Yi Zheng
    Abstract: Using an error-correction model (ECM) framework, the authors attempt to quantify the degree of disequilibrium in Canadian housing stock over the period 1961–2008 for the national aggregate and over 1981–2008 for the provinces. They find that, based on quarterly data, the level of housing stock in the long run is associated with population, real per capita disposable income, and real house prices. Population growth (net migration, particularly for the western provinces) is also an important determinant of the short-run dynamics of housing stock, after controlling for serial correlation in the dependent variable. Real mortgage rates, consumer confidence, and a number of other variables identified in the literature are found to play a small role in the short run. The authors’ model suggests that the Canadian housing stock was 2 per cent above its equilibrium level at the end of 2008. There was likely overbuilding, to varying degrees, in Saskatchewan, New Brunswick, British Columbia, Ontario, and Quebec.
    Keywords: Domestic demand and components
    JEL: E21 J00
    Date: 2010
  5. By: Bode, Eckhardt (Kiel Institute for the World Economy, Kiel, Germany); Mutl, Jan (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria)
    Abstract: We test a New Economic Geography (NEG) model for U.S. counties, employing a new strategy that allows us to bring the full NEG model to the data, and to assess selected elements of this model separately. We find no empirical support for the full NEG model. Regional wages in the U.S. do not respond to local wage shocks in the way predicted by the model. We show that the main reason for this is that the model does not predict either the migration patterns induced by local wage shocks or the repercussions of this migration for regional wages correctly.
    Keywords: New economic geography, spatial econometrics
    JEL: C21 C51 R12
    Date: 2010–07
  6. By: Luis J. Álvarez (Banco de España); Alberto Cabrero (Banco de España)
    Abstract: The aim of this paper is to characterize the cyclical properties of Spanish real and nominal housing related variables. Our three main results are: First, housing appears to lead the business cycle. Second, fluctuation in home prices are positively related to those of residential investment, suggesting the dominant role of demand factors over supply ones. Third,there are interesting asymmetries in cyclical fluctuations: contractions in GDP appear to be briefer than expansions.
    Keywords: Housing, business cycles, filtering
    JEL: E32 R21 R32
    Date: 2010–07
  7. By: Sonali Das (LQM, CSIR, Pretoria); Rangan Gupta (Department of Economics, University of Pretoria); Patrick T Kanda (Department of Economics, University of Pretoria)
    Abstract: This paper tests for house price bubbles in the South African housing market, using quarterly data from 1969:Q2 to 2009:Q3, based on the unit root test developed by Phillips et al. (2010). This test allows us to detect whether a bubble exists or not, as well as the date of emergence and collapse of the same. Our findings show evidence of house price bubbles in the large, medium and small-middle segments, as well as, the aggregate middle-segment of the South African housing market. There is however, no evidence of bubbles in the luxury and affordable segments of the market. Next we estimate an Error Correction Model (ECM) to investigate the existence of spillover effects from the housing sector onto consumption. Results indicate significant spillovers, though there is no evidence of the effect being higher during the bubble period. Finally, we disentangle the effects of the house price acceleration and deceleration on consumption in an effort to investigate whether or not consumption reacts asymmetrically to movements in house prices. We find that consumption responds significantly to the house price acceleration but not to deceleration, with this effect also not showing any evidence of being higher during the identified bubble period. The asymmetric model is found to perform better both in terms of in-sample and out-of-sample performances, relative to the symmetric model. The fact that we do not observe consumption to be more responsive to house price acceleration (deceleration) during the bubble period is most likely due two reasons: First, the National Credit Act number 34 implemented in 2005, which enforced responsible granting and use of credit and prohibited reckless awarding of credits (NCA, 2006) and second, the findings of recent studies depicting evidence of pronounced discretionary changes by the South African Reserve Bank to counter the recent adverse movements in the financial markets.
    Keywords: House price, bubble, consumption
    JEL: C22 E21 G1
    Date: 2010–07
  8. By: Luisa Lambertini; Caterina Mendicino; Maria Tereza Punzi
    Abstract: This paper analyzes housing market boom-bust cycles driven by changes in households' expectations. We explore the role of expectations not only on productivity but on several other shocks that originate in the housing market, the credit market and the conduct of monetary policy. We find that, in the presence of nominal rigidities, expectations on both the conduct of monetary policy and future productivity can generate housing market boom-bust cycles in accordance with the empirical findings. Moreover, expectations of either a future reduction in the policy rate or a temporary increase in the central bank's inflation target that are not fulfilled generate a macroeconomic recession. Increased access to credit generates a boom-bust cycle in most variables only if it is expected to be reversed in the near future.<br>
    JEL: E32 E44 E52
    Date: 2010
  9. By: Massimo Baldini; Teresio Poggio
    Abstract: We study the distributive effects on Italian households of the three most relevant housing subsidies targeted to renters: a national rent supplement scheme introduced in the context of the reform that liberalised the rental market in the late 1990s, a tax credit for renters that has been recently strengthened, and the implicit economic support given to tenants in the social housing sector, through below-market rents. The analysis is performed on data from the Eu-Silc survey for Italy and, in the case of the housing allowances, also on register data from some of the largest Italian towns. We consider in particular the ability of these schemes to target low income households and their effects on the overall levels of poverty and inequality. Results from our analysis show a good targeting but very limited effect on social protection, with the partial exception of social housing.
    Keywords: housing policy, housing benefits, social housing, tax credit, poverty, Italy.
    JEL: I38 R2 I32
    Date: 2010–07
  10. By: Daniel Albalate (Faculty of Economics, University of Barcelona); Germà Bel (Faculty of Economics, University of Barcelona); Joan Calzada (Faculty of Economics, University of Barcelona)
    Abstract: The unusual mixed public-private structure of the urban bus market in the metropolitan area of Barcelona provides an interesting context in which to analyze the management challenges and opportunities of the partial privatization of public services. Initiatives used by the public regulator to promote competition for contracts, such as short term concessions to private contractors and the removal of entry barriers, have considerable potential for improving efficiency and quality. The growth in the share of routes managed by private firms in recent years shows that privatization is a credible threat that may well stimulate improved performance among public managers. The type of reform implemented in Barcelona is of interest to all metropolitan areas large enough to operate under constant returns to scale regimes, and suitable for potential concessions of routes in segregated areas inside the metropolitan area, so as not to miss out on the benefits of economies of density.
    Keywords: Privatization, mixed public-private, regulation, competition JEL classification:
    Date: 2010–06
  11. By: Peter Friedrich; Janno Reiljan
    Abstract: In order to develop the necessary Estonian measures and policies the prevailing distribution of expenditures for these purposes are presented. Although the share of GDP used for financing education in Estonia is somewhat above the EU average the nominal amount of per capita education funds is comparatively low due to a low level of economic development. Moreover, because of thin population per square km many small schools exist in Estonia without a sufficient number of pupils, which makes the education system more costly. We consider two different basic strategies to improve the situation. The first strategy is an extension of a reform approach that was performed since January 2008 that refers mainly to the prevailing educational and spatial organization. We discuss the consequences and regional impacts of that policy. Criteria for a SWOT-analysis such as expenditure distribution, preserving regionally clear investment criteria, source of investment, etc. are used. The first strategy refers to improvements into the current system of financing schools that shows a state investment program for schools that considers the number of pupils per school and special educational needs. However, the performance of this policy is not based on a fair equal treatment of cases. Therefore a second strategy of improvement is discussed. It is based on the idea of Functional Overlapping Competitive Jurisdictions (FOCJ). The municipalities form FOCJ that are operating schools. In this way municipalities may form a school jurisdiction that can negotiate with central government institutions for the loan and the school equipment etc. A municipality can act individually or the FOCJ negotiates for the municipal members in total. Theories of FOCJ-establishment, FOCJ-contribution determination and FOCJ-negotiations with central government are demonstrated. The FOCJ can supplement positively the first strategy of reform.
    Keywords: funding of education, central government budget policy, local governments finance
    JEL: H52 I22
    Date: 2010
  12. By: Brindusa Anghel; Antonio Cabrales
    Abstract: This study reviews the recent literature on the economics of education, with a special focus on policy interventions. It also attempts to uncover the importance of school inputs, social environment and parental background on the outcomes of a standardized exam for all sixth grade students in the region of Madrid. We have data from all exam results from 2006 to 2009. These data can then be linked to individual level characteristics such as nationality, family type and parental education and profession. For public schools we also have school level data on variables such as number of students, teachers and their characteristics (type of contracts, experience), students’ nationalities, extra-curricular activities, and number of students needing special assistance.
    Date: 2010–07
  13. By: Gagnepain, Philippe; Ivaldi, Marc
    Abstract: We consider a framework of contractual interactions between urban transport authorities and transport operators. We estimate simultaneously the choice of contract by the authorities and the effect of regulation on the cost reducing activity of the operators. We test whether regulatory schemes currently implemented in the industry are the observable items of a more general menu of second best contracts. We suggest that the generation process of the data we have in hand is better explained by the political aspects of regulation. Moreover, the cost reducing effort of the operators is greater under fixed-price regimes, compared to the cost-plus case.
    Date: 2010–05
  14. By: Nicoletti C (Institute for Social and Economic Research); Rabe B (Institute for Social and Economic Research)
    Abstract: We explore the relative influence of family and neighbourhood on educational attainment and how this varies by sibling type. Using English register data we find sibling correlations in exam scores of 0.563 at the end of primary school and of 0.621 at the end of compulsory schooling. The neighbourhood explains at most 10-15% of the variance in educational attainment; whereas the family explains at least 43%. This percentage is significantly higher for twins and for siblings of the same sex. It is also higher for closely spaced siblings and siblings with a similar school starting age but only at age 11.
    Date: 2010–07–22
  15. By: Paola Bertolini; Michele Lalla; Valentina Toscano
    Abstract: The aim of the paper is the analysis of the immigrants' school insertion paths in Italy. The analysis focuses on the immigrants' school participation in the secondary school, considering also the first and the second generation. The data has been extracted from official statistical databases, mainly of the Ministry of Education and Istat (Italian National Statistics Institute). The analysis points out that the participation rates of foreign students in the secondary school are lower than those of the Italian students and both of them are different among regions and provinces. Five territorial areas are distinguished through some social and economic indicators (sectoral added value and number of industrial districts) in order to show the determinants of different participation rates between foreign and Italian students. A multivariate analysis by territorial areas reveals that the main factors affecting the education choices are related to the local characteristics and the economic variables, such as total families' income and gross national product (GNP) per capita. These results suggest that the immigrant students face with many difficulties in educational attainment preferring a fast entrance in the labour market.
    Keywords: immigrant students, educational territorial pattern, professional path, schooling determinants, seemingly unrelated regressions
    JEL: I21 J24
    Date: 2010–06
  16. By: Andrew Hughes Hallett (George Mason University, 4400 University Drive, Fairfax, Virginia 22030, USA.); Moritz Kuhn (University of Bonn, D-53012 Bonn, Germany.); Thomas Warmedinger (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.)
    Abstract: This paper does two things. First it examines the use of real time inter-annual cash data and the role of early interventions for improving the monitoring of national fiscal policies and the correction of fiscal indiscipline. Early warnings are important because they allow us to spread the necessary adjustments over time. Examples from Germany and Italy show that large corrections are often necessary early on to make adjustments later on acceptable and to keep debt ratios from escalating. There is a credibility issue here; we find the difference between front-loaded and back-loaded adjustment schemes is likely to be vital for the time consistency of fiscal policymaking. Second, without early interventions, the later deficit reductions typically double in size – meaning governments become subject to the excessive deficit procedure and significant improvement tests more often. Thus the budget savings from early intervention and the use of cash data are significant; in our examples they are similar in size to the operating budget of the department of housing and urban development in Germany. Similar results apply in other Eurozone countries. JEL Classification: E62, H50, H68.
    Keywords: fiscal surveillance, early warning, cash data, additive vs. slope adjustments, fiscal credibility.
    Date: 2010–07
  17. By: De Borger B.; Wuyts B.
    Abstract: In Europe, the preferential tax treatment of company cars implies that many employees receive a company car as part of their compensation package. In this paper, we consider a model in which wages and the decision whether or not to provide a company car are the result of direct negotiation between employer and employee. Using this framework, we theoretically and numerically study first- and second-best optimal tax policies on labour and transport markets, focusing on the role of the tax treatment of company cars. We show that higher labour taxes and a more favourable tax treatment of company cars raise the fraction employees that receives a company car; congestion and congestion tolls reduce it. More importantly, we find that earlier models that ignored the preferential tax treatment of company cars may have substantially underestimated optimal congestion tolls in Europe. The numerical illustration, calibrated using Belgian data, suggests that about one third of the optimal congestion toll is due to the current tax treatment of company cars. We further find that eliminating the preferential tax treatment of company cars is an imperfect -- but easy to implement -- substitute for currently unavailable congestion tolls: it yields about half the welfare gain attainable through optimal congestion taxes. Finally, the favourable tax treatment of company cars justifies large public transport subsidies; the numerical results are consistent with zero public transport fares.
    Date: 2010–07
  18. By: Ana Herrero-Alcalde (Departamento de Economía Aplicada y Gestión Pública, Universidad Nacional de Educación a Distancia); Jorge Martinez-Vazquez (International Studies Program. Andrew Young School of Policy Studies, Georgia State University); Encarnación Murillo-García (Universidad Rey Juan Carlos)
    Abstract: This paper analyzes the main design issues for utilizing capital transfers with an equalization objective within a system of sub-national finance. Although there is a vast literature and ample policy practice with the design of equalization grants involving needs for recurrent expenditures and/or fiscal capacity associated with current revenues, there is a dearth at the theoretical design and actual practice levels for how to use capital transfers with an interregional equalization objective. This is an area of fiscal federalism that has not been studied in depth. The aims of this paper are to identify the singular characteristics of capital expenditures and capital financing sources which allow us to quantify both needs and capacity to finance capital infrastructure and incorporate them in a capital equalization transfer formula. The theoretical design is applied to the Spanish regional level of government to reveal its advantages and shortcomings.
    Keywords: capital transfers, equalization, fiscal decentralization design
    Date: 2010–07–23
  19. By: Sebastian Grauwin (Université de Lyon, Lyon, F-69007, France, Institut rhônalpin des systèmes complexes, IXXI, Lyon, F-69007, France, ENS-LYON, Laboratoire de Physique, UMR 5672, Lyon, F-69007, France); Florence Goffette-Nagot (Université de Lyon, Lyon, F-69007, France, CNRS, GATE Lyon-St Etienne, UMR 5824, Ecully, F-69130); Pablo Jensen (Université de Lyon, Lyon, F-69007, France, Institut rhônalpin des systèmes complexes, IXXI, Lyon, F-69007, France, ENS-LYON, Laboratoire de Physique, UMR 5672, Lyon, F-69007, France, CNRS, Laboratoire d'Economie des Transports (LET), UMR 5593, Lyon, F-69363, France)
    Abstract: We propose an analytical resolution of Schelling segregation model for a general class of utility functions. Using evolutionary game theory, we provide conditions under which a potential function, which characterizes the global configuration of the city and is maximized in the stationary state, exists. We use this potential function to analyze the outcome of the model for three utility functions corresponding to different degrees of preference for mixed neighborhoods. Schelling original utility function is shown to drive segregation at the expense of collective utility. If agents have a strict preference for mixed neighborhoods but still prefer being in the majority versus in the minority, the model converges to perfectly segregated configurations, which clearly diverge from the social optimum. Departing from earlier literature, these conclusions are based on analytical results. These results pave the way to the analysis of many structures of preferences, for instance those based on empirical findings concerning racial preferences. As a by-product, our analysis builds a bridge between Schelling model and the Duncan and Duncan segregation index.
    Keywords: Residential segregation, Schelling, dynamic model, potential function, social preferences
    JEL: C63 C72 C73 D62 J15
    Date: 2010
  20. By: Enea, Gabriele; Figurelli, Lucrezio; Giuntella, Giovanni Osea
    Abstract: The aim of this paper is to estimate the economic benefit for the New York Metroplex area of the controller-to-pilot communication standard known as Data-Communication. RAMS simulation software was first used to evaluate the potential impact of the new technology on airport operations in the three airports of LaGuardia, Newark and John F. Kennedy. The new technology would allow for a greater number of operations and reduce the average hourly workload for air traffic controllers. We employ a two steps procedure. First, we estimate a benefit function per number of hourly operations. Second, using the empirical distribution of hourly operations and the benefit function found in step one, we compute the average daily benefit from the technology as the reduced cost from delays plus the net effect on controllers workload due to its implementation. The procedure is applied at each airport individually and to the metroplex area as a whole. Our estimates show that the introduction of Data-Comm would yield significant savings in the New York Metroplex area.
    Keywords: air transportation; congestion
    JEL: L93 R41
    Date: 2010–07–23
  21. By: Konstantin A. Kholodilin; Boriss Siliverstovs
    Abstract: We suggest to use Internet car sale price advertisements for measuring economic inequality between and within German regions. Our estimates of regional income levels and Gini indices based on advertisements are highly, positively correlated with the official figures. This implies that the observed car prices can serve as a reasonably good proxy for income levels. In contrast to the traditional measures, our data can be fast and inexpensively retrieved from the web, and more importantly allow to estimate Gini indices at the NUTS2 level-something that never has been done before. Our approach to measuring regional inequality is a useful alternative source of information that could complement officially available measures.
    Keywords: Car price advertisements, economic inequality, German NUTS1 and NUTS regions, Gini index, Internet
    JEL: C21 O47 R11
    Date: 2010
  22. By: Massimo Filippini (Centre for Energy Policy and Economics (CEPE), Department of Management, Technology and Economics, ETH Zurich and Department of Economics, Università della Svizzera Italiana, Switzerland)
    Abstract: This paper presents an empirical analysis on the residential demand for electricity by time-of-day. This analysis has been performed using aggregate data at the city level for 22 Swiss cities for the period 2000 to 2006. For this purpose, we estimated two log-log demand equations for peak and off-peak electricity consumption using a static and a dynamic partial adjustment approach. These demand functions were estimated using several econometric approaches for panel data, for example LSDV, RE for static models and corrected LSDV, and GMM estimators for dynamic models. The attempt of this empirical analysis has been to highlight some of the characteristics of the Swiss residential electricity demand. The estimated short-run own price elasticities are lower than 1, whereas in the long-run these values, as expected, are higher than 1. The estimated short run as well as long run cross-price elasticities are positive. This result shows that peak and off-peak electricity are substitutes. In this context, time differentiated prices should provide an economic incentive to customers so that they can modify consumption patterns by reducing peak demand and shifting electricity consumption from peak to off-peak periods.
    Keywords: residential electricity demand by time-of-use, time-of-use rates, panel data, partial adjustment model
    JEL: D D2 Q Q4 Q5
    Date: 2010–07
  23. By: Gil S. Epstein (Department of Economics, Bar Ilan University, IZA and CReAM); Yosef Mealem (Netanya Academic College, Netanya, Israel)
    Abstract: In this paper we consider the interaction between local workers and migrants in the production process of a firm. Both local workers and migrants can invest effort in assimilation activities in order to increase the assimilation of the migrants into the firm and so by increase their interaction and production activities. We consider the effect, the relative size (in the firm) of each group and the cost of activities, has on the assimilation process of the migrants.
    Keywords: Assimilation; Contracts; Ethnicity; Market Structure; Networks; harassment.
    JEL: D74 F23 I20 J61 L14
    Date: 2010–07
  24. By: Rohen D'AIGLEPIERRE; Laurent WAGNER
    Abstract: Universal Primary Education (UPE) is one of the main objectives of development aid. However, very little empirical evidence of its effectiveness actually exists. Until very recently, the quality of available data was not sufficient to obtain robust results regarding the relationship between international aid and educational achievements. In this article, the latest, more disaggregated and more reliable data is used to study the relationship between aid to education and educational achievements. The focus here not only on educational variables in term of coverage, but also in term of equity and process. The year of Fast Track Initiative (FTI) endorsement is used as an original instrument to tackle the endogeneity problem of aid. Our results are very robust and indicate that aid to primary education has a strong effect on primary school enrollment and gender parity. A negative impact on repetitions rate is also indicated while no effect on the pupil teacher ratio can be observed. Diminishing return in the effectiveness of aid to primary education may also be highlighted. Finally, the governance variables do not appear to have an impact on this relationship.
    Keywords: aid effectiveness, education, Sector-specific aid
    JEL: O11 F35 I2
    Date: 2010
  25. By: Furtado, Delia (University of Connecticut); Theodoropoulos, Nikolaos (University of Cyprus)
    Abstract: Social networks are commonly understood to play a large role in the labor market success of immigrants. Using 2000 U.S. Census data, this paper examines whether access to native networks, as measured by marriage to a native, increases the probability of immigrant employment. We start by confirming in both least squares and instrumental variables frameworks that marriage to a native indeed increases immigrant employment rates. Next, we show that the returns to marrying a native are not likely to arise solely from legal status acquired through marriage or characteristics of native spouses. We then present several pieces of evidence suggesting that networks obtained through marriage play an important part in explaining the relationship between marriage decisions and employment.
    Keywords: immigration, marriage, employment, networks
    JEL: J61 J12 J21
    Date: 2010–07
  26. By: Veronica Guerrieri; Daniel Hartley; Erik Hurst
    Abstract: Using a unique dataset of interest rates offered by a large sample of U.S. banks on various retail deposit and loan products, we explore the rigidity of bank retail interest rates. We study periods over which retail interest rates remain fixed ("spells") and document a large degree of lumpiness of retail interest rate adjustments as well as substantial variation in the duration of these spells, both across and within different products. To explore the sources of this variation we apply duration analysis and calculate the probability that a bank will change a given deposit or loan rate under various conditions. Consistent with a nonconvex adjustment costs theory, we find that the probability of a bank changing its retail rate is initially increasing with time. Then as heterogeneity of the sample overwhelms this effect, the hazard rate decreases with time. The duration of the spells is significantly affected by the accumulated change in money market interest rates since the last retail rate change, the size of the bank and its geographical scope.
    Keywords: Housing - Prices ; Gentrification
    Date: 2010
  27. By: Fafchamps, Marcel; Goyal, Sanjeev; Leij, Marco J. van der
    Abstract: The matching of individuals in teams is a key element in the functioning of an economy. The network of social ties can potentially transmit important information on abilities and reputations and also help mitigate matching frictions by facilitating interactions among “screened” individuals. We conjecture that the probability of two individuals forming a team falls in the distance between the two individuals in the network of existing social ties. The objective of this paper is to empirically test this conjecture. We examine the formation of coauthor relations among economists over a twenty-year period. Our principal finding is that a new collaboration emerges faster among two researchers if they are “closer” in the existing coauthor network among economists. This proximity effect on collaboration is strong: Being at a network distance of 2 instead of 3, for instance, raises the probability of initiating a collaboration by 27%.
    JEL: D83 D85 C78
    Date: 2010
  28. By: Chiswick, Barry R. (University of Illinois at Chicago); Miller, Paul W. (Curtin University of Technology)
    Abstract: The payoff to schooling among the foreign born in the US is only around one-half of the payoff for the native born. This paper examines whether this differential is related to the quality of the schooling immigrants acquired abroad. The paper uses the Over-education/ Required education/Under-education specification of the earnings equation to explore the transmission mechanism for the origin-country school quality effects. It also assesses the empirical merits of two alternative measures of the quality of schooling undertaken abroad. The results suggest that a higher quality of schooling acquired abroad is associated with a higher payoff to schooling among immigrants in the US labor market. This higher payoff is associated with a higher payoff to correctly matched schooling in the US, and a greater (in absolute value) penalty associated with years of under-education. A set of predictions is presented to assess the relative importance of these channels, and the over-education channel is shown to be the more influential factor. This channel is linked to greater positive selection in migration among those from countries with better quality school. In other words, it is the impact of origin country school quality on the immigrant selection process, rather than the quality of immigrants’ schooling per se, that is the major driver of the lower payoff to schooling among immigrants in the US.
    Keywords: selectivity, earnings, school quality, schooling, immigrants
    JEL: I21 J24 J31 J61 F22
    Date: 2010–07

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