nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2010‒09‒18
twenty-one papers chosen by
Steve Ross
University of Connecticut

  1. The Hedonic Price Method in Real Estate and Housing Market Research: A Review of the Literature By Shanaka Herath; Gunther Maier
  2. Housing Mobility and Downsizing at Older Ages in Britain and the United States By Banks, James; Blundell, Richard; Oldfield, Zoë; Smith, James P.
  3. House Price Volatility and the Housing Ladder By Banks, James; Blundell, Richard; Oldfield, Zoë; Smith, James P.
  4. Locational signaling and agglomeration By Berliant, Marcus; Yu, Chia-Ming
  5. Why are East Germans not More Mobile? Analyzing the Impact of Social Ties on Regional Migration By P. Bönisch; Lutz Schneider
  6. ICTs and Urban Microenterprises: Identifying and Maximizing Opportunities for Economic Development By Vigneswara Ilavarasan; Mark R Levy
  7. School System Evaluation By Value-Added Analysis under Endogeneity By Manzi, Jorge; San Martin, Ernesto; Van Bellegem, Sébastien
  8. Urban governance and planning for Economic growth By Baafi Antwi, Joseph; Oppong Kwakye, Francis
  9. The choice between bus and light rail transit: a stylised cost-benefit analysis model By Grimaldi, Raffaele; Laurino, Antonio; Beria, Paolo
  10. Performance of Fe y Alegria high school students in Colombia : is it a matter of Fe (faith) or Alegria (joy) ? By Osorio, Juan Carlos Parra; Wodon, Quentin
  11. Transport costs, distance, and time : evidence from the Japanese Census of Logistics By Tanaka, Kiyoyasu
  12. Transversality and Transition: Branching to New Regional Path Dependence By Philip Cooke
  13. Who Loses: An examination of losses in housing net worth, non-housing assets, and total savings from 2007 to 2008 among American families By Nitz, Lawrence H.
  14. Stimulating Local Public Employment: Do General Grants Work? By Lundqvist, Heléne; Dahlberg, Matz; Mörk, Eva
  15. "Exaggerated Death of Distance, Revisiting Distance Effects on Regional Price Dispersions" By Kazuko Kano; Takashi Kano; Kazutaka Takechi
  16. Pillars and electoral behavior in Belgium: The neighborhood effect revisited By Quentin David; Gilles Van Hamme
  17. Prioritizing Approaches to Economic Development in New England: Skills, Infrastructure, and Tax Incentives By Jeff Thompson
  18. Do Incumbents Improve Service Quality in Response to Entry? Evidence from Airlines’ On-Time Performance By Jeffrey T. Prince; Daniel H. Simon
  19. Scope of Innovations, Knowledge Spillovers and Growth By Gray, Elie; Grimaud, André
  20. Why children of college graduates outperform their schoolmates. A study of cousins and adoptees By Torbjørn Hægeland, Lars Johannessen Kirkebøen, Oddbjørn Raaum and Kjell G. Salvanes
  21. Urban Bias, Rural-Urban Income Gap and Agricultural Growth: the Resource-Diverting Effect of Rural-Urban Income Gap in China By Yanyan Gao

  1. By: Shanaka Herath; Gunther Maier
    Date: 2010
  2. By: Banks, James (Institute for Fiscal Studies, London); Blundell, Richard (University College London); Oldfield, Zoë (Institute for Fiscal Studies, London); Smith, James P. (RAND)
    Abstract: This paper investigates the effects of housing price risk on housing choices over the life-cycle. Housing price risk can be substantial but, unlike other risky assets which people can avoid, the fact that most people will eventually own their home creates an insurance demand for housing assets early in life. Our contribution is to focus on the importance of home ownership and housing wealth as a hedge against future house price risk for individuals moving up the ladder – people living in places with higher housing price risk should own their first home at a younger age, should live in larger homes, and should be less likely to refinance. These predictions are tested and shown to hold using panel data from the United States and Great Britain.
    Keywords: downsizing, migration
    JEL: D12 D91
    Date: 2010–09
  3. By: Banks, James (Institute for Fiscal Studies, London); Blundell, Richard (University College London); Oldfield, Zoë (Institute for Fiscal Studies, London); Smith, James P. (RAND)
    Abstract: This paper investigates the effects of housing price risk on housing choices over the life-cycle. Housing price risk can be substantial but, unlike other risky assets which people can avoid, the fact that most people will eventually own their home creates an insurance demand for housing assets early in life. Our contribution is to focus on the importance of home ownership and housing wealth as a hedge against future house price risk for individuals moving up the ladder – people living in places with higher housing price risk should own their first home at a younger age, should live in larger homes, and should be less likely to refinance. These predictions are tested and shown to hold using panel data from the United States and Great Britain.
    Keywords: downsizing, migration
    JEL: D12 D91
    Date: 2010–09
  4. By: Berliant, Marcus; Yu, Chia-Ming
    Abstract: Agglomeration can be caused by asymmetric information and a locational signaling effect: The location choice of workers signals their productivity to potential employers. The cost of a signal is the cost of housing at a location. When workers’ marginal utility of housing is negatively correlated with their productivity, skill-biased technological change causes a core-periphery bifurcation where the agglomeration of high-skill workers eventually constitutes a unique stable equilibrium. When workers’ marginal utility of housing and their productivity are positively correlated, skill-biased technological improvements will never result in a core-periphery equilibrium. Location can at best be an approximate rather than a precise sieve for high skill workers.
    Keywords: Agglomeration; Adverse Selection; Asymmetric Information; Locational Signaling
    JEL: R13 D82 D51
    Date: 2009–12–19
  5. By: P. Bönisch; Lutz Schneider
    Abstract: Individuals’ preferences in transition regions are still shaped by the former communist system. We test this ‘Communism legacy’ hypothesis by examining the impact of acculturation in a communist regime on social network participation and, as a consequence, on preferences for spatial mobility. We focus on the paradigmatic case of East Germany where mobility intentions seem to be substantially weaker than in the western part. Applying an IV ordered probit approach we firstly find that East German people acculturated in a Communist system are more invested in locally bounded informal social capital than West Germans. Secondly, we confirm that membership in such locally bounded social networks reduces the intention to move away. Thirdly, after controlling for the social network effect the mobility gap between East and West substantially reduces. Low spatial mobility of the eastern population, we conclude, is to an important part attributable to a social capital endowment characteristic to post-communist economies.
    Keywords: regional mobility, social capital, East Germany
    JEL: J61 R23 C35
    Date: 2010–09
  6. By: Vigneswara Ilavarasan; Mark R Levy
    Abstract: The research reported here was guided by three questions: (1) What are the current and potential patterns of mobile phone, landline, PC, and Internet café use among urban microentrepreneurs? (2) Are mobile phones, PCs, and Internet cafés related to the stability or growth of urban microenterprises? (3) Can we identify those urban microentrepreneurs and/or microenterprises for which ICT use is associated with economic growth?
    Keywords: economic development, mobile phone, landline, PCs, internet cafe, ICTs, urban, micro entrepreneurs, stability, growth, potential, patterns, mumbai city, india, communication,
    Date: 2010
  7. By: Manzi, Jorge; San Martin, Ernesto; Van Bellegem, Sébastien
    Abstract: Value-added analysis is a common tool in analysing school performances. In this paper, we analyse the SIMCE panel data which provides individual scores of about 200,000 students in Chile, and whose aim is to rank schools according to their educational achievement. Based on the data collection procedure and on empirical evidences, we argue that the exogeneity of some covariates is questionable. This means that a nonvanishing correlation appears between the school-specific effect and some covariates. We show the impact of this phenomenon on the calculation of the value-added and on the ranking, and provide an estimation method that is based on instrumental variables in order to correct the bias of endogeneity. Revisiting the definition of the value-added, we propose a new calculation robust to endogeneity that we illustrate on the SIMCE data.
    Date: 2010–07
  8. By: Baafi Antwi, Joseph; Oppong Kwakye, Francis
    Abstract: Governance in short is a shift from bureaucratic process to shared power for the people. Governance in the urban areas goes hand in hand with planning. Issues of governance cannot be dealt with completely without proper planning. However, planning in the two largest cities of Kumasi and Accra has seen some major changes over time both spatially and administratively. Spatial, urban planning system has moved from new towns and town expansion to high standards of living. Administratively there has been the frantic effort of merging all law governing land use into one legal document which was not previously the case. But planning for growth and governance are faced with the following weakness; selective restraint, institutional and geographical fragmentation, short termism and power and resources.
    Keywords: Governance; Planning; Growth
    JEL: P41 O2
    Date: 2010–08–22
  9. By: Grimaldi, Raffaele; Laurino, Antonio; Beria, Paolo
    Abstract: In the last 20 years light rail and tramway schemes have been introduced in many European cities. The effects of these schemes over public transport patronage, and the benefits they have generated, seem to have sometimes been overestimated. The availability of some experiences helps in deriving some reflections about the circumstances in which light rail schemes can be truly convenient compared to bus systems. This paper tries to give a contribution by developing a simplified model to support the choice between keeping a bus corridor or upgrading towards a light rail system. The choice is analysed on the basis of a parametrical socio-economic cost-benefit analysis. All the parameters introduced and used for a numerical simulation are discussed and some typical values from the literature are given. On the basis of these values, some feasibility abaci are drawn.
    Keywords: cost-benefit analysis; bus; tram; light rail; transit; public transport
    JEL: H54 L92 R42 D61
    Date: 2010
  10. By: Osorio, Juan Carlos Parra; Wodon, Quentin
    Abstract: Fe y Alegria is a catholic network of schools that started operations in Colombia in 1971, and in 2009 served more than 72,000 students in 61 schools. This paper assesses the performance of Fe y Alegria secondary schools in Colombia using test scores for Spanish and mathematics, as well as detailed information on the characteristics of the household to which students belong. Simple statistics suggest that Fe y Alegria schools perform worse than other schools for all years in the sample. However, Fe y Alegria schools also cater to poorer students who come from disadvantaged backgrounds. Once controls are included for student background, Fe y Alegria schools actually often perform as well and in some cases better than other schools for mathematics and Spanish, thus partially reversing the previous finding.
    Keywords: Tertiary Education,Secondary Education,Gender and Education,Teaching and Learning,Primary Education
    Date: 2010–09–01
  11. By: Tanaka, Kiyoyasu
    Abstract: Geographic distance is a standard proxy for transport costs under the simple assumption that freight fees increase monotonically over space. Using the Japanese Census of Logistics, this paper examines the extent to which transport distance and time affect freight costs across shipping modes, commodity groups, and prefecture pairs. The results show substantial heterogeneity in transport costs and time across shipping modes. Consistent with an iceberg formulation of transport costs, distance has a significantly positive effect on freight costs by air transportation. However, I find the puzzling results that business enterprises are likely to pay more for short-distance shipments by truck, ship, and railroad transportation. As a plausible explanation, I discuss aggregation bias arising from freight-specific premiums for timely, frequent, and small-batch shipments.
    Keywords: Japan, Transportation, Costs, Transport cost, Transport time, Distance, Logistics, Selection bias
    JEL: R30 R40 R41
    Date: 2010–06
  12. By: Philip Cooke
    Abstract: Since Paul David published his economic histories of path dependent innovation the subject has exerted fascination upon scholars of innovation, technological change and, latterly, regional scientists and economic geographers. This paper speaks to the third and fourth of these communities in the main, though it may have theoretical and empirical elements of interest to the first two as well. The paper begins with an overview of recent perspectives and critiques concerning the relevance of the path dependence concept to the understanding of regional economic development and its associated governance. It then goes on to discuss the contribution of evolutionary economic geography to thinking about ÔbranchingÕ from path dependence and the creation of new paths. Evidence for key generic spatial processes of path transition is provided before the main content of the paper concludes with new insights into the contributions of regional innovation policy to path evolution. Conclusions are then drawn.
    Keywords: regional path dependence, branching, transition, transversality
    JEL: R11
    Date: 2010–09
  13. By: Nitz, Lawrence H.
    Abstract: This study models the loss in non-housing assets, increase in non-housing liabilities, and net change in housing value across people by education, ethnic, and occupational categories in the 2007-2008 collapse of Wall Street financial markets. Hypotheses of plausible loci of loss include the usual social categories. Findings do not confirm all of the common presuppositions—managerial class workers have among the largest losses, retirees somewhat limited losses, and losses by educational group decline with advancing education, with the possible exception of Ph.D. holders. The group which had the most severe losses in all asset categories was the armed forces. The magnitude of the suggested effects would indicate that additional policy attention should be targeted on military family outcomes under economic stress.
    Keywords: housing net worth; non-household liabilities; non-household assets; occupational group; education level;
    JEL: I31 J15 I32
    Date: 2010–09–10
  14. By: Lundqvist, Heléne (Uppsala University); Dahlberg, Matz (Uppsala University); Mörk, Eva (IFAU)
    Abstract: The effectiveness of public funds in increasing public employment has long been a question on public and labor economists’ minds. In most federal countries local governments employ large fractions of the working population, meaning that a tool for stimulating local public employment can substantially affect the overall unemployment level. This paper asks whether general grants to lower-level governments have the potential of doing so. Applying the regression kink design to the Swedish grant system, we are able to estimate causal effects of intergovernmental grants on personnel in different local government sectors. Our robust conclusion is that personnel in the central administration increased substantially after a marginal increase in grants, but that such an effect was lacking both for total personnel and personnel in child care, schools, elderly care, social welfare and in technical services. We suggest several potential reasons for these results, such as heterogeneous treatment effects and bureaucratic influence in the local decision-making process.
    Keywords: fiscal federalism, intergovernmental grants, public employment, regression kink design, instrumental variables
    JEL: C33 H11 H70 J45
    Date: 2010–09
  15. By: Kazuko Kano (Faculty of Economics, University of Tokyo); Takashi Kano (School of Finance and Economics, The University of Technology Sydney); Kazutaka Takechi (Faculty of Economics, Hosei University)
    Abstract: Past studies in the literature of the law of one price (LOP) show statistically significant but economically subtle roles of geographical distance in regional price dispersions. In this paper, we challenge this empirical "death of distance" as a primary source of LOP violations investigating a unique daily data set of wholesale prices of agricultural products in Japan that enables us to identify source regions and observe product-delivery patterns to consuming regions. We build a simple structural model to explain the observed product-delivery patterns and argue that ignoring the underlying delivery choice results in a serious under-bias toward inferences on distance effects on regional price dispersions due to sample selection. Estimating a sample-selection model, on which theoretical restrictions of our structural model are imposed, with data of several agricultural products, we find quite large estimates of the distance elasticity of price differential compared with conventional estimates. This paper, hence, provides evidence that conventional estimates of the distance elasticity could be heavily biased downwards and spuriously underestimate the role transportation costs play in regional price dispersions and LOP violations.
    Date: 2010–09
  16. By: Quentin David (CREA, University of Luxembourg); Gilles Van Hamme (IGEAT, Université Libre de Bruxelles)
    Abstract: This paper explores the processes behind the neighborhood effect in electoral geography. Studies on neighborhood effect have largely ignored the local institutions and cultural milieu within which people are socialized. By taking into account the spatially differentiated social supervision of individuals, we are able to highlight the impact of local institutions on electoral behavior and restore the temporal dimension that has shaped the political specificities of places. In the case of Belgium, we show that social supervision (which took the very accomplished form of pillars) affects voting behavior through two different channels: a direct effect, coming from the family transmission of pillar values, and a contextual effect captured by a measure of the local embeddedness of the pillar.
    Keywords: electoral geography, neighborhood effect, social supervision, pillar, Belgium
    Date: 2010
  17. By: Jeff Thompson
    Abstract: Jeffrey Thompson presents evidence that investing in state infrastructure and building the skills of the current and future workforce are among the most effective ways to create jobs in New England. <p></p> <p class="bodytext"><i>Prioritizing Approaches to Economic Development in New England</i> provides ample evidence that infrastructure (roads, bridges, dams, energy transmission systems, drinking water, and the like) and education are effective approaches for creating jobs and generating economic growth. By necessity, infrastructure repairs employ local workers and use local materials. These activities would also meet an increasingly urgent need: evidence reviewed by Thompson shows that 40% of bridges in the region are structurally deficient; 80% of the region’s dams present significant hazard; most of our roads are in poor or mediocre condition; and our drinking water infrastructure is in need of $12 billion worth of repairs and renovations. </p> <p class="bodytext">Thompson describes how, instead of making these investments, state policymakers are too often turning to corporate tax breaks to lure businesses to their state and public subsidies for employers who promise to hire workers in the state. These policies have been tried for decades, but Thompson presents the clear evidence that these tax subsidies don’t work to create jobs or revitalize state economies. </p>
    Date: 2010
  18. By: Jeffrey T. Prince (Department of Business Economics and Public Policy, Indiana University Kelley School of Business); Daniel H. Simon (School of Public and Economic Affairs, Indiana University)
    Abstract: We examine if and how incumbent firms respond to entry, and entry threats, using non-price modes of competition. Our analysis focuses on service quality within the airline industry. We find that incumbent on-time performance actually worsens in response to entry, and even entry threats, by Southwest Airlines. Given Southwest’s general superiority in on-time performance, this result is consistent with equilibria of theoretical models of quality and price competition, which generally predict differentiation along quality. We corroborate this intuition with further analysis, showing there is no notable response by incumbents when an airline with average on-time performance (Continental) threatens to enter or enters a route.
    JEL: L0
    Date: 2010–09
  19. By: Gray, Elie; Grimaud, André
    Date: 2010–06
  20. By: Torbjørn Hægeland, Lars Johannessen Kirkebøen, Oddbjørn Raaum and Kjell G. Salvanes (Statistics Norway)
    Abstract: There is massive cross-sectional evidence that children of more educated parents outperform their schoolmates on tests, grade repetition and in educational attainment. However, evidence for causal interpretation of this association is weak. Within a rich census level data set for Norway, we examine the causal relationship using two approaches for identification: cousins with twin parents and adopted children. In line with most of the literature, we find no effect of mothers’ education on children’s school performance using the children-of-twins approach. However, for adopted children, mother’s education has a positive effect, but only a third of the size of the effect found in biological relationships in adopting families. Carefully tracking the work experience of parents during offspring childhood, we find no support for the hypothesis that the small causal effects of parental education can be explained by detrimental effects of higher labour force participation among more educated mothers.
    Keywords: Intergenerational transmission; education; pupil achievement
    JEL: I21 J24 J62
    Date: 2010–09
  21. By: Yanyan Gao
    Abstract: Urban bias has long been China’s dominant economic policy. The persistent urban bias leads to a severe rural-urban income gap and diverts physical as well as an effect of diverting the rural resource out of agricultural sector, and thus is detrimental to agricultural growth. This paper uses China’s provincial panel data from 1978 to 2007 to investigate the diverting effects of the rural-urban income gap on agricultural growth. The empirical results suggest that the persistent rural-urban income gap caused by urban bias has produced strong current, but smaller lagged resource-diverting effects on agriculture. The further study shows that the diverting effect is decreasing over time and it is larger in the middle provinces than other provinces. The time and region patterns are confirmed to be a “U shape” relationship between the rural-urban income gap and agricultural growth.
    Keywords: Urban Bias, Income Gap, Agricultural Growth, China
    JEL: O13 Q18 R15
    Date: 2010–05

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