nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2010‒10‒23
forty-six papers chosen by
Steve Ross
University of Connecticut

  1. Maximum Likelihood Estimation and Lagrange Multiplier Tests for Panel Seemingly Unrelated Regressions with Spatial Lag and Spatial Errors: An Application to Hedonic Housing Prices in Paris By Baltagi, Badi H.; Bresson, Georges
  2. Housing Investment: What Makes It so Volatile? Theory and Evidence from OECD Countries By Quoc Hung Nguyen
  3. Productivity in cities: self-selection and sorting By Anthony J. Venables
  4. Winners and Losers in House Markets By Nobuhiro Kiyotaki; Alexander Michaelides; Kalin Nikolov
  5. Job and residential mobility in the Netherlands: the influence of human capital, household composition and location By Kronenberg, Kristin; Carree, Martin
  6. Spatial development and the law of one price: Evidence of convergence of land values By Joseph J. Capuno
  7. Clusters, Convergence, and Economic Performance By Mercedes Delgado; Michael Porter; Scott Stern
  8. European Design Types for 21st Century Schools: An Overview By Alessandro Rigolon
  9. Bedrock Depth and the Formation of the Manhattan Skyline, 1890-1915 By Jason Barr; Troy Tassier; Rossen Trendafilov
  10. Is grade repetition one of the causes of early school dropout? :Evidence from Senegalese primary schools. By André, Pierre
  11. Tiebout, local school finance and the ineffciency of head taxes By Francisco Martínez-Mora
  12. A cross-cohort description of young people's housing experience in Britain over 30 years: An application of Sequence Analysis By Dylan Kneale; Ruth Lupton; Polina Obolenskaya; Richard D Wiggins
  13. Political and Public Acceptability of Congestion Pricing: Ideology and Self Interest By Harsman, Bjorn; Quigley, John M.
  14. Mergers in Fiscal Federalism By Breuillé, Marie-Laure; Zanaj, Skerdilajda
  15. The demand for private schooling in England: the impact of price and quality By Richard Blundell; Lorraine Dearden; Luke Sibieta
  16. Defining and measuring polycentric regions: the case of Tuscany By Burgalassi, David
  17. The determinants of industrial location in Spain, 1856-1929 By Julio Martinez-Galarraga
  18. Public School Revitalisation in Detroit By Christin Cave
  19. Local tax interaction with multiple tax instruments: evidence from Flemish municipalities By S. VAN PARYS; B. MERLEVEDE; T. VERBEKE
  20. Monetary Policy and Real Estate Prices: A Disaggregated Analysis for Switzerland By Berlemann, Michael; Freese, Julia
  21. Exaggerated Death of Distance: Revisiting Distance Effects on Regional Price Dispersions By Kazuko Kano; Takashi Kano; Kazutaka Takechi
  22. Weighting Ripley’s K-function to account for the firm dimension in the analysis of spatial concentration By Giuseppe Espa; Diego Giuliani; Giuseppe Arbia
  23. Building Support for Transit-Oriented Development: Do Community-Engagement Toolkits Work? By Machell, Erin; Reinhalter, Troy; Chapple, Karen
  24. Entrepreneurship and market size. The case of young college graduates in Italy By Sabrina Di Addario; Daniela Vuri
  25. Is there Evidence of Shift-Contagion in International Housing Markets? By Olivier de Bandt and Sheheryar Malik;
  26. Asian Property Markets: No Significant Bubbles-Yet! By Steffen Dyck; Tobias Just
  27. Gender disparities in completing school education in India: Analyzing regional variations By Husain, Zakir
  28. Can Propensity Score Analysis Replicate Estimates Based on Random Assignment in Evaluations of School Choice? A Within-Study Comparison By Robert Bifulco
  29. A Foundation System and a State System - Private-School Implications on Welfare and Education Expenditure By Andrzej Kwiatkowski
  30. Spatial variation in household structure in 19th-century Germany By Mikolaj Szoltysek; Siegfried Gruber; Sebastian Klüsener; Joshua R. Goldstein
  31. Flexible and Alternative Approaches to Providing School Infrastructure in Alberta, Canada By Allison Matichuk
  32. Spatial Relocation with Heterogeneous Firms and Heterogeneous Sectors By OKUBO Toshihiro; Rikard FORSLID
  33. Passenger Road Transport in India: Major Challenges in Reducing Energy Consumption and CO2 Emissions and Ways Ahead By Bandyopadhyay, Kaushik; Thukral, K L
  34. Social Identity and Inequality: The Impact of China's Hokou System By Farzana Afridi; Sherry Xin Li; Yufei Ren
  35. Experimental Economics in Transportation: A Focus on Social Influences and the Provision of Information By Gaker, David; Zheng, Yanding; Walker, Joan
  36. Understanding China’s Consumers By Syetarn Hansakul
  37. What determines private school choice? a comparison between the UK and Australia By Lorraine Dearden; Chris Ryan; Luke Sibieta
  38. The role of attitudes and behaviours in explaining socio-economic differences in attainment at age 16 By Haroon Chowdry; Claire Crawford; Alissa Goodman
  39. Cost Efficiency and Subsidization in German Local Public Bus Transit By Maria Nieswand; Matthias Walter
  40. How Green is Your Property Portfolio? The Environmental Performance of Commercial Real Estate By Kok, Nils; Bauer, Rob; Eichholtz, Piet; Quigley, John M.
  41. Toward Efficient Urban Form in China By Webster, Douglas; Bertaud, Alain; Jianming,Cai; Zhenshan, Yang
  42. Evaluating the Impact of Regional Development Programs By Paul Winters; Susana Sitja Rubio
  43. Imperatives of Regional Economic Integration in Asia in the Context of Developmental Asymmetries: Some Policy Suggestions By Ram Upendra Das
  44. Institutional Reactions to the Impact of Global Crisis at Source and Destination Cities of Migration in China By Maria Csanadi
  45. Effects of schooling levels on economic growth: time-series evidence from Guatemala By Loening, Josef; Rao, B. Bhaskara; Singh, Rup
  46. Anatomy of cluster development in China: The case of health biotech clusters By Conlé, Marcus; Taube, Markus

  1. By: Baltagi, Badi H. (Syracuse University); Bresson, Georges (University of Paris 2)
    Abstract: This paper proposes maximum likelihood estimators for panel seemingly unrelated regressions with both spatial lag and spatial error components. We study the general case where spatial effects are incorporated via spatial errors terms and via a spatial lag dependent variable and where the heterogeneity in the panel is incorporated via an error component specification. We generalize the approach of Wang and Kockelman (2007) and propose joint and conditional Lagrange Multiplier tests for spatial autocorrelation and random effects for this spatial SUR panel model. The small sample performance of the proposed estimators and tests are examined using Monte Carlo experiments. An empirical application to hedonic housing prices in Paris illustrates these methods. The proposed specification uses a system of three SUR equations corresponding to three types of flats within 80 districts of Paris over the period 1990-2003. We test for spatial effects and heterogeneity and find reasonable estimates of the shadow prices for housing characteristics.
    Keywords: hedonic housing prices, Lagrange multiplier tests, maximum likelihood, panel spatial dependence, spatial lag, spatial error, SUR
    JEL: C31 C33 R21
    Date: 2010–09
  2. By: Quoc Hung Nguyen (Institute of Developing Economies and Hong Kong Institute for Monetary Research)
    Abstract: This paper explains how mortgage market liberalization can introduce greater volatility in the housing market. It begins by documenting two stylized facts for OECD countries that models with perfect credit markets fail to explain: (i) housing investment is about five times as volatile as output and (ii) housing investment tends to be more volatile in economies with more liberalized mortgage markets. The paper then develops a DSGE model where households face a credit constraint and housing is used as collateral. This housing collateral constraint creates a link between the housing market and borrowing capacity, a link that amplifies the response of housing demand to shocks and becomes stronger with more mortgage market liberalization. Finally, calibrated models with a housing collateral constraint explain about 90 percent of housing investment volatility in the UK economy.
    Keywords: Housing Investment, Collateral Constraint, Mortgage Markets
    JEL: E22 E32 F34 F41
    Date: 2010–09
  3. By: Anthony J. Venables
    Abstract: Productivity is high in cities partly because the urban environment acts as a self-selection mechanism. If workers have imperfect information about the quality of workers with whom they match and matches take place within cities, then high-ability workers will choose to live and work in expensive cities. This self-selection improves the quality of matches in such cities. The mechanism may be reinforced by the development of informational networks in cities with a large proportion of high ability workers. As a consequence productivity in these cities is high for workers of all ability types.
    Keywords: economic geography, productivity, city, urban, sorting, self-selection
    JEL: R0 R1
    Date: 2010
  4. By: Nobuhiro Kiyotaki (Princeton University); Alexander Michaelides (Central Bank of Cyprus and London School of Economics); Kalin Nikolov (Bank of England and London School of Economics)
    Abstract: This paper is a quantitatively-oriented theoretical study of the interaction between housing prices, aggregate production, and household behavior over a lifetime. We develop a life-cycle model of a production economy in which land and capital are used to build residential and commercial real estates. We find that, in an economy where the share of land in the value of real estates is large, housing prices react more to an exogenous change in expected productivity or the world interest rate, causing a large redistribution between net buyers and net sellers of houses. Changing financing constraints, however, has limited effects on housing prices.
    Keywords: Real estates, land, housing prices, life cycle, collateral constraints
    JEL: E20 G10 R20 R30
    Date: 2010–07
  5. By: Kronenberg, Kristin; Carree, Martin
    Abstract: This study identifies and evaluates determinants of employees’ job and residential mobility. It examines mobility of fulltime employees in selected sectors in 2003/2004, using register data provided by Statistics Netherlands. We estimate a multinomial model of job and residential change. The results illustrate that individuals decide upon changing jobs and/or relocating by taking into account the strength of their family- and job-related ties. We also find that the prevalence of internal versus external career opportunities impedes job changes. While a high salary facilitates relocation, our findings regarding the effect of salary on interfirm mobility were inconclusive. A long commuting distance encourages (simultaneous) job and housing mobility, while being situated in the municipality of a large city encourages employees to either change jobs, or to relocate.
    Keywords: Job mobility; residential mobility; regional migration; human capital
    JEL: J62 J61 J24 R23
    Date: 2010
  6. By: Joseph J. Capuno (School of Economics, University of the Philippines Diliman)
    Abstract: Many developing countries exhibit imbalanced spatial development, but corrective policies are hampered by lack of adequate sub-regional development data. Building on the insights of the factor price equalization theorem and by applying measures of spatial autocorrelation on land values, patterns of local development and linkages in the Philippines are traced. Evidence of convergence in provincial and urban land values is found in 1986-2000, although the clustering is more local than global. Thus, greater infrastructure investments and use of land values by local governments as policy guides should be made to facilitate in-country trade and migration, and to disperse growth.
    Keywords: Spatial development, land values, convergence, Philippines
    JEL: O18 R12 R14
    Date: 2010–01
  7. By: Mercedes Delgado; Michael Porter; Scott Stern
    Abstract: This paper evaluates the role of regional cluster composition in the economic performance of industries, clusters and regions. On the one hand, diminishing returns to specialization in a location can result in a convergence effect: the growth rate of an industry within a region may be declining in the level of activity of that industry. At the same time, positive spillovers across complementary economic activities provide an impetus for agglomeration: the growth rate of an industry within a region may be increasing in the size and strength (i.e., relative presence) of related economic sectors. Building on Porter (1998, 2003), we develop a systematic empirical framework to identify the role of regional clusters – groups of closely related and complementary industries operating within a particular region in regional economic performance. We exploit newly available data from the US Cluster Mapping Project to disentangle the impact of convergence at the region-industry level from agglomeration within clusters. We find that, after controlling for the impact of convergence at the narrowest unit of analysis, there is significant evidence for cluster-driven agglomeration. Industries participating in a strong cluster register higher employment growth as well as higher growth of wages, number of establishments, and patenting. Industry and cluster level growth also increases with the strength of related clusters in the region and with the strength of similar clusters in adjacent regions. Importantly, we find evidence that new industries emerge where there is a strong cluster environment. Our analysis also suggests that the presence of strong clusters in a region enhances growth opportunities in other industries and clusters. Overall, these findings highlight the important role of cluster-based agglomeration in regional economic performance.
    Date: 2010–10
  8. By: Alessandro Rigolon
    Abstract: This article presents a critical overview of European school building design types, based on an analysis of morphologies and spatial layouts. The different design types are evaluated in function of specific didactic and social needs…
    Date: 2010–04
  9. By: Jason Barr (Rutgers University, Newark, Department of Economics); Troy Tassier (Fordham University, Department of Economics); Rossen Trendafilov (Fordham University, Department of Economics)
    Abstract: Skyscrapers in Manhattan must be anchored to bedrock to prevent (possibly uneven) settling; this can potentially increase construction costs if the bedrock lies deep below the surface. The conventional wisdom holds that Manhattan developed two business centers—downtown and midtown—because bedrock is close to the surface in these locations, with a bedrock “valley” deep below the surface in between. We measure the effects of building costs associated with bedrock depths, relative to other important economic variables in the location of early Manhattan skyscrapers. We find that bedrock depths had very little influence on the creation of separate business districts; rather its poly-centric development was due to residential and manufacturing patterns, and public transportation hubs. We do find evidence, however, that bedrock depths influenced the placement of skyscrapers within business districts.
    Keywords: Skyscrapers, geology, bedrock, urban agglomeration
    JEL: D24 N62 R14 R33
    Date: 2010
  10. By: André, Pierre
    Abstract: This chapter investigates the connection between grade repetition and school dropout. Household data is matched against a panel of academic test scores and the school career of each child inferred from the combined dataset. This chapter uses two original identification strategies to identify the effect of grade repetition on school dropout. The first instrumental strategy uses the differences among teacher attitude to repetition as an instrument for grade repetition. The second strategy uses the discontinuity in the probability of grade repetition between pupils whose test score is just lower and just higher than the target achievement. Both results show a negative effect of the grade repetition decision on the probability of being enrolled at school the next year.
    Keywords: Grade repetition; School demand; School dropouts; Senegal
    JEL: D12 I28 O12
    Date: 2009–12
  11. By: Francisco Martínez-Mora
    Abstract: The literature on local public (school) finance has shown that the use of local head taxes to finance schools leads to an effcient allocation of households and pupils to districts (Tiebout, 1956; Hamilton, 1975; Calabrese et al., 2009). This paper revises this well established result, using a two-community model with a housing market that adds two layers of realism to the analysis: not every household receives direct benefits from schools (e.g. some do not have children at school age) and communities are vertically differentiated, in the sense that one of them is exogenously preferred to the other by every household. In such context, head taxation leads to an ineffcient allocation of households to districts, even if local governments set local spending levels effciently given their population. The ineffciency emerges because too many intermediate income "in-school" households reside in the rich district in equilibrium. Income taxation is ineffcient as well but, in a counter-intuitive result, it may cause smaller effciency losses than a lump-sum tax.
    Date: 2010–05
  12. By: Dylan Kneale (Centre for Longitudinal Studies, Institute of Education, University of London, 20 Bedford Way, London WC1H 0AL.); Ruth Lupton (Centre for Analysis of Social Exclusion, London School of Economic and Political Science, University of London, Houghton Street, London, WC2A 2AE.); Polina Obolenskaya (Department of Quantitative Social Science, Institute of Education, University of London, 20 Bedford Way, London WC1H 0AL.); Richard D Wiggins (Department of Quantitative Social Science, Institute of Education, University of London, 20 Bedford Way, London WC1H 0AL.)
    Abstract: Methods. Sequence Analysis supported by Event History Analysis. Key Findings. Despite only 12 years separating both cohorts, the younger 1970 cohort exhibited very different patterns of housing including a slower progression out of the parental home and into stable tenure, and an increased reliance on privately rented housing. Returns to the parental home occurred across the twenties and into the thirties in both cohorts, although occurred more frequently and were more concentrated among certain groups in the 1970 cohort compared to the 1958 cohort. Although fewer cohort members in the 1970 cohort experienced social housing, and did so at a later age, social housing was also associated with greater tenure immobility in this younger cohort. Conclusions. The housing experiences of the younger cohort became associated with more unstable tenure (privately rented housing) for the majority. Leaving the parental home was observed to be a process, as opposed to a one-off event, and several returns to the parental home were documented, more so for the 1970 cohort. These findings are not unrelated, and in the current environment of rising house prices, collapses in the (youth) labour market and rising costs of higher education, are likely to increase in prevalence across subsequent cohorts.
    Keywords: Housing, Young People, Sequence Analysis, Housing Tenure
    JEL: J19 R20 R21
    Date: 2010–10–12
  13. By: Harsman, Bjorn; Quigley, John M.
    Abstract: Studies of the “stated preferences†of households generally report public and political opposition by urban commuters to congestion pricing. It is thought that this opposition inhibits or precludes tolls and pricing systems that would enhance efficiency in the use of scarce roadways. This paper analyzes the only case in which road pricing was decided by a citizen referendum on the basis of experience with a specific pricing system. The city of Stockholm introduced a toll system for seven months in 2006, after which citizens voted on its permanent adoption. We match precinct voting records to citizen commute times and costs by traffic zone, and we analyze patterns of voting in response to economic and political incentives. We document political and ideological incentives for citizen choice, but we also find that the pattern of time savings and incremental costs exerts a powerful influence on voting behavior. In this instance, at least, citizen voters behave as if they value commute time highly. When they have experienced first-hand the out-of-pocket costs and time-savings of a specific pricing scheme, they are prepared to adopt freely policies which reduce congestion on urban motorways.
    Date: 2010–08–01
  14. By: Breuillé, Marie-Laure; Zanaj, Skerdilajda
    Abstract: This paper analyzes mergers of regions in a two-tier setting with both horizontal and vertical tax competition. The merger of regions induces three e.ects on regional and local tax policies, which are transmitted both horizontally and vertically: i) an alleviation of tax competition at the regional level, ii) a rise in the regional tax base, and iii) a larger internalization of tax externalities generated by cities. It is shown that the merger of regions increases regional tax rates while decreasing local tax rates. This Nash equilibrium with mergers is then compared with the Nash equilibrium with coalitions of regions.
    Keywords: Mergers, Tax Competition, Fiscal Federalism
    JEL: H73 H25
    Date: 2010–09
  15. By: Richard Blundell (Institute for Fiscal Studies and University College London); Lorraine Dearden (Institute for Fiscal Studies and Bedford Group, Institute of Education, University of London); Luke Sibieta (Institute for Fiscal Studies)
    Abstract: <p><p><p>In this paper we use English school level data from 1993 to 2008 aggregated up to small neighbourhood areas to look at the determinants of the demand for private education in England from the ages of 7 until 15 (the last year of compulsory schooling). We focus on the relative importance of price and quality of schooling. However, there are likely to be unobservable factors that are correlated with private school prices and/or the quality of state schools that also impact on the demand for private schooling which could bias our estimates. Our long regional and local authority panel data allows us to employ a number of strategies to deal with this potential endogeneity. Because of the likely presence of incidental trends in our unobservables, we employ a double difference system GMM approach to remove both fixed effects and incidental trends. We find that the demand for private schooling is inversely related to private school fees as well as the quality of state schooling in the local area at the time families were making key schooling choice decisions at the ages of 7, 11 and 13. We estimate that a one standard deviation increase in the private school day fee when parents/students are making these key decisions reduces the proportion attending private schools by around 0.33 percentage points which equates to an elasticity of around -0.26. This estimate is only significant for choices at age 7 (but the point estimates are very similar at the ages of 11 and 13). At age 11 and age 13, an increase in the quality of local state secondary reduces the probability of attending private schools. At age 11, a one standard deviation increase in state school quality reduces participation in private schools by 0.31 percentage points which equates to an elasticity of -0.21. The effect at age 13 is slightly smaller, but still significant. Demand for private schooling at the ages of 8, 9, 10 and 12, 14 and 15 are almost entirely determined by private school demand in the previous year for the same cohort, and price and quality do not impact significantly on this decision other than through their initial influence on the key participation decisions at the ages of 7, 11 and 13. </p></p></p>
    Date: 2010–09
  16. By: Burgalassi, David
    Abstract: Polycentric development in regions has many dimensions, which involve several definitions and measures. This paper tackles the problem of defining and measuring polycentricity under an integrated and multi- dimensional perspective. Firstly, the policy relevance of polycentricity is analysed. Then, the paper identifies the definitions and measures of polycentricity by surveying the literature. It also provides a taxonomy among two main aspects involved in the definition of polycentricity: the morphological dimension and the functional dimension. Based on this background, an empirical analysis is carried out, by using data about population and commuting flows in the Tuscany Region (Italy). The results show that Tuscany can be viewed as a polycentric spatial structure, both considering rank-size distribution of cities and spatial interaction.
    Keywords: Polycentric development; spatial structure; rank-size estimations; spatial interaction; Tuscany
    JEL: R12 R11 R23
    Date: 2010–09
  17. By: Julio Martinez-Galarraga (Universitat de Barcelona)
    Abstract: During the 19th century, the Spanish economy went through the early stages of the industrialisation process. This process developed in parallel to the growing market integration of goods and factors as a result of the liberal reforms and the construction of the railway network, with the subsequent fall in transport costs. In that period, there were major changes in the pattern of industrial location across Spain, with an increasing spatial concentration of industrial activities between the 1850s and the Spanish Civil War (1936-39) and a deeper regional specialisation. What were the forces behind these changes? On the theoretical side, the Heckscher-Ohlin model suggests that the spatial distribution of economic activity is determined by comparative advantage due to factor endowments. In turn, NEG models show the existence of a bell-shaped relationship between the process of market integration and the degree of concentration of industrial activity in the territory. This paper examines empirically the determinants of industrial location in Spain between 1856 and 1929 estimating a model that nests both Heckscher- Ohlin and NEG factors and tests the relative strength of these forces, since they are not mutually exclusive and might be at work simultaneously. The analysis of the results shows that both comparative advantage and NEG-type mechanisms were determinant drivers of industrial location in Spain, although their relative strength changed over time.
    Keywords: factor endowments, regional economics, new economic geography, industry location, market integration, economic history
    JEL: F1 N9 R12 N6 R3
    Date: 2010
  18. By: Christin Cave
    Abstract: One of the main problems facing big-city school districts in the United States is deteriorating and underutilised school infrastructure. The Detroit public school district is attempting to tackle this issue with an injection of federal funding and a comprehensive school facilities renovation plan. Money from a bond issue passed in November 2009 will be used to construct new replacement school buildings and renovate existing ones to efficiently transform the school district and the city.
    Date: 2010–07
    Abstract: We investigate the long run result of strategic interaction among local jurisdictions using multiple tax instruments. Most studies about local policy interaction only consider a single policy instrument. With multiple tax instruments, however, tax interaction is more complex. We construct a simple theoretical framework based on a basic spillover model, with two tax rates and immobile resources. We show that the signs of within and cross tax interaction crucially depend on the extent to which a jurisdiction mimics the other jurisdiction’s budget, and the extent to which the preference for one tax instrument is affected by the level of the same or the other tax instrument in the other jurisdiction. Its specific institutional setting makes of Flanders (Belgium) a unique region to evaluate multiple tax interaction. Municipalities in Belgium are free to set two important local tax rates: the local property tax rate and the local income tax rate. We estimate whether years of strategic interaction between Flemish municipalities, of which the division is stable since 1983, has resulted in municipalities mimicking their neighbors’ tax structure. We do so by between estimating income and property tax reaction functions for the period 1992-2004, each of which simultaneously includes the neighboring municipalities’ income ànd property tax rate. We find that the property (income) tax rate of a municipality is significantly higher if the property (income) tax rate in other municipalities is high, and that the coefficient is higher if the possible impact of the other municipalities’ income (property) tax rate is accounted for. The cross impact of the other municipalities’ income (property) tax rate on the property (income) tax rate is always negative, though the significance is higher for the property tax than for the income tax reaction function. The result suggests that municipalities are keener on competing each other’s tax structure than on mimicking the neighboring municipalities’ budget.
    Keywords: tax competition; yardstick competition; local tax rates; spatial econometrics; multiple taxes; tax structure
    Date: 2010–09
  20. By: Berlemann, Michael (Helmut Schmidt University, Hamburg); Freese, Julia (Helmut Schmidt University, Hamburg)
    Abstract: Most empirical studies found that monetary policy has a significant effect on house prices while stock markets remain unaffected by interest rate shocks. In this paper we conduct a more detailed analysis by studying various sub-segments of the real estate market. Employing a new dataset for Switzerland we estimate vector autoregressive models and find substitution effects between house and apartment prices on the one hand and rental prices on the other. Interestingly enough, commercial property prices do not react on interest rate variations.
    Keywords: monetary policy; interest rate shocks; real estate; stock market
    JEL: E43 E52 R21
    Date: 2010–10–14
  21. By: Kazuko Kano (School of Finance and Economics, University of Technology, Sydney); Takashi Kano (Graduate School of Economics, University of Tokyo); 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.
    Keywords: law of one price; regional price dispersion; transportation cost; geographical distance; agricultural wholesale price; sample-selection bias
    JEL: F11 F14 F41
    Date: 2010–10–01
  22. By: Giuseppe Espa; Diego Giuliani; Giuseppe Arbia
    Abstract: The spatial concentration of firms has long been a central issue in economics both under the theoretical and the applied point of view due mainly to the important policy implications. A popular approach to its measurement, which does not suffer from the problem of the arbitrariness of the regional boundaries, makes use of micro data and looks at the firms as if they were dimensionless points distributed in the economic space. However in practical circumstances the points (firms) observed in the economic space are far from being dimensionless and are conversely characterized by different dimension in terms of the number of employees, the product, the capital and so on. In the literature, the works that originally introduce such an approach (e.g. Arbia and Espa, 1996; Marcon and Puech, 2003) disregard the aspect of the different firm dimension and ignore the fact that a high degree of spatial concentration may result from both the case of many small points clustering in definite portions of space and from only few large points clustering together (e.g. few large firms). We refer to this phenomena as to clustering of firms and clustering of economic activities. The present paper aims at tackling this problem by adapting the popular Kfunction (Ripley, 1977) to account for the point dimension using the framework of marked point process theory (Penttinen, 2006)
    Keywords: Agglomeration, Marked point processes, Spatial clusters, Spatial econometrics
    JEL: C21 D92 L60 O18 R12
    Date: 2010
  23. By: Machell, Erin; Reinhalter, Troy; Chapple, Karen
    Abstract: Many metropolitan areas are struggling with how to accommodate future population growth—and are looking to transit-oriented development (TOD) as a potential solution. TODs, in which densely-built, mixedincome housing is placed near transit to create walkable neighborhoods complete with amenities and retail, could house as many as a quarter of the country’s new households in coming years.1 Yet one barrier to building a significant amount of TOD housing is the unwillingness of many local residents to support some of the components of TOD, particularly higher-density construction and mixed-income housing. Often called NIMBYs (short for Not-In-My-Backyard), opposing residents can stop such developments in their tracks. Planners must “sell†the developments as beneficial to the community and the region, and follow up on their promises by creating good plans and developments. To that end, practitioners have developed successful strategies to both counter resistance and rally community support around projects. The process requires a great deal of community education and outreach at community meetings, often aided by community engagement tools such as PowerPoint presentations, brochures, activities, and other tools created for the purpose. Despite their widespread usage of these tools, however, there is little information about their effectiveness, or lack thereof, when used in the field. There is a need for research on what about these tools works, what doesn’t, and in which situations and contexts. It is this gap that this study will attempt to fill, to help inform the work of the developers, planners, and community engagement groups that use these community engagement tools in their work. Using focus groups in our case study region of the San Francisco Bay Area, this research begins the process of showing what does and does not work in these tools, and makes suggestions for how they may be altered in light of our findings. Focus group members found much to admire and much to find fault with in the tools. In general, focus group members responded to credibility, openness and honesty; relatable and specific facts, stories and examples, especially about real people as well as real places; community benefits; and connections to their existing understandings of their lives and communities. Conversely, they were quick to pick up on any kind of manipulation or deceptiveness, unsupported ideas, or ignorance of their particular community, all of which fostered mistrust and undermined the messages of the tools.
    Date: 2010–08–01
  24. By: Sabrina Di Addario (Bank of Italy); Daniela Vuri (University of Rome Tor Vergata)
    Abstract: We analyse empirically the effects of urbanization on Italian college graduates' work possibilities as entrepreneurs three years after graduation. We find that doubling the population density of the province of work reduces the chances of being an entrepreneur by 2-3 percentage points. This result holds after controlling for regional fixed effects and is robust to instrumenting urbanization. Provincial competition, urban amenities and disamenities, cost of labour, earning differentials between employees and self-employed workers, unemployment rates and value added per capita account for more than half of the negative urbanization penalty. Our result cannot be explained by the presence of negative differentials in returns to entrepreneurship between the most and the least densely populated areas either. In fact, as long as they succeed in entering the most densely populated markets, young entrepreneurs are able to reap the benefits of urbanization externalities: doubling the population density of the province of work increases entrepreneurs' net monthly earnings by 2-3 per cent.
    Keywords: Labour market transitions, urbanization
    JEL: R12 J24 J21
    Date: 2010–09
  25. By: Olivier de Bandt and Sheheryar Malik;
    Abstract: The paper attempts to provide, for housing markets, evidence of "shift-contagion" at the international level, i. e. regime shifts in the transmission of asset prices during crisis periods. The focus is in particular on UK and Spain. We use a Markov Switching FAVAR framework and regime-dependent impulse response functions. The `Crisis' regime which we identify endogenously is shown to also correspond to an exogenously determined index of frequency of financial crises in OECD countries, which peaked in the early 1990s and in the more recent Subprime crisis. Furthermore, we find that the response of domestic house price to a shock to a common (global) house price factor during a `Crisis' regime is relatively more amplified than in a `Normal' (more tranquil) regime. Less compelling evidence is found for France.
    Keywords: contagion, housing market, regime shifts, FAVAR model
    JEL: R31 G15 C32
    Date: 2010
  26. By: Steffen Dyck; Tobias Just
    Abstract: After house price bubbles burst in many OECD countries, investors are keeping a very watchful eye for price developments on asset markets that signal a bubble.
    Keywords: asian property markets, house prices, OECD, countries, inestors, asset markets, Beijing, Shanghai, macro economic, price
    Date: 2010
  27. By: Husain, Zakir
    Abstract: Is gender disparity greater in North India? This paper seeks to answer this question by examining gender differences in probability of completing school education across regions in India. A Gender Disparity Index is calculated using National Sample Survey Organization unit level data from the 61st Round and regional variations in this index analyzed to examine the hypothesis that gender disparity is greater in the North, comparative to the rest of India. This is followed by an econometric exercise using a logit model to confirm the results of the descriptive analysis after controlling for socio-economic correlates of completing school education. Finally, the Fairlie decomposition method is used to estimate the contribution of explanatory variables in explaining differences in probabilities of completing schooling across regions. The results reveal that gender disparities are greater in North India, for total and rural population, and in Eastern India, for urban population. However, the ‘residual effect’ after accounting for effect of explanatory variables - often referred to as ‘discrimination effect’, as opposed to disparity – is higher in Eastern India, irrespective of the place of residence.
    Keywords: discrimination; disparity; gender; Oaxaca decomposition; school education; India
    JEL: I20 C35
    Date: 2010–09–26
  28. By: Robert Bifulco (Center for Policy Research, Maxwell School, Syracuse University, Syracuse, NY 13244-1020)
    Abstract: The ability of propensity score analysis (PSA) to match impact estimates derived from random assignment (RA) is examined using data from the evaluation of two interdistrict magnet schools. As in previous within study comparisons, the estimates provided by PSA and RA differ substantially when PSA is implemented using comparison groups that are not similar to the treatment group and without pretreatment measures of academic performance. Adding pretreatment measures of the performance to the PSA, however, substantially improves the match between PSA and RA estimates. Although the results should not be generalized too readily, they suggest that nonexperimental estimators can, in some circumstances, provide valid estimates of the causal impact of school choice programs.
    Keywords: Nonexperimental, quasi-experimental, propensity score analysis, design replication, school choice.
    JEL: C21 I21 C90 I28
    Date: 2010–09
  29. By: Andrzej Kwiatkowski
    Abstract: This paper examines the effects of two different education financing systems: a foundation system and a state system on the level and distribution of resources devoted to education in the presence of private schools. We use political economy approach where households differ in their level of income, and the central tax rate used to finance education is determined by a majority vote. Our analysis focuses on implications of allowing for a private-school option. To evaluate the importance of private schools we develop a computational model and calibrate it using USA data. The results reveal that the private school option is very important quantitatively in terms of welfare, total resources spent on education and equity.
    Keywords: Education finance reform, Private schools
    JEL: I22 I28 H42
    Date: 2010–10
  30. By: Mikolaj Szoltysek (Max Planck Institute for Demographic Research, Rostock, Germany); Siegfried Gruber (Max Planck Institute for Demographic Research, Rostock, Germany); Sebastian Klüsener (Max Planck Institute for Demographic Research, Rostock, Germany); Joshua R. Goldstein (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: Although historical Germany presents itself as a perfect laboratory for studying interregional demographic differences, the historical family structures in this part of the European continent remain largely unexplored. This study fills the existing gap, and documents the variability of living arrangements using measures of household complexity and entry into marriage based on aggregate data from published statistics of the German census of 1885. We examine the hypothesized roles of the degree of urbanization, agricultural systems, inheritance practices, religion, ethnic background, and demographic constraints on household structure and marital behavior by taking into consideration a wide range of socioeconomic and demographic characteristics. We suggest the division of Germany in 1885 into two main regions with different family systems: an area with low household complexity and high levels of celibacy in the southwest, and an area with higher household complexity and lower levels of celibacy in the north and in the east. Contrary to our expectations, we found that many of the supposedly decisive cultural and socioeconomic differences that are known to have existed in late 19th-century Germany do not appear to have corresponded with these spatial patterns of family composition.
    Keywords: German Empire, family forms, historical demography
    JEL: J1 Z0
    Date: 2010–10
  31. By: Allison Matichuk
    Abstract: Like many other jurisdictions, the western Canadian province of Alberta is seeking cost-effective and creative ways of providing school infrastructure that meets the needs of 21st century learning. Solutions are being found through the use of alternative financing and procurement arrangements and through innovative approaches to creating flexible school facilities...
    Date: 2010–04
  32. By: OKUBO Toshihiro; Rikard FORSLID
    Abstract: The present paper focuses on sorting as a mechanism behind the well-established fact that there is a central region productivity premium. Using a model of heterogeneous firms that can move between regions, Baldwin and Okubo (2006) show how more productive firms sort themselves to the large core region. We extend this model by introducing different capital intensities among firms and sectors. In accordance with empirical evidence, more productive firms are assumed to be more capital intensive. As a result, our model can produce sorting to the large regions from both ends of the productivity distribution. Firms with high capital intensity and high productivity, as well as firms with very low productivity and low capital intensity, tend to relocate to the core. We use region and sector productivity distributions from Japanese micro data to test the predictions of the model. Several sectors show patterns consistent with two-sided sorting, and roughly an equal number of sectors seem to primarily be driven by sorting and selection. We also find supportive evidence for our model prediction that two-sided sorting occurs in sectors with high capital intensity.
    Date: 2010–10
  33. By: Bandyopadhyay, Kaushik; Thukral, K L
    Abstract: The shift of the Indian economy to a higher trajectory of growth over the last two decades has been primarily associated with urbanisation and rapid motorisation both as a cause and as an effect. Motorised passenger transport is now being considered as a fulcrum for inclusive growth in India. Thus putting a cap on its growth may be difficult. Given the key challenge to decouple the economic and social development from the inherent growth in energy consumption and CO2 emissions, the paper takes cue from the Bellagio Declaration 2009 and essentially argues for an integrated and multi-pronged Avoid-Shift-Improve approach to steer passenger road transport growth in India towards a sustainable low carbon path.
    Keywords: Passenger; road transport; challenges; energy consumption; CO2 emission
    JEL: R0 R4
    Date: 2010
  34. By: Farzana Afridi; Sherry Xin Li; Yufei Ren
    Abstract: They conduct an experimental study to investigate the causal impact of social identity on individuals' response to economic incentives. They focus on China‟s decades old household registration system, or the hukou institution, which categorizes citizens into urban and rural residents, and favors the former over the latter in resource allocation. Their results indicate that making individuals' hukou status salient and public significantly reduces the performance of rural migrant students on an incentivized cognitive task by 10 percent. This leads to a leftward shift of their earnings distribution – the proportion of rural migrants below the 25th earnings percentile increases significantly by almost 19 percentage points. [Working Paper No. 190]
    Keywords: social identity, hukou, inequality, field experiment, China
    Date: 2010
  35. By: Gaker, David; Zheng, Yanding; Walker, Joan
    Abstract: A major aspect of transportation planning is understanding behavior: how to predict it and how to influence it over the long term. Behavioral models in transportation are predominantly rooted in the classic microeconomic paradigm of rationality. However, there is a long history in behavioral economics of raising serious questions about rationality. Behavioral economics has made inroads in transportation in the areas of survey design, prospect theory, and attitudinal variables. Further infusion into transportation could lead to significant benefits in terms of increased ability to both predict and influence behavior. The aim of this research is to investigate the transferability of findings in behavioral economics to transportation, with a focus on lessons regarding personalized information and social influences. We designed and conducted three computer experiments using UC Berkeley students: one on personalized-information and route choice, one on social influences and auto ownership, and one combining information and social influences and pedestrian safety. Our findings suggest high transferability of lessons from behavioral economics and great potential for influencing transport behavior. We found that person- and trip-specific information regarding greenhouse gas emissions has significant potential for increasing sustainable behavior, and we are able to quantify this Value of GREEN at around $0.24/pound of greenhouse gas avoided. Congruent with lessons from behavioral economics, we found that information on peer compliance of pedestrian laws had a stronger influence on pedestrian safety behavior than information on the law, citation rates, or accident statistics. We also found that social influences positively impact the decision to buy a hybrid car over a conventional car or forgo a car altogether.
    Date: 2010–08–01
  36. By: Syetarn Hansakul
    Abstract: China’s consumers are better understood when looked at as two distinct classes: urban consumers and rural consumers. The urban households are much richer than their rural counterparts and consume three times more.
    Keywords: china, consumers, urban, consumers, households, rural, counterparts, classes, japan
    Date: 2010
  37. By: Lorraine Dearden (Institute for Fiscal Studies and Bedford Group, Institute of Education, University of London); Chris Ryan; Luke Sibieta (Institute for Fiscal Studies)
    Abstract: <p><p>This paper compares patterns of private school attendance in the UK and Australia. About 6.5% of school children in the UK attend a private school, while 33% do so in Australia. We use comparable household panel data from the two countries to model attendance at a private school at age 15 or 16 as a function of household income and other child and parental characteristics. As one might expect, we observe a strong effect of household income on private school attendance. The addition of other household characteristics reduces this income elasticity, and reveals a strong degree of intergenerational transmission in both countries, with children being 8 percentage points more likely to attend a private school if one of their parents attended one in the UK, and anywhere up to 20 percentage points more likely in Australia. The analysis also reveals significant effects of parental education level, political preferences, religious background and the number of siblings on private school attendance. </p></p>
    Date: 2010–09
  38. By: Haroon Chowdry (Institute for Fiscal Studies); Claire Crawford (Institute for Fiscal Studies); Alissa Goodman (Institute for Fiscal Studies)
    Abstract: <p>It is well known that children growing up in poor families leave school with considerably lower qualifications than children from better off backgrounds. Using a simple decomposition analysis, we show that around two thirds of the socio-economic gap in attainment at age 16 can be accounted for by long-run family background characteristics and prior ability, suggesting that circumstances and investments made considerably earlier in the child's life explain the majority of the gap in test scores between young people from rich and poor families. However, we also find that differences in the attitudes and behaviours of young people and their parents during the teenage years play a key role in explaining the rich-poor gap in GCSE attainment: together, they explain a further quarter of the gap at age 16, and the majority of the small increase in this gap between ages 11 and 16. On this basis, our results suggest that while the most effective policies in terms of raising the attainment of young people from poor families are likely to be those enacted before children reach secondary school, policies that aim to reduce differences in attitudes and behaviours between the poorest children and those from better-off backgrounds during the teenage years may also make a significant contribution towards lowering the gap in achievement between young people from the richest and poorest families at age 16.</p>
    Date: 2010–09
  39. By: Maria Nieswand; Matthias Walter
    Abstract: Subsidies are considered important means to facilitate the provision of public transit, yet the empirical evidence implies that they can have harming effects on costs and possibly also on operators' performance. This paper examines the impacts of deficit-balancing subsidies on the cost inefficiency of local public bus companies in Germany, where a complex system allocates ample financial support. Our empirical analysis relies on a unique dataset of 33 companies observed over a period of up to twelve years for a total of 231 observations. We employ a stochastic frontier cost function for panel data that account for unobserved heterogeneity and provide firm-specific, time-varying inefficiency estimates. Further, we allow variations in the optimal technology by randomizing some cost functions' coefficients in one of our model specifications. Subsidies directly enter the inefficiency function as a heteroscedastic variable. We find a positive effect of subsidies on the standard deviation of inefficiency, which implies that the range of companies' inefficiency increases with the level of subsidies relative to total costs. However, we also find that non-subsidized firms perform better in terms of cost efficiency.
    Keywords: Stochastic cost frontier, subsidies, heteroscedasticity, local public bus transportation, cost efficiency, panel data
    JEL: C13 D24 L92
    Date: 2010
  40. By: Kok, Nils; Bauer, Rob; Eichholtz, Piet; Quigley, John M.
    Date: 2010–07–01
  41. By: Webster, Douglas; Bertaud, Alain; Jianming,Cai; Zhenshan, Yang
    Abstract: Land efficiency in urban China is examined, using Tianjin as a case study, from the perspective of agricultural land conservation; reduction in energy use, conventional pollution, and greenhouse gas emissions; and human time savings. Issues addressed include increased scatter on the periphery, over-consumption of industrial land, over fiscal dependence on land sales, and loss of valuable agricultural and environmental services land. Policy implications discussed include the need for greater variation in urban densities (leveraging already high densities in urban China – one-third the global median), less broad-brush agricultural land conservation policies, higher floor area ratios near rapid transit stations, etc.
    Keywords: China, land conversion, land efficiency, land use policy, urban density
    Date: 2010
  42. By: Paul Winters; Susana Sitja Rubio
    Abstract: The purpose of this guideline is to discuss the objectives and approaches of regional (subnational) development programs in order to provide guidance on issues related to evaluating the impact of these programs. Regional development programs are designed to improve the income-generating capacity of, and reduce poverty in, a focus region within a country. The primary and unique characteristics of these programs lie in promoting a broad range of productive activities in a predefined region. To do this, regional development programs often need to address the institutional structure under which decisions are made as well as how economic resources should flow from the center to the local level. As such, the programs involve both productive and institutional transformation. Evaluating the impact of regional development programs is complicated by the need to assess both the impact of productive investment as well as the institutional transformation. As with all impact evaluations, evaluating regional development programs is thus much more likely to be successful if planned along with the design of the program. This guideline provides a summary of the options for setting up evaluations of regional development programs, while carefully considering the need to go beyond evaluating the impact on beneficiaries alone
    Keywords: regional development, impact evaluation, development effectiveness,rural livelihoods, decentralization.
    JEL: C81 O12 O18 O22 R11 R58
    Date: 2010–08
  43. By: Ram Upendra Das
    Abstract: Regional economic integration agreements are considered to be important policy mechanisms to address regional developmental asymmetries. The Asian reality is characterized by developmental asymmetries across countries on the one hand and a lack of comprehensive pan-Asian formal regional economic integration agreements on the other. The need for such regional agreements is of paramount importance given the phenomenal economic performance of Asia. [ADBI Working Paper 172]
    Keywords: Regional, economic integration, policy, Asia
    Date: 2010
  44. By: Maria Csanadi (Institute of Economics - Hungarian Academy of Sciences)
    Abstract: This paper relates on the impact of global crisis on China from a systemic point of view. In what ways external and internal adaptation pressures influenced the transformation of the party-state system in China? Did reactions have an impact on the transformation of political or economic system? The purpose of our small field research was to respond to this question by examining institutional reactions to crisis from late 2008 to late 2009. We have examined the common and disparate characteristics of institutional adaptation at prefecture level at sources and destination cities of migration. We have also tried to detect their common or different sensitivity to crisis analyzing the periods before, during and after the crisis. We shall reflect on the reasons of prevailing political stability despite sudden large unemployment, and substantial economic, social and political impact on the party-state system. The paper uses interviews in 13 prefectures and newspaper analysis of 16 prefectures from mid 2008 to the end of 2009 complemented by available relevant statistical data.
    Keywords: system transformation, global crisis, migration, economic policy reactions,prefectures
    JEL: F5 D78 R58 J08 E24
    Date: 2010–06
  45. By: Loening, Josef; Rao, B. Bhaskara; Singh, Rup
    Abstract: This paper examines the determinants of economic growth in Guatemala, with a particular focus on the schooling level. Results based on an error-correction methodology show a better educated labour force has a positive and significant impact on economic growth. Consistent with micro evidence for Guatemala, primary education is more important than secondary and tertiary education. These findings are robust while changing the conditioning variables, controlling for data issues and endogeneity. Due to social and political conflict, the average per capita growth rate in Guatemala has been low.
    Keywords: Economic growth; education; error-correction model; Guatemala
    JEL: N16
    Date: 2010–08–16
  46. By: Conlé, Marcus; Taube, Markus
    Abstract: Focussing on China's health biotech clusters the study explores the anatomy of interaction in as well as between various clusters. While the literature has identified the existence of a dense network of durable interactions among firms and between firms and academia at a particular location as one of the most important prerequisites for well-performing clusters, we show that network ties extending beyond regional boundaries are equally valuable for the innovative capacity of China's biotech firms. Analysing the demographic process of cluster emergence we show that there exist different types of biotech clusters in China, which are closely linked and exchange knowledge and technology amongst each other. It appears as if further analysis of these cross-cluster links may provide important insights of how learning and innovation works in China's health biotech industry. Although China's science parks and industrial bases may on an individual basis appear to be badly structured, the organization of China's health biotech industry turns out to be substantially enhanced once these external linkages are taken into consideration. --
    Keywords: China,health biotechnology,cluster,entrepreneurship,localization
    Date: 2010

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