nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2010‒11‒20
fifty-six papers chosen by
Steve Ross
University of Connecticut

  1. Search, Migration, and Urban Land Use: The Case of Transportation Policies By Zenou, Yves
  2. Moving into the Projects: Social Housing Neighbourhoods and School Performance in England By Felix Weinhardt
  3. Housing Markets and the Financial Crisis of 2007-2009: Lessons for the Future By John V. Duca; John Muellbauer; Anthony Murphy
  4. The Mortgage Interest Deduction and its Impact on Homeownership Decisions By Christian A. L. Hilber; Tracy M. Turner
  5. Predicting the Geography of House Prices By Bernard Fingleton
  6. Search, Wage Posting, and Urban Spatial Structure By Zenou, Yves
  7. Teacher Pay, Class Size and Local Governments: Evidence from the Latvian Reform By Hazans, Mihails
  8. Homeownership for the long run: an analysis of homeowner subsidies By O. Emre Ergungor
  9. New Housing Supply and the Dilution of Social Capital By Christian A. L. Hilber
  10. The Fluctuating Record of Economic Regeneration in Englands Second-Order City Regions, 1984-2007 By Tony Champion; Alan Townsend
  11. The effect of social trust on achievement test performance of students in Japan By Yamamura, Eiji
  12. Spatial Costs in a Monocentric City(And Implications for Agglomeration) By Hugh B. Wenban-Smith
  13. Capitalization of Central Government Grants into Local House Prices: Panel Data Evidence from England By Christian A. L. Hilber; Teemu Lyytikäinen; Wouter Vermeulen
  14. Are Immigrants Graded Worse in Primary and Secondary Education? – Evidence for German Schools By David Kiss
  15. Network dynamics in regional clusters: The perspective of an emerging economy By Elisa Giuliani
  16. Agglomeration Elasticities and Firm Heterogeneity By Daniel J. Graham; David C. Maré
  17. On the Origins of Land Use Regulations: Theory and Evidence from US Metro Areas By Christian A. L. Hilber; Frédéric Robert-Nicoud
  18. Does the Rotten Child Spoil His Companion? Spatial Peer Effects Among Children in Rural India By Christian Helmers; Manasa Patnam
  19. Modelling and Forecasting UK Mortgage Arrears and Possessions By Janine Aron; John Muellbauer
  20. Neighborhood effects and parental involvement in the intergenerational transmission of education By Eleonora Patacchini; Yves Zenou
  21. Regional Manufacturing Wages: Dancing to the Tune of Trade Shocks By Filipe Lage de Sousa
  22. Entrepreneurship and Market Size. The Case of Young College Graduates in Italy. By Sabrina Di Addario; Daniela Vuri
  23. Measuring the external health cost of particulate matter from road traffic and other sources in Stockholm, Sweden. By Nerhagen, Lena; Bergström, Robert; Forsberg, Bertil; Johansson, Christer; Eneroth, Kristina
  24. "The Henry George Theorem in A Second-Best World" By Kristian Behrens; Yoshitsugu Kanemoto; Yasusada Murata
  25. In Search of the Economic Dividend of Devolution: Spatial Disparities, Spatial Economic Policy and Decentralisation in the UK By Andy Pike; Andrés Rodríguez-Pose; John Tomaney; Gianpiero Torrisi; Vassilis Tselios
  26. Regional Heterogeneity and Fertility Behaviour in India By Christophe Z. Guilmoto; S. Irudaya Rajan
  27. The impact of creativity on growth in German regions By Wedemeier, Jan
  28. Bank Location and Financial Liberalization Reforms: Evidence from Microgeographic Data By Marieke Huysentruyt; Eva Lefevere; Carlo Menon
  29. The rise of risk-based pricing of mortgage interest rates in Italy By Silvia Magri; Raffaella Pico
  30. Success from Satisficing and Imitation: Entrepreneurs’ Location Choice and Implications of Heuristics for Local Economic Development By Berg, Nathan
  31. Self-Reinforcing Shocks: Evidence from a Resettlement Policy By Aki Kangasharju; Matti Sarvimäki
  32. The Impact of University Research on Corporate Patenting By Christian Helmers; Mark Rogers
  33. What Sustainable Road Transport Future?: Trends and Policy Options By Stef Proost; Kurt Van Dender
  34. Towards the Resilient Region?: Policy Activism and Peripheral Region Development By Stuart Dawley; Andy Pike; John Tomaney
  35. Local Determinants of Crime: Do Military Bases Matter? By Alfredo R. Paloyo; Colin Vance; Matthias Vorel
  36. Mostly Pointless Spatial Econometrics? By Steve Gibbons; Henry G. Overman
  37. Implementing Congestion Charging: Summary and Conclusions By OECD
  38. Regional Knowledge and the Emergence of an Industry: Laser Systems Production in West Germany, 1975Ð2005 By Guido Buenstorf; Michael Fritsch; Luis Medrano
  39. Who Benefits from Promoting Small Enterprises? Some Empirical Evidence from Ethiopia.. By Rijkers, Bob; Ruggeri Laderchi, Caterina; Teal, Francis
  40. Geography or Economics? A Micro-Level Analysis of the Determinants of Degree Choice in the Context of Regional Economic Disparities in the UK By Philip Wales
  41. Governments under influence: Country interactions in discretionary fiscal policy By Aurélie Cassette; Jerome Creel; Etienne Farvaque; Sonia Paty
  42. Regions, frictions, and migrations in a model of structural transformation By Tombe, Trevor
  43. Local Human Capital and Its Impact on Local Employment Chances in Britain By Ioannis Kaplanis
  44. Is Fiscal Decentralization Harmful for Economic Growth? Evidence from the OECD Countries By Roberto Ezcurra; Andrés Rodríguez-Pose
  45. Early schooling and later outcomes : Evidence from pre-school extension in France By Dumas Christelle; Lefranc Arnaud
  46. The Dynamic Change in Wage Gap between Urban Residents and Rural Migrants in Chinese Cities By Dandan Zhang; Xin Meng; Dewen Wang
  47. Individual tradable permit market and traffic congestion: An experimental study By Ch'ng, Kean Siang
  48. Job Contact Networks and the Ethnic Minorities By Battu, Harminder; Seaman, Paul; Zenou, Yves Zenou
  50. Consumer Preferences for Water Supply? An Application of Choice Models to Urban India By P.B. Anand
  51. Transport Outlook 2010: The Potential for Innovation By OECD
  52. The importance of financial market development on the relationship between loan guarantees for SMEs and local market employment rates By Craig E. Armstrong; Ben R. Craig; William E. Jackson, III; James B. Thomson
  53. Social Interactions and Spillovers By Cabrales, Antonio; Calvó-Armengol, Antoni; Zenou, Yves
  54. Markets in Education: An Analytical Review of Empirical Research on Market Mechanisms in Education By Sietske Waslander; Cissy Pater; Maartje van der Weide
  55. Wage Effects from Changes in Local Human Capital in Britain By Ioannis Kaplanis
  56. Public Use or Abuse? The Use of Eminent Domain for Economic Development in the Era of \textit{Kelo} By Moussa Diop; Steven P. Lanza; Thomas J. Miceli; C. F. Sirmans

  1. By: Zenou, Yves (Dept. of Economics, Stockholm University)
    Abstract: We develop a search-matching model with rural-urban migration and an explicit land market. Wages, job creation, urban housing prices are endogenous and we characterize the steady-state equilibrium. We then consider three different policies: a transportation policy that improves the public transport system in the city, an entry-cost policy that encourages investment in the city and a restricting-migration policy that imposes some costs on migrants. We show that all these policies can increase urban employment but the transportation policy has much more drastic effects. This is because a decrease in commuting costs has both a direct positive effect on land rents, which discourages migrants to move to the city, and a direct negative effect on urban wages, which reduces job creation and thus migration. When these two effects are combined with search frictions, the interactions between the land and the labor markets have amplifying positive effects on urban employment. Thus, improving the transport infrastructure in cities can increase urban employment despite the induced migration from rural areas.
    Keywords: Rural-urban migration; transportation policies; entry costs; restricting migration
    JEL: D83 J61 O18 R14
    Date: 2010–11–08
  2. By: Felix Weinhardt
    Abstract: This study estimates the effect of living in a very deprived neighbourhood, as identified by ahigh density of social housing, on the educational attainment of fourteen years old (9th grade)students in England. Neighbourhoods with markedly high concentrations of social housinghave very high unemployment and extremely low qualification rates, as well as high buildingdensity, rooms over-crowding and low house prices. In order to identify the causal impact ofneighbourhood deprivation on pupil attainments, I exploit the timing of moving into theseneighbourhoods. The timing of a move can be taken as exogenous because of long waitinglists for social housing in high-demand areas. This is a new strategy that by-passes the usualsorting and reflection problems. Using this approach, there is no evidence for otherwisenegative effects, which has potentially wide-ranging implications for social housing policy.
    Keywords: Neighbourhood effects on education
    JEL: I21 J24
    Date: 2010–02
  3. By: John V. Duca; John Muellbauer; Anthony Murphy
    Abstract: An unsustainable weakening of credit standards induced a US mortgage and housing bubblewhose consumption impact was amplified by innovations altering the collateral role ofhousing. In countries with more stable credit standards, any overshooting of construction andhouse prices owed more to traditional housing supply and demand factors. Housing collateraleffects on consumption varied, depending on the liquidity of housing wealth. Lessons includerecognizing the importance of financial innovation, regulation, housing policies, and globalfinancial imbalances for fueling credit, construction, house price and consumption cycles thatvary across countries.
    Keywords: financial crisis, house prices, credit crunch, subprime mortgages
    JEL: R21 G18 E51 E21 C51 C52
    Date: 2010–04
  4. By: Christian A. L. Hilber; Tracy M. Turner
    Abstract: This paper examines the impact of the combined U.S. state and federal mortgage interestdeduction (MID) on homeownership attainment, using data from 1984 to 2007 and exploitingvariation in the subsidy across states, over time and due to inter-state moves. We test whethercapitalization of the MID into house prices offsets the positive effect on homeownership. Wefind that the MID only boosts homeownership attainment of higher income households in lesstightly regulated housing markets. In more restrictive places - typically larger coastal cities -an adverse effect exists. The MID is an ineffective policy to promote homeownership andimprove social welfare.
    Keywords: Homeownership, mortgage interest deduction, tax subsidies, land use regulation
    JEL: H22 H24 H71 R21 R31 R52
    Date: 2010–09
  5. By: Bernard Fingleton
    Abstract: Prediction is difficult. In this paper we use panel data methods to make reasonably accurate shorttermex-post predictions of house prices across 353 local authority areas in England. The issue ofprediction over the longer term is also addressed, and a simple method that makes use of thedynamics embodied in New Economic geography theory is suggested as a possible way toapproach the problem.
    Keywords: new economic geography, real estate prices, spatial econometrics, panel data, prediction
    JEL: C21 C31 O18 R12 R31
    Date: 2010–02
  6. By: Zenou, Yves (Dept. of Economics, Stockholm University)
    Abstract: We develop an urban-search model in which firms post wages. When all workers are identical, there is a unique wage in equilibrium even in the presence of search and spatial frictions. This wage is affected by spatial and labor costs. When workers differ according to the value imputed to leisure, we show that, under some conditions, two wages emerge in equilibrium. The commuting cost affects the land market but also the labor market through wages. Workers’ productivity also affects housing prices and this impact can be positive or negative depending on the location in the city. We then run some numerical simulations to reproduce some stylized facts about the labor-market outcomes of black and white workers. We find that a reduction in commuting costs for all workers reduces the unemployment rate of white workers and the profit of all firms but increases the wage of all workers (black and white) and raises the fraction of firms posting the high wage.
    Keywords: Diamond paradox; urban land-use; spatial compensation; search frictions; wage dispersion
    JEL: D83 J64 R14
    Date: 2010–11–08
  7. By: Hazans, Mihails (University of Latvia)
    Abstract: This paper employs a rich collection of survey and administrative datasets, including linked school-teacher payroll data, to document the reform of teacher compensation and school network implemented in Latvia amidst the economic crisis of 2008-2010, immediately after territorial reform. We explore diverse responses by local governments in terms of proportion of state subsidy transferred to schools, extent of redistribution of state funds between schools, degree of autonomy in compensation policies given to schools, and municipal contribution to school wage bills. Other things equal, municipalities tend to redistribute funds from schools with high student-teacher ratio (S/T) to ones with low S/T. Nevertheless, the reform has changed the effect of the local student-teacher ratio on teacher earnings per workload from negative to positive of the same size. Survived schools feature strong heterogeneity in terms of workload and staff reduction, change in class size, and compensation strategies. We provide evidence for a substantial incidence of using performance-related criteria for teacher base salary differentiation. We analyze school and individual level determinants of teacher pay using mixed models with municipality and school level random effects.
    Keywords: local governments, teacher compensation, linked employee-employer data
    JEL: H75 I22 I28 J31 J33 J45 M52 C23
    Date: 2010–10
  8. By: O. Emre Ergungor
    Abstract: This paper examines the impact of interest-rate and down-payment subsidies on default rates and losses given default, and finds that down-payment subsidies create successful homeowners at a lower cost than interest-rate subsidies.
    Keywords: Mortgage loans ; Default (Finance) ; Housing - Finance
    Date: 2010
  9. By: Christian A. L. Hilber
    Abstract: This paper examines the role of local housing supply conditions for social capital investment.Using an instrumental variables approach and data from the Social Capital CommunityBenchmark Survey, it is documented that the positive link between homeownership andindividual social capital investment is largely confined to more built-up neighborhoods (withmore inelastic supply of new housing). The empirical findings provide support for theproposition that in these localities house price capitalization provides additional incentivesfor homeowners to invest in social capital. The findings are also largely consistent with theproposition that built-up neighborhoods provide protection from inflows of newcomers thatcould upset a mutually beneficial equilibrium involving reciprocal cooperation. However, theresults do not appear to be driven by selection based on inherent differences in socialaptitudes or by Tiebout sorting.
    Keywords: House price capitalization, social capital, homeownership, land and housing supply, reciprocal cooperation
    JEL: D71 R21 R31
    Date: 2010–01
  10. By: Tony Champion; Alan Townsend
    Abstract: This study examines how far and in what way 'Our cities are back', as claimed by England's Core Cities Group. It focuses on 1984-2007 employment changes for the eight Core Cities and their city regions: Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield. City regions are defined on a consistent functional basis and allowance is made for discontinuities in the jobs time-series. These provincial city regions are found to have suffered relatively less than London in the early 1990s recession, but then recovered more slowly to achieve their greatest rates of growth in 1998- 2002 and only then did the Core Cities outpace the rest of their city regions. Employment growth slowed after this, though their population recovery continued.
    Keywords: Urban regeneration, employment data, city regions, Core Cities, England
    JEL: J21 O18 R11 R12 R23
    Date: 2009–10
  11. By: Yamamura, Eiji
    Abstract: Empirical results using Japanese data suggest that social trust improves student language and mathematics achievement test scores in primary and junior high school. After controlling for endogeneity bias, social trust had a greater effect on scores for primary school students than on scores for junior high school students.
    Keywords: Social trust; human capital
    JEL: I21 Z13
    Date: 2010–11–10
  12. By: Hugh B. Wenban-Smith
    Abstract: Using water supply as a model for a wider range of infrastructure services, the effect of a negative exponential density gradient on distribution costs is investigated for four monocentric urban development scenarios: (a) Densification; (b) Dispersion; (c) Suburbanisation; and (d) Constant density. It is shown that economies of scale in production can be outweighed by diseconomies in distribution in cases (b) and (c), suggesting that the agglomeration benefits of infrastructure cannot be taken for granted. They depend as much on the effect of density on distribution costs as the effect of size on production costs.
    Keywords: Urbanisation, spatial analysis, returns to scale, water utilities
    JEL: R12 R32 D24 L95
    Date: 2009–10
  13. By: Christian A. L. Hilber; Teemu Lyytikäinen; Wouter Vermeulen
    Abstract: We explore the impact of central government grants on local house prices in England using apanel data set of local authorities (LAs) from 2001 to 2008. Electoral targeting of grants toLAs by the incumbent national government provides an exogenous source of variation ingrants that we exploit to identify their causal effect on house prices. Our results indicatesubstantial or even full capitalization. We also find that house prices respond more stronglyin locations in which new construction is constrained by physical barriers. Our results implythat (i) during our sample period grants were largely used in a way that is valued by themarginal homebuyer and (ii) increases in grants to a LA may mainly benefit the typicallybetter off property owners (homeowners and absentee landlords) in that LA
    Keywords: local public finance, house prices, supply constraints, central government grants
    JEL: H2 H3 H7 H81 R21 R31
    Date: 2010–09
  14. By: David Kiss
    Abstract: Using PIRLS 2001 and PISA 2003 data for Germany, this paper examines whether immigrants attending primary and secondary school are graded worse in math than comparable natives. Controlling for differences in math skills, class fixed effects regressions and results of a matching approach suggest that immigrants have grade disadvantages in primary education. In Germany, track choice after primary education is mainly determined by the average of grades obtained in math and German. Hence, grade disadvantages could lead to lower level track choice. Immigrants who attend the most common secondary school tracks are not graded differently from natives.
    Keywords: Grading; educational system; migration background; matching
    JEL: C40 I21 J15
    Date: 2010–11
  15. By: Elisa Giuliani
    Abstract: Regional clusters are spatial agglomerations of firms operating in the same or connected industries, which enable innovation and economic performance for firms. A wealth of empirical literature shows that one of key elements of the success of regional clusters is that they facilitate the formation of local inter-organizational networks, which act as conduits of knowledge and innovation. While most studies analyze the benefits and characteristics of regional cluster networks and focus on advanced economies and high tech Ôhot spotsÕ, this paper advances with the existing literature by analyzing network dynamics and taking an emerging economyÕs perspective. Using longitudinal data of a wine cluster in Chile and stochastic actor-oriented models for network dynamics, this paper examines what micro-level effects influence the formation of new knowledge ties among wineries. It finds that the coexistence of cohesion effects (reciprocity and transitivity) and the presence of inter-firm knowledge base heterogeneity contribute to the stability of an informal hierarchical network structure over time. Empirical results have interesting implications for cluster competitiveness and network studies, and for the burgeoning literature on corporate behavior in emerging economies.
    Keywords: Regional clusters, knowledge networks, network dynamics, wine industry, Chile
    Date: 2010–10
  16. By: Daniel J. Graham; David C. Maré
    Abstract: This paper estimates the relationship between agglomeration and multi factor productivity atthe one digit industry level and by region using longitudinal firm level data for New Zealand.A key focus of the paper is on methods to represent firm level heterogeneity and non-randomsorting of firms. The panel structure of the data allows us to control for it at the level of localindustries or enterprises. We obtain a cross-sectional agglomeration elasticity of 0.171, whichfalls by 70% when we use local industry controls, and by 90% when we impose enterprisefixed effects. Using industry specific production functions, we find that the "within localindustry" estimates are similar, though slightly larger than the cross sectional estimates(~0.070), suggesting negative sorting between areas, combined with positive sorting withinareas. The within-enterprise estimates yield a small elasticity of 0.010. Our results indicatethat the imposition of a common production technology across all industries is not a validassumption. While cross-sectional estimates may overstate the true impact of agglomerationon productivity in the presence of positive bias from sorting, the within enterprise approach(which is increasingly common in the literature) can suffer from identification problems dueto the highly persistent nature of agglomeration variables and may understate the true causaleffect of agglomeration on productivity. We thus rely on the "within local industry" estimatesas providing the most reliable indication of agglomeration elasticities.
    Keywords: Agglomeration, urban density, productivity
    JEL: L25 R12 R3
    Date: 2010–02
  17. By: Christian A. L. Hilber; Frédéric Robert-Nicoud
    Abstract: We model residential land use constraints as the outcome of a political economy gamebetween owners of developed and owners of undeveloped land. Land use constraints benefitthe former group (via increasing property prices) but hurt the latter (via increasingdevelopment costs). More desirable locations are more developed and, as a consequence ofpolitical economy forces, more regulated. Using an IV approach that directly follows fromour model we find strong and robust support for our predictions. The data provide weak or nosupport for alternative hypotheses whereby regulations reflect the wishes of the majority ofhouseholds or efficiency motives.
    Keywords: Land use regulations, zoning, land ownership, housing supply
    JEL: H7 Q15 R52
    Date: 2010–01
  18. By: Christian Helmers; Manasa Patnam
    Abstract: This paper identifies the effect of neighborhood peer groups on childhood skill acquisitionusing observational data. We incorporate spatial peer interaction, defined as a child's nearestgeographical neighbors, into a production function of child cognitive development in AndhraPradesh, India. Our peer group construction takes the form of directed networks, whosestructure allows us to identify peer effects and enables us to disentangle endogenous effectsfrom contextual effects. We exploit variation over time to avoid confounding correlated withsocial effects. Our results suggest that spatial peer and neighborhood effects are stronglypositively associated with a child's cognitive skill formation. These peer effects hold evenwhen we consider an alternative IV-based identification strategy and different variations tonetwork size. Further, we find that the presence of peer groups helps provide insuranceagainst the negative impact of idiosyncratic shocks to child learning.
    Keywords: Children, peer effects, cognitive skills, India
    JEL: C21 O15 R23
    Date: 2010–10
  19. By: Janine Aron; John Muellbauer
    Abstract: This paper presents new models for aggregate UK data on mortgage possessions(foreclosures) and mortgage arrears (payment delinquencies). The innovations include thetreatment of difficult to observe variations in loan quality and shifts in forbearance policy bylenders, by common latent variables estimated in a system of equations for arrears andpossessions, for quarterly data over 1983-2009. A second innovation is the theory-justifieduse of an estimate of the proportion of mortgages in negative equity, based on an averagedebt to equity ratio, as one of the key drivers of possessions and arrears. A third is thesystematic treatment of measurement bias in the months in arrears measures. Finally, thepaper does not impose a proportional long-run relationship between possessions and arrearsassumed in the previous UK literature. A range of economic forecast scenarios for forecaststo 2013 reveals the sensitivity of mortgage possessions and arrears to different economicconditions, highlighting potential risks faced by the UK and its mortgage lenders. Acomprehensive review of data on arrears and possessions completes the paper.
    Keywords: foreclosures, mortgage possessions, mortgage payment delinquencies, mortgage arrears,UK mortgage market, defaults, unobserved components model
    JEL: G21 G28 R21 C51 C53 E27
    Date: 2010–08
  20. By: Eleonora Patacchini (Università di Roma "La Sapienza"); Yves Zenou (Stockholm University & Research Institute of Industrial Economics (IFN))
    Abstract: We analyze the intergenerational transmission of education focusing on the interplay between family and neighborhood effects. We develop a theoretical model suggesting that both neighborhood quality and parental effort are of importance for the education attained by children. This model proposes a mechanism explaining why and how they are of importance, distinguishing between high- and low-educated parents. We then bring this model to the data using a longitudinal data set in Britain. The available information on social housing in big cities allows us to identify the role of neighbourhood in educational outcomes. We find that the better is the quality of the neighborhood, the higher is the parents’ involvement in their children’s education. A novel finding with respect to previous US studies is that family is of importance for children with highly-educated parents while it is the community that is crucial for the educational achievement of children from low-educated families.
    Keywords: Education, cultural transmission, cultural substitution, peer effects, social tenants.
    JEL: I21 J13 J24
    Date: 2010
  21. By: Filipe Lage de Sousa
    Abstract: Firms generally choose to locate their production where profits are maximized. As costsaffect profits, trade-offs between two marginal costs - employees' wages and transport costs- may be important for decisions regarding location. Wages tend to be greater in industrialcentres and decrease as transport costs increase. Trade shocks might impact regional wagedisparities by making foreign markets, for example, relatively more attractive for firms thandomestic markets. This paper tests these two hypotheses by using regional Brazilian data.Results corroborate that regions with higher transport costs present lower wages, and thattrade shocks affect these regional wage disparities.
    Keywords: Economic geography, trade shocks, manufacturing wages
    JEL: F12 F14 R12
    Date: 2010–04
  22. By: Sabrina Di Addario (Bank of Italy); Daniela Vuri (Faculty of Economics, 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 province of work’s population density 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. Provinces’ competition, urban amenities and dis-amenities, 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-off the benefits of urbanization externalities: the elasticity of entrepreneurs’ net monthly earnings with respect to population density is 0.02-0.03.
    Keywords: Labour market transitions; Urbanization.
    JEL: R12 J24 J21
    Date: 2010–11–08
  23. By: Nerhagen, Lena (VTI); Bergström, Robert; Forsberg, Bertil; Johansson, Christer; Eneroth, Kristina
    Abstract: This paper measures the external health cost due to emissions from different sources in the Stockholm area using the Impact pathway approach. The estimated health impact is the result of detailed dispersion modelling with high spatial resolution. We make separate calculations for the impact that occur within the Stockholm area, the surrounding region and the rest of Europe. The pollutants considered are combustion and secondary particulate matter (PM) from the burning of fuels and also road wear (non-exhaust PM) that makes a large contribution to measured concentrations of PM locally in Stockholm. We also investigate the influence of assumptions made regarding the exposure-response functions used in these calculations since PM of different origin are expected to have different health impacts. According to the results road traffic makes important contributions to the external health cost both on a local and a regional scale compared to other sources. This is in part due to emissions being released in close proximity to where people live but also because of the amount of pollutants emitted. Although non-exhaust PM makes a large contribution to local population exposure within Stockholm the external health cost is relatively small which is due to other health impact being relevant for this emission source. Residential heating also makes an important contribution to exposure and external health cost on a local scale while power plants have a large influence regionally.
    Keywords: Health cost; particulate matter; dispersion modelling; exposure-response functions; value of life year lost
    JEL: D62
    Date: 2010–11–10
  24. By: Kristian Behrens (Departement des Sciences Economiques, Universite du Queebec a Montreal (UQAM), CIRPEE, and CEPR); Yoshitsugu Kanemoto (Graduate School of Economics and Graduate School of Public Policy (GraSPP), University of Tokyo, National Graduate Institute for Policy Studies); Yasusada Murata (Advanced Research Institute for the Sciences and Humanities (ARISH), Nihon University)
    Abstract: The Henry George Theorem (HGT), or the golden rule of local public finance, states that, in first-best economies, the fiscal surplus, defined as aggregate land rents minus aggregate losses from increasing returns to scale activities, is zero at optimal city sizes. We derive a general second-best HGT in which the fiscal surplus equals the excess burden, expressed as an extended Harberger formula. We then apply our theorem to various settings encompassing urban eco- nomics, the new economic geography and local public finance to investigate whether or not a single tax on land rents can raise enough revenue to cover aggregate losses from increasing returns to scale activities.
    Date: 2010–11
  25. By: Andy Pike; Andrés Rodríguez-Pose; John Tomaney; Gianpiero Torrisi; Vassilis Tselios
    Abstract: After a decade of devolution and amid uncertainties about its effects, it is timely to assess andreflect upon the evidence and enduring meaning of any 'economic dividend' of devolution inthe UK. Taking a multi-disciplinary approach utilising institutionalist and quantitativemethods, this paper seeks to discern the nature and extent of any 'economic dividend'through a conceptual and empirical analysis of the relationships between spatial disparities,spatial economic policy and decentralisation. Situating the UK experience within thehistorical context of its evolving geographical political economy, we find: i) a varied anduneven nature of the relationships between regional disparities, spatial economic policy anddecentralisation that change direction during specific time periods; ii) the role of nationaleconomic growth is pivotal in explaining spatial disparities and the nature and extent of theirrelationship with the particular forms of spatial economic policy and decentralisationdeployed; and, iii) there is limited evidence that any 'economic dividend' of devolution hasemerged but this remains difficult to discern because its likely effects are over-ridden by therole of national economic growth in decisively shaping the pattern of spatial disparities and indetermining the scope and effects of spatial economic policy and decentralisation.
    Keywords: Economic dividend, devolution, spatial disparities, spatial economic policy,decentralisation, UK
    JEL: D53 R51
    Date: 2010–10
  26. By: Christophe Z. Guilmoto; S. Irudaya Rajan
    Abstract: This paper examines regional heterogeneity both from statistical and cartographic perspectives, using factor analysis of non-demographic data, models of fertility determinants and district-wise mapping to test out the presence of regional clustering. Regional analysis reveals that economic, social and health indicators display spatial patterns as strong as fertility rates. All recent models of fertility incorporate a significant geographical component (using dummy regional variables or autocorrelation measurements). The map of fertility decline spreading along culturally and spatially contiguous regions also suggests that diffusion mechanisms may play an independent role in the spread of new reproductive behaviour (small family norm). Though diffusion per se, no real explanation for the fast decline of fertility in Southern or Coastal India (what would then be the cause of diffusion in the first place?), it would definitely be important to understand how these mechanisms are facilitated by social and cultural homogeneity or by regional policies. [Working Paper No. 290]
    Keywords: Fertility, South India, diffusion, heterogeneity, family planning, reproductive behaviour, coastal India, infant mortality
    Date: 2010
  27. By: Wedemeier, Jan
    Abstract: The objective of this paper is to analyze the impact of the creative professions - technological employees and bohemians - on economic growth in Germany’s planning regions. It is concluded that technological employees and bohemians foster economic growth. We find that growth is particularly dynamic in agglomerated and urbanized regions. Among regional factors relevant to the location decisions of creative professionals, diversity is analyzed in particular, as it might stimulate growth because of its potential to increase the rate of interchange of different ideas and knowledge. Diversity is therefore a “knowledge production factor." The analysis of both - creative professions and diversity - is related to two current topics in regional economics, namely the knowledge based economy and its effects on city development, and the topic of creative cities.
    Keywords: Regional Economic Growth; Creativity; Diversity
    JEL: R1 O3 O4 R23
    Date: 2010
  28. By: Marieke Huysentruyt; Eva Lefevere; Carlo Menon
    Abstract: We examine the effects of bank deregulation on the spatial dynamics of retail-bankbranching, exploiting, much like a quasi-natural experiment, the context of intenseliberalization reforms in Belgium in the late nineties. Using .ne-grained data on branchnetwork dynamics within the metropolitan area of Antwerp and advancing novel spatialeconometric techniques, we show that these liberalization reforms radically shifted andaccelerated branch network dynamics. Entry and exit dynamics substantially intensified, thelevel change in financial void grew significantly, and bank choice markedly declined.Moreover, all these changes consistently extended (even with greater intensity) after theliberalization peak. However, the immediate and longer-term spatial ramifications of thefinancial sector liberalization were very distinct. All immediate changes systematically,differentially impacted the poorer and wealthier neighborhoods, disenfranchising the poorerneighbourhoods and favoring their wealthier counterparts. The longer-term effects on spatialpatterns of change no longer exhibited this systematic relationship with neighborhoodincome. We draw out the policy implications of our findings.
    Keywords: Location, Retail-banking, Liberalization, Poverty, Spatial Statistics
    JEL: G21 L1 L22 O16 R12
    Date: 2010–10
  29. By: Silvia Magri (Bank of Italy); Raffaella Pico (Bank of Italy)
    Abstract: The paper assesses the extent to which mortgage rates in Italy are priced according to credit risk as proxied by the probability of household mortgage delinquency estimated using the EU-Silc database. For reasons of data availability we restrict the analysis of mortgage pricing to Italian households. Consistent with the more extensive use of credit scoring techniques, our estimates indicate that Italian lenders have increasingly priced mortgage interest rates with reference to credit risk. For mortgages granted between 2000 and 2007, a 1 percentage point increase in the probability of default is associated with a 21 basis point rise in mortgage interest rates, less than the 38 basis point premium Edelberg (2006) estimated for the U.S. at the end of the '90s.
    Keywords: mortgage interest rate, mortgage delinquencies, risk-based pricing
    JEL: D10 E43 G21
    Date: 2010–10
  30. By: Berg, Nathan
    Abstract: Decisions about location choice provide an opportunity to compare the predictions of optimization models, which require exhaustive search through very large choice sets, against the actual decision processes used by entrepreneurs choosing where to allocate investment capital. This paper presents new data on entrepreneurs’ self-described decision processes when choosing where to locate, based on scripted interviews with 49 well-placed business owners and senior managers in charge of location choice. Consideration sets are surprisingly small, especially among those who are successful. According to entrepreneurs’ own accounts, locations are frequently discovered by chance rather than systematic search. Few describe decision processes that bear any resemblance to equating marginal benefit with marginal cost as prescribed by standard optimization theory. Nearly all interviewees describe location choice decisions based on threshold conditions, providing direct evidence of satisficing rather than optimization. Imitation is beneficial for small investment projects. Decision process data collected here suggests a need to rethink standard policy tools used to stimulate local economic development.
    Keywords: Process Model; Bounded Rationality; Interview Data; Ethnic; Discrimination; Low income; Neighborhood; Lexicographic; Non-compensatory; Business Owners
    Date: 2010
  31. By: Aki Kangasharju; Matti Sarvimäki
    Abstract: We examine the long-term effects of resettling 11 percent of the Finnish population fromareas ceded to the Soviet Union during World War II. Our empirical strategy exploits featuresof the resettlement policy as a source of plausibly exogenous variation in population growth.The results suggest that a 10 percent increase in the population of a rural location during thewar caused an additional 15 percent growth during the next five decades. The growth wasdriven by migration and led to the expansion of the non-primary sector. The effect is largerfor locations connected to the railway network.
    Keywords: Economic geography, agglomeration, migration
    JEL: F12 J10 R12 N94
    Date: 2010–04
  32. By: Christian Helmers; Mark Rogers
    Abstract: This paper analyses the association between the number of patenting manufacturing firms andthe quantity and quality of relevant university research across UK postcode areas. We showthat different measures of research `power' and `excellence' positively affect the patenting ofsmall firms within the same postcode area. Patenting by large firms, in contrast, is unaffectedby research undertaken in nearby universities. This confirms the commonly held view thatlocation matters more for small firms than large firms. We also investigate specific channelsof technology transfer, finding that university-industry knowledge transfer occurs throughboth formal and informal channels. From a methodological point of view, we contribute tothe existing literature by accounting for potential simultaneity between university researchand patenting of local firms by adopting an instrumental variable approach. Moreover, wealso allow for the effects of the presence of universities in neighbouring postcode areas toinfluence firms' patenting activity by incorporating spatial neighborhood effects.
    Keywords: Patents, universities, knowledge transfer, spillover, UK
    JEL: L22 L26 O34
    Date: 2010–09
  33. By: Stef Proost; Kurt Van Dender
    Abstract: A brief review of long run projections of demand for road transport suggests that problems related to road network congestion and greenhouse gas emissions are likely to become more pressing than they are now. Hence we review, from a macroscopic perspective, popular policy measures to address these problems: stimulating modal shift, regulating land use to reduce car use, and boosting low carbon technology adoption to reduce greenhouse gas emissions. We find that these policies can produce tangible results, but that they may have unintended consequences that drive up costs considerably.
    Date: 2010–11
  34. By: Stuart Dawley; Andy Pike; John Tomaney
    Abstract: Discussions of local and regional development have recently broadened from apreoccupation with growth to one which captures the notion of resilience. This papermakes two main contributions to these debates. First, the paper critiques staticequilibrium-based notions of resilience and instead advances a more dynamicevolutionary approach to explain local and regional resilience. Second, we seek toaddress the widening gap between resilience thinking and its transfer to practical policyprescription. To do this, we explore the notions of adaptability, adaptive capacity andnew path creation in developing local and regional resilience. We then focus upon whatthis might mean for local and regional strategies and draw on the case study of theRenewable Energy sector in North East England to demonstrate the enduring role ofpolicy intervention in stimulating change and building resilience in peripheral regions.
    Keywords: Resilience, adaptability, adaptation
    JEL: O10 R00
    Date: 2010–09
  35. By: Alfredo R. Paloyo; Colin Vance; Matthias Vorel
    Abstract: Using a unique panel dataset, we estimate the impact of the military base realignments and closures (BRACs) in Germany on the intensity of criminal activity surrounding the base. We use a fixed-effect model to account for time-invariant unobservables in our panel of 298 military bases for the period 2003–2007. We also take advantage of geographic information system software to mitigate estimation issues arising from the spatial nature of the dataset. Estimation results are presented for total crime and four other subcategories: breaking and entering, automobile-related crime, violent crime, and drug-related crime. The estimates indicate that there is no effect of BRACs on criminal activity surrounding the base. We also confirm existing findings in the literature on the determinants of crime.
    Keywords: Armed forces; BRAC; deviant behavior; geographic information system
    JEL: H56 K42 R19
    Date: 2010–10
  36. By: Steve Gibbons; Henry G. Overman
    Abstract: We argue that identification problems bedevil most applied spatial research. Spatialeconometrics solves these problems by deriving estimators assuming that functional formsare known and by using model comparison techniques to let the data choose betweencompeting specifications. We argue that in most situations of interest this, at best, achievesonly very weak identification. Worse, in most cases, such an approach will simply beuninformative about the economic processes at work rendering much applied spatialeconometric research 'pointless', unless the main aim is simply description of the data. Weadvocate an alternative approach based on the 'experimental paradigm' which puts issues ofidentification and causality at centre stage.
    Keywords: statistical methods, spatial, modeling
    JEL: C1 C12 C21 R00 R15
    Date: 2010–10
  37. By: OECD
    Abstract: The Round Table addressed the broad question of what research and experience tell us about how to arrive at a successful introduction of congestion charging schemes. Attention was limited mostly to urbanized areas where road traffic congestion is or may become an issue. “Success” means (a) that a policy is implemented, (b) that it works, (c) that it is accepted by actual and potential users, and (d) that it generates benefits for society overall. In order to shed light on these dimensions of success, lessons are drawn from more and less successful attempts to implement charges. In addition, we ask if and how the evolving understanding of the economics of road traffic congestion charging might affect the assessment of congestion charging policy. The…
    Date: 2010–11
  38. By: Guido Buenstorf; Michael Fritsch; Luis Medrano
    Abstract: We analyze the emergence and spatial evolution of the German laser systems industry. Regional knowledge in the related field of laser sources, as well as the presence of universities with physics or engineering departments, is conducive to the emergence of laser systems suppliers. The regional presence of source producers is also positively related to entry into laser systems. One important mechanism behind regional entry is the diversification of upstream laser source producers into the downstream systems market. Entry into the materials processing submarket appears to be unrelated to academic knowledge in the region, but the presence of laser source producers and the regional stock of laser knowledge are still highly predictive in this submarket.
    Keywords: Innovation, regional knowledge, laser technology, emerging industries, diversification
    JEL: L22 L69 R11 O52
    Date: 2010–11
  39. By: Rijkers, Bob; Ruggeri Laderchi, Caterina; Teal, Francis
    Abstract: The Addis Ababa Integrated Housing Development Program (AAIHDP) aims to tackle the housing shortage and unemployment that prevail in Addis Ababa by deploying and supporting small enterprises to construct low-cost housing using technologies novel for Ethiopia. The motivation for such support is predicated on the view that small firms create more jobs per unit of investment by virtue of being more labor intensive and that the jobs so created are concentrated among the low-skilled and hence the poor. To assess whether the program has succeeded in biasing technology adoption in favor of labor and thereby contributed to poverty reduction, the impact of the program on technology usage, labor intensity, and earnings is investigated using a unique matched workers-firms dataset, the Addis Ababa Construction Enterprise Survey (AACES), collected specifically for the purpose of analyzing the impact of the program. We find that program firms do not adopt different technologies and are not more labor intensive than nonprogram firms. There is an earnings premium for program participants, who tend to be relatively well educated, which is heterogeneous and highest for those at the bottom of the earnings distribution.
    Date: 2010
  40. By: Philip Wales
    Abstract: The importance of human capital to the economic performance of a national, regional or local economy is now well established. Labour markets are thought to reward individuals in proportion to their marginal productivity and to encourage an efficient allocation of skilled workers. However, labour markets also provide signals to students about the return to a particular level or type of skill, which in turn affects the future supply of skilled workers. This paper explores how labour market conditions affect one aspect of this supply: through an impact on the subject an individual chooses to study for their undergraduate degree. Using a large micro-level dataset on graduates from British universities between 2004/5 and 2006/7, this paper implements a series of linear probability models in subject choice and makes several contributions to the existing literature. Firstly, it uses a more detailed classification of subjects than has hitherto been employed. Second, it examines the impact of local economic conditions on the student‟s subject choice. Thirdly, the time dimension of the dataset is used to implement fixed effects to control for several forms of endogeneity. The results suggest that personal and academic characteristics, such as gender, ethnicity and prior academic attainment, strongly affect degree choice and suggest that individuals endogenously select into particular areas and schools. It finds that local labour market signals do encourage individuals to take up particular degrees in preference to others, and raises several policy issues.
    Keywords: Education, Human Capital, Skills, Regional Labour Markets
    JEL: C25 I2 J24 R23
    Date: 2010–09
  41. By: Aurélie Cassette (EQUIPPE-Universités de Lille, Faculté des sciences économiques et sociales); Jerome Creel (Observatoire Français des Conjonctures Économiques); Etienne Farvaque (EQUIPPE-Universités de Lille, Faculté des sciences économiques et sociales); Sonia Paty (CREM Université de Caen and CNRS (France) and EQUIPPE-Universités de Lille, Faculté des sciences économiques et sociales)
    Abstract: We investigate the interactions between countries of the discretionary component of national fiscal policies (i.e. the cyclically- and interest-adjusted part of fiscal policy), therefore observing and investigating the part of public spending and tax receipts on which governments keep full discretion. Our sample covers 18 OECD countries, during the 1974-2008 period. First, we build a measure of such discretionary fiscal policy, considered as the residual component of a VAR model, and compute the measure for the full sample. Drawing on this new dataset, the second step provides estimates of discretionary fiscal policy interactions between countries of the sample. Our results highlight the existence of interactions between neighboring countries' public decisions, where neighborhood is defined by economic leadership as well as geography. We also find evidence of an opportunistic behavior of OECD countries' governments for the discretionary public spending. Finally, the disciplining device of the European Union fiscal framework is shown to be ineffective.
    Keywords: Fiscal policy; discretion; interactions; VAR; spatial econometrics
    JEL: E62 H60 H87
    Date: 2010–10
  42. By: Tombe, Trevor
    Abstract: Why do some regions grow faster than others? More precisely, why do rates of convergence differ? Recent research points to labour market frictions as a possible answer. This paper expands along this line by investigating how these labour market frictions interact with regional migration. Motivating this are two important observations: (1) farm-to-nonfarm labour reallocation costs have fallen, disproportionately benefiting poorer agricultural regions; and (2) migration flows vary dramatically by region, lowering (raising) marginal productivities in destination (source) regions. Using a general equilibrium model of structural transformation calibrated with US regional data over time, I find regional migration barriers magnify the income convergence effect of labour market improvements. For instance, recent research points to improved nonagricultural skills acquisition as a driver of Southern US convergence with the North. I find the strong link between labour markets and Southern convergence follows from the South’s historically extensive migration restrictions. Finally, the model captures the low convergence rates experienced by other regions, such as the US Midwest.
    Keywords: structural change; regional migration; transportation costs; labour market frictions; regional convergence
    JEL: O11 N1 E00 R11
    Date: 2010–03–01
  43. By: Ioannis Kaplanis
    Abstract: This paper examines how high human capital in a locality is associated with the employmentoutcomes of individuals. A probit model is used to examine how the employment probabilityof otherwise similar working age males is associated with changes in the share of degreeholders in the local area. Different econometric specifications are employed in order to shedlight on the positive effect found and its possible causes. The paper discusses three mainaccounts, referring to the consumption demand, productivity spillovers and productioncomplementarities. For Britain, it is found that the share of high skill residents in a localityhas a strong positive impact on the local employment chances of men with no qualifications.The effect on the local employment chances of the other educational groups is eitherinsignificant or significant negative. These results are consistent with the consumer demandhypothesis that the presence of high educated, high income individuals in a locality boosts thedemand for local low skill services. On the other hand, when the share of skilled workers isused, the results hint on possible simultaneous effect of production complementarities andproductivity spillovers. However, the analysis points to the existing limitations ofsuccessfully isolating the consumption demand and the production function mechanisms andcalls for further research.
    Keywords: local labour markets, employment, consumer demand, human capital externalities
    JEL: J21 J24 R23
    Date: 2010–01
  44. By: Roberto Ezcurra; Andrés Rodríguez-Pose
    Abstract: The global drive towards decentralization has been increasingly justified on the basis thatgreater transfers of resources to subnational governments are expected to deliver greaterefficiency in the provision of public goods and services and greater economic growth. Thispaper examines whether this is the case, by analysing the relationship betweendecentralization and economic growth in 21 OECD countries during the period between 1990and 2005 and controlling not only for fiscal decentralization, but also for political andadministrative decentralization. The results point towards a negative and significantassociation between fiscal decentralization and economic growth in the sample countries, arelationship which is robust to the inclusion of a series of control variables and to differencesin expenditure preferences by subnational governments. The impact of political andadministrative decentralization on economic growth is weaker and sensitive to the definitionand measurement of political decentralization.
    Keywords: Fiscal decentralization, political decentralization, administrative decentralization, economic growth, OECD
    JEL: H40 H52
    Date: 2010–05
  45. By: Dumas Christelle; Lefranc Arnaud (Universite de Cergy-Pontoise, THEMA, F-95000 Cergy-Pontoise.; Universite de Cergy-Pontoise, THEMA, F-95000 Cergy-Pontoise.)
    Abstract: Over the 1960s and 1970s, France undertook a large-scale expansion of preschool enrollment. As a result, during this period, the enrollment rate of 3 years old children rose from 35% to 90% and that of 4 years old rose from 60% to virtually 100%. This paper evaluates the eect of such an expansion on subsequent schooling outcomes (repetitions, test scores, high school graduation) and wages. We find some sizeable and persistent effect of preschool and this points to the fact that preschool can be a tool for reducing inequalities. Indeed, the analysis shows that children from worse-off or intermediate social groups benefit more from preschool than children from better-off socioeconomic backgrounds.
    Keywords: education; preschool; France
    JEL: I2 C3
    Date: 2010
  46. By: Dandan Zhang; Xin Meng; Dewen Wang
    Abstract: Although a significant wage gap has been found in many previous studies between urban workers and rural migrants in Chinese cities, it is still not clear how such a wage gap may evolve over time. This paper uses both a dynamic wage decomposition method and economic assimilation model with pooled cross-sectional data from the China Household Income Project Survey (CHIPS) of 1999 and 2002 to investigate the change in the wage gap between urban workers and rural migrants over time and its determinants in Chinese cities. The estimation results show that (1) there is a widening on-average wage gap between urban workers and rural migrants across the two surveyed years in Chinese cities, mainly caused by the decline in the return to education for rural migrants; (2) rural migrants can catch up with the wage level of their urban counterparts as the time they reside in the host cities increases, but because of the decline in the speed of catching-up over time, rural migrants cannot obtain wages comparable totheir urban counterparts in their life time, and more importantly well-educated rural migrants do not seem to have a significant advantage in this wage assimilation process than the lowlypoorly-educated ones. Both findings suggest that there might be discrimination against well-educated rural migrants which prevents them from obtaining a fair wage in the Chinese urban labour market.
    Keywords: Wage differential, Migration
    JEL: J31 J61
    Date: 2010
  47. By: Ch'ng, Kean Siang
    Abstract: This paper investigates the potential of an individual tradable permit system in an experimental two-sided repeated double auction market to overcome over-consumption through road demand management. The evaluation of this system shows that traders exhibit strong dependence on reservation price and there are significant transfers of permit from low value users to high value users. During peak hours, the permit price increases owing to high demand, so the cost of using the road is high during congestion. This creates incentive for low value drivers to postpone their trips and resell permits in the peak hours to gain profit. The results show the delayer pays principle, in which drivers who value highly have to pay drivers who are willing to stay off the road during peak hours.
    Keywords: : Individual tradable permit; Congestion; High value and low value drivers; Allocative efficiency
    JEL: D61 R41 C91
    Date: 2010–10–16
  48. By: Battu, Harminder (University of Aberdeen); Seaman, Paul (University of Dundee); Zenou, Yves Zenou (Dept. of Economics, Stockholm University)
    Abstract: Using data from the UK Quarterly Labour Force Survey, this paper examines the job finding methods of different ethnic groups in the UK. Our empirical findings suggest that, though personal networks are a popular method of finding a job for the ethnic minorities, the foreign born and those who identify themselves as non-British, they are not necessarily the most effective either in terms of gaining employment or in terms of the level of job achieved. However, there are some important differences across ethnic groups with some groups losing out disproportionately from using personal networks.
    Keywords: Job search; networks; social capital; ethnic disadvantage
    JEL: J15 J64
    Date: 2010–11–08
  49. By: Maria De Poala; Vincenzo Scoppa (Dipartimento di Economia e Statistica, Università della Calabria)
    Abstract: We carry out a randomized experiment involving undergraduate students enrolled at an Italian University attending an introductory economics class to evaluate the impact on achievement of examination frequency and interim feedback provision. Students in the treated group were allowed to undertake an intermediate exam and were informed about the results obtained, while students in the control group could only take the final exam. It emerges that students undertaking the intermediate exam perform better both in terms of probability of passing the exams and of grades obtained. High ability students appear to benefit more from the treatment. The experiment design allows us to disentangle “workload division or commitment” effects from “feedback provision” effects. We find that the estimated treatment impact is due exclusively to the first effect, while the feedback provision has no positive effect on performance. Finally, the better performance of treated students in targeted examinations seems not to be obtained at the expenses of results earned in other examinations.
    Keywords: Education Production Function, Student Effort, Work Organization, Feedback Provision, Higher Education, Randomized Evaluation
    JEL: I21 J31 D82
    Date: 2010–11
  50. By: P.B. Anand
    Abstract: This paper examines consumer preferences for the attributes of alternative sources of water supply in Chennai, based on a household survey where respondents were given the description of a set of options. Their decision to choose one of the options is examined using discrete choice models. Whether consumer preferences are hierarchical or lexicographic is also briefly examined. Access to a yard tap is considered to be a more important attribute than water quantity, quality and the provider (the private sector or public sector). In general, the estimated willingness to pay is substantially higher than the present monthly water expenditures. However, some consumers, specially those living in the peri-urban areas, do not seem to be willing to pay for water supply improvements. Among the plausible reasons are a lack of trust in the public utility or a manifestation of the equity politics in India (the peri-urban households claiming their entitlement to subsidized water), or the presence of preference reversal. [Discussion Paper No.2001/145]
    Keywords: watersupply,consumerpreferences,discretechoice,lexicographic preferences
    Date: 2010
  51. By: OECD
    Abstract: This paper provides evidence on and discussion of recent developments in global transport markets and analyzes what policies look most promising for stabilizing CO2- emissions from light-duty vehicles. In the aftermath of the economic crisis, recovery is uncertain and unevenly spread across the globe. This has potential impacts on global trade patterns and commodity flows, and hence on key freight transport flows. For the management of future greenhouse gas emissions from transport, our analysis strongly suggests that technologies to improve fuel economy and ultimately transform the energy basis of transport are the key, as there are very strong upward pressures on demand volumes. This of course does not mean that demand…
    Date: 2010–11
  52. By: Craig E. Armstrong; Ben R. Craig; William E. Jackson, III; James B. Thomson
    Abstract: We empirically examine whether a major government intervention in the small-firm credit market yields significantly better results in markets that are less financially developed. The government intervention that we investigate is SBA-guaranteed lending. The literature on financing small and medium size enterprises (SMEs) suggests that small firms may be exposed to a particular type of market failure associated with credit rationing. And SMEs in markets that are less financially developed will likely face a greater degree of this market failure. To test our hypothesis, we use the level of bank deposits per capita as our relative measure of financial market development, and we use local market employment rates as our measure of economic performance. After controlling for the appropriate cross-sectional market characteristics, we find that SBA-guaranteed lending has a significantly more (less) positive impact on the average annual level of employment when the local market is relatively less (more) financially developed. This result has important implications for public policy directives concerning where SBA-guaranteed lending should be directed.
    Keywords: Small Business Administration ; Financial markets ; Small business - Finance ; Employment
    Date: 2010
  53. By: Cabrales, Antonio (Universidad Carlos III de Madrid); Calvó-Armengol, Antoni (Universitat Autònoma de Barcelona); Zenou, Yves (Dept. of Economics, Stockholm University)
    Abstract: The aim of this paper is to provide a tractable model where both socialization (or network formation) and productive efforts can be analyzed simultaneously. This permits a full-fledged equilibrium/welfare analysis of network formation with endogenous productive efforts and heterogeneous agents. We show that there exist two stable interior equilibria, which we can Pareto rank. The socially efficient outcome lies between these two equilibria. When the intrinsic returns to production and socialization increase, all equilibrium actions decrease at the Pareto-superior equilibrium, while they increase at the Pareto-inferior equilibrium. In both cases, the percentage change in socialization effort is higher (in absolute value) than that of the productive effort.
    Keywords: Peer effects; network formation; welfare
    JEL: L22 L51 O31 O38
    Date: 2010–11–08
  54. By: Sietske Waslander; Cissy Pater; Maartje van der Weide
    Abstract: In the last three decennia, many governments have introduced market mechanisms in education. They have done so by enhancing parental choice and encouraging school competition, through policies like abolishing catchment areas, creating voucher programmes and setting up charter schools. These market mechanisms have given rise to fierce debates in both political and scientific circles. However, most prior reviews of research literature in this area have concluded that the effects of market mechanisms in education are small, if they are found at all. This review tries to answer the question why that is the case, by analysing the causal pathways that link market mechanisms to educational outcomes and by reviewing the empirical evidence for each step along those causal pathways. The findings of this review point to the need for a nuanced and qualified discussion about market mechanisms in education. What market mechanisms mean in actual practice strongly depends on (local) contexts, while the impact of market mechanisms is related to other policies impacting on parental choice behaviour as well as actions taken by schools.<BR>Au cours des trois dernières décennies, de nombreux gouvernements dans le monde entier ont introduit des mécanismes de marché au sein de leur système éducatif. Ils ont procédé ainsi en valorisant le choix des parents d’élèves et en encourageant la compétition scolaire à travers des politiques telles que l’abolition des zones scolaires, la création de programmes accessibles à l’aide de chèques scolaires, et mise en place des écoles à charte. Ces mécanismes de marché ont donné naissance à des débats passionnés dans les milieux politiques et scientifiques. Cependant, les toutes premières recherches dans ce secteur ont conclu que les effets des mécanismes de marché dans le secteur éducatif sont mineurs, lorsqu’ils sont déterminés. Cette étude essaie de comprendre pourquoi il en est ainsi en analysant la chaîne causale qui lie les mécanismes de marché aux résultats dans le secteur éducatif, en passant en revue les données empiriques à chaque étape du processus. Les résultats de cette étude soulignent le besoin d’un débat nuancé et modéré sur les mécanismes de marché dans l’éducation. Ce que mécanismes de marché signifie en pratique dépend fortement du contexte, alors que l’impact des mécanismes de marché est lié à d’autres politiques qui influencent le choix des parents d’élèves ainsi que les actions mises en place dans les écoles.
    Date: 2010–10–21
  55. By: Ioannis Kaplanis
    Abstract: This paper examines the wage effects arising from changing local human capital in the labourmarket areas of Britain. Employing wage regressions, it is found that individuals' wages arepositively associated with changes in the employment shares of high-paid occupation workersin the British travel-to-work-areas for the late 1990s. I examine this positive association fordifferent occupational groups (defined by pay) in order to disentangle between productionfunction and consumer demand driven theoretical justifications. The former refer toproduction complementarities or wider productivity spillovers arising in areas with highshares of high-skill workers. According to the latter, the presence of a high income workforcein the economy boosts the demand for consumer services leading to an increase in low-pay,service related employment. As these services are non-traded, the increased demand for locallow-paid services should be reflected in a wage premium for the relevant low-paidoccupation employees in the areas with larger shares of high-paid workers. The wage impactis found to be stronger and significant for the bottom occupational quintile compared to themiddle-occupational quintiles and using also sectoral controls the paper argues to providesome preliminary evidence for the existence of consumer demand effects. The empiricalinvestigation addresses potential sources of biases controlling for time invariant unobservedarea-specific characteristics and unobserved individual characteristics. Nevertheless, thepaper points to a number of caveats of the analysis that warrant future research.
    Keywords: local labour markets, wages, consumer demand, human capital externalities
    JEL: J21 J24 J31 R23
    Date: 2010–01
  56. By: Moussa Diop (Pennsylvania State University); Steven P. Lanza (University of Connecticut); Thomas J. Miceli (University of Connecticut); C. F. Sirmans (Florida State University)
    Abstract: The Supreme Court decision in Kelo v. New London (2005) authorized the use of eminent domain for economic redevelopment projects provided that there are sufficient spillover benefits to the public in the form of enhanced taxes and new jobs. This paper examines the economic basis for this decision, and tests the conclusions using cross-state data on economic development takings. It also examines the factors underlying the political actions by states to limit such takings following the Kelo decision. The results are consistent with the economic justification for eminent domain as a means of overcoming holdout problems associated with land assembly.
    Keywords: Economic development, eminent domain, holdout problem, takings
    JEL: H11 H41 H42 O12 K11 R11
    Date: 2010–11

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