nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2011‒01‒23
35 papers chosen by
Steve Ross
University of Connecticut

  1. Do Social Housing Programs Increase Poverty? An Empirical Analysis of Shelter Induced Poverty in Latin America By Inder Ruprah
  2. Spatial Structure and CO2 Emissions Due to Commuting: an Analysis on Italian Urban Areas By Andrea CIRILLI; Paolo VENERI
  3. School Composition Effects in Spain By Antonio Di Paolo
  4. Do Neighbours Affect Teenage Outcomes? Evidence from Neighbourhood Changes in England By Stephen Gibbons; Olmo Silva; Felix Weinhardt
  5. Peers, neighborhoods and immigrant student achievement - evidence from a placement policy By Åslund, Olof; Edin, Per-Anders; Fredriksson, Peter; Grönqvist, Hans
  6. Segregation for aggregation? The pattern and logic of spatial segregation practices of young affluent heads of households in the post-war city of Beirut. By Alaily-Mattar, N.
  7. Instrument Variable Estimation of a Spatial Autoregressive Panel Model with Random Effects By Badi H. Baltagi; Long Liu
  8. Is there a metropolitan bias? The inverse relationship between poverty and city size in selected developing countries By Céline Ferré; Francisco H.G. Ferreira; Peter Lanjouw
  9. Is it Redistribution or Centralization? On the Determinants of Government Investment in Infrastructure By Daniel Albalate; Germà Bel; Xavier Fageda
  10. Estimating the distributional effects of mortgage interest tax relief in Europe By Manos Matsaganis
  11. Why do educated mothers matter? A model of parental help By Luciano Canova; Alessandro Vaglio
  12. Spatial Cournot Competition and Consumers’ Heterogeneity: A Note By Corrado Benassi
  13. Culture and diversity in knowledge creation By Berliant, Marcus; Fujita, Masahisa
  14. Economic Geography By Jacques-François Thisse
  15. More price competition can benefit spatial duopolists when the consumer preferences are uncertain By Michal Król
  16. The public choice of urban water service management: a multi-criteria approach By Alberto Ruiz-Villaverde; Francisco Gónzalez-Gómez
  17. Smart Cities Initiative: how to foster a quick transition towards local sustainable energy systems By Leonardo Meeus; Erik Delarue; Isabel Azevedo; Jean-Michel Glachant; Vitor Leal; Eduardo de Oliveira Fernandes
  18. Parental Incarceration, Child Homelessness, and the Invisible Consequences of Mass Imprisonment By Christopher Wildeman
  19. Technology, Business Models and Network Structure in the Airline Industry By Xavier Fageda; Ricardo Flores-Fillol
  20. Clustering or scattering: the underlying reason for regulating distance among retail outlets By Joan-Ramon Borrell; Laura Fernández-Villadangos
  21. Putting All One's Eggs in One Basket: Relational Contracts and the Provision of Local Public Services By Claudine Desrieux; Eshien Chong; Stéphane Saussier
  22. The End of the European Welfare States? Migration, Ethnic Diversity and Public Goods By Nikolaj A. Harmon
  23. Voting by Ballots and Feet in the Laboratory By Alessandro Innocenti; Chiara Rapallini
  24. The organisational decomposition of innovation and territorial knowledge dynamics – insights from the German software industry By Simone Strambach; Benjamin Klement
  25. Can the economic impact of political decentralisation be measured? By Roberto Ezcurra; Andrés Rodríguez-Pose
  26. The Impact of Placing Adolescent Males into Foster Care on their Education, Income Assistance and Incarcerations By Warburton, William P.; Warburton, Rebecca N.; Sweetman, Arthur; Hertzman, Clyde
  27. Evolution of the Chinese Rural-Urban Migrant Labor Market from 2002 to 2007 By Qu, Zhaopeng (Frank); Zhao, Zhong
  28. Stockholding: Participation, Location, and Spillovers By Haliassos, Michael; Christelis, Dimitris; Georgarakos, Dimitris
  29. Obesity and Diabetes, the Built Environment, and the ‘Local’ Food Economy By Matthew, Salois
  30. Bias from the use of mean-based methods on test scores By Koerselman, Kristian
  31. The Impact of Teachers' Expectations on Students' Educational Opportunities in the Life Course By Dominik Becker
  32. Different approaches and responsibilities for investment sustainability in EU railway infrastructure: Four case studies By Gian Carlo Scarsi; Gregory Smith
  33. Exports dynamics and information spillovers: evidence from Spanish firms By Juana Castillo-Giménez; Guadalupe Serrano; Francisco Requena-Silvente
  34. Does Owning Your Home Make You Happier? Impact Evidence from Latin America By Inder Ruprah
  35. Using Large Data Sets to Forecast Sectoral Employment By Rangan Gupta; Alain Kabundi; Stephen M. Miller; Josine Uwilingiye

  1. By: Inder Ruprah (Interamerican Development Bank, Washington, DC)
    Abstract: In this paper we estimate the size of shelter induced poverty by housing tenure in Latin America and determine whether public housing programs of the ABC type (programs that require savings, provide vouchers and with the residual financed through a public or privately provided mortgage for a given valued program house) increase or decrease shelter induced poverty. Shelter induced poverty describes the situation where a household, after paying for housing (rent or mortgage plus utilities, property taxes and house maintenance), cannot afford the minimum poverty basket of non-housing goods. We find that shelter induced indigence and poverty is substantial. It varies across countries and more so according to the housing tenure. Housing programs, as currently designed, generally would further increase indigence and poverty rates. These findings suggest housing should be considered in poverty analysis and used as a mechanism in poverty reduction strategies. The findings also suggest that housing programs should use shelter induced poverty as a means to prioritise applicants for housing program but need to increase the size of the existing housing vouchers to avoid further increasing shelter induced poverty, particularly if targeted to the poor.
    Keywords: Housing Policy, Targeting, ABC, Poverty, Homeownership
    JEL: O2 I3
    Date: 2010–11
  2. By: Andrea CIRILLI (Universita' Politecnica delle Marche, Dipartimento di Economia); Paolo VENERI (Universita' Politecnica delle Marche, Dipartimento di Economia)
    Abstract: The aim of this paper is to investigate whether and to what extent the spatial configuration of an urban area affects its level of environmental externalities. Starting from previous contributions to this field of research, it examines several features of urban spatial structure - such as compactness, monocentricity, concentration and functional diversity - and attempts to gauge their environmental implications in terms of per capita CO2 emissions associated with a given pattern of commuting (i.e., mode of commuting and distance travelled). The main finding of the analysis on the 111 largest Italian urban areas is that urban spatial configuration is an important determinant of travel patterns and the associated level of per capita CO2 emissions. In particular, smaller, more compact and less monocentric areas are associated with lower levels of CO2 per commuter, with socio-demographic characteristics also playing a role.
    Keywords: CO2 emissions, commuting, environmental costs, urban spatial structure
    JEL: Q56 R14 R41
    Date: 2010–12
  3. By: Antonio Di Paolo (Departament d'Economia Aplicada, Universitat Autònoma de Barcelona (UAB); Campus de Bellaterra, Edifici B 08193 Bellaterra (Cerdanyola), Spain. Institut d’Economia de Barcelona, Universitat de Barcelona)
    Abstract: Drawing on PISA data of 2006, this study examines the impact of socio-economic school composition on science test score achievement for Spanish students in compulsory secondary schools. We define school composition in terms of the average parental human capital of students in the same school. These contextual peer effects are estimated using a semi-parametric methodology, which enables the spillovers to affect all the parameters of the educational production function. We also deal with the potential problem of self-selection of student into schools, using an artificial sorting that we argue to be independent from unobserved student’s abilities. The results indicate that the association between socio-economic school composition and test score results is clearly positive and significantly higher when computed with the semi-parametric approach. However, we find that the endogenous sorting of students into schools plays a fundamental role, given that the spillovers are significantly reduced when this selection process is ruled out from our measure of school composition effects. Specifically, the estimations suggest that the contextual peer effects are moderately positive only in those schools where the socio-economic composition is considerably elevated. In addition, we find some evidence of asymmetry of how the external effects and the sorting process actually operate, which seem affect in a different way males and females as well as high and low performance students.
    Keywords: Educational Attainments, Peer Effects, PISA, Spain
    JEL: I20 I21 I29
    Date: 2010–12
  4. By: Stephen Gibbons; Olmo Silva; Felix Weinhardt
    Abstract: In this paper, we use census data on several cohorts of secondary school students in England matched to detailed information on place of residence to investigate the effect of neighbours' background characteristics and prior achievements on teenagers' educatioinal and behavioural outcomes. Our analysis focuses on the age-11 to age-16 time-lapse, and uses variation in neighbourhood composition over this period that is driven by residential mobility. Exploiting the longitudinal nature and detail of our data, we are able to scontrol for pupil unobserved characteristics, neighbourhood fixed-effects and time-trends, school-by-cohort unobservables, as well as students' observable attributes and prior attainments. Our results provide little evidence that neighbours' characteristics significantly affect pupil test score progression during secondary education. Similarly, we find that neighbourhood composition only exerts a small effect on pupil behavioural outcomes, such as general attitudes towards schooling, substance use and anti-social behaviour, UK
    JEL: C21 I20 H75 R23
    Date: 2010–10
  5. By: Åslund, Olof (Institute for Labour Market Policy Evaluation (IFAU)); Edin, Per-Anders (IFAU, UCLS); Fredriksson, Peter (Stockholm University, IZA, UCLS); Grönqvist, Hans (Swedish Institute for Social Research, Stockholm University)
    Abstract: We examine to what extent immigrant school performance is affected by the characteristics of the neighborhoods that they grow up in. We address this issue using a refugee placement policy which provides exogenous variation in the initial place of residence in Sweden. The main result is that school performance is increasing in the number of highly educated adults sharing the subject’s ethnicity. A standard deviation increase in the fraction of high-educated in the assigned neighborhood raises compulsory school GPA by 0.9 percentile ranks. Particularly for disadvantaged groups, there are also long-run effects on educational attainment.
    Keywords: Peer effects; Ethnic enclaves; Immigration; School performance
    JEL: I20 J15 Z13
    Date: 2010–11–11
  6. By: Alaily-Mattar, N.
    Abstract: This thesis describes, conceptualizes and explains the segregated spatiality of everyday life of young affluent heads of households in post-war Beirut, Lebanon. It tracks how young affluent heads of households have come to produce the living spaces of their everyday life in a spatially segregated way that rejects the local and is stretched out over the totality of the city. Its main objectives are to contribute to the literature on spatial segregation by (1) conceptualizing segregation in its residential and non-residential manifestations as actively and passively practiced by a certain profile of affluent individuals and (2) explaining the logic behind this type of segregation from the point of view of affluent individuals that are actively pursuing segregation. This research has utilized an ethnographic research approach that started from observing and understanding the motivations of individuals who are actively pursuing segregation. Based mainly on a qualitative research methodology, this research has utilized ethnographic field notes, qualitative interviews and participant observation with young affluent heads of households. The findings of this qualitative research have been supported by questionnaires that were distributed in five elite childcare nurseries in Beirut in which young affluent heads of households were outcropped. A total of 118 questionnaires were collected. The four core chapters of this thesis discuss the relationship of affluence to the local place around the home, to places of play, to non--places and to places of passage in post war Beirut. They conceptualize the spatiality of affluence in Beirut and propose the concept of the layer as one that captures the pattern of this spatiality and unlocks its logic. This thesis concludes by raising questions related to the changing role of neighbourhoods in Beirut and the changing nature of its urban condition. Indeed, to affluent individuals in Beirut the neighbourhood has become a space with which they avoid getting in contact, while, paradoxically, the city is perceived as a small neighbourly space where everyone knows everyone else.
    Date: 2010–10–28
  7. By: Badi H. Baltagi (Center for Policy Research, Maxwell School, Syracuse University, Syracuse, NY 13244-1020); Long Liu (Department of Economics, College of Business, University of Texas at San Antonio, One UTSA Circle, TX 78249-0633)
    Abstract: This paper extends the instrumental variable estimators of Kelejian and Prucha (1998) and Lee (2003) proposed for the cross-sectional spatial autoregressive model to the random effects spatial autoregressive panel data model. It also suggests an extension of the Baltagi (1981) error component 2SLS estimator to this spatial panel model.
    Keywords: Panel Data, Spatial Model, Two Stage Least Squares, Error Components.
    JEL: C13 C21
    Date: 2011–01
  8. By: Céline Ferré (World Bank); Francisco H.G. Ferreira (World Bank); Peter Lanjouw (World Bank)
    Abstract: This paper provides evidence from eight developing countries of an inverse relationship between poverty and city size. Poverty is both more widespread and deeper in very small and small towns than in large or very large cities. This basic pattern is generally robust to choice of poverty line. The paper shows, further, that for all eight countries, a majority of the urban poor live in medium, small, or very small towns. Moreover, it is shown that the greater incidence and severity of consumption poverty in smaller towns is generally compounded by similarly greater deprivation in terms of access to basic infrastructure services, such as electricity, heating gas, sewerage, and solid waste disposal. The authors illustrate for one country—Morocco—that inequality within large cities is not driven by a severe dichotomy between slum dwellers and others. The notion of a single cleavage between slum residents and well-to-do burghers as the driver of urban inequality in the developing world thus appears to be unsubstantiated—at least in this case. Robustness checks are performed to assess whether the findings in the paper are driven by price variation across city-size categories, by the reliance on an income-based concept of well-being, and by the application of small area estimation techniques for estimating poverty rates at the town and city level.
    Keywords: poverty and city size, urban poverty, slums.
    JEL: I32 O18 R20
    Date: 2011
  9. By: Daniel Albalate (Department of Economic Policy, Universitat de Barcelona, Avinguda Diagonal 690, 08034 Barcelona, Spain.); Germà Bel (Department of Economic Policy, Universitat de Barcelona, Avinguda Diagonal 690, 08034 Barcelona, Spain.); Xavier Fageda (Department of Economic Policy, Universitat de Barcelona, Avinguda Diagonal 690, 08034 Barcelona, Spain.)
    Abstract: The dilemma efficiency versus equity, together with political partisan interests, has received increasing attention to explain the territorial allocation of investments. However, centralization intended to introduce or reinforce hierarchization in the political system has not been object as of now of empirical analysis. Our main contribution to the literature is providing evidence that meta-political objectives related to the ordering of political power and administration influence regional investment. In this way, we find evidence that network mode’s (roads and railways) investment programs are influenced by the centralization strategy of investing near to the political capital, while investment effort in no-network modes (airports and ports) appears to be positively related to distance. Since investment in surface transportation infrastructures is much higher than that in airports and ports, and taken into account that regions surrounding the political capital are poorer than the average, we suggest that centralization rather than redistribution has been the driver for the concentration of public investment on these regions.
    Keywords: Investment, infrastructures, centralization, redistribution
    Date: 2010–12
  10. By: Manos Matsaganis (Athens University of Economics and Business)
    Abstract: This paper attempts to contribute to the analysis of mortgage interest tax relief from the perspective of the economics of social policy. It begins with a brief discussion of �fiscal welfare�, highlighting key contributions within this particular intellectual tradition. It then contrasts this largely critical approach to the standard, more neutral, treatment of mortgage interest tax relief in the housing literature. Finally, the paper draws on both approaches to present on-going research on the distributional effects of mortgage interest tax relief in Europe.
    Date: 2011–01–10
  11. By: Luciano Canova (Enrico Matei School); Alessandro Vaglio (University of Bergamo)
    Abstract: The paper investigates the role of mothers in affecting childrens' performance at school. It develops a theoretical model in which household is treated as an individual, whose utility depends on the performance at school of the student and on consumption. The model focuses on the possibilities through which mother’s help may affect pupil's performance in terms of time devoted to supervision and spillover effects. Empirical evidence, using Italian PISA 2006, shows that highly educated mothers have a positive impact on students' score only when they are highly qualified in the job market.
    Keywords: Education; PISA; quantile regressions; parental help
    JEL: J12 J24 I21
    Date: 2010–12
  12. By: Corrado Benassi (Dipartimento di Scienze Economiche, Alma Mater Studiorum - Università di Bologna; The Rimini Centre for Economic Analysis)
    Abstract: We consider the standard model of spatial Cournot competition and show that a necessary condition for dispersion equilibria is that the distribution be not unimodal.
    Keywords: Spatial Cournot competition, consumers’ distribution
    JEL: D31 D40
    Date: 2011–01
  13. By: Berliant, Marcus; Fujita, Masahisa
    Abstract: Is the paradise of effortless communication the ideal environment for knowledge creation? Or, can the development of local culture in regions raise knowledge productivity compared to a single region with a unitary culture? In other words, can a real technological increase in the cost of collaboration and the cost of public knowledge flow between regions, resulting in cultural differentiation between regions, increase welfare? In our framework, a culture is a set of ideas held exclusively by residents of a location. In general in our model, the equilibrium path generates separate cultures in different regions. When we compare this to the situation where all workers are resident in one region, R & D workers become too homogeneous and there is only one culture. As a result, equilibrium productivity in the creation of new knowledge is lower relative to the situation when there are multiple cultures and workers are more diverse.
    Keywords: knowledge creation; knowledge diversity; ideas and culture
    JEL: Z1 D83 O31
    Date: 2011–01–09
  14. By: Jacques-François Thisse (CORE, Université Catholique de Louvain and CREA, Université de Luxembourg)
    Date: 2011
  15. By: Michal Król
    Date: 2011
  16. By: Alberto Ruiz-Villaverde (Departamento de Economía Aplicada. Facultad de Ciencias Económicas y Empresariales. Campus de Cartuja, s/n, 18071. GRANADA); Francisco Gónzalez-Gómez (Departamento de Economía Aplicada. Facultad de Ciencias Económicas y Empresariales. Campus de Cartuja, s/n, 18071. GRANADA)
    Abstract: Local governments have to take decisions in increasingly complex contexts. Among other decisions, in countries where it is permitted by the legal framework, local policymakers have to choose the type of management of local public services. The importance of the urban water service and the variety of criteria to be considered in the management choice make it advisable that local government should consider the existing tools to rationalize the decision-making. Different Multi-Criteria Analysis (MCA) facilitates decision-making processes in situations where several criteria must be taken into account. This paper applies an Analytic Hierarchy Process (AHP) to analyze the decision on the urban water service management in Granada, city in southern Spain. An assessment through an ex-post analysis is aimed to conclude whether the choice was appropriate and, therefore, whether or not the City Council should reconsider its past decision. The main conclusion is that the decision was consistent.
    Keywords: Urban water management; public choice; Multi-criteria analysis; Analytic Hierarchy Process equation, Spanish regions
    Date: 2011–01
  17. By: Leonardo Meeus; Erik Delarue; Isabel Azevedo; Jean-Michel Glachant; Vitor Leal; Eduardo de Oliveira Fernandes
    Abstract: The European Commission has recently launched the Smart Cities Initiative to demonstrate and disseminate how to foster a quick transition towards local sustainable energy systems. Within this initiative, the three main challenges faced by pioneering cities, are to reduce or modify the demand for energy services, to improve the uptake of energy efficient technologies and to improve the uptake of renewables in the urban environment. We find that enough resources will need to be provided to a significant number of pioneering cities, and propose that the initiative would allocate these resources through project competition, rewarding innovation, ambition and performance, which have been ingredients of success at Member State level.
    Keywords: Smart Cities; sustainable local energy systems; city authority incentives; EU energy policy
    Date: 2010–09–21
  18. By: Christopher Wildeman (Yale University)
    Abstract: The share of the homeless population composed of African Americans and children has grown since the early 1980s, but the causes of these changes remain poorly understood. This article implicates mass imprisonment in these shifts by considering the effects of recent paternal and maternal incarceration on child homelessness using data from the Fragile Families and Child Wellbeing Study. These are the only data that represent a contemporary cohort of the urban children most at risk of homelessness, establish appropriate time-order between recent parental incarceration and child homelessness, and include information about prior housing. Results show substantial effects of recent paternal (but not maternal) incarceration on the risk of child homelessness. Furthermore, these effects are concentrated among black children. Taken together, findings provide support for two important conclusions. First, when these large individual-level effects are combined with massive increases and racial disparity in the risk of parental imprisonment, it becomes transparent that the prison boom has been a key driver of the dramatic increases in the risk of homelessness for black children. Thus, while economic downturns bring to mind the effects of foreclosure and eviction on homelessness, mass imprisonment may have played a role in the growth of the population of homeless African American children even during the economic boom of the late 1990s. Finally, paternal and maternal incarceration lead children down parallel paths of severe disadvantage. While maternal incarceration increases the risk of child foster care placement, paternal incarceration increases the risk of child homelessness.
    Keywords: homeless population, African Americans, incarceration, prison, child homelessness, parental incarceration
    JEL: D19 I30 J12 J13
    Date: 2011–01
  19. By: Xavier Fageda (Department of Economic Policy, Universitat de Barcelona, Avinguda Diagonal 690, 08034 Barcelona, Spain.); Ricardo Flores-Fillol (Department of Economics, Universitat Rovira i Virgili, Avinguda de la Universitat 1, 43204 Reus, Spain.)
    Abstract: Network airlines have been increasingly focusing their operations on hub airports through the exploitation of connecting traffic, allowing them to take advantage of economies of traffic density, which are unequivocal in the airline industry. Less attention has been devoted to airlines? decisions on point-to-point thin routes, which could be served using different aircraft technologies and different business models. This paper examines, both theoretically and empirically, the impact on airlines ?networks of the two major innovations in the airline industry in the last two decades: the regional jet technology and the low-cost business model. We show that, under certain circumstances, direct services on point-to-point thin routes can be viable and thus airlines may be interested in deviating passengers out of the hub.
    Keywords: regional jet technology, low-cost business model, point-to-point network, hub-and-spoke network
    JEL: L13 L2 L93
    Date: 2010–12
  20. By: Joan-Ramon Borrell (Research Group on Governments and Markets (GiM) - Dep. de Política Econòmica - Institut d’Economia Aplicada (IREA), Universitat de Barcelona, Diagonal 690, 08034 Barcelona, Spain); Laura Fernández-Villadangos (Research Group on Governments and Markets (GiM) - Dep. de Política Econòmica - Institut d’Economia Aplicada (IREA), Universitat de Barcelona, Diagonal 690, 08034 Barcelona, Spain.)
    Abstract: Concerns on the clustering of retail industries and professional services in main streets had traditionally been the public interest rationale for supporting distance regulations. Although many geographic restrictions have been suppressed, deregulation has hinged mostly upon the theory results on the natural tendency of outlets to differentiate spatially. Empirical evidence has so far offered mixed results. Using the case of deregulation of pharmacy establishment in a region of Spain, we empirically show how pharmacy locations scatter, and that there is not rationale for distance regulation apart from the underlying private interest of very few incumbents.
    Keywords: distance, location, regulation, retailing
    JEL: L51 K23 H42
    Date: 2010–12
  21. By: Claudine Desrieux; Eshien Chong; Stéphane Saussier
    Abstract: The provision of local public services is increasingly being contracted out to private companies. We observe that local governments regularly choose the same private operator for a range of different services, and develop a model of relational contracts that shows how this strategy may lead to better performance at lower cost for public authorities. We test the implication of our model using an original database of the contractual choices made by 5000 French local public authorities in the years 1998, 2001 and 2004.
    Keywords: bundling; contract; public-private partnerships; local public services
    Date: 2010–11–19
  22. By: Nikolaj A. Harmon (Princeton University)
    Abstract: Over the last several decades global migration ows have increased rapidly, resulting in corresponding increases in the number and sizes of ethnic minorities in many places - Western Europe in particular. Given the existing theory and evidence of a negative relationship between ethnic diversity and public goods, a simple extrapolation thus suggests that the large public sectors in Western Europe will shrink. However, stark differences in the histories of ethnic confl ict, quality of institutions and timing between the European case and the settings studied in the existing literature raises concerns that such an extrapolation might be misguided. Using data on municipal elections and budgetary outcomes in Danish municipalities 1981-2001 this paper attempts to address these concerns. Employing a rich set of controls and an IV strategy based on historical housing data, the main results of the paper show that ethnic diversity has impacted outcomes of municipal elections in a way consistent with lower public good demand. Using a simple theoretical model to disentangle ethnic diversity effects from other budgetary effects, the paper further shows that the same holds true for budgetary outcomes, although an untestable but plausible auxiliary assumption is required on the budgetary process. The findings have important implications for immigration and refugee policy both in Europe and more broadly.
    Keywords: migration, Denmark, elections, ethnic relations
    JEL: J18 J15 O15 N94 N34
    Date: 2010–12
  23. By: Alessandro Innocenti; Chiara Rapallini
    Abstract: This paper provides laboratory evidence on the efficiency-enhancing properties of the Tiebout model as a decentralized system of public goods provision. Tiebout (1956) shows that if a sufficient number of local communities exist to accommodate different types of preferences, individuals sort themselves in a way that provides an efficient allocation of public goods and taxes. Our experiment aims to disentangle the effect of voting participation and is composed of two treatments. In the non-participation treatment, local public good provision is chosen by only one subject, while the other members of the community can only stay in or move to another community. In the participation treatment, all the community members have the right to vote as well as to move to another community and collective decisions are taken by majority rule. Our findings show that social welfare is greater in the participation than in the non-participation treatment. We conclude that voting with one’s feet increases efficiency if all the community members vote and that the influence of voting participation on the allocation of local public goods should be taken into account to assess the viability of the Tiebout model.
    Keywords: Tiebout model, local public goods, voting participation, federalism, experiment.
    JEL: C91 H41 C92 D23
    Date: 2011–01
  24. By: Simone Strambach (Department of Geography, Philipps University Marburg); Benjamin Klement (Department of Geography, Philipps University Marburg)
    Abstract: In recent years, innovation processes involve more heterogenous actors inside and outside the firm. Little is known however about the spatial impact of this organisational decomposition of innovation processes (ODIP): Does it lead to a geographical dispersion of innovation activities as well? Furthermore, which parts of the innovation process are carried out spatially or organisationally separated? To what extent are knowledge-creating activities subject to organisational decomposition? We propose the analytical ODIP framework which integrates research on innovation systems, global value chains and knowledge-intensive business services (KIBS). Thereby we provide a conceptual contribution to the debate on the globalisation of innovation in the identification of different modes of decomposed innovation processes by capturing the participating actors and their contribution in specific innovation events. The exploration of the spatial dimension of innovation processes in the software industry shows that the global-local dichotomy in the innovation debate does not suffice to describe their complex, multi-scalar nature. In analysing ODIP in a knowledge-intensive industry, we contribute to the debate about the ‘new geography of innovation’ by providing insights into the upgrading of subsidiary capabilities.
    Keywords: ODIP, innovation, software, territorial knowledge dynamics
    JEL: D83 F23 L14 L86 O32
    Date: 2010–12
  25. By: Roberto Ezcurra (Universidad Pública de Navarra); Andrés Rodríguez-Pose (IMDEA Social Sciences Institute)
    Abstract: This paper examines whether, given the increasing salience of subnational governments, political decentralisation has an impact on overall economic performance. It uses panel data analyses in order to determine the association between a number of the different indices of political decentralisation developed over the last decade and a half with two basic measures of economic performance: changes in aggregate GDP per head and the evolution of within country territorial inequalities. The results highlight that, in the case of economic growth, the perception we may have of how political decentralisation affects economic performance is highly contingent on the index we use, with results ranging from a mildly positive to a neutral influence of political decentralisation on economic growth. For regional inequalities, political decentralisation seems to lead to a rise in disparities, regardless of how political decentralisation is measured.
    Keywords: political decentralisation; economic growth; regional disparities; regions; Europe
    JEL: H70 R11 R59
    Date: 2011–01–05
  26. By: Warburton, William P. (University of British Columbia, Vancouver); Warburton, Rebecca N. (University of Victoria); Sweetman, Arthur (McMaster University); Hertzman, Clyde (University of British Columbia, Vancouver)
    Abstract: Understanding the causal impacts of taking youth on the margins of risk into foster care is an element of the evidence-base on which policy development for this crucial function of government relies. Yet, there is little research looking at these causal impacts; neither is there much empirical work looking at long-term outcomes. This paper focuses on estimating the impact of placing 16 to 18 year old male youth into care on their rates of high school graduation, and post-majority income assistance receipt and incarceration. Two distinct sources of exogenous variation are used to generate instrumental variables, the estimates from which are interpreted in a heterogeneous treatment effects framework as local average treatment effects (LATEs). And, indeed, each source of exogenous variation is observed to estimate different parameters. While both instruments are in accord in that placement in foster care reduces (or delays) high school graduation, the impact of taking youth into care on income assistance use has dramatically different magnitudes across the two margins explored, and, perhaps surprisingly, one source of exogenous variation causes an increase, and the other a decrease, in the likelihood of the youth being incarcerated by age 20. Our results suggest that it is not enough to ask whether more or fewer children should be taken into care; rather, which children are, and how they are, taken into care matter for long-term outcomes.
    Keywords: foster care, local average treatment effects
    JEL: J13 I38
    Date: 2011–01
  27. By: Qu, Zhaopeng (Frank) (Beijing Normal University); Zhao, Zhong (Renmin University of China)
    Abstract: The paper studies the dynamic change of the migrant labor market in China from 2002 to 2007 using two comparable data sets. Our focus is on the rural-urban migration decision, the wage structure of migrants, the urban labor market segmentation between migrants and urban natives, and the changes of these aspects from 2002 to 2007. We find that prior migration experience is a key factor for the migration decision of rural household members, and its importance keeps increasing from 2002 to 2007. Our results show that there is a significant increase in wages among both migrants and urban natives over this 5-year period, but migrants have enjoyed faster wage growth, and most of the increase of wages among migrants can be attributed to the increase of returns to their characteristics. We also find evidence suggesting convergence of urban labor markets for migrants and for urban natives during this 5-year period.
    Keywords: rural-urban migration, labor market, wage structure, migration decision, segmentation, China
    JEL: J21 J61 O15
    Date: 2011–01
  28. By: Haliassos, Michael; Christelis, Dimitris; Georgarakos, Dimitris (Mannheim Research Institute for the Economics of Aging (MEA))
    Abstract: This paper provides the first joint analysis of household stockholding participation, location among stockholding modes, and participation spillovers. Our model matches observed participation, conditional and unconditional, and asset location patterns. We find that financial sophistication correlates strongly only with direct stockholding and mutual fund participation, while social interactions mainly influence stockholding through retirement accounts. Whether retirement account owners include7 stocks in them strongly depends on owner characteristics, unlike with mutual fund owners and investment in stock funds. Stockholding is more common among retirement account owners, but mainly because of owner characteristics rather than spillovers from retirement account ownership.
    JEL: G11 E21 D14 C35
    Date: 2010–11–18
  29. By: Matthew, Salois
    Abstract: Obesity and diabetes are increasingly attributed to environmental factors, however, little attention has been paid to influence of the 'local' food economy. This paper examines the association of measures relating to the built environment and the ‘local’ food economy with county-level prevalence of obesity and diabetes. Key indicators of the ‘local’ food economy include the density of farmers’ markets, volume of direct farm sales, and presence of farm-to-school programs. This paper employs a robust regression estimator to account for non-normality of the data and to accommodate outliers. Overall, the built environment is strongly associated with prevalence of obesity and diabetes and a strong 'local' food economy may play an important role in prevention. Results imply considerable scope for community-level interventions.
    Keywords: community-level intervention; diabetes; food environment; farmers market; leverage points; local food; robust regression; obesity; outliers
    JEL: C10 I12 I10 Q18
    Date: 2010–12–01
  30. By: Koerselman, Kristian (Swedish Institute for Social Research, Stockholm University)
    Abstract: Economists regularly regress IQ scores or achievement test scores on covariates, for example to evaluate educational policy. These test scores are ordinal measures, and their distributions can take an arbitrary shape, even though they are often constructed to look normal. The ordinality of test scores makes the use of mean-based methods such as OLS is inappropriate: estimates are not robust to changes in test score estimation assumptions and methods. I simulate the magnitude of robustness problems, and show that in practice, problems with mean-based regression of normally distributed test scores are small. Even so, test score distributions with more exotic shapes will need to be transformed before use.
    Keywords: dmissible statistics; test scores; educational achievement; item response theory; IQ; PISA.
    JEL: C40 I20 I21 J24
    Date: 2011–01–03
  31. By: Dominik Becker (CGS, University of Cologne)
    Abstract: The substantial aim of this paper is to integrate the main idea of 'Pygmalion' or self-fulfilling prophecy research (Rosenthal and Jacobson, 1968; Jussim and Harber, 2005) into the general subjective expected utility framework about inequality in educational opportunities (Breen and Goldthorpe, 1997; Esser, 1999). In the theoretical section, a formal model of the impact of self-fulfilling prophecies on educational transitions is developed. In the empirical section, we test this model to predict both students' educational success (in terms of high school graduation) and their university transitions. Since we assume a conditional dependence of these outcomes, we control for sample selection bias (Heckman, 1979). We find that in our operationalization of self-fulfilling prophecies the latter show significant effects on both educational success and university transitions. However, while the results remain stable in case of educational success, we find that the conditional decision problem of university transitions leads to a selection bias for the estimates in the latter case. In a sensitivity analysis we find that only if unobserved heterogeneity would be disturbingly high, it could also affect the stability of self-fulfilling prophecy estimates.
    Keywords: Inequality in Educational Opportunities, Educational Transitions, Subjective Expected Utility Theory, Self-Fulfilling Prophecies, Pygmalion, Selection Bias, Sensitivity Analysis
    Date: 2010–12–15
  32. By: Gian Carlo Scarsi; Gregory Smith
    Abstract: This paper describes the approach to investment in rail infrastructure in four different European countries (Great Britain, France, Germany, and the Netherlands) with a view to understanding whether and how these countries differ in their approach to the sustainability of investment in infrastructure. We compare and contrast different approaches to investment, such as: The direct role of government; The role of the economic regulator, where available; The influence of particular ownership agreements, such as the use of concessions for high-speed lines; Any differential treatment of different assets, and any differential treatment of different items of expenditure, such as maintenance, renewals, and enhancements; The role played by private capital (in infrastructure as separate from passenger and freight train operations); and The existence of a (more or less unlimited), either direct or indirect, state guarantee on debt issued to fund investment in network assets. In analysing the European case studies, the paper asks the following questions, which may differ across infrastructure categories (for instance track/signalling, stations, and high-speed lines): (i) What is the ownership structure of each IM? (ii) Who “sponsors” and specifies investment? (iii) Who is responsible for planning and approving investment? (iv) What are the ultimate funding sources of investment? (v) Who is responsible for delivering investment? (vi) What is the role of the independent economic and technical regulator (where availble) vis-à-vis the government? (vii) Is there any (direct or indirect) market mechanism, for instance as part of incentive regulation, that is mimicked when incentivising the monopoly provider of infrastructure to achieve a sustainable level of investment? The paper concludes with some policy considerations and recommendations based on the four case studies examined.
    Keywords: railway; reform; investment in public transport
    Date: 2010–11–23
  33. By: Juana Castillo-Giménez; Guadalupe Serrano; Francisco Requena-Silvente
    Abstract: This paper investigates the determinants of a firm’s export decision and focuses on the identification of spillovers from neighbouring firms. We use a panel of Spanish firms that started to export to at least one of 95 countries over the 2000-2006 period. Detailed data on the location of firms as well as on the destinations of their exports allows us to analyze the presence of spillovers across firms exporting to different countries. Results show evidence of information spillovers, i.e. new exporters acquire valuable information from other local firms on foreign consumer tastes, product standards or customs administration in a particular market. However the selection of the most productive firms to the most difficult markets decreases the impact of spillovers on firms exporting to these countries.
    Keywords: export decision, export market, agglomeration, spillovers
    JEL: F1 R12 L25
    Date: 2011–01
  34. By: Inder Ruprah (Inter-American Development Bank, Washington, DC, USA)
    Abstract: In this paper we present evidence that homeowners are happier than nonhomeowners and it is homeownership that causes the difference in happiness. The data used is for seventeen Latin American countries obtained from the LatinBarometer surveys. The association between homeownership and happiness is measured by an ordered logit regression with a comprehensive set of sociodemographic control variable with errors clustered at year and country. Happiness and ownership are positively and statistically significantly related. Causality is determined through nonparametric impact measure via the propensity score matching technique. Homeownership causes increased happiness. The impact result is robust to the problem of hidden bias. The impact conclusion also holds in a meta-impact approach where impacts are calculated for each country separately. Owning your home makes you happier, at least in Latin America.
    Keywords: Home Ownership, Happiness
    JEL: R30 I00
    Date: 2010–11
  35. By: Rangan Gupta (University of Pretoria); Alain Kabundi (University of Johannesburg); Stephen M. Miller (University of Connecticut and University of Nevada, Las Vegas); Josine Uwilingiye (University of Johannesburg)
    Abstract: We implement several Bayesian and classical models to forecast employment for eight sectors of the US economy. In addition to standard vector-autoregressive and Bayesian vector autoregressive models, we also include the information content of 143 additional monthly series in some models. Several approaches exist for incorporating information from a large number of series. We consider two approaches -- extracting common factors (principle components) in a factor-augmented vector autoregressive or vector error-correction, Bayesian factor-augmented vector autoregressive or vector error-correction models, or Bayesian shrinkage in a large-scale Bayesian vector autoregressive models. Using the period of January 1972 to December 1999 as the in-sample period and January 2000 to March 2009 as the out-of-sample horizon, we compare the forecast performance of the alternative models. Finally, we forecast out-of sample from April 2009 through March 2010, using the best forecasting model for each employment series. We find that factor augmented models, especially error-correction versions, generally prove the best in out-of-sample forecast performance, implying that in addition to macroeconomic variables, incorporating long-run relationships along with short-run dynamics play an important role in forecasting employment.
    Keywords: Sectoral Employment, Forecasting, Factor Augmented Models, Large-Scale BVAR models
    JEL: C32 R31
    Date: 2011–01

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