nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2011‒01‒30
33 papers chosen by
Steve Ross
University of Connecticut

  1. Dwindling U.S. Internal Migration: Evidence of Spatial Equilibrium? By Mark D., Partridge; Dan S. , Rickman; M. Rose , Olfert; Kamar, Ali
  2. Should the optimal portfolio be region-specific? A multi-region model with monetary policy and asset price co-movements By Leung, Charles Ka Yui; Teo, Wing Leong
  3. White Suburbanization and African-American Home Ownership, 1940-1980 By Leah Platt Boustan; Robert A. Margo
  4. Is there a "zoo effect" in French local governments? By Quentin Frère; Hakim Hammadou; Sonia Paty
  5. A Proposal for an Alternative Spatial Weight Matrix under Consideration of the Distribution of Economic Activity? By Jens K. Perret
  7. Tender prices in local bus transport in Germany - an application of alternative regression techniques By Beck, Arne; Walter, Matthias
  8. Improving the Flexibility of the Dutch Housing Market to Enhance Labour Mobility By Jens Høj
  9. On the importance of growth spillovers and regional clustering in the Russian Federation? By Jens K. Perret
  10. Taxicab regulation and urban residents' expectations from policy makers: a survey in eight cities By Richard Darbéra
  11. Industrial Localisation and Economic Development. A Case Study By COPPOLA, Gianluigi; GAROFALO, Maria Rosaria; MAZZOTTA, Fernanda
  12. Are rural road investments alone sufficient to generate transport flows ? lessons from a randomized experiment in rural Malawi and policy implications By Raballand, Gael; Thornton, Rebecca; Yang, Dean; Goldberg, Jessica; Keleher, Niall; Muller, Annika
  13. Migration, urban population growth and regional disparity in China By Mary-Françoise Renard; Zelai Xu; Nong Zhu
  14. Sensitivity Analysis of SAR Estimators By Liu, Shuangzhe; Polasek, Wolfgang; Sellner, Richard
  15. Too much of a good thing? Gender, 'Concerted cultivation' and unequal achievement in primary education By McCoy, Selina; Byrne, Delma; Banks, Joanne
  16. A multi-scalar analysis of European cities By Enrico Giovannetti; Francesco Pagliacci
  17. Local politics and economic geography By Berliant, Marcus; Tabuchi, Takatoshi
  18. Negative Equity Does Not Reduce Homeowners' Mobility By Sam Schulhofer-Wohl
  19. Provincial and Local Governments in China: Fiscal Institutions and Government Behavior By Roger H. Gordon; Wei Li
  20. Determinants and dynamics of schooling and child labor in Bolivia By Grigoli, Francesco; Sbrana, Giacomo
  21. Centralized Innovation Policy in an agglomeration and growth model: A welfare analysis By Benjamin Montmartin
  22. Decentralization and Ethnic Conflict: The Role of Empowerment By Jean Pierre Tranchant
  23. Productivity spillovers and regional differences: some evidence on the italian manufacturing sector By IMBRIANI, Cesare; REGANATI, Filippo
  24. Regional Agreements and Welfare in the South: When Scale Economies in Transport Matter By Céline Carrere
  25. Shrinking classroom age variance raises student achievement : evidence from developing countries By Wang, Liang Choon
  26. Tax mix corners and other kinks By Federico Revelli
  27. The Design of Performance Pay in Education By Derek Neal
  28. Manager Ethnicity and Employment Segregation By Giuliano, Laura; Ransom, Michael R.
  29. Regional heterogeneity and firms’ innovation: the role of regional factors in industrial R&D in India By Pradhan, Jaya Prakash
  30. Where are the taxis going? By Richard Darbéra
  31. University choice, peer group and distance By B. Cesi; Dimitri Paolini
  32. Search and Homophily in Social Networks By Sergio Currarini; Fernando Vega Redondo
  33. Cultural Transmission, Discrimination and Peer Effects By Sáez-Martí, Maria; Zenou, Yves

  1. By: Mark D., Partridge; Dan S. , Rickman; M. Rose , Olfert; Kamar, Ali
    Abstract: This paper examines whether the significant downward shift in U.S. gross migration rates after 2000 is indicative of the economy nearing a stationary spatial equilibrium. Nearness to spatial equilibrium would imply that site-specific factors such as amenities and location within the urban hierarchy have little influence on migration because their values have been capitalized into prices, causing interregional utility levels to become approximately equal. Yet, in an examination of U.S. counties, we find empirical evidence of only a mild ebbing of natural amenity-based migration after 2000 and little slowing of population redistribution from peripheral towards core urban areas. Instead, the primary finding is a downward shift in the responsiveness of population to spatially asymmetric demand shocks post-2000, and associated increased responsiveness of local area labor supply, more consistent with European regional labor markets. Quantile regression analysis suggests that this shift does not relate to a difference in regional labor market tightness across the two decades.
    Keywords: spatial equilibrium; migration; regional growth
    JEL: R32 R23
    Date: 2010–12–27
  2. By: Leung, Charles Ka Yui; Teo, Wing Leong
    Abstract: A multi-region, dynamic stochastic general equilibrium (MRDSGE) model is built to show that differences in the price elasticity of housing supply can be related to stylized facts on regional differences in (1) house price level, (2) house price volatility, (3) monetary policy propagation mechanism and (4) household asset portfolio. In addition, regional house prices are found to move more closely with regional fundamentals than with the national GDP. The correlation between the national stock price and the regional housing price also vary significantly across regions, which suggests that optimal portfolio should be region specific.
    Keywords: regional economic difference; monetary policy; housing market; region-specific portfolio
    JEL: R10 E32 E52
    Date: 2010–12
  3. By: Leah Platt Boustan; Robert A. Margo
    Abstract: Between 1940 and 1980, the rate of homeownership among African-American households increased by close to 40 percentage points. Most of this increase occurred in central cities. We show that rising black homeownership was facilitated by the filtering of the urban housing stock as white households moved to the suburbs, particularly in the slower growing cities of the Northeast and Midwest. Our OLS and IV estimates imply that up to one half of the national increase in black homeownership over the period can be attributed to white suburbanization.
    JEL: J71 N92 R21
    Date: 2011–01
  4. By: Quentin Frère; Hakim Hammadou; Sonia Paty
    Abstract: From the observation that many public goods ?such as zoos? are indivisible, OATES (1988) put forward the idea that the range of public goods should increase with localities? size; this is the ?zoo effect?. But despite this argument appears obvious, it suffers from a limited empirical literature. Therefore, the purpose of the present paper is to test this theoretical argument using data on French inter-municipalities, i.e. local governments that gather several municipalities together in order to manage some local goods. Depending on their spatial position, we split our data set into three groups: urban, suburban and rural inter-municipalities. Using spatial econometrics, estimation results provide evidence for the existence of a zoo effect in French inter-municipalities. In other terms, we find that the variety of services provided in larger inter-municipalities exceeds those in smaller communities. Moreover, the intensity of the zoo effect depends on the urban-rural gradient. It is less intense in the suburban and rural areas than in the urban communities.
    Keywords: Local public services, Population size, Zoo effect, French juridictions, Intermunicipalities, spatial econometrics
    JEL: H4 H7
    Date: 2011–11–18
  5. By: Jens K. Perret (European Institute for International Economic Relations at the University of Wuppertal)
    Abstract: In economic geography all indicators and studies are based in one way or another on a measure of distances between two points of interest. The present study discusses the problems that arise in the course of calculating distances between regions. It is shown that measures presently in use are usually biased. A new measuring concept is therefore presented that takes into account the regional economic or demographic structures and constructs distances between regions accordingly.
    Keywords: Russian Federation, Spillovers, Spatial Economectrics, Spatial Weights
    JEL: R11 R15
    Date: 2011–01
  6. By: Michela Ponzo; Vincenzo Scoppa (Dipartimento di Economia e Statistica, Università della Calabria)
    Abstract: Using data for 9, 13 and 15-year-old students from three different datasets (PIRLS-2006, TIMSS-2007 and PISA-2009), we investigate whether the age at school entry affects children school performance at the fourth, eighth and tenth grade levels. Since student’s age in a grade may be endogenous, we use an Instrumental Variable estimation strategy exploiting the exogenous variations in the month of birth coupled with the entry school cut-off date. We find that younger children score substantially lower than older peers at the fourth, the eighth and the tenth grade. The advantage of older students does not dissipate as they grow older. We do not find any significant effect of the relative age of a child with respect to the classmates’ age. Finally, we show that secondary school students are more likely to be tracked in more academic schools rather than in vocational schools if they are born in the early months of the year.
    Keywords: school entry age, educational production function, student achievement, choice of track, instrumental variables, Italy, PIRLS, TIMSS, PISA
    JEL: I21 I28 J13 J24
    Date: 2011–01
  7. By: Beck, Arne; Walter, Matthias
    Abstract: Competitive tendering of local bus services in Germany has received increased attention. Employing Seemingly Unrelated Regression analyses, we observe that prices have regionally varying determinants; for example, while prices throughout most of the federal state of Hesse increase over time, prices in the Munich area decrease. Optimisation of bus utilisation in general has a cost-decreasing impact, confirming that public transport authorities can reduce prices via adequate transport planning. Furthermore, Stochastic Frontier Analysis shows that tender prices in Hesse are slightly less efficient. Moreover we conclude that the public transport authority's experience has an efficiency-increasing impact which supports the introduction of overarching authorities. --
    Keywords: public transport,bus,tendering,price,region,SUR analysis,SFA
    JEL: C12 C13 C31 H57 K23 L16 L92 R32 R48
    Date: 2010
  8. By: Jens Høj
    Abstract: The housing market figures among the main determinants of labour mobility, as households seldom make employment and housing decisions independently of each other. This interdependence is likely to strengthen as the cost of commuting increases, due to worsening road congestion or measures that would raise fuel prices, for example to counter global warming. The Dutch housing market is more rigid than in many other OECD countries, as the result of numerous government interventions. Boosting labour mobility by easing rigidities would improve labour resource utilisation, which will be especially important as the labour force contracts with ageing. The rental sector could be made more attractive and flexible by dismantling strict rent regulation and rigid allocation mechanisms in the social housing sector. Lowering tax incentives to homeowners would improve the allocation of scarce capital and reduce house prices. Easing strict land-use and zoning regulation would increase the supply of all types of housing, reducing prices and allowing the housing stock to adjust better to residents’ needs. This Working Paper relates to the 2010 OECD Economic Survey of the Netherlands ( netherlands).<P>Renforcer la flexibilité du marché immobilier néerlandais pour améliorer la mobilité de la main-d'oeuvre<BR>Le marché immobilier est l’un des principaux déterminants de la mobilité de la main d’oeuvre, car les ménages prennent rarement de décisions en matière d’emploi et de logement de façon disjointe. Cette interdépendance est vraisemblablement appelée à se renforcer, par suite de la hausse du coût des migrations pendulaires liée à la congestion du réseau routier ou aux mesures renchérissant l’essence, par exemple dans le cadre de la lutte contre le réchauffement climatique. Le marché immobilier néerlandais est plus rigide que dans de nombreux pays de l’OCDE, par suite des nombreuses interventions du gouvernement. Stimuler la mobilité professionnelle en atténuant ces rigidités permettrait d’optimiser l’utilisation des ressources en main d’oeuvre, ce qui serait tout particulièrement important à l’heure où le nombre d’actifs diminue sous l’effet du vieillissement de la population. Le secteur locatif pourrait gagner en attractivité et en souplesse si le strict encadrement des loyers et les mécanismes rigides d’attribution étaient supprimés dans le secteur du logement social. La réduction des aides fiscales accordées aux propriétaires améliorerait l’affectation de ressources limitées et ferait baisser les prix de l’immobilier. L’assouplissement des règles foncières et du zonage entraînerait une hausse de l’offre de logements de tous types, ce qui ferait baisser les prix et permettrait de mieux ajuster le parc immobilier aux besoins de la population. Ce document de travail se rapporte à l’Étude économique des Pays-Bas de 2010 (
    Keywords: housing, labour mobility, rent regulation, social housing, own-occupied housing, logement, logement social, mobilité de la main d’oeuvre, logements en accession à la propriété, réglementation des loyers
    JEL: J61 R23 R3
    Date: 2011–01–17
  9. By: Jens K. Perret (European Institute for International Economic Relations at the University of Wuppertal)
    Abstract: Regions differ from each other not only in their economic structure but concerning the impact they have on their neighbors. In the present study interregional spillover activities are analyzed for the regions of the Russian Federation. Instead of knowledge spillovers, more general growth spillovers are accounted for. The time period observed in this study is 1994 to 2008, therefore a large part of the Russian transition period. Using the local Moran's I statistic as a measure of regional spillover activity reveals that only limited spillover activity is present. Additionally, to account for the range of these spillovers, an approach introduced by Bottazzi and Peri (2003) is implemented. It is shown that the spillovers' reach is very limited if present at all.
    Keywords: Russian Federation, Spillovers, Spatial Economectrics, Clustering
    JEL: R11 R15
    Date: 2011–01
  10. By: Richard Darbéra (LATTS - Laboratoire Techniques, Territoires et Sociétés - CNRS : UMR8134 - Université Paris-Est - Ecole des Ponts ParisTech)
    Abstract: Everywhere in the world, residents want better and cheaper taxi services. But what they mean by better services and how they think prices could be lowered varies widely from one city to the other. These differences underline the specific issues both regulators and taxi operators have to address in each city. Our survey was addressed the city residents of Paris, London, New York, Amsterdam, Lisbon, Berlin, Dublin, Stockholm. These residents were screened to be representative of the urban population of each city in terms of gender, age, and location (centre and suburbs). Our questionnaire included two open questions in which they were asked to give their own opinions on two issues: (i) what reforms would you like your government to implement in your city to make taxi services better cater for your needs and (ii) what are the features of the taxis services you have experienced abroad that you would like to see at home. What we are presenting here is a detailed analysis of the 4700 answers we got to these two open questions. We already presented an analysis of the 40 multiple-choice questions results in a previous paper (2) given at the last World Conference on Transport Research (WCTR 2010 Lisbon).
    Keywords: taxi; regulation; survey;
    Date: 2010–11–05
  11. By: COPPOLA, Gianluigi (CELPE (Centre of Labour Economics and Economic Policy), University of Salerno, Italy); GAROFALO, Maria Rosaria (CELPE (Centre of Labour Economics and Economic Policy), University of Salerno, Italy); MAZZOTTA, Fernanda (CELPE (Centre of Labour Economics and Economic Policy), University of Salerno, Italy)
    Abstract: The research described in this paper is consisting of an indepth study of an important area of the Italian Mezzogiorno: the province of Salerno. The aim of the paper is twofold. The first was to identify, by means of cluster analysis, specialization of industrial areas in this province For that, some methodological points are previously selected from the current approach to development economics, that focuses both on genesis and evolution of local systems, by emphasising, among other aspects, the role of the immaterial resources and institutions. The results depict a variegated territory comprising both areas of closed economy, where the purpose of economic activity is to satisfy basic needs (food and housing), and areas that display a certain degree of economic openness towards the outside markets. Many clusters with high indexes of manufacturing specialization are classified as areas of sub furniture or as areas born by an exogenous intervention. The second aim of the research is to measure the social conditions that should foster the growth of new industrial districts within different areas of productive specialization, just identified by the cluster analysis. The approach used was the simple correspondence analysis of a set of qualitative variables surveyed, by a questionnaire given to 462 businesses in the province of Salerno.
    Keywords: industrialization; local labour market; regional and urban analysis; correspondence analysis
    JEL: C10 O14 O18
    Date: 2011–01–18
  12. By: Raballand, Gael; Thornton, Rebecca; Yang, Dean; Goldberg, Jessica; Keleher, Niall; Muller, Annika
    Abstract: This paper draws lessons from an original randomized experiment in Malawi. In order to understand why roads in relatively good condition in rural areas may not be used by buses, a minibus service was subsidized over a six-month period over a distance of 20 kilometers to serve five villages. Using randomly allocated prices for use of the bus, this experiment demonstrates that at very low prices, bus usage is high. Bus usage decreases rapidly with increased prices. However, based on the results on take-up and minibus provider surveys, the experiment demonstrates that at any price, low (with high usage) or high (with low usage), a bus service provider never breaks even on this road. This can contribute to explain why walking or cycling is so widespread on most rural roads in Sub-Saharan Africa. In terms of policy implications, this experiment explains that motorized services need to be subsidized; otherwise a road in good condition will most probably not lead to provision of service at an affordable price for the local population.
    Keywords: Transport Economics Policy&Planning,Transport in Urban Areas,Urban Transport,Markets and Market Access,Rural Roads&Transport
    Date: 2011–01–01
  13. By: Mary-Françoise Renard (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Zelai Xu (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Nong Zhu (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: The main objective of this paper is to study the determinants of city population growth in China during the 1990s', as well as the determinants of migrations towards cities, which constitutes the main source of urban population growth in this period. A second objective is to identify regional differences in the urban growth and migrations, that is, whether urban growth and migration patterns are different between coastal and inland provinces. Additionally, we are interested in the differences between temporary and permanent migrations towards urban areas.
    Keywords: cerdi
    Date: 2011–01–18
  14. By: Liu, Shuangzhe (University of Canberra, Canberra, Australia); Polasek, Wolfgang (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria); Sellner, Richard (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria)
    Abstract: Estimators of spatial autoregressive (SAR) models depend in a highly non-linear way on the spatial correlation parameter and least squares (LS) estimators cannot be computed in closed form. We first compare two simple LS estimators by distance and covariance properties and then we study the local sensitivity behavior of these estimators using matrix derivatives. These results allow us to calculate the Taylor approximation of the least squares estimator in the spatial autoregression (SAR) model up to the second order. Using Kantorovich inequalities, we compare the covariance structure of the two estimators and we derive efficiency comparisons by upper bounds. Finally, we demonstrate our approach by an example for GDP and employment in 239 European NUTS2 regions. We find a good approximation behavior of the SAR estimator, evaluated around the non-spatial LS estimators. These results can be used as a basis for diagnostic tools to explore the sensitivity of spatial estimators.
    Keywords: Spatial autoregressive models, least squares estimators, sensitivity analysis, Taylor Approximations, Kantorovich inequality
    JEL: C11 C15 C52 E17 R12
    Date: 2011–01
  15. By: McCoy, Selina; Byrne, Delma; Banks, Joanne
    Abstract: It is well established that cultural and economic resources imparted to children vary significantly by social class. Literature on concerted cultivation has highlighted the extent to which out-of-school activities can reproduce social inequalities in the classroom. Within this literature however, little attention has been given to the role of gender in concerted cultivation. In this paper, we use data from the first wave of the Growing Up in Ireland longitudinal study to consider how both social class and gender influence the level and type of out-of-school activities in which children engage. Moreover, we examine how out-of-school activities, class and gender impact on children's school engagement and academic achievement. We find that while childrearing logics tend to operate within social class categories, there is an additional cultural aspect of gender in the uptake of different types of out-of-school activities. Our findings suggest the need to move beyond explanations of concerted cultivation to explain gender differences in maths and reading attainment.
    Keywords: social class,concerted cultivation,gender,school engagement,academic achievement,maths performance,reading performance
    Date: 2010–11
  16. By: Enrico Giovannetti; Francesco Pagliacci
    Abstract: In this article, we observe existing links between sustainable development and cities’ structural features. First, we identify cluster of cities that are homogenous in structural terms. We then adopt a multiscalar perspective. We compare the results at different territorial scales (LAU-2 and NUTS-3 level). When the sustainable development of the clusters is observed, a clear ‘geography of resource exploitation’ emerges. Then, as a possible response to these problems, we suggest a tool adopted by planners: that is, polycentrism. We look upon it as a possible mode for the governance of networks of medium-sized cities. In particular, we analyse the structural drivers that explain potential for polycentric integration.
    Keywords: Medium-sized cities; polycentrism; sustainable development; cluster analysis
    JEL: Q01 R10 R58
    Date: 2010–12
  17. By: Berliant, Marcus; Tabuchi, Takatoshi
    Abstract: We consider information aggregation in national and local elections when voters are mobile and might sort themselves into local districts. Using a standard model of private information for voters in elections in combination with a New Economic Geography model, agglomeration occurs for economic reasons whereas voter stratification occurs due to political preferences. We compare a national election, where full information equivalence is attained, with local elections in a three district model. A stable equilibrium accounting for both the economic and political sectors is shown to exist. Restricting to an example, we show that full information equivalence holds in only one of the three districts when transport cost is low. The important comparative static is that full information equivalence is a casualty of free trade. When trade is more costly, people tend to agglomerate for economic reasons, resulting in full information equivalence in the political sector. Under free trade, people sort themselves into districts, most of which are polarized, resulting in no full information equivalence in these districts. We examine the implications of the model using data on corruption in the legislature of the state of Alabama and in the Japanese Diet.
    Keywords: information aggregation in elections; informative voting; new economic geography; local politics
    JEL: D82 D72 R12
    Date: 2011–01–13
  18. By: Sam Schulhofer-Wohl
    Abstract: Some commentators have argued that the housing crisis may harm labor markets because homeowners who owe more than their homes are worth are less likely to move to places that have productive job opportunities. I show that, in the available data, negative equity does not make homeowners less mobile. In fact, homeowners who have negative equity are slightly more likely to move than homeowners who have positive equity. Ferreira, Gyourko and Tracy's (2010) contrasting result that negative equity reduces mobility arises because they systematically drop some negative-equity homeowners' moves from the data.
    JEL: R21 R23
    Date: 2011–01
  19. By: Roger H. Gordon; Wei Li
    Abstract: What are the incentives faced by local officials in China? Without democratic institutions, there is no mechanism for local residents to exercise “voice”. Given the hukou registration system, local residents have little opportunity to threaten “exit” if they are unhappy with local taxes and spending. This paper explores an alternative source of incentives, starting from the premise that local officials aim to maximize the jurisdiction’s fiscal residual (profits), equal to local tax revenue minus expenditures on public services. In a Tiebout setting with mobile households, this objective should lead to efficient provision. What happens, though, if firms and economic activity but not people are mobile? The paper examines the incentives faced by local Chinese officials in this context, and argues that the forecasted behavior helps to explain both the successes and the problems arising from local government activity in China.
    JEL: H7 O17 O38 O53 P16 P2 P43
    Date: 2011–01
  20. By: Grigoli, Francesco; Sbrana, Giacomo
    Abstract: This paper investigates the determinants of primary school enrollment, attendance and child labor in Bolivia from 1999 to 2007. The analysis also aims at identifying the substitution and complementary relationships between schooling and working. Although enrollment rates show a significant improvement, lack of attendance remains an issue. The empirical results reveal that the increase in enrollment is led by indigenous children and those living in urban areas. Moreover, contrary to common belief, being extremely poor and indigenous are the main determinants of school attendance. Although extremely poor children increased their school attendance, they were not able to reduce child labor. However, for indigenous children school attendance and child labor were substitutes, increasing schooling and reducing child labor.
    Keywords: Street Children,Primary Education,Education For All,Youth and Governance,Children and Youth
    Date: 2011–01–01
  21. By: Benjamin Montmartin (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines)
    Abstract: Innovation policies are strategic tools for reinforcing long-term economic growth. If the literature highlights the need for coordination among national R&D policies, the need for transnational policies appears to be less clear. Using a model à la Martin and Ottaviano (1999), we conduct a welfare analysis in order to judge the effect of a centralized R&D subsidy policy. If theoretical results suggest that this policy can improve efficiency and equity, our welfare analysis shows that when there are few knowledge spillovers between countries, then the policy leads to a conflict of interest. In the case of strong international knowledge spillovers however, the conflict of interest disappears suggesting that innovation policies should first focus on the development of knowledge flows between countries.
    Keywords: agglomeration and growth models; innovation policy; welfare criteria
    Date: 2011
  22. By: Jean Pierre Tranchant (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: Decentralization is increasing in all parts of the world. Assessing the efficiency of decentralization as a means to mitigate ethnic conflict is then of primarily importance. This paper builds a simple model of decentralization as an empowerment mechanism. It suggests that decentralization could promote peace conditional on a set of countries and groups characteristics. Typically, decentralization should empower minorities which are small at the national level, while representing a critical mass of the population in the regions they live in. Empirical results confirm that decentralization impacts ethnic conflict only when those conditioning factors are controlled for. Furthermore, decentralization dampens all forms of ethnic violence for groups spatially concentrated enough and/or for groups having a local majority. In contrast, it fuels protest and even rebellion for groups lacking one. The paper then highlights the crucial need to build checks and balances mechanisms at the regional level for local minorities not being harmed by the decentralization process.
    Keywords: Minorities;Conflict;decentralization;Panel Data Analysis
    Date: 2011–01–18
  23. By: IMBRIANI, Cesare (CELPE (Centre of Labour Economics and Economic Policy), University of Salerno, Italy); REGANATI, Filippo (Dipartimento Sociologia e Comunicazione, Università di Roma La Sapienza)
    Abstract: This work examines the main theoretical and empirical interpretations regarding the effects of foreign direct investment on productivity of local firms and, in particular, in which way productivity spillovers are related to the existence of regional differences. By taking into consideration the Italian manufacturing sector and using cross-section data, we find that although at a national level productivity levels are higher in the domestic sectors where multinational firms account for larger shares, productivity spillovers are concentrated only in the north-western area of Italy.
    Keywords: foreign direct investment; productivity spillovers
    JEL: F23 O30
    Date: 2011–01–18
  24. By: Céline Carrere (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: This paper focuses on two issues that challenge the accepted pessimistic view that regional trade agreements (RTAs) between developing countries in welfare terms by taking into account scale economies in transport. First, how is the standard welfare analysis of an RTA affected by the endogeneity of transport costs (i.e. by the joint determination of trade quantities and transport costs)? Second, what are the long-run consequences of endogenous transport costs for welfare if worldwide free trade is achieved through RTAs? A standard model of inter and intra-industry trade is augmented by a “hub-and-spoke” transport network structure, where the standard “iceberg” transport cost model is contrasted with one in which transport costs depend on the distance between trade partners, the volume of trade, and the level of development. Under a plausible parameterization for scale economies in transport, regional liberalization will have persistent effect on trade flows through an irreversible effect on regional transport costs that improves welfare. Free trade achieved under an RTA leads to permanently higher welfare than under multilateral liberalization.
    Keywords: regional integration;Welfare;Transport Costs;Economies of Scale;developing countries
    Date: 2011–01–18
  25. By: Wang, Liang Choon
    Abstract: Large classroom variance of student age is prevalent in developing countries, where achievement tends to be low. This paper investigates whether increased classroom age variance adversely affects mathematics and science achievement. Using exogenous variation in the variance of student age in ability-mixing schools, the author finds robust negative effects of classroom age variance on fourth graders'achievement in developing countries. A simulation demonstrates that re-grouping students by age in the sample can improve math and science test scores by roughly 0.1 standard deviations. According to past estimates for the United States, this effect size is similar to that of raising expenditures per student by 26 percent.
    Keywords: Tertiary Education,Educational Sciences,Youth and Governance,Secondary Education,Scientific Research&Science Parks
    Date: 2011–01–01
  26. By: Federico Revelli (University of Torino)
    Abstract: This paper models the local tax mix determination process in the presence of state-wide tax limitations and shows how excess sensitivity of local public spending to grants (the conventionally and somewhat misleadingly called flypaper effect) arises in the endogenously generated constrained tax mix and cannot in general be taken as a symptom of local government overspending. By means of a panel data switching regression approach that allows for fixed effects and endogenous selection, the paper exploits the clustering of Italian Provinces at the corners produced by upper and lower tax limitations, and provides evidence of considerable cap-generated excess sensitivity.
    Keywords: Flypaper effect, excess sensitivity, tax mix, switching regression, endogenous selection
    JEL: C23 C25 H72
    Date: 2010
  27. By: Derek Neal
    Abstract: This chapter analyzes the design of incentive schemes in education while reviewing empirical studies that evaluate performance pay programs for educators. Several themes emerge. First, it is difficult to use one assessment system to create both educator performance metrics and measures of student achievement. To mitigate incentives for coaching, incentive systems should employ assessments that vary in both format and item content. Separate no-stakes assessments provide more reliable information about student achievement because they create no incentives for educators to take hidden actions that contaminate student test scores. Second, relative performance schemes are rare in education even though they are more difficult to manipulate than systems built around psychometric or subjective performance standards. Third, assessment-based incentive schemes are mechanisms that complement rather than substitute for systems that promote parental choice, e.g. vouchers and charter schools.
    JEL: I20 I28
    Date: 2011–01
  28. By: Giuliano, Laura (University of Miami); Ransom, Michael R. (Brigham Young University)
    Abstract: Using nine years of personnel records from a regional grocery store chain in the United States, this study examines the effect of manager ethnicity on the ethnic composition of employment at the firm's 73 stores. We estimate separate models with store fixed effects for several departments and job titles at each store. We first compare the rates at which Hispanic employees are hired under Hispanic and non-Hispanic, white managers, and then examine the effects of manager-employee ethnic differences on separations and on transfers between stores. We find significant effects of manager ethnicity on hiring patterns in the four job positions that are in small departments, but not in the two positions in larger departments. Manager-employee ethnic dissimilarity has no significant effects on transfers, and affects rates of employee separations in only one case.
    Keywords: ethnicity, segregation, managerial discretion
    JEL: J71
    Date: 2011–01
  29. By: Pradhan, Jaya Prakash
    Abstract: This study makes an early attempt to estimate the magnitude and intensity of manufacturing firms’ R&D by Indian states during the period 1991‒2008 and analyses the role of regional factors on firm-level R&D activities. As there is little research on state-wise R&D performance of firms in India, this study serves an important contribution to the academic and policy realm. It has brought out the fact the total manufacturing R&D investment in India is unevenly distributed regionally with a few states accounting for disproportionate share of it. Regional heterogeneity or inter-state disparities in R&D has increased between the 1990s and the first decade of the twenty-first century. In view of this persistent regional heterogeneity in R&D, the study has developed and estimated an empirical model for a sample of 4545 Indian manufacturing firms with R&D facilities located in single state and that explicitly includes regional factors as probable factors affecting R&D. The three-step Censored Quantitle Regression results confirm that regional factors play an important role in shaping the R&D intensity of the sample of firms. This led us to some useful policy suggestions for regional governments to promote local firms’ R&D activities.
    Keywords: Regional heterogeneity; R&D; manufacturing firms; Indian states; censored quantitle regression.
    JEL: O18 O30 O32 C21 L60
    Date: 2011–01–12
  30. By: Richard Darbéra (LATTS - Laboratoire Techniques, Territoires et Sociétés - CNRS : UMR8134 - Université Paris-Est - Ecole des Ponts ParisTech)
    Abstract: 1. Everywhere in the world, the taxi is set to play a central role in the future of urban mobility. On the supply side, the revolution in practices brought about by the mobile phone and GPS still have a long way to go in terms of improvements in service and reductions in costs. On the demand side, demographic and lifestyle changes and environmental imperatives are beginning to create certain needs that the taxi is best able to meet at minimum cost. 2. These forces that govern the role of the taxi and the demand for mobility apply everywhere, but the resistances they encounter differ from one city to the next. However, even in cities where existing positions seem most firmly entrenched, the attraction of these markets is such that new players are managing to infiltrate gaps in the system by means of innovation. 3. The evolution of the taxi industry is generally not a smooth ride, especially when some stakeholders, entrenched in obsolete regulation, have been able to deter reform for a long time. 4. When looking back through history, the taxi industry seems to evolve from crisis to crisis, punctuating more or less lengthy periods of stillness. These crises may be the disruptive entries of newcomers into a tightly regulated market. Most of the time, these bring with them a new technology or a radically different business model. These crises may also be engineered by governments, as in the case of deregulation. 5. Studying these critical moments could provide some insights in the basic economic and political mechanisms at work when shaping the supply of taxi services and help regulators anticipating the outcomes of the changes in progress they witness.
    Keywords: taxi; regulation; history
    Date: 2010–07–13
  31. By: B. Cesi; Dimitri Paolini
    Abstract: We analyze how authorizing a new university affects welfare when the students’ education depends on the peer group effect. Students are horizontally differentiated according to their ability and the distance from the university. Comparing a monopolistic university with a two-universities model we find that allowing a “new” university is welfare improving when the monopolistic university is only attended by able students with less mobility constraints. This occurs when mobility costs are sufficiently high. When mobility costs are low, a negative externality arises and welfare decreases. The negative externality comes through the peer group effect - high ability students that would have gone to the monopolistic university go to the university with the lower average ability. These students end up in a university with students whose ability was not high enough to go to the monopolist. On the other hand, students remaining in the good university benefit from a lower average ability. Thus, a new university is welfare improving only for those with low ability that in the monopolistic scenario would remain unskilled. When, instead, the mobility cost is high, the monopolist leaves out a significative mass of individuals. In this case, no negative externality arises because no student swaps university therefore a "new" university is welfare improving. However, this welfare improvement makes the opportunities for a higher education less equal (according to Romer, 1998) because an "external circumstance" like mobility cost, rather than own ability, becomes the main determinant of the students’ human capital.
    Keywords: peer group quality; mobility costs; universities
    JEL: I21 I23
    Date: 2011
  32. By: Sergio Currarini (Department of Economics, University Of Venice Cà Foscari); Fernando Vega Redondo (European University Institute)
    Abstract: We study the formation of social ties among heteogeneous agents in a model where meetings are governed by agents' directed search. The aim is to shed light on the important issue of homophily (the tendency of agents to connect with others of the same type). The essential contribution of the model is to provide a basic microfoundation for the opportunity/meeting biases that, as the literature highlights, are a crucial element of the phenomenon. Under the assumption that search is more effective in large pools, the equilibrium is characterized by a threshold in terms of group size: large groups only search among similar agents while smaller groups search in the whole population. This threshold behavior is consistent with the empirical evidence observed in a range of social environments such as high school friendships and interethnic marriages. And assuming that search is subject to small frictions, it also generates the bell-shaped form of the so-called Coleman index observed in the data. Other implications of the model supported by the evidence concern the pattern of cross-group ties among small groups, the linearity of excess homophily for large groups, and the positive effect on it of overall population size.
    Keywords: Homophily, search, social networks, segregation.
    JEL: D7 D71 D85 Z13
    Date: 2010
  33. By: Sáez-Martí, Maria (University of Zurich); Zenou, Yves (Department of Economics, Stockholm University and Research Institute of Industrial Economics)
    Abstract: Workers can have good or bad work habits. These traits are transmitted from one generation to the next through a learning and imitation process which depends on parents’ investment on the trait and the social environment where children live. We show that, if a high enough proportion of employers have taste-based prejudices against minority workers, their prejudices are always self-fulfilled in steady state. Affirmative Action improves the welfare of minorities whereas integration is beneficial to minority workers but detrimental to workers from the majority group. If Affirmative Action quotas are high enough or integration is strong enough, employers’ negative stereotypes cannot be sustained in steady-state.
    Keywords: Ghetto culture; overlapping generations; rational expectations; multiple equilibria; peer effects
    JEL: J15 J71
    Date: 2011–01–24

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