nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2011‒02‒19
27 papers chosen by
Steve Ross
University of Connecticut

  1. Persistence of regional unemployment : Application of a spatial filtering approach to local labour markets in Germany By Patuelli, Roberto; Schanne, Norbert; Griffith, Daniel A.; Nijkamp, Peter
  2. Do Regions with Entrepreneurial Neighbors Perform Better?: A Spatial Econometric Approach for German Regions By Katharina Pijnenburg; Konstantin A. Kholodilin
  3. Dynamics of urban mobility: A Comparative analysis of megacities of India By B. Sudhakara Reddy; P. Balachandra
  4. The Effect on Program Participation of Replacing Current Low-Income Housing Programs with an Entitlement Housing Voucher Program By Edgar O. Olsen; Jeffrey M. Tebbs
  5. Social Networks and Interactions in Cities By Helsley, Robert; Zenou, Yves
  6. Stars and comets: an exploration of the patent universe By Carlo Menon
  7. A Panel of Price Indices for Housing, Other Goods, and All Goods for All Areas in the United States 1982-2008 By Edgar O. Olsen; Dirk W. Early; Paul E. Carrillo
  8. Spatial Differentiation in Industrial Dynamics. A Core-Periphery Analysis based on the Pavitt-Miozzo-Soete Taxonomy By Marco Capasso; Elena Cefis; Koen Frenken
  9. School tracking, social segregation and educational opportunity: evidence from Belgium By J. HINDRIKS; M. VERSCHELDE; G. RAYP; K. SCHOORS
  10. On-the-job search in urban areas By Keisuke Kawata; Yasuhiro Sato
  11. Peer Effects, Fast Food Consumption and Adolescent Weight Gain By Bernard Fortin; Myra Yazbeck
  12. Joint Analysis of Preschool Education and School Performance in Public Schools in Montevideo. By Renato Aguilar; Ruben Tansini
  13. Spatial versus Social Mismatch: The Strength of Weak Ties By Zenou, Yves
  14. Accumulation of education and regional income growth: Limited human capital effects in Norway By Jørn Rattsø and Hildegunn E. Stokke
  15. The leadership of schools in three regions in Portugal based on the findings of external evaluation By Quintas, Helena; Gonçalves, José Alberto
  16. Income Equality, School Performance and Educational Mobility with Quasi-Experimental Data By Philipp C. Bauer; Christoph A. Schaltegger
  17. Harnessing the Forces of Urban Expansion - The Public Economics of Farmland Development Allowance By Chau, Nancy H.; Zhang, Weiwen
  18. ``Ripple" Effects in South African House Prices By Mehmet Balcilar; Abebe D. Beyene; Rangan Gupta; Monaheng Seleteng
  19. Vertical Fiscal Transfers and the Location of Economic Activity across a Country Regions.Theory and Evidence for Argentina. By Pedro Moncarz; Sebastián Freille; Alberto Figueras; Marcelo Capello
  20. The tax system and the financial crisis By Vieri Ceriani; Stefano Manestra; Giacomo Ricotti; Alessandra Sanelli; Ernesto Zangari
  21. Does the Support of Innovative Clusters Sustainably Foster R&D Activity? Evidence from the German BioRegio and BioProfile Contests By Dirk Engel; Timo Mitze; Roberto Patuelli; Janina Reinkowski
  22. Social Exclusion and Jobs Reservation in India By Borooah, Vani / K
  23. Job Matching Efficiency in Skilled Regions - Evidence on the Microeconomic Foundations of Human Capital Externalities By Daniel F. Heuermann
  24. Credit constraints and distance, what room for Central banking? The French experience (1880-1913) By Guillaume Bazot
  25. Criminal Networks: Who is the Key Player? By Liu, Xiaodong; Patacchini, Eleonora; Zenou, Yves; Lee, Lung-Fei
  26. Fiscal Performance and Sustainability of Local Government in South Africa – An Empirical Analysis By Niek Schoeman
  27. Systemic Risk and Network Formation in the Interbank Market By Cohen-Cole, Ethan; Patacchini, Eleonora; Zenou, Yves

  1. By: Patuelli, Roberto; Schanne, Norbert (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Griffith, Daniel A.; Nijkamp, Peter
    Abstract: "The geographical distribution and persistence of regional/local unemployment rates in heterogeneous economies (such as Germany) have been, in recent years, the subject of various theoretical and empirical studies. Several researchers have shown an interest in analysing the dynamic adjustment processes of unemployment and the average degree of dependence of the current unemployment rates or gross domestic product from the ones observed in the past. In this paper, we present a new econometric approach to the study of regional unemployment persistence, in order to account for spatial heterogeneity and/or spatial autocorrelation in both the levels and the dynamics of unemployment. First, we propose an econometric procedure suggesting the use of spatial filtering techniques as a substitute for fixed effects in a panel estimation framework. The spatial filter computed here is a proxy for spatially distributed region-specific information (e.g., the endowment of natural resources, or the size of the 'home market') that is usually incorporated in the fixed effects parameters. The same argument applies for the spatial filter modelling of the heterogenous dynamics. The advantages of our proposed procedure are that the spatial filter, by incorporating region-specific information that generates spatial autocorrelation, frees up degrees of freedom, simultaneously corrects for time-stable spatial autocorrelation in the residuals, and provides insights about the spatial patterns in regional adjustment processes. We present several experiments in order to investigate the spatial pattern of the heterogeneous autoregressive parameters estimated for unemployment data for German NUTS-3 regions. We find widely heterogeneous but generally high persistence in regional unemployment rates." (author's abstract, IAB-Doku) ((en))
    Keywords: Arbeitslosenquote, Persistenz, Schätzung, regionale Disparität
    JEL: C31 E24 E27 R11
    Date: 2011–02–10
  2. By: Katharina Pijnenburg; Konstantin A. Kholodilin
    Abstract: We use a neoclassical production function to analyze the effects of knowledge spillovers via entrepreneurship on economic performance of 337 German districts. To take the spatial dependence structure of the data into account, we estimate a spatial Durbin model. We highlight the importance of the choice of the appropriate weight matrix. We find positive knowledge spillover effects via entrepreneurship within a certain region. Between regions, entrepreneurship as a vehicle by which knowledge spills over and contributes to economic performance depends largely on the choice of the weight matrix. We see this as evidence for regionally bounded knowledge spillover effects via entrepreneurship.
    Keywords: Entrepreneurship capital, regional output, spatial weight matrix
    JEL: C21 M13 R11
    Date: 2011
  3. By: B. Sudhakara Reddy (Indira Gandhi Institute of Development Research); P. Balachandra (Indian Institute of Science)
    Abstract: This paper aims to analyse urban mobility patterns and consequent impacts on energy and environment in India. We investigate the quantity of energy use in 23 metropolitan regions for the period 1981-2005 and present empirical results obtained using national and urban data sets. It explores the underlying relationship among three dependent variables-energy intensity, type of mode and passenger km. Patterns of energy consumption and CO2 emissions in private and public transport are examined. Some policy recommendations are outlined to reduce urban transport energy use and greenhouse gases and provide suggestions to achieve sustainable urban mobility.
    Keywords: Energy, Environment, Intensity, Transport, Urban
    JEL: Q4 L94 L95 L98
    Date: 2010–12
  4. By: Edgar O. Olsen; Jeffrey M. Tebbs
    Abstract: This paper estimates the effect on participation rates of families of various types of replacing HUD’s largest low-income housing programs with alternative tenure-neutral entitlement housing voucher programs that differ in their taxpayer cost and the relative generosity of the subsidy to households of different types. The estimates of participation in the entitlement programs are based primarily on the five-percent household sample from the 2000 Decennial Census and participation experience in the only entitlement housing assistance programs that have been operated in the United States. HUD’s administrative records provide data on current recipients of low-income housing assistance. The paper explores the sensitivity of the results to the equations used to predict participation. The results indicate that even the entitlement housing voucher program that costs 10 percent less than the current system would serve 50 percent more households in total and many more of each type – white, black, and Hispanic; elderly and nonelderly; families living in metropolitan and nonmetropolitan areas; small, medium, and large families; and households in the first two real income deciles.
    Keywords: Low-income housing assistance, housing vouchers, welfare reform two-sided markets, junk mail, email, telemarketing, Do Not Call List, message pricing, the Medium is the Message, market research. Classification-H53, I38, R00
    Date: 2011–01
  5. By: Helsley, Robert (University of California, Berkeley); Zenou, Yves (Stockholm University and Research Institute of Industrial Economics (IFN), Stockholm, Sweden, and GAINS)
    Abstract: We examine how interaction choices depend on the interplay of social and physical distance, and show that agents who are more central in the social network, or are located closer to the geographic center of interaction, choose higher levels of interactions in equilibrium. As a result, the level of interactivity in the economy as a whole will rise with the density of links in the social network and with the degree to which agents are clustered in physical space. When agents can choose geographic locations, there is a tendency for those who are more central in the social network to locate closer to the interaction center, leading to a form of endogenous geographic separation based on social distance. Finally, we show that the market equilibrium is not optimal because of social externalities. We determine the value of the subsidy to interactions that could support the first-best allocation as an equilibrium and show that interaction effort and the incentives for clustering are higher under the subsidy program.
    Keywords: Social networks; urban-land use; Bonacich centrality
    JEL: D85 R14 Z13
    Date: 2011–02–14
  6. By: Carlo Menon (Bank of Italy)
    Abstract: The analysis of patent and citation data has become a popular source of evidence on localized knowledge spillovers and innovation. Nevertheless, one aspect has been overlooked: the patent distribution across inventors is extremely skewed, as many inventors -- the comets -- register one or few patents, while a small number of inventors -- the stars -- register many patents. This raises a number of questions relating to the geography of innovation: do different categories of inventors interact with the local economic environment in the same way? Are they equally distributed over space or do they tend to concentrate? Is spatial proximity beneficial for their activity? Using a rich database on US inventors, we provide evidence suggesting that the two categories of patents are associated with different kinds of cities. We then test whether the activity of stars is beneficial for local comets, finding that a 10% increase in the number of patents authored by star inventors leads to a 3% increase in the number of patents developed by comet inventors.
    Keywords: localized knowledge spillovers, patents, innovation
    JEL: R10 O31
    Date: 2011–01
  7. By: Edgar O. Olsen; Dirk W. Early; Paul E. Carrillo
    Abstract: This paper produces a panel of price indices for housing, other produced goods, and all produced goods for each metropolitan area in the United States and the non-metropolitan part of each state from 1982 through 2008 that can be used for estimating behavioral relationships, studying the workings of markets, and assessing differences in the economic circumstances of people living in different areas. Our general approach is to first produce cross-sectional price indices for a single year 2000 and then use BLS time-series price indices to create the panel. Our geographic housing price index for 2000 is based on a large data set with detailed information about the characteristics of dwelling units and their neighborhoods throughout the United States that enables us to overcome many shortcomings of existing interarea housing price indices. For most areas, our price index for all goods other than housing is calculated from the price indices for categories of non-housing goods produced each quarter by the Council for Community and Economic Research. In order to produce a non-housing price index for areas of the United States not covered by their index, we estimate a theoretically-based regression model explaining differences in the composite price index for non-housing goods for areas where it is available and use it to predict a price of other goods for the uncovered areas. The overall consumer price index for all areas is based on the preceding estimates of the price of housing and other goods. The paper also discusses existing interarea price indices available to researchers, and it compares the new housing price index with housing price indices based on alternative methods using the same data and price indices based on alternative data sets. Electronic versions of the price indices are available online.
    Keywords: Interarea price indices, interarea housing price indices, geographic cost-of-living differences, geographic price differences
    JEL: C8 R1 R2 R3
    Date: 2010–12
  8. By: Marco Capasso; Elena Cefis; Koen Frenken
    Abstract: We compare the industrial dynamics in the core, semi-periphery and periphery in The Netherlands in terms of firm entry-exit, size, growth and sectoral location patterns. The contribution of our work is to provide the first comprehensive study on spatial differentiation in industrial dynamics for all firm sizes and all sectors, including services. We find that at the aggregate level the spatial pattern of industrial dynamics is consistent with the spatial product lifecycle thesis: entry and exit rates are highest in the core and lowest in the periphery, while the share of persistently growing firms is higher in the periphery than in the core. Disaggregating the analysis to the sectoral level following the Pavitt-Miozzo-Soete taxonomy, findings are less robust. Finally, sectoral location patterns are largely consistent with the spatial product lifecycle model: Fordist sectors are over-represented in the periphery, while sectors associated with the ICT paradigm are over-represented in the core, with the notable exception of science-based manufacturing.
    Keywords: Entry, exit, spatial product lifecycle, Fordist paradigm, ICT paradigm
    JEL: L25 L26 L60 L80 O18 O33 R10
    Date: 2010–11
    Abstract: Educational tracking is a very controversial issue in education. The tracking debate is about the virtues of uniformity and vertical dierentiation in the curriculum and teaching. The pro- tracking group claims that curriculum and teaching better aimed at children's varied interest and skills will foster learning efficacy. The anti-tracking group claims that tracking systems are inef- cient and unfair because they hinder learning and distribute learning inequitably. In this paper we provide a detailed within-country analysis of a specific educational system with a long history of early educational tracking between schools, namely the Flemish secondary school system in Belgium. This is interesting place to look because it provides a remarkable mix of excellence and inequality. Indeed the Flemish school system is repeatedly one of the best performer in the international harmonized PISA tests in math, science and reading; whereas it produces some of the most unequal distributions of learning between schools and students. Combining evidence from the PISA 2006 data set at the student and school level with recent statistical methods, we show first the dramatic impact of tracking on social segregation; and then, the impact of social segregation on equality of educational opportunity (adequately measured). It is shown that tracking, via social segregation, has a major effect on inequality of opportunity. Children of dierent economic classes will have different access to knowledge.
    Keywords: tracking, ability grouping, educational performance, social segregation, inequality, PISA
    JEL: I28 H52 D63
    Date: 2010–11
  10. By: Keisuke Kawata (Graduate School of Economics, Osaka University); Yasuhiro Sato (Graduate School of Economics, Osaka University)
    Abstract: This study develops an on-the-job search model involving spatial structure. In this model, workers are either employed and commuting frequently to a central business district (CBD) or unemployed and commuting less frequently to the CBD to search for a job. When an unemployed worker succeeds in off-the-job search, the quality of the job match is determined stochastically: a good match yields high-productivity whereas a bad match yields low-productivity. Although a high-productivity worker does not search for a new job, a lowproductivity worker decides whether to conduct an on-the-job search, which would require additional commuting to the CBD. Analysis of this model demonstrates that in equilibrium, the relocation path of workers corresponds to their career path, while welfare analysis demonstrates that such a spatial structure distorts firmsf decision regarding the posting of vacancies.
    Keywords: City structure; On-the-job search; Unemployment; Efficiency; Relocation and career paths;
    JEL: J64 R14 R23
    Date: 2011–03
  11. By: Bernard Fortin; Myra Yazbeck
    Abstract: This paper aims at opening the black box of peer effects in adolescent weight gain. Using Add Health data on secondary schools in the U.S., we investigate whether these effects partly flow through the eating habits channel. Adolescents are assumed to interact through a friendship social network. We first propose a social interaction model of fast food consumption using a generalized spatial autoregressive approach. We exploit results by Bramoullé, Djebbari and Fortin (2009) which show that intransitive links within a network (i.e., a friend of one of my friends is not my friend) help identify peer effects. The model is estimated using maximum likelihood and generalized 2SLS strategies. We also estimate a panel dynamic weight gain production function relating an adolescent’s Body Mass Index (BMI) to his current fast food consumption and his lagged BMI level. Results show that there are positive significant peer effects in fast food consumption among adolescents belonging to a same friendship school network. The estimated social multiplier is 1.59. Our results also suggest that, at the network level, an extra day of weekly fast food restaurant visits increases BMI by 2.4%, when peer effects are taken into account. <P>Cet article a pour but d’ouvrir la boîte noire des effets de pairs dans les gains de poids chez les adolescents. À partir des données Add Health sur les écoles secondaires aux États-Unis, nous étudions si ces effets découlent en partie des habitudes alimentaires. On suppose que les adolescents interagissent dans le cadre d’un réseau social d’amitié. Nous proposons une analyse des interactions sociales de consommation de malbouffe à l’aide d’un modèle autorégressif spatial généralisé. Nous exploitons les résultats de Bramoullé, Djebbari et Fortin (2009) qui montrent que les liens intransitifs à l’intérieur d’un réseau (i.e., un ami d’un de mes amis n’est pas mon ami) aide à l’identification des effets de pairs. Le modèle est estimé à partir de méthodes de maximum de vraisemblance et de variables instrumentales généralisées. Nous estimons en outre une fonction dynamique de gain de poids reliant l’indice de masse corporelle de l’adolescent (IMC) à sa consommation courante de malbouffe et à son niveau retardée d’IMC. Nos résultats montrent qu’il existe des effets de pairs positifs et significatifs dans la consommation de malbouffe parmi les adolescents appartenant au même réseau d’amis de l’école. Le multiplicateur social est de 1,59. Nos résultats suggèrent de plus qu’au niveau du réseau social, une journée additionnelle de consommation hebdomadaire dans un restaurant de malbouffe augmente l’IMC de 2,4 %, lorsque les effets de pairs sont pris en compte.
    Keywords: Obesity, overweight, peer effects, social interactions, fast food, spatial models., Obésité, embompoint, effets de pair, malbouffe, réseaux sociaux, modèle autorégressif spatial
    Date: 2011–02–01
  12. By: Renato Aguilar (Departamento de Economía, University of Gothenburg, Sweden); Ruben Tansini (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)
    Abstract: This paper aims at explaining the academic performance of a sample of children starting their first year at public schools in Montevideo, Uruguay, during 1999. We are mainly in- terested in the effect of preschool education on the children’s academic results. Previous probit and OLS estimations suggested that preschool education has a positive impact on short and long term school performance. However, these results could be biased because a rather strong endogeinity of the preschool education variable. We solved this problem us- ing bivariate probit and treatment effects estimations. The results confirmed the bias and suggested that our previous estimations underestimated the positive effect of preschool educations. Thus, we found fairly strong empirical evidence suggesting that preschool education has a short and long term positive effect on these children’s results
    Keywords: preschool education, school results, bivariate probit, treatment effects, Uruguay
    JEL: I21
    Date: 2010–12
  13. By: Zenou, Yves (Stockholm University and Research Institute of Industrial Economics (IFN), Sweden, and GAINS)
    Abstract: The aim of this paper is to provide a new mechanism based on social interactions explaining why distance to jobs can have a negative impact on workers’ labor-market outcomes, especially ethnic minorities. Building on Granovetter’s idea that weak ties are superior to strong ties for providing support in getting a job, we develop a model in which workers who live far away from jobs tend to have less connections to weak ties. Because of the lack of good public transportation in the US, it is costly (both in terms of time and money) to commute to business centers to meet other types of people who can provide other source of information about jobs. If distant minority workers mainly rely on their strong ties, who are more likely to be unemployed, there is then little chance of escaping unemployment. It is therefore the separation in both the social and physical space that prevents ethnic minorities finding a job.
    Keywords: Weak ties; labor market; social networks; land rent
    JEL: A14 J15 R14 Z13
    Date: 2011–02–04
  14. By: Jørn Rattsø and Hildegunn E. Stokke (Department of Economics, Norwegian University of Science and Technology)
    Abstract: Accumulation of education and geographic concentration of educated people in cities are expected to generate urban income growth. New economic geography predicts income divergence across regions. We investigate the dynamic process of accumulating tertiary education and regional income growth in Norway during the past four decades. The expansion of smart cities goes along with catching up of education level in the periphery and overall the education levels converge. Income levels also are shown to converge in distribution analysis using Kernel functions and first order Markov chains. However, the movements in the income distribution are unrelated to the accumulation of education. The hypothesis of equal income transition probabilities across subgroups of regions with different increases in education cannot be rejected. We conclude that accumulation of education has not been important for the pattern of income growth. Catching up from low income is not driven by education and income growth has not taken off in cities with increasing education level.
    Date: 2011–02–01
  15. By: Quintas, Helena (University of Algarve); Gonçalves, José Alberto (University of Algarve)
    Abstract: School leadership has significant effects on the learning, development and academic success of the pupils and on the quality of educational organisations, so, to a large extent, the effectiveness of the school depends upon the way in which leadership is carried out. It is on this basis that we undertook our study which led in this article. In it we sought to characterise the leadership of schools and school clusters in the regions of the Algarve, Alentejo and Lisbon and Tagus Valley, globally and specifically, based on the analysis of the content of external evaluation reports produced by teams from the General Inspectorate of Education during the 2006/2007, 2007/2008 and 2008/2009 academic years. This analysis was carried out as part of the research project FSE/CED/83489/2008 under the responsibility of the Centre for Sociology Research and Studies from the Lisbon University Institute, the University of the Algarve and the Barafunda Association, and we were part of the respective research team. By analysing the data we have been able to establish a joint and per region “profile” of the leaderships in the schools and school clusters that were evaluated, although we onsider that their results cannot be extrapolated, given he imits in the wording of the valuation reports and the fact at these reports were produced by different teams from egion to region and even within the regions themselves
    Keywords: external evaluation of schools; external evaluation reports of schools; leadership of schools; exercising of leadership in schools
    JEL: I21
    Date: 2010–12–30
  16. By: Philipp C. Bauer; Christoph A. Schaltegger
    Abstract: Is income equality a precondition for higher school performance and higher educational mobility? Or is the opposite true? We test empirically whether school performance and intergenerational transmission of educational attainment is depending on income equality on the local level. Using Swiss data, we take advantage of an exogenous variation across 2740 local municipalities. Our results point to a beneficial effect of income inequality on school performance for children with middle educated parents. In contrast, children with poorly educated parents as well as children with highly educated parents perform worse in more unequal communities. However, the popular idea that societies with a more equal income distribution inevitably enhance the upward mobility of disadvantaged children cannot be confirmed.
    Keywords: inequality; intergenerational transmission; mobility; educational attainment; income distribution; human capital
    JEL: I2 I21 I30 J24 D30 D31 D63
    Date: 2011–02
  17. By: Chau, Nancy H.; Zhang, Weiwen
    Abstract: For decades, rapid urban expansion has led to concerns over the loss of cultivated land in rural China. This contrasts sharply with another salient feature of the Chinese land policy reform landscape that has gone on largely unnoticed - the addition of newly cultivated land in China through land development has consistently exceeded land conversion. In a model featuring fiscal decentralization, local governments as custodians of land use and development, along with a land development allowance policy instituted in 1998, we show that a land development allowance policy can harness the forces of urban expansion to encourage agricultural land development.
    Keywords: land development allowance, fiscal decentralization, inter-jurisdictional competition, agricultural development, Community/Rural/Urban Development, H11, H77, P35, R5, R14, O18,
    Date: 2011–01
  18. By: Mehmet Balcilar (Department of Economics, Eastern Mediterranean University, Famagusta, North Cyprus,via Mersin 10, Turkey); Abebe D. Beyene (Department of Economics, University of Pretoria); Rangan Gupta (Department of Economics, University of Pretoria); Monaheng Seleteng (Department of Economics, University of Pretoria)
    Abstract: This paper analyzes the so-called “ripple” effect of house prices in five major metropolitan areas of South Africa, namely, Cape Town, Durban Unicity, Greater Johannesburg, Port Elizabeth/Uitenhage and Pretoria, based on available quarterly data covering the period of 1966:Q1 to 2010:Q1. Following the extant literature, we contextualize the issue as a unit root problem, with one expecting the ratios of metropolitan house price to national house price to exhibit stationarity to an underlying trend value, if there is diffusion in house prices. Using Bayesian, parametric non-linear and non-parametric unit root tests, besides the standard linear parametric tests of stationarity with and without structural break, we find the linear unit root tests, with and without structural break, provide quite distinct evidence of the existence of house price diffusion, which, in turn are overwhelmingly supported by the Bayesian unit root tests. With the exception of the large middle-segment for Cape Town, the robustness of the results are confirmed by at least one of the non-linear or non-parametric unit root tests, which have been shown to have very good power properties in the presence of structural breaks and non-linearities or regime-switching. Overall, we find strong and robust evidence of ripple effect in the five major metropolitan areas of South Africa.
    Keywords: House-price ratios, “Ripple” effects, Time series properties, Unit root tests
    JEL: G10 C30 C50
    Date: 2011–02
  19. By: Pedro Moncarz (Universidad Nacional de Córdoba); Sebastián Freille (Universidad Nacional de Córdoba; CONICET); Alberto Figueras (Universidad Nacional de Córdoba); Marcelo Capello (Universidad Nacional de Córdoba; IERAL de Fundación Mediterránea)
    Abstract: Argentina has an important system of vertical transfers with a compensatory aim including the convergence across sub-national regions. However, there still exist high levels of asymmetries among the country provinces. Extending Martin and Rogers’ FCM including non- tradable goods and public employment we analyse the effect on economic activity location that follows to changes on the regional distribution of transfers. An increase in the share of transfers a region receives positively effect the production of manufactures the higher are: transaction costs of goods produced under increasing returns to scale; the share of transfers that goes directly to consumers instead of local governments; the elasticity of substitution between differentiated goods; the share of consumers’ expenditure on manufactures via-as-vis on non- traded goods.
    Keywords: federalism, vertical fiscal transfers, economic location
    JEL: R12 H71 H72
    Date: 2010–11
  20. By: Vieri Ceriani (Banca d'Italia); Stefano Manestra (Banca d'Italia); Giacomo Ricotti (Banca d'Italia); Alessandra Sanelli (Banca d'Italia); Ernesto Zangari (Banca d'Italia)
    Abstract: This paper investigates the effects of the tax system on the economic factors that triggered the financial crisis. We examine three cases in which the tax regime interacted with these factors, reinforcing them. First, we focus on the taxation of residential building: while the importance of capital gains taxes is disputed, the deductibility of mortgage interest may have contributed to the financial crisis by creating some of the raw materials for the securitization industry. Second, a narrow perspective on the tax treatment, together with specific provisions, may have fostered performance-based remuneration of managers, resulting in overemphasis of short-term profitability and incentive to excessive risk-taking. Third, the securitization process, which played a key role in the outbreak of the financial crisis, was accompanied by opportunities for tax arbitrage and reduction of the overall tax wedge paid by investors, through offset of incomes that are ordinarily taxed at different rates; a de facto exemption of CDS premiums received by non-residents supplemented the tax arbitrage.
    Keywords: taxation, financial crisis, housing market, stock options, securitization, credit default swaps
    JEL: H2 G1
    Date: 2011–01
  21. By: Dirk Engel (University of Applied Science Stralsund; RWI); Timo Mitze (RWI; Ruhr University Bochum); Roberto Patuelli (University of Lugano; The Rimini Centre for Economic Analysis (RCEA)); Janina Reinkowski (ifo Munich)
    Abstract: In this paper, we evaluate the R&D enhancing effects of two large public grant schemes aiming at encouraging the performance of firms organized in clusters. These are Germany's well known BioRegio and BioProfile contests for which we compare the research performance of winning regions in contrast with non-winning and non-participating comparison regions. We apply Difference-in-Difference estimation techniques in a generalized linear model framework, which allows to control for different initial regional conditions in the biotechnology related R&D activity. Our econometric findings support the view that winners generally outperform non-winning participants during the treatment period, thus indicating that exclusive funding as well as the stimulating effect of being a "winner" seems to work in the short-term. In contrast, no indirect impacts stemming from a potential mobilizing effect of the contest approaches have been detected. Also, we find only limited evidence for long-term effects of public R&D grants in the post-treatment period. The results of our analysis remain stable if we additionally augment the model to account for the particular role of spatial dependence in the R&D outcome variables.
    Keywords: Biotechnology; R&D Policies; Cluster; Diff-in-Diff Estimation
    JEL: O38 R38 C23
    Date: 2011–02
  22. By: Borooah, Vani / K
    Abstract: This paper argues that social exclusion robs people of their "confidence" and this loss adversely affects their capacity to function effectively. We may not be able to define confidence precisely but we know it when we have it and also when we lack it. In a “just” society, no group should unfairly suffer from a “confidence deficit” or enjoy a “confidence surplus”. However, affirmative action policies to boost a deprived group's employment rate suffer from several defects. In particular, they may have only a small effect (as with Dalits in India) when the group's educational base is low. Consequently, another prong of policy could, indeed should, focus on improving the educational standards of Dalits. The root of the problem of poor Dalit achievement lies in the many dysfunctional primary and secondary schools in the villages and towns of India. Admittedly, tackling the problem at its roots will only yield results after a long delay. Nor does the emphasis on effective learning at school carry the glamour associated with being a putative graduate of the Indian Institute of Technology, the Indian Institute of Management, or the All-India Medical Institute. But, before the vast mass of educationally and economically deprived children in India (many of whom are Dalits) can meaningfully enter the portals of Universities and Institutes of Higher Education they need to go to good schools.
    Keywords: Dalits; Discrimination; Social Exclusion; Deprivation
    JEL: J71 J15 K31
    Date: 2010–12–25
  23. By: Daniel F. Heuermann (Institute for Labour Law and Industrial Relations in the EC, University of Trier)
    Abstract: Inspired by the literature on the role of local career networks for the quality of labor market matches we investigate whether human capital externalities arise from a higher job matching efficiency in skilled regions. Using two samples of highly qualified workers in Germany we find that an increase in the regional share of highly qualified workers by one standard deviation is associated with between-job wage growth of about three percent and an increase in the annual probability of a job change of up to four percent. Wage gains are incurred only by workers changing jobs within industries. Consistently, workers in skilled regions are about fifty percent more likely to change jobs within rather than between industries. Taken together, these findings suggest that human capital externalities partly arise because workers in skilled regions have better access to labor market information, which allows them to capitalize on their industry-specific knowledge when changing jobs.
    Keywords: Human Capital Externalities, Job Matching
    JEL: D62 J24 J31 R11
    Date: 2011–01
  24. By: Guillaume Bazot (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: Although a relative consensus is emerging about the economic effects of credit development, many controversies remain as to the role of the central bank in that development. This paper addresses the process of credit allocation by the central bank as observed on a spatial basis. It examines how and why improved geographical access to the central bank contributes to credit development by looking at the Fench experience in the ‘classical period' (1880-1913). In an environment of emerging, but highly prudent, deposit banks and the absence of a centralised money market, Banque de Fance branches had enough supply and demand to generate a network. Access to “central loans” hence reduced liquidity constraints and encouraged local banks and firms to lend. We shape the proof in two stages. First, a simple banking model presents our intuition and the mechanisms at work. Second, we take a new data set on the development of credit by French geographic area (département) to test our hypothesis using panel econometric tools. The results show the Banque de France branches having a strong and robust impact on credit development.
    Keywords: credit constraint ; distance ; soft information ; succursales of the Banque de France ; credit development
    Date: 2010–11
  25. By: Liu, Xiaodong (University of Colorado at Boulder); Patacchini, Eleonora (La Sapienza University of Rome, EIEF and CEPR.); Zenou, Yves (Stockholm University, Research Institute of Industrial Economics (IFN) and GAINS); Lee, Lung-Fei (The Ohio State University)
    Abstract: We analyze delinquent networks of adolescents in the United States. We develop a theoretical model showing who the key player is, i.e. the criminal who once removed generates the highest possible reduction in aggregate crime level. We also show that key players are not necessary the most active criminals in a network. We then test our model using data on criminal behaviors of adolescents in the United States (AddHealth data). Compared to other criminals, key players are more likely to be a male, have less educated parents, are less attached to religion and feel socially more excluded. They also feel that adults care less about them, are less attached to their school and have more troubles getting along with the teachers. We also find that, even though some criminals are not very active in criminal activities, they can be key players because they have a crucial position in the network in terms of betweenness centrality.
    Keywords: Crime; bonacich centrality; betweenness centrality; network characteristics; crime policies
    JEL: A14 D85 K42 Z13
    Date: 2011–02–11
  26. By: Niek Schoeman
    Abstract: This paper analyses fiscal performance in terms of own-revenue collection and sustainability of local municipalities in South Africa. Criteria such as gross value added, revenue collected from own sources, debtors outstanding, the ageing of debt and dependency on grants are considered. The conclusion is that a large number of municipalities do not comply with the requirement that a ‘reasonable’ amount of current expenditures be financed by means of own resources. Furthermore, local government finances are featured by substantial variance as far as collection of own income is concerned. While close to half of them finance more than 50 percent of their current expenditures from own resources, about one third are largely dependent on grants from upper spheres of government and generate less than 20 percent of current expenditures from own resources. As a whole, the fiscal sustainability of the local government sector, given the current scenario of flows, is a reason for concern. In order to comply with international criteria for solid fiscal performance, a number of municipalities will have to improve their performance with regard to own-revenue collection. The reason for this phenomenon seems to be the problem of ‘soft budgets’ and an historic dependence on grants to finance not only capital expenditures but also most, if not all of, current expenditures. Due to historical and political factors, local governments in South Africa differ substantially in terms of potential revenue base, but it may be that in many cases potential revenue is not exploited and that the high level of dependency on grants is the result of inefficiency and lack of political will to be more self-reliant. In view of the wide-spread protest actions against poor quality of service delivery at the local government level, fiscal authorities should take a fresh look at the extent to which these governments are accountable for being more financially independent. This would help prevent the accumulation of debt as a result of growing backlogs in service payments.
    Keywords: Local government; fiscal sustainability; South Africa.
    JEL: H71 H72
    Date: 2011
  27. By: Cohen-Cole, Ethan (University of Maryland); Patacchini, Eleonora (University of Roma La Sapienza); Zenou, Yves (Dept. of Economics, Stockholm University)
    Abstract: We propose a novel mechanism to facilitate understanding of systemic risk in financial markets. The literature on systemic risk has focused on two mechanisms, common shocks and domino-like sequential default. Our approach is a formal model that provides an intellectual combination of the two by looking at how shocks propagate through a network of interconnected banks. Transmission in our model is not based on default. Instead, we provide a simple microfoundation of banks’ profitability based on classic competition incentives. As competitors lending quantities change, both for closely connected ones and the whole market, banks adjust their own lending decisions as a result, generating a ‘transmission’ of shocks through the system. We provide a unique equilibrium characterization of a static model, and embed this model into a full dynamic model of network formation with n agents. Because we have an explicit characterization of equilibrium behavior, we have a tractable way to bring the model to the data. Indeed, our measures of systemic risk capture the propagation of shocks in a wide variety of contexts; that is, it can explain the pattern of behavior both in good times as well as in crisis.
    Keywords: Financial networks; interbank lending; interconnections; network centrality; spatial autoregressive models
    JEL: C21 G10
    Date: 2011–02–11

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