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on Urban and Real Estate Economics |
| By: | Miren Lafourcade (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, Université de Valenciennes et du Hainaut Cambrésis - Université de valenciennes et du Hainaut Cambrésis, 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); Jacques-François Thisse (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, 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, CORE - Center of Operation Research and Econometrics [Louvain] - Université Catholique de Louvain) |
| Abstract: | The paper surveys the main contributions of new economic geography from the point of view of transport analysis. It shows that decreasing transport costs is likely to exacerbate regional disparities. However, very low transport costs should foster a more balanced distribution for economic activities across space. Thus, the spatial curve of development, which relates the degree of spatial concentration to the level of transport costs, would be bell-shaped. The paper also provides a detailed discussion of the main determinants of transport costs, which remain fairly large in most countries. It concludes with a discussion of some policy implications. |
| Keywords: | economic geography ; transport costs ; regional disparities |
| Date: | 2011–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-00586878&r=ure |
| By: | Dang, Hai-Anh (World Bank); Sarr, Leopold (World Bank); Asadullah, Niaz (University of Reading) |
| Abstract: | This study reports evidence from an unusual policy intervention – The Reaching Out of School Children (ROSC) project – in Bangladesh where school grants and education allowances are offered to attract hard-to-reach children to schools comprised of a single teacher and a classroom. The operating unit cost of these schools is a fraction of that of formal primary schools. We use panel data to investigate whether ROSC schools are effective in raising enrolment and learning outcomes. Our findings suggest that there is a modest impact on school participation: ROSC schools increase enrolment probability between 9 and 18% for children in the two age cohorts 6-8 and 6-10. They perform as well as non-ROSC schools in terms of raising test scores, and even have positive impacts on academically stronger students. There is also strong evidence of positive externalities on non-ROSC schools in program areas. These results point to the effectiveness of a new model of non-formal primary schools that can be replicated in similar settings. |
| Keywords: | non-formal school, impact evaluation, multiple treatments, learning outcomes |
| JEL: | I21 O10 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5659&r=ure |
| By: | Eva Ortega (Banco de España); Margarita Rubio (Banco de España); Carlos Thomas (Banco de España) |
| Abstract: | One of the most salient feature of the Spanish housing market, compared to other European economies, is its relatively low rental share. This may be partly attributed to the existence of fiscal distortions in Spain favoring ownership. In this paper, we simulate the potential efects of different policy measures aimed at homogenizing the fiscal treatment of ownership and renting and improving the efficiency of the rental market. We do so in the context of a DSGE model featuring a market for owner-occupied and rented housing, as well as collateral constraints in loan markets. We find that eliminating the existing subsidy to house purchases, introducing a comparable subsidy to rental payments or increasing the efficiency in the production of housing rental services raise the rental share by a similar amount. However, their implications in terms of the construction sector differ. |
| Keywords: | Rental market share, subsidy to house purchases, subsidy to rents, rental market efficiency |
| JEL: | E21 E3 E51 E6 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:1108&r=ure |
| By: | Francisco Martínez Mora |
| Abstract: | This paper studies a Tiebout model with two school districts, housing markets and peer effects to re-evaluate the optimality properties of the allocation of households to districts induced by head and income taxes. The main novel results reveal that head taxes are not superior to income taxes and that the indirect redistribution implied by income taxation is not necessarily at odds with location optimality or associated to welfare losses. Many combinations of head taxes differentiated by household type can sustain the optimal outcome as an equilibrium. While this may not be possible using differentiated income taxes, a combination of non-differentiated ones and differentiated head taxes levied on the residents of the rich district can lead to the optimal outcome and effect significant local redistribution. In turn, non-differentiated head taxes are suboptimal (unless optimality requires one of the districts to be type-homogeneous) and a combination of uniform income taxes and head taxes levied on the rich district’s population can do as well as them. Moreover, non-differentiated income taxes may generate smaller welfare losses than their lump-sum counterpart, a result which clashes with the benefit view of head taxes. |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdaddt:2011-07&r=ure |
| By: | Marcus BERLIANT; 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. |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:11046&r=ure |
| By: | Orla Doyle (UCD Geary Institute, University College Dublin); Kelly McNamara (UCD Geary Institute, University College Dublin) |
| Date: | 2011–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:ucd:wpaper:201110&r=ure |
| By: | Robert J. Shiller (Cowles Foundation, Yale University); Rafal M. Wojakowski (Lancaster University Management School, Accounting and Finance); M. Shahid Ebrahim (Bangor Business School, Bangor University); Mark B. Shackleton (Lancaster University Management School) |
| Abstract: | This paper models Continuous Workout Mortgages (CWMs) in an economic environment with refinancings and prepayments by employing a market-observable variable such as the house price index of the pertaining locality. Our main results include: (a) explicit modelling of repayment and interest-only CWMs; (b) closed form formulae for mortgage payment and mortgage balance of a repayment CWM; (c) a closed form formula for the actuarially fair mortgage rate of an interest-only CWM. For repayment CWMs we extend our analysis to include two negotiable parameters: adjustable "workout proportion" and adjustable "workout threshold." These results are of importance as they not only help understanding the mechanics of CWMs and estimating key contract parameters. These results are of importance as they not only help in the understanding of the mechanics of CWMs and estimating key contract parameters, but they also provide guidance on how to enhance the resilience of the financial architecture and mitigate systemic risk. |
| Keywords: | Continuous Workout Mortgage (CWM), Repayment, Interest-only, House price index, Prepayment intensity, Cap and floor on continuous flow |
| JEL: | C63 D11 D14 D92 G13 G21 R31 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:1794&r=ure |
| By: | Kathleen W. Johnson; Geng Li |
| Abstract: | Past research argues that changes in adjustable-rate mortgage (ARM) payments may lead households to cut back on consumption or to default on their mortgages. In this paper, we argue that these outcomes are more likely if ARM borrowers are borrowing constrained, and find that ARM borrowers exhibit characteristics and behavior that are consistent with being borrowing constrained. Although the demographic and financial characteristics of ARM and fixed-rate mortgage (FRM) borrowers are quite similar, ARM borrowers differ from FRM borrowers in their uses of credit and attitudes towards it. In addition, we find the consumption growth of households with an ARM is more sensitive to past income than the consumption growth of other households, suggesting the ARM borrowers are more likely subject to borrowing constraints that hinder their ability to smooth consumption. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2011-21&r=ure |
| By: | Thomas Philippon; Virgiliu Midrigan |
| Abstract: | A salient feature of the recent U.S. recession is that output and employment have declined more in regions (states, counties) where household leverage had increased more during the credit boom. This pattern is difficult to explain with standard models of financing frictions. We propose a theory that can account for these cross-sectional facts. We study a cash-in-advance economy in which home equity borrowing, alongside public money, is used to conduct transactions. A decline in home equity borrowing tightens the cash-in-advance constraint, thus triggering a recession. We show that the evidence on house prices, leverage and employment across US regions identifies the key parameters of the model. Models estimated with cross-sectional evidence display high sensitivity of real activity to nominal credit shocks. Since home equity borrowing and public money are, in the model, perfect substitutes, our counter-factual experiments suggest that monetary policy actions have significantly reduced the severity of the recent recession. |
| JEL: | E2 E4 E5 G0 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16965&r=ure |
| By: | Hintermaier, Thomas (University of Bonn); Koeniger, Winfried (Queen Mary, University of London) |
| Abstract: | We provide a model with endogenous portfolios of secured and unsecured household debt. Secured debt is collateralized by owner-occupied housing whereas unsecured debt can be discharged according to bankruptcy regulations. We show that the calibrated model matches important quantitative characteristics of observed wealth and debt portfolios for prime-age consumers in the U.S. We then establish the quantitative result that home equity does not serve as informal collateral for unsecured debt since, as in the data, unsecured debtors hold small amounts of home equity in equilibrium. Thus, observed variations in homestead exemptions, which are an important part of U.S. bankruptcy regulation, have a small effect on the quantity and price of unsecured debt. |
| Keywords: | household debt portfolios, housing, collateral, bankruptcy, commitment, income risk |
| JEL: | E21 D91 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5653&r=ure |
| By: | Francesca Cornaglia; Andrew Leigh |
| Abstract: | Most estimates of the cost of crime focus on victims. Yet it is plausible that an even larger cost of crime occurs via its indirect impact on the mental wellbeing of non-victims. To test how crime affects individuals' mental outcomes, we exploit detailed panel data on mental wellbeing, allowing us to observe the relationship between changes in crime in a local area and changes in the mental wellbeing of resident non-victims in that area (controlling for changes in local economic conditions). Our results suggest that increases in crime rates have a negative impact on the mental wellbeing of residents, with the biggest impacts arising from violent crime. We also find that local press coverage of criminal activity enhances the effect of crime on mental well-being. |
| Keywords: | neighbourhood effects, mental health, fear of crime |
| JEL: | I18 K14 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1049&r=ure |
| By: | L. Mauro; Francesco Pigliaru |
| Abstract: | Since Putnam s work on social capital, the Italian regional case has been a very rich source of both data and theories about the origins of large and persistent differences in local stocks of social capital, and about the impact of such differences on economic performances. The Italian case is widely interpreted as supporting the idea that persistent regional divides are largely explained by local differences in social capital. In this paper we maintain that this interpretation fails to recognize that the current large regional gap in Italy is significantly linked to two policy decisions taken by the central State at the beginning of the 1970s. In particular, we focus on the possibility that social capital became a binding constraint for the growth of southern Italy’s mainly as a consequence of the deep process of governmental decentralization that began in the1970s. We formalize this hypothesis by using an endogenous growth model with public capital. In this model, the accumulation of public capital is characterized by the presence of iceberg costs that depend on social capital. Decentralization affects these costs because the impact of the local stocks of social capital on public investment increases when the latter is managed locally. To assess the role of decentralization as a trigger of the influence of local social capital on growth, we control for the impact of labor market reforms, a second and almost simultaneous institutional shock that took place in Italy and that made regional labor markets far more rigid than in the previous decades. In the second part of our paper, we use the large empirical literature on the Italian regions to restrict the values of the parameters of our model in order to perform a simple simulation exercise. In this exercise, the model turns out to be able to account for the major swings in the convergence of southern regions towards the center-northern regions since 1861. The general lessons we can draw from this further analysis of the Italian regional case are as follows. First, we show that the strength of social capital as a determinant of long-run growth may depend on some well-defined characteristic of the institutional context. Second, our model suggests that the economic success of decentralization policies -- even when the budget constraint is not "soft" -- depends on the local endowment of social capital. |
| Keywords: | Growth; Decentralization; Convergence; Social Capital |
| JEL: | O4 R5 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:cns:cnscwp:201103&r=ure |
| By: | Laurent Gobillon (INED - INED); Carine Milcent (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, 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) |
| Abstract: | This paper studies the determinants of the regional disparities in the mortality of patients treated in a hospital for a heart attack in France. These determinants can be some differences in patient characteristics, treatments, hospital charateristics, and local healthcare market structure. We assess their importance with an exhaustive administrative dataset over the 1998-2003 period using a stratified duration model. The raw disparities in the propensity to die within 15 days between the extreme regions reaches 80%. It decreases to 47% after controlling for the patient characteristics and their treatments. In fact, a variance analysis shows that innovative treatments play an important role. Remaining regional disparities are significantly related to the local healthcare market structure. The more patients are locally concentrated in a few large hospitals rather than many small ones, the lower the mortality. |
| Keywords: | spatial health disparities ; stratified duration model |
| Date: | 2011–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-00586837&r=ure |
| By: | Jeanty, P. Wilner; Ulimwengu, John Mususa |
| Abstract: | The poverty rate and income transfer are clearly correlated. However, not much research has attempted to determine the causal linkage between the two. Previous research has primarily focused on the poverty-reducing impact of income transfer. In this paper, we apply a simultaneous equation system of spatial regressions to uncover the spatial pattern of the relationship between the poverty rate and income transfer, using a sample of 3,001 U.S. counties. The results are in line with theoretical expectations; they provide evidence of a significant simultaneity effect between the poverty rate and income transfer. Our findings also confirm the presence of significant spatial autocorrelation. Contrary to previous studies, we find that more generous counties tend to do a better job of reducing poverty and that counties with more poor tend to be less generous, creating incentive for the poor to participate in the labor force. Furthermore, counties located in devolution states perform better in both poverty reduction and income transfer. These findings are missing from extant literature that focuses only on the poverty-reducing impact of welfare payments. |
| Keywords: | endogeneity, income transfer, Poverty, SHAC, spatial econometrics, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1076&r=ure |
| By: | S. Nuray Akin (Department of Economics, University of Miami); Val E. Lambson (Department of Economics, Brigham Young University); Grant R. McQueen (Marriott School, Brigham Young University); Brennan Platt (Department of Economics, Brigham Young University); Barrett A. Slade (Marriott School, Brigham Young University); Justin Wood (Marriott School, Brigham Young University) |
| Abstract: | We explore the questions of whether and why Real Estate Investment Trusts (REITs) pay more for real estate than non-REIT buyers, consequently breaking the law of one price. We develop a model where REITs optimally pay more for property because (1) they are able, due to capital access advantages and, (2) are occasionally compelled, due to regulatory time constraints on the deployment of capital. We show that the typically large (20 to 60 percent) and statistically significant (p-values less than 0.01) REIT-buyer premiums found in standard empirical hedonic pricing models are biased due to unobserved explanatory variables. Using a repeat-transaction methodology that controls for unobserved independent variables, we find the REIT-buyer premium to be about 5 percent. Furthermore, we show that REITs¿ ability (as measured by access to capital markets) and regulator compulsion (as measured by capital deployment deadlines) are related to the price premium. |
| Keywords: | Real Estate Investment Trusts (REITs), commercial properties, hedonic price analysis, repeat transactions, market efficiency, law of one price, price premium |
| JEL: | D83 G14 R33 R3 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:mia:wpaper:2011-1&r=ure |
| By: | Mujcic, Redzo (University of Queensland); Frijters, Paul (University of Queensland) |
| Abstract: | We study social preferences in the form of altruism using data on 959 interactions between random commuters at selected traffic intersections in the city of Brisbane, Australia. By observing real decisions of individual commuters on whether to stop (give way) for others, we find evidence of (i) gender discrimination by both men and women, with women discriminating relatively more against the same sex than men, and men discriminating in favour of the opposite sex more than women; (ii) status-seeking and envy, with individuals who drive a more luxury motor vehicle having a 0.18 lower probability of receiving a kind treatment from others of low status, however this result improves when the decision maker is also of high status; (iii) strong peer effects, with those commuters accompanied by other passengers being 25 percent more likely to sacrifice for others; and (iv) an age effect, with mature-aged people eliciting a higher degree of altruism. |
| Keywords: | altruism, social interaction, social discrimination, status, peer effects, commuters |
| JEL: | D64 C90 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5648&r=ure |
| By: | Nicolas Jacquemet (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Constantine Yannelis (Stanford University - Department of Economics - Department of Economics) |
| Abstract: | The extent of racial discrimination in the labor market is now clearly identified, but its nature largely remains an open question. This paper reports results from an experiment in which fabricated resumes are sent to help-wanted advertisements in Chicago newpapers. We use three groups of identical resumes : one with Anglo-Saxon names, one with African-American names and one with fictitious foreign names whose ethnic origin is unidentifiable to most Americans. We find that resumes with Anglo-Saxon names generate nearly one half more call-backs than identical resumes with African-American or Foreign names. Resumes with non-Anglo-Saxon names, whether African-American or Foreign, show no statistically significant difference in the number of callbacks they elicit. We also find that discrimination is significantly higher in the Chicago suburbs - where ethnic homogenity is high - as opposed to the city proper. We take this as evidence that discriminatory behavior is part of a larger pattern of unequal treatment of any member of non-majority groups - ethnic homophily. |
| Keywords: | Correspondence testing, racial discrimination. |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00587674&r=ure |
| By: | Cellini, Roberto (University of Catania); Torrisi, Gianpiero (University of Newcastle upon Tyne) |
| Abstract: | In this paper, we analyse the effects of public spending for tourism in the twenty Italian regions. The evaluation is made possible by the availability of the databank under the project ‘Conti Pubblici Territoriali’ (‘Regional Public Account’) of the Ministry of Economic Development, wherein the spending of all public institutions is aggregated for each region, and it is also classified according to different criteria, including the sectoral criterion. We take a cross-sectional regression analysis approach, and the effects of public spending for tourism on tourism attraction are investigated. Generally speaking, the effectiveness of public spending appears to be weak. |
| Keywords: | Tourism; Regions; Public Spending; Regional Public Accounts |
| JEL: | C21 L83 M49 R53 R58 |
| Date: | 2010–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:demqwp:2010_010&r=ure |
| By: | Martin Gregor (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Lenka Šastná (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic) |
| Abstract: | We examine a symmetric two-district setting with spillovers of local public spending where a spill-in from the foreign spending is not a substitute, but a complement to domestic spending. Specifically, we assume production of two district-specific public goods out of two complementary district-specific inputs. We compare equilibria in non-cooperative decentralization and cooperative centralization for different spillovers, complementarities and cost-division rules, and control for the effects of strategic delegation and the feasibility of voluntary contributions to the input in the foreign district. We find that centralization welfare-dominates decentralization in most institutional settings and for a wide range of parameters, yet we can also identify necessary and sufficient conditions for decentralization to welfare-dominate centralization. The setup features three novelties: In the absence of transfers, welfare in decentralization increases in spillovers, strategic delegation in decentralization improves welfare, and centralized provision may be non-monotonic in spillovers. |
| Keywords: | Spillover, Spill-in, Strategic complementarity, Decentralization theorem |
| JEL: | H41 H73 H77 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2011_13&r=ure |
| By: | Rothstein, Jesse; Wozny, Nathan |
| Abstract: | Analysts often examine the black-white test score gap conditional on family income. Typically only a current income measure is available. We argue that the gap conditional on permanent income is of greater interest, and we describe a method for identifying this gap using an auxiliary data set to estimate the relationship between current and permanent income. Current income explains only about half as much of the black-white test score gap as does permanent income, and the remaining gap in math achievement among families with the same permanent income is only 0.2 to 0.3 standard deviations in the CNLSY and ECLS samples. When we add permanent income to the controls used by Fryer and Levitt (2006), the unexplained gap in 3rd grade shrinks below 0.15 SDs, less than half of what is found with their controls. |
| Keywords: | Labor Economics |
| Date: | 2011–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:indrel:1925649&r=ure |
| By: | Davide, Furceri; Aleksandra, Zdzienicka |
| Abstract: | The aim of this paper is to assess the short term effects of social spending on economic activity. Using a panel of OECD countries from 1980 to 2005, the results show that social spending has expansionary effects on GDP. In particular, we find that an increase of 1% of social spending increases GDP by about 0.1 percentage point, which, given the share of social spending to GDP, corresponds to a multiplier of about 0.6. The effect is similar to the one of total government spending, and it is larger in periods of severe downturns. Among spending subcategories, social spending in Health and Unemployment benefits have the greatest effects. Social spending also positively affects private consumption while it has negligible effects on investment. The empirical results are economically and statistically significant, and robust. |
| Keywords: | Fiscal Policy; Social Spending; Economic Activity. |
| JEL: | H30 E60 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:30356&r=ure |
| By: | Kaiser, Ulrich (University of Zurich); Kongsted, Hans Christian (University of Copenhagen); Rønde, Thomas (Copenhagen Business School) |
| Abstract: | We study the mapping between labor mobility and industrial innovative activity for the population of R&D active Danish firms observed between 1999 and 2004. Our study documents a positive relationship between the number of workers who join a firm and the firm's innovative activity. This relationship is stronger if workers join from innovative firms. We also find evidence for positive feedback from workers who leave for an innovative firm, presumably because the worker who left stays in contact with their former colleagues. This implies that the positive feedback ("social network effects") that has been found by other studies not only exists but even outweighs the disruption and loss of knowledge occurring to the previous employer from the worker leaving. Summing up the effects of joining and leaving workers, we find ample evidence for mobility to be associated with an increase in total innovative activity of the new and the old employer. |
| Keywords: | labor mobility, innovation, social network |
| JEL: | O33 O34 C23 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5654&r=ure |