nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2011‒07‒02
33 papers chosen by
Steve Ross
University of Connecticut

  1. Does re-design of the policies on housing finance and supply help to solve housing question of Turkey? By Coskun, Yener
  2. What Drives Urban Consumption in Mainland China? The Role of Property Price Dynamics By Yu-Fu Chen; Michael Funke; Aaron Mehrotra
  3. The Incidence of Local Labor Demand Shocks By Matthew J. Notowidigdo
  4. Dynamics of a Protected Housing Market: The Case of Switzerland By Karol Jan BOROWIECKI; Clemens STRUCK
  5. Exploring the polycentric city with an agent-based model By Rémi Lemoy; Charles Raux; Pablo Jensen
  6. Can Anchoring and Loss Aversion Explain the Predictability in the Housing Market? By Tin Cheuk Leung; Kwok Ping Tsang
  7. A Century of the Evolution of the Urban System in Brazil By Valente J. Matlaba; Mark Holmes; Philip McCann; Jacques Poot
  8. Explaining learning gaps in Namibia: The role of language proficiency By Garrouste, Christelle
  9. How Do Mortgage Subsidies Affect Home Ownership? Evidence from the Mid-century GI Bills By Daniel K. Fetter
  10. Favored child? School choice within the family By Chumacero, Rómulo; Paredes, Ricardo
  11. Testing for Clustering of Industries - Evidence from micro geographic data By Tobias Scholl; Thomas Brenner
  12. Investigating Regional House Price Convergence in the United States: Evidence from a pair-wise approach By Mark J. Holmes; Theodore Panagiotidis; Jesus Otero
  13. Critical review of cluster mapping studies in Poland By Tomasz Brodzicki
  14. Does Competition Kill? The Case of Classical Composers By Karol Jan BOROWIECKI; Georgios KAVETSOS
  15. Entrepreneurship and Cities: Evidence from the Post-communist World By Maksim Belitski; Julia Korosteleva
  16. Infrastructure investment opportunities in the New EU Member States: the role of regional policies By Silvia Vignetti; Emanuela Sirtori
  17. Proximity, Networks and Knowledge Production in Europe By Emanuela Marrocu; Raffaele Paci; Stefano Usai
  18. Social Networks and Parental Behavior in the Intergenerational Transmission of Religion By Patacchini, Eleonora; Zenou, Yves
  19. In Government We Trust: The Role of Fiscal Decentralization By Ligthart, J.E.; Oudheusden, P. van
  20. Human Capital and Regional Development By Nicola Gennaioli; Rafael La Porta; Florencio Lopez-de-Silanes; Andrei Shleifer
  21. Cognitive Disparities, Lead Plumbing, and Water Chemistry: Intelligence Test Scores and Exposure to Water-Borne Lead Among World War Two U.S. Army Enlistees By Joseph P. Ferrie; Karen Rolf; Werner Troesken
  22. The effect of vertical knowledge spillovers via the supply chain on location decision of firms By Kashefi, Mohammad Ali
  23. MNE’s Regional Location Choice - A Comparative Perspective on East Germany, the Czech Republic and Poland By Andrea Gauselmann; Philipp Marek; J. P. Angenendt
  24. On the geography of international banking: the role of third-country effects By Georgios Fotopoulos; Helen Louri
  25. The knowledge regions in the enlarged Europe By Alessandra Colombelli; Marta Foddi; Raffaele Paci
  26. An Analysis of the Factors Determining Crime in England and Wales: A Quantile Regression Approach By Siddhartha Bandyopadhyay; Samrat Bhattacharya; Rudra Sensarma
  27. Dynamic Large Spatial Covariance Matrix Estimation in Application to Semiparametric Model Construction via Variable Clustering: the SCE approach By Song Song
  28. How Performance Information Affects Human-Capital Investment Decisions: The Impact of Test-Score Labels on Educational Outcomes By John P. Papay; Richard J. Murnane; John B. Willett
  29. Assessing the tendency of Spanish manufacturing industries to cluster: Co-localization and establishment size By Marta Casanova; Vicente Orts Ríos
  30. Land use planning: the impact on retail productivity By Paul Cheshire; Christian Hilber; Ioannis Kaplanis
  31. The Impact of Out-of-Home Childcare Centers on Early Childhood Development By Gregory Veramendi; Sergio Urzua
  32. Measuring Fiscal Decentralization - Exploring the IMF’s Databases By Phebby Kufa; Carlos A Gutierrez Mangas; Claudia Helene Dziobek
  33. How Far Has China's Urbanization Come? (Japanese) By MENG Jianjun

  1. By: Coskun, Yener
    Abstract: Housing is one of the major socio-economic problems in Turkey. Widespread spontaneous settlements in urban area may be accepted as the sufficient criterion for the level of housing question in Turkey. Additionally, there are important quality problems in existing housing units. This problematic structure may be also explained by the lack of efficient housing policies and housing finance system. It seems after 2003 that housing policy of Turkey is essentially based on the Housing Development Administration‟s (HDA) pragmatic approaches. In this context, we may argue that the current housing policy is one-dimensional and also would be unsustainable in some perspectives. In this experimental research, the author attempts to analyze limitations and clear/potential problems of the housing policies of HDA. We basically analyze whether affordable housing problem is minimize with alternative policies and required incentives. In this context, we review housing subsidies and PPPs as the instruments of alternative social/private rental housing supply models. In a broader perspective, the original contribution of this paper is to examine private rental housing, social rental housing, urban renewal, micro-finance and housing production of REITs as the alternative housing supply/finance models to improve affordable housing. We conclude that these alternative housing supply/finance models may improve housing affordability and hence minimize the housing question in Turkey, if they can optimally design and required incentives may meet by the central/local governments.
    Keywords: Housing finance; affordable housing; Turkish housing policies; TOKI (Housing Development Administration)
    JEL: R31 R38
    Date: 2011–06–18
  2. By: Yu-Fu Chen (University of Dundee); Michael Funke (Hamburg University and Hong Kong Institute for Monetary Research); Aaron Mehrotra (Bank of Finland)
    Abstract: This paper adds to the literature on wealth effects on consumption by disentangling house price effects on consumption for mainland China. In a stochastic modelling framework, the riskiness, rate of increase and persistence of house price movements have different implications for the consumption/housing ratio. We exploit the geographical variation in property prices by using a quarterly city-level panel dataset for the period 1998Q1 - 2009Q4 and rely on a panel error correction model. Overall, the results suggest a significant long run impact of property prices on consumption. They also broadly confirm the predictions from the theoretical model.
    Keywords: Consumption, House Prices, China, Panel Data
    JEL: E21 R31 C23 O53
    Date: 2011–05
  3. By: Matthew J. Notowidigdo
    Abstract: Low-skill workers are comparatively immobile: when labor demand slumps in a city, low-skill workers are disproportionately likely to remain to face declining wages and employment. This paper estimates the extent to which (falling) housing prices and (rising) social transfers can account for this fact using a spatial equilibrium model. Nonlinear reduced form estimates of the model using U.S. Census data document that positive labor demand shocks increase population more than negative shocks reduce population, this asymmetry is larger for low-skill workers, and such an asymmetry is absent for wages, housing values, and rental prices. GMM estimates of the full model suggest that the comparative immobility of low-skill workers is not due to higher mobility costs per se, but rather a lower incidence of adverse labor demand shocks.
    JEL: H53 J01 R31
    Date: 2011–06
  4. By: Karol Jan BOROWIECKI (Department of Economics, Trinity College Dublin); Clemens STRUCK (Department of Economics, Trinity College Dublin)
    Abstract: We analyze the determinants and dynamics of a highly protected housing market. Based on Swiss data for the time period 1990 to 2009 we model house prices and construction activity. We find that house prices exhibit a positive association with construction price, working age population as well as GDP and a negative with interest rates, whereas construction activity is positively related to working age population and GDP and negatively with construction price and interest rates. These estimates are broadly consistent with previous theoretical and empirical research.
    Keywords: Housing demand, housing supply and markets
    JEL: R21 R31
    Date: 2011–06
  5. By: Rémi Lemoy (LET - Laboratoire d'économie des transports - CNRS : UMR5593 - Université Lumière - Lyon II - Ecole Nationale des Travaux Publics de l'Etat, IXXI - Institut Rhône-Alpin des systèmes complexes - INRIA - École Normale Supérieure de Lyon - Institut National des Sciences Appliquées de Lyon - Université Claude Bernard - Lyon I - Université Joseph Fourier - Grenoble I - CNRS - IRD - École Normale Supérieure de Lyon); Charles Raux (LET - Laboratoire d'économie des transports - CNRS : UMR5593 - Université Lumière - Lyon II - Ecole Nationale des Travaux Publics de l'Etat, IXXI - Institut Rhône-Alpin des systèmes complexes - INRIA - École Normale Supérieure de Lyon - Institut National des Sciences Appliquées de Lyon - Université Claude Bernard - Lyon I - Université Joseph Fourier - Grenoble I - CNRS - IRD - École Normale Supérieure de Lyon); Pablo Jensen (LET - Laboratoire d'économie des transports - CNRS : UMR5593 - Université Lumière - Lyon II - Ecole Nationale des Travaux Publics de l'Etat, IXXI - Institut Rhône-Alpin des systèmes complexes - INRIA - École Normale Supérieure de Lyon - Institut National des Sciences Appliquées de Lyon - Université Claude Bernard - Lyon I - Université Joseph Fourier - Grenoble I - CNRS - IRD - École Normale Supérieure de Lyon, Phys-ENS - Laboratoire de Physique de l'ENS Lyon - CNRS : UMR5672 - École Normale Supérieure de Lyon)
    Abstract: The standard urban economics model of Alonso, Muth, Mills, describes analytically an equilibrium location of households in urban areas. We present an agent-based model, using simple interactions between agents, and able to reach this equilibrium in a dynamic way. The agent-based model allows us to simulate the development of a city by combination of heterogeneous agents and the introduction of several work centers. This tool allows the addition of a wide variety of features to the standard urban economics model to study their effects. We focus here on the study of the polycentric city.
    Keywords: agent-based model ; urban economics ; location choice ; polycentric city
    Date: 2011–05–30
  6. By: Tin Cheuk Leung (The Chinese University of Hong Kong); Kwok Ping Tsang (Virginia Tech and Hong Kong Institute for Monetary Research)
    Abstract: We offer an explanation of why changes in house prices are predictable. Extending the static model in Leung and Tsang (2010), we analyze the housing market with loss averse sellers and anchoring buyers in a dynamic setting. A buyer's current offer price increases with the housing unit's previous purchase price, and the seller has the tendency to delay the sale of a housing unit that has a loss. We show that when both cognitive biases are present, changes in house prices are predicted by price dispersion and trade volume. Using a sample of housing transactions in Hong Kong from 1992 to 2006, we find that price dispersion and transaction volume are indeed powerful predictors of housing return. For forecasting both in and out of sample, the two variables perform as well as conventional predictors like real interest rate and real stock return.
    Keywords: Housing Return Predictability, Price Dispersion, Anchoring, Loss Aversion, Hong Kong Housing Market
    JEL: R31 C53
    Date: 2011–05
  7. By: Valente J. Matlaba (University of Waikato); Mark Holmes (University of Waikato); Philip McCann (University of Groningen); Jacques Poot (University of Waikato)
    Abstract: In this paper, we study the hitherto unexplored evolution of the size distribution of 185 urban areas in Brazil between 1907 and 2008. We find that the power law parameter of the size distribution of the 100 largest urban areas increases from 0.63 in 1907 to 0.89 in 2008, which confirms an agglomeration process in which the size distribution has become more unequal. A panel fixed effects model pooling the same range of urban size distributions provides a power law parameter equal to 0.53, smaller than those from cross-sectional estimation. Clearly, Zipf’s Law is rejected. The lognormal distribution fits the city size distribution quite well until the 1940s, but since then applies to small and medium size cities only. These results are consistent with our understanding of historical-political and socio-economic processes that have shaped the development of Brazilian cities.
    Keywords: Zipf’s Law; Gibrat’s Law; lognormal distribution; city size; population growth; Brazil
    JEL: J11 N96 O18 R11 R12
    Date: 2011–06–21
  8. By: Garrouste, Christelle
    Abstract: In a multilingual context, this study investigates the role of language skills on mathematics achievement. It compares characteristics of 5048 Grade-6 learners in 275 Namibian schools. The outcome variable is the standardized SACMEQ mathematics score collected in year 2000. Hierarchical linear modeling is used to partition the total variance in mathematics achievement into its within- and between-school components. The results do confirm the positive correlation between strong language skills variations at the school-level and low pupil mathematics scores, which may question the capacity of the current bilingual policy to provide for an effective and equal learning environment.
    Keywords: Learning achievement; language skills; multilevel analysis; HLM
    JEL: C13 I2 C3
    Date: 2011
  9. By: Daniel K. Fetter
    Abstract: The sharpest increase in U.S. home ownership over the last century occurred between 1940 and 1960, associated primarily with a decrease in the age at first ownership. To shed light on the contribution of several coincident large-scale government interventions in housing finance, I examine veterans' home loan benefits provided under the postwar GI Bills. I use two breaks in the probability of military service by date of birth, for cohorts coming of age at the end of World War II and the Korean War, to estimate the impact of veteran status on home ownership. I find significant, positive effects of veteran status on home ownership in 1960. Consistent with a model in which the impact of easier loan terms declines with age, these effects are larger for younger veterans and diminish in 1970 and 1980 as the cohorts age. Complementary evidence suggests veterans' non-housing benefits and military service itself are unlikely to explain the observed differences in home ownership. Veterans' housing benefits appear to have increased aggregate home ownership rates primarily by shifting purchase earlier in life; they can explain approximately 7.4 percent of the increase in aggregate home ownership from 1940 to 1960, and 25 percent of the increase for the affected cohorts.
    JEL: N00 N22 N92 R00
    Date: 2011–06
  10. By: Chumacero, Rómulo; Paredes, Ricardo
    Abstract: We study school choice within the family, analyzing how birth order, gender, innate talent, and family financial restrictions impact the parents´ decision to prioritize the education of one or more of the children over the rest. We find that parents, particularly from lower income homes, are more likely to select more prestigious, higher cost schools for their eldest child, male children and the most talented children. This behavior may explain part of the positive “male bias” in learning and may have a relevant impact on income distribution among family members.
    Keywords: School Choice; Siblings; Chile
    JEL: D13 C25
    Date: 2011–06–25
  11. By: Tobias Scholl (EBS European Business School); Thomas Brenner (Department of Geography, Philipps University Marburg)
    Abstract: We present a new statistical method that describes the localization patterns of industries in a continuous space. The proposed method does not divide space into subunits whereby it is not affected by the Modifiable Areal Unit Problem (MAUP). Our method fulfils all five criteria for a spatial statistical test of localization proposed by Duranton and Overman (2005) and improves them with respect to the significance of its results. Additionally, our test allows inference to the localization of highly clustered firms. Furthermore, the algorithm is efficient in its computation, which eases the usage in research.
    Keywords: Spatial concenctration, localization, clusters, MAUP, distance-based measures
    JEL: C40 C60 R12
    Date: 2011–06
  12. By: Mark J. Holmes (Department of Economics, Waikato University Management School); Theodore Panagiotidis (Department of Economics, University of Macedonia); Jesus Otero (Facultad de Economia, Universidad del Rosario)
    Abstract: In this paper we examine long-run house price convergence across US states using a novel econometric approach advocated by Pesaran (2007) and Pesaran et al. (2009). Our empirical modelling strategy employs a probabilistic test statistic for convergence based on the percentage of unit root rejections among all state house price differentials. Using a sieve bootstrap procedure, we construct confidence intervals and find evidence in favour of convergence. We also conclude that speed of adjustment towards long-run equilibrium is inversely related to distance.
    Keywords: Panel data, cross-section dependence, pair-wise approach, house prices,convergence.
    JEL: C2 C3 R1 R2 R3
    Date: 2011–06
  13. By: Tomasz Brodzicki (Faculty of Economics, University of Gdansk)
    Abstract: The concept of industrial cluster has become one of the most prominent ones both in theoretical discussions, policy making and actual business. It is generally believed that under certain conditions, efficiently performing cluster through positive externalities can become an engine of regional development. Due to potential market imperfections public intervention is frequently required. The concept has gained significance in Eastern and Central European Countries including Poland. Sound cluster-based policy requires a detailed identification of dominant cluster as well as embryonic clusters. In the past few years at the central level of Poland and at the level of some of its provinces (eg. Pomerania, Mazovia, Opole, Silesia) cluster-mapping exercises were performed as part of an effort to modify/inform regional development strategies. Apart from several domestic studies an analysis by an international team for the European Commission for the whole area of Central and Eastern Europe was carried out. The present paper critically reviews the aforementioned studies identifying major methodological bottlenecks. It seems that more emphasis should be placed on the issue of co-location of both vertically related industrial sectors as well as horizontal agglomeration. Spatial autocorrelation should also be included. Appropriate level of sectoral as well as spatial disaggregation of data is of outmost importance.
    Keywords: industrial concentration, cluster, cluster-based policy, statistical cluster mapping
    JEL: B41 C81 R12 R30
    Date: 2010–08
  14. By: Karol Jan BOROWIECKI (Department of Economics, Trinity College Dublin); Georgios KAVETSOS (Cass Business School, City University, London)
    Abstract: We investigate the impact of peer competition on longevity using a unique historical data set of classical composers. We measure the geographic concentration of peers by the number of composers located in the same area and the time spent in one of the main geographic clusters for classical music. Using instrumental variables, we find a significant negative effect of geographic concentration. An additional composer based in the same location decreases longevity by 2.3 years, on average. Besides the widely known economic benefits associated with competition, these findings suggest that significant negative welfare externalities exist as well.
    Keywords: geographic concentration, well-being, mortality, culture
    JEL: D12 I12 N90 R11 Z19
    Date: 2011–06
  15. By: Maksim Belitski (Brunel University); Julia Korosteleva (University College London)
    Abstract: This paper investigates the variation in entrepreneurship across cities of the Commonwealth of Independent States during 1995-2008, utilising a unique dataset and employing the System Generalised Method of Moments technique. Our findings suggest that banking reform facilitates entrepreneurship, whereas the size of the state discourages it. Our results confirm a U-shaped relationship between per-capita income and entrepreneurship. We also find that cities with higher concentration of universities are likely to have higher entrepreneurial entry. This provides some evidence for the importance of agglomeration economies in terms of higher concentration of knowledge which may lead to intensified exchange of ideas driving knowledge-based entrepreneurship in the region.
    Keywords: Entrepreneurship, small business, urbanisation, transition, CIS Urban Audit
    Date: 2011–06–24
  16. By: Silvia Vignetti (Centre for Industrial Studies (CSIL)); Emanuela Sirtori (Centre for Industrial Studies (CSIL))
    Abstract: Infrastructure development is a priority on policy agendas in the EU and worldwide, because of the very high investment needs in basic infrastructure, especially in lagging behind regions and countries. The paper provides a descriptive analysis of the infrastructural gaps in EU transition economies at national and, as far as possible, regional level for some infrastructure sectors: transport, telecommunication, environment and energy. The analysis suggests that, on average, internal divergences in the infrastructures’ endowment are present between the urbanised capital cities regions and the peripheral and rural areas, in all the Member States; yet, the density and quality of such endowment is significantly higher in the Western countries and limited in the Eastern ones.
    Keywords: Infrastructure, regional policy, EU new member states
    JEL: H54 O18 R11 R58
    Date: 2010–03–15
  17. By: Emanuela Marrocu; Raffaele Paci; Stefano Usai
    Abstract: This paper aims at assessing the role of various dimension of proximity on the innovative capacity of a region within the context of a knowledge production function where we consider as main internal inputs R&D expenditures and human capital. We want to assess if, and how much, the creation of new ideas in a certain region is the result of flows of information and knowledge coming from proximate regions. In particular, we examine in details the concept of proximity combining the usual geographical dimension with the institutional, the technological, the social and the organizational proximity. The analysis is implemented for an ample dataset referring to 287 regions in 29 countries (EU27 plus Norway, Switzerland) for the last decade. Results show that human capital and R&D are clearly essential for innovative activity but with an impact which is much higher for the former factor. As for the proximity and network effects, we find that geography is important but less than technological and cognitive proximity. Social and organizational networks are also relevant but their role is more modest. Finally, most of these proximities prove to have a complementary role in shaping innovative activity across regions in Europe.
    Keywords: knowledge production; technological spillover; proximity; networks
    JEL: O31 C31 O18 R12 O52
    Date: 2011
  18. By: Patacchini, Eleonora (Sapienza University of Rome); Zenou, Yves (Stockholm University)
    Abstract: We analyze the intergenerational transmission of the strength of religion focusing on the interplay between family and peer effects. We develop a theoretical model suggesting that both peer quality and parental effort are of importance for the religious behavior of the children. We then bring the model to the data by using a very detailed dataset of adolescent friendship networks in the United States. We find that, for religious parents, the higher is the fraction of religious peers, the more parents put effort in transmitting their religiosity, indicating cultural complementarity. For non-religious parents, we obtain the reverse, indicating cultural substitutability. Concerning the success in transmitting the religious trait, we find that, for religious parents, the fraction of religious peers has only an indirect effect (through parental effort) while, for non-religious parents, there is a lower indirect effect and a statistically significant and sizeable direct effect of peers on the transmission of the non-religious trait.
    Keywords: religion, cultural transmission, peer effects, network fixed effects
    JEL: A14 D85 Z12
    Date: 2011–06
  19. By: Ligthart, J.E.; Oudheusden, P. van (Tilburg University, Center for Economic Research)
    Abstract: We measure the contribution of fiscal decentralization to trust in government. Using repeated cross-country survey data of individuals on several measures of trust in govern- ment over the 1994-2007 period, we estimate an ordered response model of the government trust and fiscal decentralization nexus. We control for unobserved country characteristics, macroeconomic determinants, and individual characteristics. Our main finding is that fiscal decentralization increases trust in government. More specifically, a one percentage point increase in fiscal decentralization causes roughly a four-fifths of a percentage point increase in government trust. The beneficial effect of fiscal decentralization on trust in government is neither limited to nor necessarily large for relatively decentralized countries.
    Keywords: Fiscal Decentralization;Government Trust;Social Capital
    JEL: D70 H11 H70 H72
    Date: 2011
  20. By: Nicola Gennaioli; Rafael La Porta; Florencio Lopez-de-Silanes; Andrei Shleifer
    Abstract: We investigate the determinants of regional development using a newly constructed database of 1569 sub-national regions from 110 countries covering 74 percent of the world’s surface and 96 percent of its GDP. We combine the cross-regional analysis of geographic, institutional, cultural, and human capital determinants of regional development with an examination of productivity in several thousand establishments located in these regions. To organize the discussion, we present a new model of regional development that introduces into a standard migration framework elements of both the Lucas (1978) model of the allocation of talent between entrepreneurship and work, and the Lucas (1988) model of human capital externalities. The evidence points to the paramount importance of human capital in accounting for regional differences in development, but also suggests from model estimation and calibration that entrepreneurial inputs and human capital externalities are essential for understanding the data.
    JEL: L26 O11 O43 O47 R11
    Date: 2011–06
  21. By: Joseph P. Ferrie; Karen Rolf; Werner Troesken
    Abstract: Assessing the impact of lead exposure is difficult if individuals select on the basis of their characteristics into environments with different exposure levels. We address this issue with data from when the dangers of lead exposure were still largely unknown, using new evidence on intelligence test scores for male World War Two U.S. Army enlistees linked to the households where they resided in 1930. Higher exposure to water-borne lead (proxied by urban residence and low water pH levels) was associated with lower test scores: going from pH 6 to pH 5.5, scores fell 5 points (1/4 standard deviation). A longer time exposed led to a more severe effect. The ubiquity of lead in urban water systems at this time and uncertainty regarding its impact mean these effects are unlikely to have resulted from selection into locations with different levels of exposure.
    JEL: I10 N3
    Date: 2011–06
  22. By: Kashefi, Mohammad Ali
    Abstract: In this paper a game theoretic model is employed to analyze the relationship between strategic location decision of firms in the supply chain considering the role of horizontal and vertical knowledge spillovers, and numerical approach is applied to characterize the equilibria of the considered multi-stage game. Geographical concentration or isolation as equilibrium outcome is determined based on our different parameterizations and two scenarios each consists of two separated cases, which we establish according to the location of our agents. In the first scenario both suppliers are supposed to be located in different regions while in the second one they act in a same region. In addition, first case of each scenario considers geographical isolation of two producers whereas second case investigates the geographical concentration. Furthermore, the effect of different technological level of our agents on their final location decision is investigated.
    Keywords: Strategic Firm Location; Knowledge Spillover; Geographical Concentration; Supply Chain
    JEL: R30 L13 C88 C61 D83 C72
    Date: 2011–05–01
  23. By: Andrea Gauselmann; Philipp Marek; J. P. Angenendt
    Abstract: The focus of this article is the empirical identification of factors influencing Foreign Direct Investment (FDI) in transition economies on a regional level (NUTS 2). The analysis is designed as benchmark between three neighboring post-communist regions, i.e. East Germany, the Czech Republic and Poland. Their different transition paths have not only resulted in economic differences. We can also observe today that the importance of pull factors for FDI varies significantly across the regions. This analysis shows that in comparison with Poland and the Czech Republic, East Germany’s major benefit is its purchasing power, its geographical proximity to West European markets, and its modern infrastructure. Furthermore, the analysis suggests that intra-industry linkages such as specialization and agglomeration economies are relevant factors for the location decision of foreign investors. This result can help to explain the regional divergence of FDI streams in transition economies.
    Keywords: multinational enterprises, international business, regional economic activity: growth, development, and changes, discrete choice
    JEL: F23 R11 C25
    Date: 2011–06
  24. By: Georgios Fotopoulos (University of Peloponnese and visiting scholar at the Bank of Greece); Helen Louri (Bank of Greece)
    Abstract: International banking is a complex phenomenon. Among its determinants, distance has been found to be critical. But does distance only have a simple negative direct effect? Or is the role of geography more intricate? Applying spatial analysis techniques on BIS data of bank foreign claims in 178 countries in 2006, evidence of positive spatial autocorrelation under alternative spatial weights schemes is brought to light. The geographical aspects of international banking are further explored by a spatial autoregressive gravity model. The results obtained support that the operation of a spatial lag leads to important indirect or third-country effects. Evidence of such financial spillovers is further corroborated by results of a spatial autoregressive Tobit model. Geography is more important than the effect of distance on its own would suggest. Third-country effects operate in a manner that subsequently connects countries through links beyond those immediately involved in borrowing (destination) and lending (origin) relationships. Confirming earlier results, the economic size of sending and recipient countries, cultural similarity and in-phase business cycles enhance international banking, while distance and exchange rate volatility hinder it. Also, while lower political risk has a positive role, so do higher financial and economic risks, reflecting-to some extent-some of the reasons behind the current financial crisis.
    Keywords: international banking ;financial spillovers; gravity model; spatial econometrics
    Date: 2011–03
  25. By: Alessandra Colombelli; Marta Foddi; Raffaele Paci
    Abstract: Since the Lisbon agenda in 2000, Europe stated the goal to become the most advanced knowledge economy in the world relying specifically on the increase and strengthen of its human capital and technological endowments. However, given the presence of localized externalities in the knowledge accumulation process, this policy may produce distortive and unwanted consequences at the territorial level reinforcing the existing high inequalities among regions. Another crucial feature to be considered is the recent enlargement process of the European Union which has brought on stage new players characterized by a low average level of knowledge activity accompanied by a huge degree of internal territorial disparity. The aim of this paper is to identify the “knowledge regions” in Europe and to examine their main territorial features. To this aim we first build, for 287 regions belonging to 31 European countries, a comprehensive picture of the two variables - human capital and technological activity - which constitute the main pillars of the knowledge economy. We compute two synthetic indicators for human capital and technology and, on the basis of these two dimensions, we identify 74 knowledge regions, mainly located in the centre and north of Europe. This results are confirmed by a cluster analysis.
    Keywords: knowledge; human capital; technological activity; regions; Europe
    JEL: R11 J24 O30 O52
    Date: 2011
  26. By: Siddhartha Bandyopadhyay; Samrat Bhattacharya; Rudra Sensarma
    Abstract: We examine how socio-economic and police enforcement variables affect property and violent crimes at different points of the crime distribution in England and Wales over the period 1992-2007. By using data from 43 police force areas, we examine how the effect of real earnings, unemployment, crime detection rate, income inequality and proportion of young people varies across high and low crime areas. Six crime categories are examined - burglarly, theft and handling, fraud and forgery, violence against the person, robbery, and sexual assault. Using a quantile regression model, we find that there are statistically significant differences in the impact of explanatory variables on various crime rates for low and high crime areas. For example, not only does unemployment increase crime but it does so more in high crime areas. Higher detection rates reduce crime rates and the effect is stronger in low crime areas. There are also differences in distributional impact on crime rates for real earnings, income inequality and proportion of young people. Thus, our work points to the need to look beyond the usual mean effects of policing and socio-economic factors on crime and consider their impact on the entire distribution of crime rates. This will enable us to tailor policies that are particularly effective at different points in the crime distribution. Further, given the differential impact of earnings and unemployment across high and low crime areas this provides insight into why paradoxically recessions may have no impact on crime or even lower it.
    Keywords: Crime, Quantile Regression
    JEL: K42 C23
    Date: 2011–06
  27. By: Song Song
    Abstract: To better understand the spatial structure of large panels of economic and financial time series and provide a guideline for constructing semiparametric models, this paper first considers estimating a large spatial covariance matrix of the generalized $m$-dependent and $\beta$-mixing time series (with $J$ variables and $T$ observations) by hard thresholding regularization as long as ${{\log J \, \cx^*(\ct)}}/{T} = \Co(1)$ (the former scheme with some time dependence measure $\cx^*(\ct)$) or $\log J /{T} = \Co(1)$ (the latter scheme with some upper bounded mixing coefficient). We quantify the interplay between the estimators' consistency rate and the time dependence level, discuss an intuitive resampling scheme for threshold selection, and also prove a general cross-validation result justifying this. Given a consistently estimated covariance (correlation) matrix, by utilizing its natural links with graphical models and semiparametrics, after "screening" the (explanatory) variables, we implement a novel forward (and backward) label permutation procedure to cluster the "relevant" variables and construct the corresponding semiparametric model, which is further estimated by the groupwise dimension reduction method with sign constraints. We call this the SCE (screen - cluster - estimate) approach for modeling high dimensional data with complex spatial structure. Finally we apply this method to study the spatial structure of large panels of economic and financial time series and find the proper semiparametric structure for estimating the consumer price index (CPI) to illustrate its superiority over the linear models.
    Date: 2011–06
  28. By: John P. Papay; Richard J. Murnane; John B. Willett
    Abstract: Students receive abundant information about their educational performance, but how this information affects future educational-investment decisions is not well understood. Increasingly common sources of information are state-mandated standardized tests. On these tests, students receive a score and a label that summarizes their performance. Using a regression-discontinuity design, we find persistent effects of earning a more positive label on the college-going decisions of urban, low-income students. Consistent with a Bayesian-updating model, these effects are concentrated among students with weaker priors, specifically those who report before taking the test that they do not plan to attend a four-year college.
    JEL: I20 I21 J24
    Date: 2011–06
  29. By: Marta Casanova (Dpto. Economía); Vicente Orts Ríos (Dpt. Economia)
    Abstract: In this paper, we use a distance-based method, specifically the Ripley’s K function, to evaluate the spatial location patterns of Spanish manufacturing establishments and to assess the different tendencies to cluster in each sector or subsector relative to the whole of manufacturing. Specifically, we analyse the role played by the size of establishments in determining the location patterns detected in each sector, and the co-localization between horizontally- and verticallylinked industries to assess the importance of the potential spillovers across industries. We apply this methodology to Spanish manufacturing industries at the two-digit and the four-digit levels. Considering four digits of disaggregation allows us to isolate the different behaviour in the spatialdistribution of each subsector as well as prevent the effects of compensation due to previous aggregation. En este trabajo se utiliza un método basado en la distancia, específicamente la función K de Ripley, para analizar los patrones de localización espacial de los establecimientos manufactureros españoles y evaluar las diferentes tendencias a concentrarse de cada sector o subsector en relación con el conjunto de la industria manufacturera. En concreto, se analiza el papel que desempeña el tamaño de los establecimientos en la determinación de los patrones de localización detectados en cada sector. Así mismo, se evalúa la importancia de los spillovers potenciales entre las diferentes industrias o subsectores mediante un análisis de la tendencia a la co-localización entre empresas de industrias relacionadas horizontal y verticalmente. Aplicamos esta metodología a las industrias manufactureras españolas con un nivel de desagregación de dos y cuatro dígitos CNAE. El hecho de considerar cuatro dígitos de desagregación nos permitedetectar las diferencias en el comportamiento de la distribución espacial de cada subsector, así como prevenir los efectos de compensación debidos a la agregación anterior.
    Keywords: localización espacial, método basado en la distancia, función K de Ripley, área poligonal, desagregación, co-localización, tamaño de establecimiento. spatial location, distance-based method, Ripley’s K function, polygonal boundary, disaggregation, co-localization, establishment size.
    JEL: C15 C40 C60 R12
    Date: 2011–06
  30. By: Paul Cheshire; Christian Hilber; Ioannis Kaplanis
    Abstract: The restrictions that planning policies impose on retail development have significantly reduced the productivity of supermarkets, according to Paul Cheshire and colleagues.
    Keywords: Land use regulation, regulatory costs, firm productivity, retail
    JEL: D2 L51 L81 R32
    Date: 2011–06
  31. By: Gregory Veramendi; Sergio Urzua
    Abstract: This paper presents a comprehensive empirical analysis of the impact of attending a child day care center on early childhood development (ECD) in Chile, examining child development from a multi-dimensional perspective. The potential endogeneity associated with the parental decision of sending children to day care centers (or preschools) is addressed. Additionally, unobserved heterogeneity is interpreted as (latent) abilities. This approach provides a unifying framework combining parental decisions, children’s endowments, and child care characteristics. The results of the study suggest that: (i) cognitive and socioemotional test scores from children younger than two are too noisy to be analyzed; (ii) analysis of enrollment in child care centers for children older than two reveals significant effects of family background, unobserved abilities, the local availability of centers, and local capacity; and (iii) enrollment in child care centers seems to boost cognitive development among children older than two.
    Date: 2011–06
  32. By: Phebby Kufa; Carlos A Gutierrez Mangas; Claudia Helene Dziobek
    Abstract: Conventional wisdom postulates that there are benefits from decentralizing government finances but there is little empirical evidence about actual country practices. This paper presents data on fiscal decentralization for about 80 countries over a period of about 20 years (1990-2008) from the IMF’s Government Finance Statistics Yearbook (GFSY), the only global database with fiscal data for several levels of government. The data show that in many countries, revenue collection remains relatively more centralized than expenditures and that employment tends to be concentrated in lower levels of government. Except for transition economies, the levels of decentralization are relatively stable over the time period. The findings are shown by degree of economic development, constitutional power arrangements, and geographic area, broadly confirming key factors identified in the literature as determining the extent of fiscal decentralization.
    Date: 2011–06–02
  33. By: MENG Jianjun
    Abstract: Currently, China is urbanizing its population at an unprecedented pace in human history. China's urbanization rate is expected to reach to 50% in 2010, reflecting that China has entered into a society of urban majority. In consideration of the massive surplus in the labor force in rural areas, the process of urbanization in China is far from complete and will continue over the next two decades. Under the effects of a unique "household registration system" and the rapidly evolving labor market, China's urbanization is facing more challenges than its predecessors of developed countries and its peers of developing countries. With the signs of frequent manpower shortages and rising labor costs in coastal regions in recent years, China's labor market has been deemed to pass the Lewisian turning point. Although the rapid economic growth and population aging are shaping the labor market in China, the household registration system still constitutes a barrier for the more efficient allocation of its labor force. This paper will examine the urbanization process in China and propose relevant new policies and systems to reconcile with the country's demographic trends and economic growth.
    Date: 2011–06

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