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on Urban and Real Estate Economics |
| By: | Juan Carlos Hatchondo; Leonardo Martinez; Juan M. Sánchez |
| Abstract: | We incorporate house price risk and mortgages into a standard incomplete market (SIM) model. We calibrate the model to match U.S. data and we show that the model also ac- counts for non-targeted features of the data such as the distribution of down payments, the life-cycle profile of home ownership, and the mortgage default rate. In addition, we show that the average coefficients that measure the agents' ability to self-insure against income shocks are similar to those of a SIM model without housing (as presented by Kaplan and Violante, 2010). However, incorporating housing increases the values of these coefficient for younger agents, which narrows the gap between the SIM model's implications and the data. The response of consumption to house price shocks is minimal. We also study the effects of default prevention policies. Introducing a minimum down payment requirement of 15% reduces defaults on mortgages by 30%, reduces the home ownership rate up to only 0.2 percentage points (if the aggregate house price level does not adjust), and may cause house prices to decline up to 0.7% (if home ownership does not adjust). Garnishing defaulters' income in excess of 43% of median consumption for one year produces a similar decline in defaults; but, since it reduces the median equilibrium down payment from 19% to 9%, it boosts home ownership up to 4.3 percentage points (if the aggregate house price level does not adjust) and may increase house prices up to 16.1% (if home ownership does not adjust). The introduction of minimum down payments or income garnishment benefit a majority of the population. |
| Keywords: | Mortgage loans ; Default (Finance) |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2011-019&r=ure |
| By: | Evridiki Tsounta |
| Abstract: | This paper investigates the role of government intervention in achieving the American dream of homeownership. The study analyzes the role of tax deductions in housing finance, including their impact on homeownership and housing consumption. The role of the Government Sponsored Enterprises in facilitating the creation of a secondary market for mortgage-backed securities is also analyzed as well as the role of the Federal Housing Administration. Cross-country comparisons of how housing is financed in other industrial countries is also provided, emphasizing how other countries have been able to achieve comparable homeownership rates as the United States in a less complicated and fiscally cheaper system. Country experiences of successfully phasing out government intervention are also analyzed. |
| Keywords: | Cross country analysis , Household credit , Housing , Housing prices , Loan guarantees , Private sector , Tax exemptions , Tax rates , United States , |
| Date: | 2011–08–09 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:11/191&r=ure |
| By: | David J. Deming; Justine S. Hastings; Thomas J. Kane; Douglas O. Staiger |
| Abstract: | We study the impact of a public school choice lottery in Charlotte-Mecklenburg (CMS) on postsecondary attainment. We match CMS administrative records to the National Student Clearinghouse (NSC), a nationwide database of college enrollment. Among applicants with low-quality neighborhood schools, lottery winners are more likely than lottery losers to graduate from high school, attend a four-year college, and earn a bachelor’s degree. They are twice as likely to earn a degree from an elite university. The results suggest that school choice can improve students’ longer-term life chances when they gain access to schools that are better on observed dimensions of quality. |
| JEL: | H4 I2 I21 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17438&r=ure |
| By: | Kurata, Hiroshi; Nomura, Ryoichi; Suga, Nobuhito |
| Abstract: | We investigate the effects of a reduction in trade costs on industrial location and welfare in an economy with external economies of scale. We propose a Chamberlinian agglomeration model with footloose capital, which is analytically-solvable. With respect to industrial location, we demonstrate that a reduction in trade cost is likely to lead to agglomeration. With respect to welfare, we show that agglomeration makes a country with agglomeration better off, and the country without agglomeration better or worse off, depending on the degree of external economies of scale. We also prove that agglomeration makes the overall economy better off. |
| Keywords: | New economic geography, Agglomeration, Footloose capital, External economies of scale, F12, F15, F21, R12, |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:hok:dpaper:242&r=ure |
| By: | David Castells (Faculty of Economics, University of Barcelona) |
| Abstract: | The effects of inequality on economic growth depend on several factors. On one hand, they depend on the time horizon considered, on the initial level of income and on its initial distribution. But, on the other hand, as growth and inequality are also uneven across space, it also seems relevant to wonder how the effects of inequality on growth are related to the geographic agglomeration of economic activity. By introducing measures of urban concentration, this work analyzes how the effects of income inequality on economic growth depend not only on the level of development, and on the initial distribution of income, but are also affected by the process of concentration of economic activity at the urban level. By setting different econometric specifications, short from long-run effects are distinguished to then differentiate the effects of changes from the effects of levels of inequality. Results suggest that while inequality is a limiting factor for long-run growth, especially for low-income countries -consistent with previous literature-, increasing inequality, when associated with increasing concentration of economic activity at the urban level, is likely to enhance growth in the short and medium-run in those low-income countries. |
| Keywords: | Agglomeration, Urban concentration, Inequality, Growth JEL classification:O1, O4, R1 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:ira:wpaper:201114&r=ure |
| By: | Pradhan, Menno; Suryadarma, Daniel; Beatty, Amanda; Wong, Maisy; Alishjabana, Armida; Gaduh, Arya; Artha, Rima Prama |
| Abstract: | This study evaluates the effect of four randomized interventions aimed at strengthening school committees, and subsequently improving learning outcomes, in public primary schools in Indonesia. All study schools were randomly allocated to either a control group receiving no intervention, or to treatment groups receiving a grant plus one or a combination of three interventions: training for school committee members, a democratic election of school committee members, or facilitated collaboration between the school committee and the village council, also called linkage. Nearly two years after implementation, the study finds that measures to reinforce existing school committee structures, the grant and training interventions, demonstrate limited or no effects; while measures that foster outside ties between the school committee and other parties, linkage and election, lead to greater engagement by education stakeholders and in turn to learning. Test scores improve in Indonesian by 0.17 standard deviations for linkage and 0.22 standard deviations for linkage+election. The election intervention alone leads to changes in time household members accompany children studying per week, but this does not lead to learning. Linkage is the most cost effective intervention, causing a 0.13 change in standard deviation in Indonesian test scores for each 100 dollars (US) spent. |
| Keywords: | Education For All,Tertiary Education,Primary Education,Teaching and Learning,Disability |
| Date: | 2011–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5795&r=ure |
| By: | Martinho, Vítor João Pereira Domingues |
| Abstract: | The aim of this paper is to present a further contribution to the analysis of absolute convergence, associated with the neoclassical theory, of the manufactured industry productivity at regional level and for the period from 1995 to 1999 (1)(Martinho, 2011a). This paper pretends, also, to analyze the importance which the natural advantages and local resources are in the manufacturing industry location, in relation with the "spillovers" effects and industrial policies. To this, we estimate the Rybczynski equation matrix for the various manufacturing industries in Portugal, at regional level (NUTS II) and for the period 1995 to 1999 (2)(Martinho, 2011b). |
| Keywords: | convergence; geographic concentration; panel data; manufactured industries; Portuguese regions |
| JEL: | O18 C23 R11 L60 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:33407&r=ure |
| By: | Martinho, Vítor João Pereira Domingues |
| Abstract: | This work aims to test the Verdoorn Law, with the alternative specifications of (1)Kaldor (1966), for the five Portuguese regions (NUTS II), from 1995 to 1999. It is intended to test, yet in this work, the alternative interpretation of (2)Rowthorn (1975) about the Verdoorn's Law for the same regions and period. The results of this study are about each one of the manufactured industries operating in the Portuguese regions. This paper pretends, also, to analyze the importance which the natural advantages and local resources are in the manufacturing industry location, in relation with the "spillovers" effects and industrial policies. To this, we estimate the Rybczynski equation matrix for the various manufacturing industries in Portugal, at regional level (NUTS II) and for the period 1995 to 1999. |
| Keywords: | Verdoorn law; geographic concentration; panel data; manufactured industries; Portuguese regions |
| JEL: | O18 C23 R11 L60 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:33406&r=ure |
| By: | Martinho, Vítor João Pereira Domingues |
| Abstract: | The aim of this paper is to present a further contribution to the analysis of absolute convergence, associated with the neoclassical theory, of the manufactured industry productivity at regional level and for the period from 1986 to 1994 (1)(Martinho, 2011a). This paper pretends, also, to analyze the importance which the natural advantages and local resources are in the manufacturing industry location, in relation with the "spillovers" effects and industrial policies. To this, we estimate the Rybczynski equation matrix for the various manufacturing industries in Portugal, at regional level (NUTS II) and for the period 1986 to 1994 (2)(Martinho, 2011b). |
| Keywords: | convergence; geographic concentration; panel data; manufactured industries; Portuguese regions |
| JEL: | O18 C23 R11 L60 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:33411&r=ure |
| By: | Martinho, Vítor João Pereira Domingues |
| Abstract: | This work aims to test the Verdoorn Law, with the alternative specifications of (1)Kaldor (1966), for the five Portuguese regions (NUTS II), from 1986 to 1994. It is intended to test, yet in this work, the alternative interpretation of (2)Rowthorn (1975) about the Verdoorn's Law for the same regions and period. The results of this study are about each one of the manufactured industries operating in the Portuguese regions. This paper pretends, also, to analyze the importance which the natural advantages and local resources are in the manufacturing industry location, in relation with the "spillovers" effects and industrial policies. To this, we estimate the Rybczynski equation matrix for the various manufacturing industries in Portugal, at regional level (NUTS II) and for the period 1986 to 1994. |
| Keywords: | Verdoorn law; geographic concentration; panel data; manufactured industries; Portuguese regions |
| JEL: | O18 C23 R11 L60 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:33404&r=ure |
| By: | Jacques Thépot (LaRGE Research Center, Université de Strasbourg) |
| Abstract: | This paper explores the idea to regulate retailing industry through a tax on the store parking size. In Western economies, retailers use common resources (land use, road networks) contributing to the store accessibility that they do not pay for. This kind of free riding gives gross merchandisers and hypermakets a competitive advantage which establishes undue market power while creating, presumably, inefficiencies when social cost is taken into account. Hence the idea to tax the parking, which is a proxy measure of the accessibility resources used by the retailer. By using a standard model of horizontal differentiation, we explore the impact of parking taxation in a monopoly and in duopoly and we characterize optimal taxation policies. |
| Keywords: | spatial competition, optimal taxation, parking |
| JEL: | L13 H20 H40 R10 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:lar:wpaper:2011-06&r=ure |
| By: | Frijters, Paul (University of Queensland); Kong, Tao (Australian National University); Meng, Xin (Australian National University) |
| Abstract: | We use a unique data of representative migrants and urban local workers in 15 Chinese cities to investigate entrepreneurship and credit constraints under labour market discrimination. We divide self employed into prefer to be self-employed and prefer to have a salaried job but cannot find one; and divide salaried workers into want-to-be entrepreneurs and happy-to-be salaried workers. Over 40 percent of migrant workers are either currently or want-to-be entrepreneurs. Both groups are very similar in terms of risk taking preferences and network size. Want-to-be entrepreneurs however suffer from credit constraints identified by negative financial shocks in the year before. Our back-of-envelope calculation reveals that overcoming the current level of credit constraints may be worth 2% of GDP per year direct earnings increases. |
| Keywords: | entrepreneurs, credit constraints, migration, China |
| JEL: | L26 J14 J70 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5967&r=ure |
| By: | Ceren Ozgen (Department of Spatial Economics, VU University Amsterdam) |
| Abstract: | Due to the growth in international migration in recent decades, the workforce of firms in host countries has become considerably more diverse, both demographically and culturally. It is an important question for firms and for governments to ask whether there are some productivity-enhancing externalities gained from this growing diversity within firms. In recent years migration research has demonstrated positive economic impacts of cultural diversity on productivity and innovation at the regional level. However, there is a dearth of research on the links between innovation and migrant diversity at the firm level. In this paper we construct and analyse a unique linked employer-employee micro-dataset of 4582 firms, based on survey and administrative data obtained from Statistics Netherlands. Excluding firms in the hospitality industry and other industries that employ low-skilled migrants, we use the local number of restaurants with foreign cuisines and the historical presence of migrant communities as valid instruments of endogenous migrant settlement. We find that firms in which foreigners account for a relatively large share of employment are somewhat less innovative. However, there is strong evidence that firms that employ a more diverse foreign workforce are more innovative, particularly in terms of product innovations. |
| Keywords: | immigration, innovation, cultural diversity, knowledge spillovers, linked employer-employee data, Netherlands |
| JEL: | F22 O31 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:nor:wpaper:2011013&r=ure |
| By: | Singh, Prakarsh |
| Abstract: | This paper provides evidence for spillovers in learning and behavior within urban slums in Chandigarh, India. In an experiment, mothers of children (aged 3-6 years) enrolled in government day-care centers were provided recipe books to lower their price per calorie. Theory suggests that if learning takes place among untreated mothers in the same slum cluster, it may increase or decrease their food expenditure. Results from a difference-in-differences analysis show that nutritional knowledge increases among untreated mothers and there is a corresponding reduction in food expenditure. These neighbouring mothers exhibit learning spillovers and a reduction in expenditure regardless of their level of literacy. |
| Keywords: | Externality; Informational Spillovers; Child health; Learning; Communication; Urban slums; Behavioral Change |
| JEL: | D62 I12 I18 I38 D83 |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:33362&r=ure |
| By: | Anurag N Banerjee (Durham Business School); Nilanjan Banik (Institute for Financial Management and Research, Chennai, India) |
| Abstract: | In India, the popular perception is economic reforms have benefited the rich more than the poor leading to an unequal income distribution, as in Quah's twin peaks hypothesis. In this article we test this hypothesis by studying the spatial dynamics of income distribution. Using district-level per-capita income we find that the income distribution has not changed. The perception about economic reforms having benefitted only the rich is not correct because income growth across districts is positively correlated spatially. Thus there is a positive spatial multiplier effect on income and growth. In addition, we also identify physical infrastructure, human capital, and factories, as factors responsible for increase in income for both the rich, and the poor districts. |
| Keywords: | Districts of India, Income, Moran’s Index, Spatial Analysis |
| JEL: | C31 R12 |
| Date: | 2011–02–16 |
| URL: | http://d.repec.org/n?u=RePEc:dur:durham:2011_11&r=ure |
| By: | Black, Dan A. (Harris School, University of Chicago); Kolesnikova, Natalia (Federal Reserve Bank of St. Louis); Sanders, Seth G. (Duke University); Taylor, Lowell J. (Carnegie Mellon University) |
| Abstract: | We examine Becker's (1960) contention that children are "normal." For the cross section of non-Hispanic white married couples in the U.S., we show that when we restrict comparisons to similarly-educated women living in similarly-expensive locations, completed fertility is positively correlated with the husband's income. The empirical evidence is consistent with children being "normal." In an effort to show causal effects, we analyze the localized impact on fertility of the mid-1970s increase in world energy prices – an exogenous shock that substantially increased men's incomes in the Appalachian coal-mining region. Empirical evidence for that population indicates that fertility increases in men's income. |
| Keywords: | economics of fertility, location choice, Appalachian fertility |
| JEL: | J13 J40 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5959&r=ure |
| By: | Klênio de Souza Barbosa; Pierre C. Boyer |
| Abstract: | Many local governments allow competition between public and private rms for provision of local public services in order to reduce procurement cost. Competition is usually introduced through competitive tendering for concession contracts. We show that in a symmetric competition between public and private rms with learning-by-doing, private rm's ability to transfer learning among concessions may reduce consumer's welfare. The model provides testable implications which are consistent with the empirical evidence: little competition for concessions, retail prices higher under private operation than under public one, and subsidies and retail prices to service providers increased over time. In addition, consumers' gains from switching to private ownership are higher in industries where private rms have low-ability to transfer learning among dierent concessions. |
| Keywords: | Sequential Auction, Public versus Private Firms, Learning-by-doing, Transferability of Learning |
| JEL: | D44 H57 H70 H87 |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:fea:wpaper:06-2011&r=ure |
| By: | Ana Poças (Polytechnic Institute of Guarda and UDI); Elias Soukiazis (Faculdade de Economia/GEMF, Universidade de Coimbra) |
| Abstract: | The aim of this study is to analyze the impact of health factors on economic growth and convergence across the Portuguese regions at the district level. Like education, health factors could be important for explaining the growth performance of regions through the increase in labour productivity. Therefore, human capital can be seen in a broader perspective encompassing not only educational qualifications but also health conditions. Although this is not a new idea, empirical evidence at a regional level is not robust supporting this issue, with few exceptions. With this study we try to fill this gap and bring additional evidence of the relevance of health on regional growth considering the Portuguese districts. We employ a panel data approach for the period 1996-2006 taking into account specific regional differences. We also analyze whether there are differences between the littoral (coastal) and the interior (in-land) districts in what concerns health conditions and how they affect their convergence process. |
| Keywords: | : Regional growth, health and human capital, panel data. |
| JEL: | R11 O18 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:gmf:wpaper:2011-14&r=ure |
| By: | Johannes Paha (University of Giessen); Dirk Rompf (University of Giessen); Christiane Warnecke (University of Giessen) |
| Abstract: | The current level of competition in European commercial passenger rail markets is low and empirical data on customer preferences in intramodal competition has hardly been available, yet. Our study raises the knowledge of competition in commercial passenger rail by exploring the determinants of customers’ choice behaviour on two cross-border routes, Cologne-Brussels and Cologne-Amsterdam. We analyse stated preference information from about 700 on-train interviews by means of multinomial Logit regressions. Our analysis indicates that customers experiencing competition (Cologne-Brussels) show a higher preference for competitive services than customers for whom competition is a purely hypothetical situation (Cologne-Amsterdam). Moreover, travellers show a status quo bias, i.e. a preference for the service provider on whose trains they were interviewed which partly stems from switching costs. These findings regarding status quo bias and switching costs complement previous studies on the outcome of intramodal competition, implying that entry is even more difficult than they predicted. |
| Keywords: | Competition, Passenger, Rail, Transport, Discrete Choice, Multinomial Logit |
| JEL: | C25 D12 D40 L92 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201137&r=ure |
| By: | Abdala Rioja, Yamile E |
| Abstract: | The present paper reviews the causes that led to the financial crisis. Unlike other interpretations, this paper does not place main significance on a single source or on a set of causes. I consider all major standpoints highlighted by research and media prior, during and after the financial market turmoil in 2007. When evidence permits, reasons are validated and their potential consequences are reviewed by means of reductio ad absurdum, specifically by proof by contradiction. This analysis proposes arguments that are in favor and against a specific source whenever applicable, so as to address each cause’s major implications and deterrents. Ultimately, this analysis reveals through graph theory the interconnections among the analyzed sources for the crisis and their forbearance as a cluster that projected the final downturn. |
| Keywords: | financial crisis, subprime crisis, systemic risk, financial regulation, monetary policy, global imbalances, global savings glut, shadow banking system, predatory lending, too big to fail, securitization, housing bubble, interest rates, credit ratings, toxic assets, liar loans, graph theory, directed graph, finitary relations |
| JEL: | F34 E44 G24 F42 E66 C65 E58 G18 G15 E52 G28 |
| Date: | 2011–09–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:33408&r=ure |
| By: | Keijiro Otsuka (National Graduate Institute for Policy Studies); Tetsushi Sonobe (National Graduate Institute for Policy Studies) |
| Abstract: | The need to construct an effective strategy for industrial development in low-income countries has been largely ignored by development economists because industrial policies have failed in many developing countries. This does not imply, however, that industrial development cannot be promoted. This paper attempts to synthesize the conventional wisdom in development economics with recent advancements in various fields of economics (such as theories of endogenous growth and agglomeration economies) to provide a useful framework to design a strategy for industrial development, which consists of investments in managerial human capital followed by the provision of credit and the construction of industrial zones. |
| Keywords: | Competitive market environments, comparative advantage, industrial cluster, managerial training, provision of credit, construction of industrial zones |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:ngi:dpaper:11-09&r=ure |