nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2011‒10‒09
forty-four papers chosen by
Steve Ross
University of Connecticut

  1. Search, Migration, and Urban Land Use: The Case of Transportation Policies By Yves Zenou
  2. Real estate investors, the leverage cycle, and the housing market crisis By Andrew Haughwout; Donghoon Lee; Joseph Tracy; Wilbert van der Klaauw
  3. Inter-regional home price dynamics through the foreclosure crisis By Francisca G-C Richter; Youngme Seo
  4. Classroom peer effects and student achievement By Mary Burke; Tim R. Sass
  5. Congestive Traffic Failure: The Case for High-Occupancy and Express Toll Lanes in Canadian Cities By Benjamin Dachis
  6. Strategic Interaction between Inter Vivos Gifts and Housing Acquisition By Norifumi Yukutake; Shinichiro Iwata; Takako Idee
  7. The agglomeration of R&D labs By Gerald A. Carlino; Jake K. Carr; Robert M. Hunt; Tony E. Smith
  8. Mortgage defaults By Juan Carlos Hatchondo; Leonardo Martinez; Juan M. Sanchez
  9. Do House Prices Impact Consumption and Interest Rate? Evidence from OECD Countries using an Agnostic Identification Procedure By Christophe Andre; Rangan Gupta; Patrick T. Kanda
  10. A model based on the Rybczynski equation for Portugal. Another way By Martinho, Vítor João Pereira Domingues
  11. Search, Liquidity and the Dynamics of House Prices and Construction By Allen Head; Huw Lloyd-Ellis; Hongfei Sun
  12. Rational expectations in urban economics By Berliant, Marcus; Yu, Chia-Ming
  13. A model for net migration between the Portuguese regions. Another perspective By Martinho, Vítor João Pereira Domingues
  14. Neighborhood Eff ects and Individual Unemployment By Thomas K. Bauer; Michael Fertig; Matthias Vorell
  15. Immigration and Innovation By David Mare; Richard Fabling; Steven Stillman
  16. High Leverage and Willingness to Pay: Evidence from the Residential Housing Market By Ben-David, Itzhak
  17. Do More Productive Firms Locate New Factories in More Productive Locations?<br />An empirical analysis based on panel data from Japan's Census of Manufactures By FUKAO Kyoji; IKEUCHI Kenta; KIM YoungGak; KWON Hyeog Ug
  18. A spatial model based on the endogenous growth theory for Portugal By Martinho, Vítor João Pereira Domingues
  19. Bend It Like Beckham: Ethnic Identity and Integration By Alberto Bisin; Eleonora Patacchini; Thierry Verdier; Yves Zenou
  20. Childhood lead and academic performance in Massachusetts By Jessica W. Reyes
  21. Anchoring and Loss Aversion in the Housing Market: Implications on Price Dynamics By Tin Cheuk Leung; Kwok Ping Tsang
  22. The Geographic Accessibility of Child Care Subsidies and Evidence on the Impact of Subsidy Receipt on Childhood Obesity By Chris M. Herbst; Erdal Tekin
  23. A spatial model based on the endogenous growth theory for Portugal. Another analysis By Martinho, Vítor João Pereira Domingues
  24. Out-of-school suspensions and parental involvement in children’s education By Maria E. Canon
  25. 2008 Economic Crisis Analysis By Golmohammadpoor Azar, Kamran; Mansoori, Masoud
  26. Securitization and moral hazard: evidence from credit score cutoff rules By Ryan Bubb; Alex Kaufman
  27. State Gun Policy and Cross-State Externalities: Evidence from Crime Gun Tracing By Brian G. Knight
  28. Regional Unemployment in the EU before and after the Global Crisis By Enrico Marelli; Roberto Patuelli; Marcello Signorelli
  29. The Implementation of the Korean Green Growth Strategy in Urban Areas By Lamia Kamal-Chaoui; Fabio Grazi; Jongwan Joo; Marissa Plouin
  30. Referral-based Job Search Networks By Christian Dustmann; Albrecht Glitz; Uta Schönberg
  31. Homeownership and ill-being By Bloze, Gintautas; Skak, Morten
  32. Job Contact Networks and the Ethnic Minorities By Harminder Battu; Paul Seaman; Yves Zenou
  33. The Determinants of Child Schooling in Nigeria By Olanrewaju Olaniyan
  34. The NRU and the Evolution of Regional Disparities in Spanish Unemployment By Roberto Bande; Marika Karanassou
  35. Splines models for prediction of house prices By David Boniface
  36. Designing formulas for distributing reductions in state aid By Bo Zhao; David Coyne
  37. Implementing procedures for spatial panel econometrics in Stata By Gordon Hughes
  38. Explaining the Black/White Employment Gap: The Role of Weak Ties By Zenou, Yves
  39. Who Offers Tax-Based Business Development Incentives? By R. Alison Felix; James R. Hines, Jr.
  40. An assessment of the relationship between public real estate markets and stock markets at the local, regional, and global levels By Liow, Kim Hiang; Schindler, Felix
  41. The Calculation of Rural Urban Food Price Differentials from Unit Values in Household Expenditure Surveys: A new procedure and comparison with existing methods By Amita Majumder; Ranjan Ray; Kompal Sinha
  42. The determinants of international commercial real estate investments By Lieser, Karsten; Groh, Alexander P.
  43. Migration and Education By Christian Dustmann; Albrecht Glitz
  44. Racial Disparities in Job Finding and Offered Wages By Roland G. Fryer, Jr; Devah Pager; Jörg L. Spenkuch

  1. By: Yves Zenou (Stockholm University, IFN, and CREAM)
    Abstract: We develop a search-matching model with rural-urban migration and an explicit land market. Wages, job creation, urban housing prices are endogenous and we characterize the steady-state equilibrium. We then consider three different policies: a transportation policy that improves the public transport system in the city, an entry-cost policy that encourages investment in the city and a restricting-migration policy that imposes some costs on migrants. We show that all these policies can increase urban employment but the transportation policy has much more drastic effects. This is because a decrease in commuting costs has both a direct positive effect on land rents, which discourages migrants to move to the city, and a direct negative effect on urban wages, which reduces job creation and thus migration. When these two effects are combined with search frictions, the interactions between the land and the labor markets have amplifying positive effects on urban employment. Thus, improving the transport infrastructure in cities can increase urban employment despite the induced migration from rural areas.
    Keywords: Rural-urban migration, transportation policies, entry costs, restricting migration
    JEL: D83 J61 O18 R14
    Date: 2010–11
  2. By: Andrew Haughwout; Donghoon Lee; Joseph Tracy; Wilbert van der Klaauw
    Abstract: We explore a mostly undocumented but important dimension of the housing market crisis: the role played by real estate investors. Using unique credit-report data, we document large increases in the share of purchases, and subsequently delinquencies, by real estate investors. In states that experienced the largest housing booms and busts, at the peak of the market almost half of purchase mortgage originations were associated with investors. In part by apparently misreporting their intentions to occupy the property, investors took on more leverage, contributing to higher rates of default. Our findings have important implications for policies designed to address the consequences and recurrence of housing market bubbles.
    Keywords: Mortgages ; Financial leverage ; Real estate investment
    Date: 2011
  3. By: Francisca G-C Richter; Youngme Seo
    Abstract: Overall regional conditions such as employment, geography, and amenities, favor the co-movement of housing prices in central cities and their suburbs. Simultaneously, over half a century of sprawl may induce a negative relation between suburban and central city home prices, with central city values falling relative to suburban home values. What happens to the relationship between subhousing markets when cities are shocked by the foreclosure crisis? This paper builds repeat-sales indices to explore home price dynamics before and after the foreclosure crisis in the Cleveland area, a market that in the aggregate had little home price appreciation prior to the crisis, but significant follow-up depreciation. The analysis finds evidence that connectedness, expressed as the relative importance of neighboring housing market conditions in explaining city home prices, increases among submarkets even as they experience varying levels of foreclosure rates, and that foreclosure effects give little sign of receding in the near future. The analysis is relevant to the discussion of economic recovery among city and suburban communities as the nation faces high inventories of soon-to-be foreclosed properties.
    Keywords: Housing ; Housing policy ; Foreclosure
    Date: 2011
  4. By: Mary Burke; Tim R. Sass
    Abstract: In this paper we analyze the impact of classroom peers' ability on individual student achievement with a unique longitudinal data set covering all Florida public school students in grades 3-10 over a five-year period. Unlike many data sets used to study peer effects in education, ours identifies each member of a student's classroom peer group in elementary, middle, and high school as well as the classroom teacher responsible for instruction. As a result, we can control for student fixed effects simultaneously with teacher fixed effects, thereby alleviating biases due to endogenous assignment of both peers and teachers, including some dynamic aspects of assignment. Our estimation strategy, which measures the influence on individual test scores of peers' fixed characteristics (including unobserved components), also alleviates potential bias due to measurement error in peer ability. Under linear-in-means specifications, estimated peer effects are small to nonexistent, but we find sizable and significant peer effects in nonlinear models. We find that peer effects depend on an individual student's own ability and on the relative ability level of peers, results suggesting that some degree of tracking by ability may raise aggregate achievement. Estimated peer effects tend to be smaller when teacher fixed effects are included than when they are omitted, a result that emphasizes the importance of controlling for teacher inputs. We also find that classroom peers exert a greater influence on individual achievement than the broader group of grade-level peers at the same school.
    Keywords: Achievement tests
    Date: 2011
  5. By: Benjamin Dachis (C.D. Howe Institute)
    Abstract: Congestion on Canadian highways is having a significant negative economic impact on major Canadian cities. Rather than face the political challenge of introducing road tolls to discourage traffic, governments have chosen to build carpool lanes on urban highways, despite evidence that these lanes have limited effectiveness in curbing congestion. Policymakers in major Canadian cities need realistic options for reducing the economic cost of congestion and increasing revenue for transportation infrastructure: converting carpool to HOT lanes would fit those needs.
    Keywords: Urban Issues Series, high-occupancy toll lanes (HOT lanes), highway congestion, Canada
    JEL: H23 O18 R41 R48
    Date: 2011–08
  6. By: Norifumi Yukutake; Shinichiro Iwata; Takako Idee
    Abstract: To consider the policy event of a gift tax reduction earmarked for housing acquisition, the interdependence of parental gifts and children's housing investments is modeled, considering an informal care issue behind such decision making. The empirical results, which use a sample of households who purchased a house in Japan, demonstrate that such a tax cut would appear to have the following limited effects on boosting housing investment in equilibrium. First, even though transfers are encouraged, they consequently reduce housing investment because the housing investment function is negatively related to gifts. Second, increments in housing investment are further discouraged because the slopes of the gift and housing investment functions have opposite signs.
    Keywords: Intergenerational Transfer, Housing Investment, Gift Tax
    JEL: D11 D12 J14 R21
    Date: 2011–08
  7. By: Gerald A. Carlino; Jake K. Carr; Robert M. Hunt; Tony E. Smith
    Abstract: The authors study the location and productivity of more than 1,000 research and development (R&D) labs located in the Northeast corridor of the U.S. Using a variety of spatial econometric techniques, they find that these labs are substantially more concentrated in space than the underlying distribution of manufacturing activity. Ripley's K-function tests over a variety of spatial scales reveal that the strongest evidence of concentration occurs at two discrete distances: one at about one-quarter of a mile and another at about 40 miles. These findings are consistent with empirical research that suggests that some spillovers depreciate very rapidly with distance, while others operate at the spatial scale of labor markets. The authors also find that R&D labs in some industries (e.g., chemicals, including drugs) are substantially more spatially concentrated than are R&D labs as a whole.> > Tests using local K-functions reveal several concentrations of R&D labs (Boston, New York-Northern New Jersey, Philadelphia-Wilmington, and Washington, DC) that appear to represent research clusters. The authors verify this conjecture using significance-maximizing techniques (e.g., SATSCAN) that also address econometric issues related to "multiple testing" and spatial autocorrelation.> > The authors develop a new procedure for identifying clusters — the multiscale core-cluster approach — to identify labs that appear to be clustered at a variety of spatial scales. They document that while locations in these clusters are often related to basic infrastructure, such as access to major roads, there is significant variation in the composition of labs across these clusters. Finally, the authors show that R&D labs located in clusters defined by this approach are, all else equal, substantially more productive in terms of the patents or citation-weighted patents they receive.>
    Date: 2011
  8. By: Juan Carlos Hatchondo; Leonardo Martinez; Juan M. Sanchez
    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 accounts for non-targeted features of the data such as the distribution of down payments, the life-cycle prole of homeownership, 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 coefficients 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 percent reduces defaults on mortgages by 30 percent, reduces the homeownership 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 percent (if homeownership does not adjust). Garnishing defaulters' income in excess of 43 percent of median consumption for one year produces a similar decline in defaults; but, since it reduces the median equilibrium down payment from 19 percent to 9 percent, it boosts homeownership up to 4.3 percentage points (if the aggregate house price level does not adjust) and may increase house prices up to 16.1 percent (if homeownership does not adjust). The introduction of minimum down payments or income garnishment benefit a majority of the population.
    Keywords: Mortgages ; Default (Finance)
    Date: 2011
  9. By: Christophe Andre (Economics Department, Organisation for Economic Co-operation and Development (OECD)); Rangan Gupta (Department of Economics, University of Pretoria); Patrick T. Kanda (Department of Economics, University of Pretoria)
    Abstract: This paper investigates the existence of significant spillovers from the housing sector onto the wider economy for the seven major OECD countries using Uhlig's (2005) agnostic identification procedure. This method allows identifying a housing demand shock in a six-variable VAR model by imposing sign restrictions on the impulse responses of consumer prices, residential investment, real house prices and mortgage loans, while private consumption and nominal interest rate responses are left unrestricted. The results suggest that consumption responds positively and significantly to a house price shock in Canada, France, Japan and the UK. On the other hand, a significant positive delayed response of nominal interest rates follows a house price shock in Germany, Japan, the UK and the US, suggesting that while central banks do not seem to respond instantly and systematically to a housing demand shock, the real repercussions of the latter on the economy tend to translate into higher policy rates after a few quarters.
    Keywords: House Price, Monetary Policy, Consumption, Agnostic Identification
    JEL: C32 E31 E32 E44 E52
    Date: 2011–09
  10. By: Martinho, Vítor João Pereira Domingues
    Abstract: We built a model analyzing 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. As a summary conclusion, noted that the location of manufacturing in Portugal is still mostly explained by specific factors, with a tendency to increase in some cases the explanation by these factors, having the effect "spillovers" and industrial policies little importance in this context.
    Keywords: geographical concentration; Portuguese regions; linear models
    JEL: C20 C50 R39 O14
    Date: 2011
  11. By: Allen Head (Queen's University); Huw Lloyd-Ellis (Queen's University); Hongfei Sun (Queen's University)
    Abstract: We characterize the dynamics of relative house prices, construction rates and population growth across US cities. In response to fluctuations in relative incomes, we find that population growth rates adjust more rapidly than construction rates in the short run and that price appreciation exhibits considerable serial correlation in the short-run and mean reversion in the long-run. We develop a competitive search model of the housing market in which construction, the entry of buyers, house prices and rents are endogenously determined in equilibrium. Our theory generates dynamics that are qualitatively consistent with our empirical observations. In particular, in a version of the economy calibrated to match long-run features of the housing market in U.S. cities, variation in the time it takes to sell a house (i.e. the house's liquidity) induces house values and transaction prices to exhibit momentum, or serially correlated growth.
    Keywords: House prices, liquidity, search, construction, dynamic panel
    JEL: E30 R31 R10
    Date: 2011–09
  12. By: Berliant, Marcus; Yu, Chia-Ming
    Abstract: Canonical analysis of the classical general equilibrium model demonstrates the existence of an open and dense subset of standard economies that possess fully-revealing rational expectations equilibria. This paper shows that the analogous result is not true in urban economies under reasonable modifications for this field. An open subset of economies where none of the modified rational expectations equilibria fully reveals private information is found. There are two important pieces. First, there can be information about a location known by a consumer who does not live in that location in equilibrium, and thus the equilibrium rent does not reflect this information. Second, if a consumer's utility depends only on information about their (endogenous) location of residence, perturbations of utility naturally do not incorporate information about other locations conditional on the consumer's location of residence. Existence of equilibrium is proved. Space can prevent housing prices from transmitting information from informed to uninformed households, resulting in an inefficient outcome.
    Keywords: Urban Economics; General Equilibrium; Private Information; Rational Expectations
    JEL: R13 D82 D51
    Date: 2011–09–27
  13. By: Martinho, Vítor João Pereira Domingues
    Abstract: We built a model identifying the determinants that affect the mobility of labor. The empirical part of the work will be performed for the NUTS III of Portugal, from 1991 and 2001. At this level of spatial disaggregation (and in this period) the basic equipment (amenities), particularly in terms of availability of housing, are the main determinants of migration (1)(Martinho 2011).
    Keywords: net migration; Portuguese regions; cross-section estimations
    JEL: C20 C50 O15 R23
    Date: 2011
  14. By: Thomas K. Bauer; Michael Fertig; Matthias Vorell
    Abstract: Using a unique dataset for Germany that links individual longitudinal data from the GSOEP to regional data from the federal employment agency and data of real estate prices, we evaluate the impact of neighborhood unemployment on individual employment propects. The panel setup and richness of the data allows us to overcome some of the identifi cation problems which are present in this strand of literature. The empirical results indicate that there is a signifi cant negative impact of neighborhood unemployment on the individual employment probability.
    Keywords: Social interactions; unemployment; neighborhood characteristics
    JEL: J65 R23
    Date: 2011–09
  15. By: David Mare (Motu Economic and Public Policy Research); Richard Fabling (Reserve Bank of New Zealand); Steven Stillman (Motu Economic and Public Policy Research, IZA and CReAM)
    Abstract: We combine firm-level innovation data with area-level Census data to examine the relationship between local workforce characteristics, especially the presence of immigrants and local skills, and the likelihood of innovation by firms. We examine a range of innovation outcomes, and test the relationship for selected subgroups of firms. We find a positive relationship between local workforce characteristics and average innovation outcomes in labour market areas, but this is accounted for by variation in firm characteristics such as firm size, industry, and research and development expenditure. Controlling for these influences, we find no systematic evidence of an independent link between local workforce characteristics and innovation.
    Keywords: Innovation; Immigration; Local labour market
    JEL: O31 R30
    Date: 2011–05
  16. By: Ben-David, Itzhak (OH State University)
    Abstract: In pursuit of understanding the mechanism that relates the expansion in credit to the increase in real-estate prices during the real-estate bubble, I explore transaction-level data for 1994-2008. I document a strong correlation between borrowing at high leverage (>95% loan to value) and paying the full listing price or above. Homebuyers in these transactions pay prices that are higher than market prices by 3.4% ($5,700 on average) and they are 22.7% more likely to default on their mortgages, relative to other highly leveraged borrowers. The correlation between leverage and paying high prices is stronger beyond what a mechanical relation predicts: there is a discontinuity in the average leverage around the full listing price. The correlation is stronger for financially constrained and unsophisticated homebuyers, and in areas of high past price growth (indicative of buyer optimism). The study highlights the importance of buyer sophistication, financial constraints, and beliefs in determining prices and leverage.
    JEL: D14 G11 L85 R21
    Date: 2011–09
  17. By: FUKAO Kyoji; IKEUCHI Kenta; KIM YoungGak; KWON Hyeog Ug
    Abstract: Using a Melitz-style model of heterogeneous firms, Baldwin and Okubo (2006) recently presented a theoretical model in which self-sorting occurs and more productive factories choose to locate in more productive areas. The model suggests that firm-specific factors and regional factors affect each other through the endogeneity of location decisions. However, to date there have been few studies empirically testing this issue. Against this background, our aim is to examine the relationship between firms and location-specific factors in location decisions using factory-level panel data from Japan's Census of Manufactures. We begin by estimating how much of the differences in factories' TFP levels can be explained by both firm and location effects. The estimation results show that both effects have a significant impact on the productivity level of a factory, and that the firm effects are more important than the location effects. We also find a statistically significant negative correlation between firm effects and location effects, and investigate what causes this relationship. One potential explanation is that more productive firms may tend to set up new factories in less productive locations such as rural areas, where factor prices such as land prices and wage rates are usually low, in order to benefit from low factor prices. To examine this issue, we estimate a mixed logit model of location choice. The results indicate that more productive firms indeed tend to set up new factories in low-productivity locations, which is consistent with our hypothesis.
    Date: 2011–09
  18. By: Martinho, Vítor João Pereira Domingues
    Abstract: We built a model analyzing, through cross-section estimation methods, the influence of spatial effects in the productivity conditional convergence in the economic sectors of NUTs III of mainland Portugal between 1995 and 2002. Taking into account the estimation results, it is stated once again that the indications of convergence are greater in industry, and it can be seen that spatial spillover effects, spatial lag and spatial error, do not condition the convergence of productivity in the several economic sectors of Portuguese region in the period under consideration.
    Keywords: endogenous growth theory; spatial econometrics; Portuguese Regions
    JEL: O18 C20 C50 R11
    Date: 2011
  19. By: Alberto Bisin (New York University, Department of Economics; and NBER); Eleonora Patacchini (Universita' di Roma "La Sapienza," CEPR, and IZA); Thierry Verdier (Paris School of Economics and CEPR); Yves Zenou (Stockholm University, Research Institute of Industrial Economics, CEPR, and CREAM)
    Abstract: We propose a theoretical framework to study the determinants of ethnic and religious identity along two distinct motivational processes which have been proposed in the social sciences: cultural conformity and cultural distinction. Under cultural conformity, ethnic identity is reduced by neighborhood integration, which weakens group loyalties and prejudices. On the contrary, under cultural distinction, ethnic minorities are more motivated in retaining their own distinctive cultural heritage the more integrated are the neighborhoods where they reside and work. Data on ethnic preferences and attitudes provided by the Fourth National Survey of Ethnic Minorities in the UK enables us to test the relative significance of these two identity processes. We find evidence consistent with intense ethnic and religious identity mostly formed as a cultural distinction mechanism. Consistently, we document that ethnic identities are more intense in mixed than in segregated neighborhoods.
    Keywords: Ethnicity, identity, intermarriage, cultural transmission
    JEL: A14 J15
    Date: 2010–10
  20. By: Jessica W. Reyes
    Abstract: It is now widely accepted that childhood exposure to even low levels of lead can adversely affect neurodevelopment, behavior, and cognitive performance. Using individual-level data on childhood lead levels and test scores in Massachusetts, this paper investigates the link between lead levels in early childhood in the 1990s and student test scores in elementary school in the 2000s. Elevated levels of blood lead in early childhood are shown to adversely impact standardized test performance, even when controlling for community and school characteristics. Accordingly, public health policy that reduced childhood lead levels in the 1990s was responsible for modest but statistically significant improvements in test performance in the 2000s, with particular benefits for children in low-income communities.
    Keywords: Achievement tests
    Date: 2011
  21. By: Tin Cheuk Leung (The Chinese University of Hong Kong); Kwok Ping Tsang (Virginia Tech and Hong Kong Institute for Monetary Research)
    Abstract: In this paper we develop a simple model with anchoring and loss aversion to explain house price dynamics. We have two testable implications: 1) when both cognitive biases are present, price dispersion and trade volume are pro-cyclical; 2) if anchoring decreases with time, then price dispersion and trade volume are higher for transactions whose previous purchase is more recent. Using a dataset that contains most real estate transactions in Hong Kong from 1992 to 2006, we find strong and significant anchoring and loss aversion which are robust to type of housing and sample period. The finding is consistent with the strong correlation between house price, price dispersion, and volume in the data. Moreover, anchoring decreases with time since previous transaction, and both price dispersion and volume show the same pattern. Our results suggest that anchoring and loss aversion can induce cyclicality in house prices.
    Keywords: Price Dispersion, Anchoring, Loss Aversion, Housing Market
    JEL: R31
    Date: 2011–09
  22. By: Chris M. Herbst; Erdal Tekin
    Abstract: This paper examines the impact of the spatial accessibility of public human services agencies on the likelihood of receiving a child care subsidy among disadvantaged mothers with young children. In particular, we collect data on the location of virtually every human services agency in the U.S. and use this information to calculate the approximate distance that families must travel from home in order to reach the nearest office that administers the subsidy application process. Using data from the Kindergarten cohort of the Early Childhood Longitudinal Study (ECLS-K), our results indicate that an increase in the distance to a public human services agency reduces the likelihood that a family receives a child care subsidy. Specifically, we estimate an elasticity of subsidy receipt with respect to distance of -0.13. The final section of the paper provides an empirical application in which we use variation in families’ travel distance to identify the causal effect of child care subsidies on children’s weight outcomes. Our instrumental variables estimates suggest that subsidized child care leads to sizeable increases in the prevalence of overweight and obesity among low-income children.
    JEL: I12 I18 J13 R53
    Date: 2011–09
  23. By: Martinho, Vítor João Pereira Domingues
    Abstract: We built a model analyzing, through cross-section estimation methods, the influence of spatial effects and human capital in the conditional productivity convergence in the economic sectors of NUTs III of mainland Portugal between 1995 and 2002. Taking into account the estimation results, it is stated once again that the indications of convergence are greater in industry, and it can be seen that spatial spillover effects, spatial lag and spatial error, do not condition the convergence of productivity in the various economic sectors of Portuguese region in the period under consideration. In contrast the human capital condition the productivity convergence.
    Keywords: endogenous growth theory; spatial econometrics; Portuguese Regions
    JEL: O18 C20 C50 R11
    Date: 2011
  24. By: Maria E. Canon
    Abstract: Do parents alter their investment in their child’s human capital in response to changes in school inputs? If they do, then ignoring this effect will bias the estimates of school and parental inputs in educational production functions. This paper tries to answer this question by studying out-of-school suspensions and their effect on parental involvement in children’s education. The use of out-of- school suspensions is the novelty of this paper. Out-of-school suspensions are chosen by the teacher or the principal of the school and not by parents, but they are a consequence of student misbehavior. To account for the nature of these out-of-school suspensions, they are instrumented with measures of “principal’s preference toward discipline.” The estimates show that, without controlling for selection, the level of parental involvement is negatively correlated with the number of out-of-school suspensions. Once selection is accounted for, the effect disappears—that is, out-of-school suspensions do not affect parental involvement in children’s education.
    Keywords: Education ; School choice
    Date: 2011
  25. By: Golmohammadpoor Azar, Kamran; Mansoori, Masoud
    Abstract: Recent economic crisis started from the American Housing. In 2005, the price of housing started to grow and for gaining more profit, the banks inclined to housing and provided applicants with lots of facilities. With the burst of price bubbles, intense reduction of prices occurred in the housing market and the loan recipients did not have any motives to repay their loans. Therefore, the credit- providing and official organs that had given lots of facilities to the housing sector faced crisis. This recession rapidly spread to other economic sectors and shortly infected Europe and Japan, and also influenced other countries with respect to their dependence on America’s economy. This paper, with an approach to macroeconomics and IS-LM model, analyzes the recent crisis. --
    Keywords: Economic Crisis,Macroeconomics,IS-LM Model,America's Economy
    Date: 2011–05–09
  26. By: Ryan Bubb; Alex Kaufman
    Abstract: Mortgage originators use credit score cutoff rules to determine how carefully to screen loan applicants. Recent research has hypothesized that these cutoff rules result from a securitization rule of thumb. Under this theory, an observed jump in defaults at the cutoff would imply that securitization led to lax screening. We argue instead that originators adopted credit score cutoff rules in response to underwriting guidelines from Fannie Mae and Freddie Mac and offer a simple model that rationalizes such an origination rule of thumb. Under this alternative theory, jumps in default are not evidence that securitization caused lax screening. We examine loan-level data and find that the evidence is inconsistent with the securitization rule-of-thumb theory but consistent with the origination rule-of-thumb theory. There are jumps in the number of loans and in their default rate at credit score cutoffs in the absence of corresponding jumps in the securitization rate. We conclude that credit score cutoff rules provide evidence that large securitizers were to some extent able to regulate originators' screening behavior.
    Keywords: Mortgage loans ; Credit scoring systems
    Date: 2011
  27. By: Brian G. Knight
    Abstract: This paper provides a theoretical and empirical analysis of cross-state externalities associated with gun regulations in the context of the gun trafficking market. Using gun tracing data, which identify the source state for crime guns recovered in destination states, we find that firearms in this market tend to flow from states with weak gun laws to states with strict gun laws, satisfying a necessary condition for the existence of cross-state externalities in the theoretical model. We also find an important role for transportation costs in this market, with gun flows more significant between nearby states; this finding suggests that externalities are spatial in nature. Finally, we present evidence that criminal possession of guns is higher in states exposed to weak gun laws in nearby states.
    JEL: H7 K4
    Date: 2011–09
  28. By: Enrico Marelli (Department of Economics, Faculty of Economics, University of Brescia, Italy); Roberto Patuelli (Department of Economics, Faculty of Economics-Rimini, University of Bologna, Italy; The Rimini Centre for Economic Analysis (RCEA), Italy); Marcello Signorelli (Department of Economics, Finance and Statistics, Faculty of Political Sciences, University of Perugia, Italy)
    Abstract: In this paper we empirically assess the evolution for the EU regions of both employment and unemployment before and after the Global Crisis. After a review of the literature on the theories and key determinants of regional unemployment, we shall overview the main findings concerning the labour market impact of the Global Crisis. The empirical analysis will initially be carried out at the national level including all EU countries; subsequently, we shall focus on the EU regions (at the NUTS-2 level), in order to detect possible changes in the dispersion of regional unemployment rates after the crisis. Our econometric investigations aim to assess the effect, on labour market performance, of previous developments in regional labour markets time series, as well as the importance of structural characteristics of the labour markets, in terms of the sectoral specialization of the regional economies. In fact, the local industry mix may have played a crucial role in shaping labour market performance in response to the crisis. In addition, we consider further characteristics of the regional labour markets, by including indicators of the level of precarization of labour and of the share of long-term unemployed, as indicators of the efficiency of the local labour markets. From a methodological viewpoint, we exploit eigenvector decomposition-based spatial filtering techniques, which allow us to greatly reduce unobserved variable bias – a significant problem in cross-sectional models – by including indicators of latent unobserved spatial patterns. Finally, we render a geographical description of the heterogeneity influence of past labour market performance over the crisis period, showing that the past performance has a differentiated impact on recent labour market developments.
    Keywords: crisis, employment, unemployment, European Union, NUTS-2, spatial filtering, sectoral composition, spatially heterogeneous parameters
    JEL: C21 R12
    Date: 2011–09
  29. By: Lamia Kamal-Chaoui; Fabio Grazi; Jongwan Joo; Marissa Plouin
    Abstract: This report on the Korean Strategy for Green Growth and its implementation in urban areas assesses the contributions of sub-national governments to Korea's National Strategy for Green Growth and identifies the main challenges for effective implementation at the local level. Korea's economy, heavily reliant on foreign exports, was hard hit by the recent global financial crisis. Since the 1970s, Korea has become one of the most energy-intensive economies in the OECD area, thanks to higher living standards, rapid urbanisation and an expanding industrial sector. As a result, the country's greenhouse gas emissions almost doubled between 1990 and 2005, registering the highest growth rate in the OECD area. It is in this context of rapid urbanisation and unprecedented resource consumption and environmental pressures that the report focuses on the role of urban areas within Korea's National Strategy for Green Growth. The effectiveness of Korea's green growth agenda, which has been driven by a central government vision and strategy, will largely hinge on the contribution of urban areas toward more sustainable, greener growth. Through the lens of a multilevel governance framework, an assessment of green growth policies in Korean cities helps to identify concrete strategies for delivering a coherent policy message and improving governance across all levels of government, with particular recommendations in terms of policy, funding, technical capacity and information sharing.
    Keywords: sustainable development, development, government policy, planning, global warming, regional, regional economics, urban sustainability, territorial, cities, urban, green growth, climate
    JEL: Q2 Q3 Q4 Q5 R1 R4 R5
    Date: 2011–07
  30. By: Christian Dustmann (University College London); Albrecht Glitz (Universitat Pompeu Fabra and Barcelona GSE); Uta Schönberg (University College London and Institute for Employment Research (IAB))
    Abstract: This paper develops a model and derives novel testable implications of referral-based job search networks in which employees provide employers with information about potential job market candidates that they otherwise would not have. Using unique matched employeremployee data that cover the entire workforce in one large metropolitan labor market over a 20 year period, we find strong support for the predictions of our model. We first show that firms are more likely to hire minority workers from a particular group if the existing share of workers from that group employed in the firm is higher. We then provide evidence that workers earn higher wages, and are less likely to leave their firms, if they were hired by a firm with a larger share of minority workers from their own group and are therefore more likely to have obtained the job through a referral. The effects are particularly strong at the beginning of the employment relationship and decline with tenure in the firm. These findings have important implications in suggesting that job search networks help to reduce informational deficiencies in the labor market and lead to productivity gains for workers and firms.
    Keywords: Networks, Referrals, Uncertainty
    JEL: J61 J63 J31
    Date: 2011–06
  31. By: Bloze, Gintautas (Department of Business and Economics); Skak, Morten (Department of Business and Economics)
    Abstract: Social policy aims to relieve the ill-being of low income groups, and housing policies in many European countries promote homeownership for low-income households. Previous economic research on subjective well-being seems to indicate that homeownership increases subjective well-being, but little research is done on the relations between homeownership and ill-being. The present study tries to fill some of this gap by use of panel data from three Danish surveys on living conditions in the years 1976, 1986 and 2000.
    Keywords: Ill-being; subjective well-being; homeownership
    JEL: D10 I10 R20
    Date: 2011–08–01
  32. By: Harminder Battu (Department of Economics and Centre for European Labour Market Research (CELMR)); Paul Seaman (Department of Economic Studies, University of Dundee); Yves Zenou (Stockholm University, IFN, and CREAM)
    Abstract: Using data from the UK Quarterly Labour Force Survey, this paper examines the job finding methods of different ethnic groups in the UK. Our empirical findings suggest that, though personal networks are a popular method of finding a job for the ethnic minorities, the foreign born and those who identify themselves as non-British, they are not necessarily the most effective either in terms of gaining employment or in terms of the level of job achieved. However, there are some important differences across ethnic groups with some groups losing out disproportionately from using personal networks.
    Keywords: Job search, networks, social capital, ethnic disadvantage
    JEL: J15 J64
    Date: 2010–11
  33. By: Olanrewaju Olaniyan
    Abstract: This study explores the determinants of child schooling in Nigeria and takes current enrolment and delayed entry into schools as measures of schooling outcome. The study utilized reduced form relationships for male and female children within urban and rural households. Using data from the 1999 Multiple Indicator Cluster Survey (MICS) of Nigeria, the study found that socioeconomic backgrounds of children are significant determinants of schooling with education of parents being the most important determinant. Educated parents desire more schooling for their children. Our decomposition analysis revealed that the way a household treats boys and girls in urban areas contracts the gender gap in enrolment, while it widens the gap in rural areas.
    Date: 2011–01
  34. By: Roberto Bande (University of Santiago and IDEGA); Marika Karanassou (Queen Mary, University of London and IZA)
    Abstract: On both theoretical and empirical grounds, this paper provides evidence that refutes the natural rate of unemployment (NRU) hypothesis as an explanation of the evolution of regional disparities in the unemployment rate. We first present our analytical framework, which follows the chain reaction theory (CRT) of unemployment and argues that (i) a system of interactive labour market equations, rather than a single-equation unemployment rate model, is better equipped to accommodate unemployment dynamics, and (ii) due to the interplay of frictions and growth in labour markets, the NRU ceases to be an attractor of the unemployment rate time path. We then provide evidence that the Spanish ecoomy is characterised by large and persistent disparities in the regional unemployment rates. Through standard kernel density tecnhiques, we demonstrate the existence of marked differences between two groups of high and low unemployment regions that remain stable in their composition through time. Finally, we review our empirical labour market model for each group of regions and evaluate the corresponding natural rates. Our findings confirm that the evolution of regional disparities cannot be attributed to disparities in the natural rates, given that these, although different, do not act as an attractor of unemployment. Thus, the NRUs offer little help in the formulation of labour market policies.
    Keywords: regional unemployment, disparities, kernel, natural rate, frictional growth
    JEL: R23 J64
    Date: 2011
  35. By: David Boniface (Epidemiology and Public Health, University College London)
    Abstract: Aim: To create a web-based facility for customers to enter an address of a house and obtain a graph showing the trend of price of house since last sold, extrapolated to current date, within milliseconds. Method: The UK Land Registry of house sale prices was used to estimate mean price trends from 2000 to 2010 for each category of house. The Stata ado-file uvrs (with user-specified knots) was used to model the curve. The parameter estimates were saved. Later, to respond in real time to a query about a particular house, splinegen was used to generate the spline curve for the appropriate time period, which was adjusted to apply to the particular house and plotted on the webpage. Challenges: use of coded date, choice of user knots for splines, saving and retrieving the knots and parameter estimates, use of log scale for prices to deal with skewed price distribution, estimation of prediction intervals, and the 2009 slump in house prices
    Date: 2011–09–26
  36. By: Bo Zhao; David Coyne
    Abstract: Local governments depend on state aid to provide residents and businesses with vital public services, such as education, police and fire protection, and safe public roads. However, in response to the recent fiscal crisis, many states are quickly and deeply cutting local aid. The Congressional Budget Office reported that 22 states reduced aid to local governments in FY 2010, and 20 states have proposed additional cuts in FY 2011. ; States tend to cut aid either on an ad hoc basis or across the board, with every community receiving the same percent aid cut. This paper proposes a new, more equitable approach to distributing reductions in state aid. It develops a framework that distributes reductions in state aid based on underlying local fiscal health whereby communities that are in worse underlying fiscal health and receive less existing aid experience smaller aid cuts. The framework can also apply to aid increases, giving policymakers a single tool to accommodate any change in state aid. ; The paper uses Massachusetts data on unrestricted municipal aid to simulate the impact of the proposed framework. The framework can be used to distribute cuts or increases in school aid or non-school aid, and is potentially applicable to all states.
    Keywords: Municipal finance - Massachusetts ; Municipal finance
    Date: 2011
  37. By: Gordon Hughes (School of Economics, University of Edinburgh)
    Abstract: Econometricians have begun to devote more attention to spatial interactions when carrying out applied econometric studies. In part, this is motivated by an explicit focus on spatial interactions in policy formulation or market behavior, but it may also reflect concern about the role of omitted variables that are or may be spatially correlated. The classic models of spatial autocorrelation or spatial error rely upon a predefined matrix of spatial weights W, which may be derived from an explicit model of spatial interactions but which, alternatively, could be viewed as a flexible approximation to an unknown set of spatial links similar to the use of a translog cost function. With spatial panel data, it is possible, in principle, to regard W as potentially estimable, though the number of time periods would have to be large relative to the number of spatial panel units unless severe restrictions are placed upon the structure of the spatial interactions. While the estimation of W may be infeasible for most real data, there is a strong, formal similarity between spatial panel models and nonspatial panel models in which the variance-covariance matrix of panel errors is not diagonal. One important variant of this type of model is the random-coefficient model in which slope coefficients differ across panel units so that interest focuses on the mean slope coefficient across panel units. In certain applications--for example, cross-country (macro-)economic data--the assumption that reaction coefficients are identical across panel units is not intuitively plausible. Instead of just sweeping differences in coefficients into a general error term, the random-coefficient model allows the analyst to focus on the common component of responses to changes in the independent variables while retaining the information about the error structure associated with coefficients that are random across panel units but constant over time for each panel unit. At present, Stata's spatial procedures include a range of user-written routines that are designed to deal with cross-sectional spatial data. The recent release of a set of programs (including spmat, spivreg, and spreg) written by Drukker, Prucha, and Raciborski provides Stata's users with the opportunity to fit a wide range of standard spatial econometric models for cross-sectional data. Extending such procedures to deal with panel data is nontrivial, in part because there are important issues about how panels with incomplete data should be treated. The casewise exclusion of missing data is automatic for cross-sectional data, but omitting a whole panel unit because some of the data in the panel are missing will typically lead to a very large reduction in the size of the working dataset. For example, it is very rare for international datasets on macroeconomic or other data to be complete, so that casewise exclusion of missing data will generate datasets that contain many fewer countries or time periods than might otherwise be usable. The theoretical literature on econometric models for the analysis of spatial panels has flourished in the last decade with notable contributions from LeSage and Pace, Elhorst, and Pfaffermayr, among others. In some cases, authors have made available specific code for the implementation of the techniques that they have developed. However, the programming language of choice for such methods has been MATLAB, which is expensive and has a fairly steep learning curve for nonusers. Many of the procedures assume that there are no missing data and the procedures may not be able to handle large datasets because the model specifications can easily become unmanageable if either N (the number of spatial units) or T (the number of time periods) becomes large. The presentation will cover a set of user-written maximum likelihood procedures for fitting models with a variety of spatial structures including the spatial error model, the spatial Durbin model, the spatial autocorrelation model, and certain combinations of these models--the terminology is attributable to LeSage and Pace (2009). A suite of MATLAB programs to fit these models for both random and fixed effects has been compiled by Elhorst (2010) and provides the basis for the implementation in Stata/Mata. Methods of dealing with missing data, including the implementation of an approach proposed by Pfaffermayr (2009), will be discussed. The problem of missing data is most severe when data on the dependent variable are missing in the spatial autocorrelation model because it means that information on spatial interactions may be greatly reduced by the exclusion of countries or other panel units. In such cases, some form of imputation may be essential, so the presentation will consider alternative methods of imputation. It should be noted that mi does not support panel data procedures in general, and the relatively high cost of fitting spatial panel models means that it may be difficult to combine mi with spatial procedures for practical applications. A second aspect of spatial panel models that will be covered in the presentation concerns the links between such models and random-coefficient models that can be fit using procedures such as xtrc or the user-written procedure xtmg. The classic formulation of random-coefficient models assumes that the variance-covariance model of panel errors is diagonal but heteroskedastic. This is an implausible assumption for most cross-country datasets, so it is important to consider how it may be relaxed, either by allowing for explicit spatial interactions or by using a consistent estimator of the cross-country variance-covariance model. The user-written procedures introduced in the presentation will be illustrated by applications drawn from analyses of demand for infrastructure, health outcomes, and climate for cross-country data covering the developing and developed world plus regions in China.
    Date: 2011–09–26
  38. By: Zenou, Yves
    Abstract: The aim of this paper is to provide a new mechanism based on social interactions explaining why minority workers have worse labor-market outcomes than majority workers. Building on Granovetter's idea that weak ties are superior to strong ties for providing support in getting a job, we develop a social interaction model where workers can obtain a job through either their strong or weak ties. In this model, it is better to meet weak ties because a strong tie does not help in the state where all best friends are unemployed. But a weak tie can help leaving unemployment in any state because that person might be employed. So there is an asymmetry that is key to the model and that explains why some workers (blacks) may be stuck in poverty traps having little contact with weak ties (whites) that can help them escape unemployment.
    Keywords: labor market; social networks; Weak ties
    JEL: A14 J15 Z13
    Date: 2011–09
  39. By: R. Alison Felix; James R. Hines, Jr.
    Abstract: Many American communities seek to attract or retain businesses with tax abatements, tax credits, or tax increment financing of infrastructure projects (TIFs). The evidence for 1999 indicates that communities are most likely to offer one or more of these business development incentives if their residents have low incomes, if they are located close to state borders, and if their states have troubled political cultures. Ten percent greater median household income is associated with a 3.2 percent lower probability of offering incentives; ten percent greater distance from a state border is associated with a 1.0 percent lower probability of offering incentives; and a 10 percent higher rate at which government officials are convicted of federal corruption crimes is associated with a 1.2 percent greater probability of offering business incentives. TIFs are the preferred incentive of communities whose residents have household incomes between $25,000 and $75,000; whereas TIFs are much less commonly offered by communities whose residents have household incomes below $25,000. The need to finance TIFs out of incremental tax revenues may make it infeasible for many of the poorest of communities to use TIFs for local business development.
    JEL: H25 H71 H73
    Date: 2011–09
  40. By: Liow, Kim Hiang; Schindler, Felix
    Abstract: The primary contribution of this study is to assess whether public real estate markets and stock markets are linked at the local, regional, and global levels, and to assess the evolution of their dynamic relationship and gradual integration during the last two decades. For individual pairs of real estate and stock markets, our analysis shows that the current levels of local, regional, and global correlation between real estate and stock markets are time-varying and are, at most, moderate at the respective integration levels. The real estate and stock markets are both contemporaneously and causally linked in their returns and volatilities; however the causality relationship appears weaker. In the long run, the real estate markets have slowly become more integrated with the global and regional stock markets; while less integrated with the local stock markets. In addition, the extracted common factors allow for a direct assessment of the dynamic relationships between the real estate and stock markets as a group, and thereby complement the individual results. Finally, there appears to be a declining real estate and stock return dispersion and differential at the local, regional, and global levels for all nine economies, indicating a tendency of return convergence between real estate and stock market in an international environment. --
    Keywords: Time-Varying Integration,Return and Volatility Causality,Multivariate Asymmetric DCC-GARCH,Return Convergence,Securitized Real Estate Markets,International Stock Markets
    JEL: C32 G31
    Date: 2011
  41. By: Amita Majumder; Ranjan Ray; Kompal Sinha
    Abstract: While national and international statistical agencies spend much resource on calculating purchasing power parity (PPP) between countries, relatively little attention is given to PPP calculations within countries. Yet, for large and heterogeneous countries, such as the US and India, intra country PPP is as important as cross-country PPP. This is particularly true of the rural urban divide in such countries where the idea that one unit of currency has the same purchasing power in both sectors is clearly false. This paper addresses this limitation by proposing a demand system based methodology for calculating rural urban PPP that incorporates rural urban differences in preferences and applies it to India. The methodology is compared with conventional procedures, such as the Laspeyre’s price index and the CPD model, and shown to have several advantages over them. The result on significant rural urban price difference in India underlines the need to extend the cross-country PPP calculations to incorporate spatial differences in large, heterogeneous countries with a diverse set of preferences and prices.
    Keywords: Rural Urban PPP, Unit Values, Quality Adjustment, CPD Model
    JEL: C13 D12 E30 R10 R20
    Date: 2011–09
  42. By: Lieser, Karsten (IESE Business School); Groh, Alexander P. (EMLYON Business School)
    Abstract: We examine the determinants of commercial real estate investments using a unique set of panel data series for 47 countries worldwide, ranging from 2000 to 2009. We explore how different socio-economic, demographic and institutional characteristics affect commercial real estate investment activity through both cross-sectional and time-series analyses, running augmented random effect panel regressions. We provide evidence that economic growth, rapid urbanization and compelling demographics attract real estate investments and also confirm that lack of transparency in a country's legal framework, administrative burdens of doing real estate business, socio-cultural challenges and political instabilities reduce international real estate allocations.
    Keywords: Real Estate Investments; International Asset Allocation; Real Estate Market Attractiveness;
    JEL: C23 C33 G11 G23 G24 O16 O18 P25 P52
    Date: 2011–07–13
  43. By: Christian Dustmann (CReAM, University College London); Albrecht Glitz (CReAM, Universitat Pompeu Fabra)
    Abstract: Sjaastad (1962) viewed migration in the same way as education: as an investment in the human agent. Migration and education are decisions that are indeed intertwined in many dimensions. Education and skill acquisition play an important role at many stages of an individual's migration. Differential returns to skills in origin- and destination country are a main driver of migration. The economic success of the immigrant in the destination country is to a large extent determined by her educational background, how transferable these skills are to the host country labour market, and how much she invests into further skills after arrival. The desire to acquire skills in the host country that have a high return in the country of origin may also be an important reason for a migration. From an intertemporal point of view, the possibility of a later migration may also affect educational decisions in the home country long before a migration is realised. In addition, the decisions of migrants regarding their own educational investment, and their expectations about future migration plans may also affect the educational attainment of their children. But migration and education are not only related for those who migrate or their descendants. Migrations of some individuals may have consequences for educational decisions of those who do not migrate, both in the home and in the host country. By easing credit constraints through remittances, migration of some may help others to go to school. By changing the skill base of the receiving country, migration may change incentives to invest in certain types of human capital. Migrants and their children may create externalities that influence educational outcomes of non-migrants in the destination country. This chapter will discuss some of the key areas that connect migration and education.
    Keywords: Migration, Education, Human Capital, Return Migration, Immigrant Selection, Second-generation
    Date: 2011–02
  44. By: Roland G. Fryer, Jr; Devah Pager; Jörg L. Spenkuch
    Abstract: The extent to which discrimination can explain racial wage gaps is one of the most divisive subjects in the social sciences. Using a newly available dataset, this paper develops a simple empirical test which, under plausible conditions, provides a lower bound on the extent of discrimination in the labor market. Taken at face value, our estimates imply that differential treatment accounts for at least one third of the black-white wage gap. We argue that the patterns in our data are consistent with a search-matching model in which employers statistically discriminate on the basis of race when hiring unemployed workers, but learn about their marginal product over time. However, we cannot rule out other forms of discrimination.
    JEL: J01 J15 J71
    Date: 2011–09

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