nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2011‒11‒28
48 papers chosen by
Steve Ross
University of Connecticut

  1. Agglomeration, accessibility and industrial location: evidence from spanish municipalities By Ángel Alañón-Pardo; Josep-Maria Arauzo-Carod
  2. The Effect of School Construction on Test Scores, School Enrollment, and Home Prices By Neilson, Christopher; Zimmerman, Seth
  3. A scale-free transportation network explains the city-size distribution By Berliant, Marcus; Watanabe, Hiroki
  4. Firm growth and the spatial impact of geolocated external factors: Empirical evidence for German manufacturing firms By Duschl, Matthias; Schimke, Antje; Brenner, Thomas; Luxen, Dennis
  6. The Welfare Impacts of Social Housing Programs in Latin America: A Meta-impact Analysis By Inder Ruprah
  7. Residential Segregation and Immigrants' Satisfaction with the Neighborhood in Germany By Verena Dill; Uwe Jirjahn; Georgi Tsertvadze
  8. Neighborhood Effects and Individual Unemployment By Thomas K. Bauer; Michael Fertig; Matthias Vorell
  9. Planning Innovation and Regional Development: the Spreading of Urban Strategic Planning in Southern Italy By Ignazio Vinci
  10. Consumption, Wealth, Stock and Housing Returns: Evidence from Emerging Markets By Guglielmo Maria Caporale; Ricardo M. Sousa
  11. Migrant Youths' Educational Achievement: The Role of Institutions By Deborah Cobb-Clark; Mathias Sinning; Steven Stillman
  12. Human Capital and Spatial Heterogeneity in the Iberian Countries’ Regional Growth and Convergence By Catarina Cardoso; Eric J. Pentecost
  13. Does Skilled Migration Foster Innovative Performance? Evidence from British Local Areas By Luisa Gagliardi
  14. Creative-based strategies in small and medium-sized cities: some European study cases By Elisabete Tomaz; Catarina Selada; Inês Vilhena da Cunha
  15. Innovation, Spillovers and Venture Capital Contracts By Dessi, Roberta
  16. A spatial nonparametric analysis of local multipliers By Stefano Magrini; Margherita Gerolimetto
  17. Immigration and the School System By Albornoz-Crespo, Facundo; Cabrales, Antonio; Hauk, Esther
  18. Education and Migration Choices in Hierarchical Societies: The Case of Matam, Senegal By Auriol, Emmanuelle; Demonsant, Jean-Luc
  19. Migrant Youths' Educational Achievement: The Role of Institutions By Deborah A. Cobb-Clarke; Mathias Sinning; Steven Stillman
  20. Are Stock and Housing Returns Complements or Substitutes? Evidence from OECD Countries By Guglielmo Maria Caporale; Ricardo M. Sousa
  21. The relationship between homeownership and life satisfaction in Germany By Zumbro, Timo
  22. Does grade retention affect achievement? Some evidence from PISA By J. Ignacio García-Pérez; Marisa Hidalgo-Hidalgo; J. Antonio Robles-Zurita
  23. Ethnic Solidarity and the Individual Determinants of Ethnic Identification By Thomas Bossuroy
  24. Competition and Industry Structure for International Rail Transportation By Friebel, Guido; Ivaldi, Marc; Pouyet, Jérôme
  25. The Bright Side of Social Capital: How 'Bridging' Makes Italian Provinces More Innovative By Riccardo Crescenzi; Luisa Gagliardi; Marco Percoco
  26. Education or just Creativity: what matters most for economic performance? By Emanuela Marrocu; Raffaele Paci
  27. Knowledge Spillovers and Knowledge Intensive Business Services: An Empirical Study By Fernandes, Cristina; Ferreira, João
  28. Should Economists Listen to Educational Psychologists? Some Economics of Student Motivation By Donze, Jocelyn; Gunnes, Trude
  29. The impact of West-German universities on regional innovation activities: A social network analysis By Meyborg, Mirja
  30. Underpricing and Firm’s Distance from Financial Centre: Evidence from three European Countries By Antonio Acconcia; Alfredo Del Monte; Luca Pennacchio
  31. Causes and Consequences of Bailing out Expectations of Subcentral Governments: Theory and Evidence from the Italian Regions By Fabio Padovano, CREM-CNRS and Condorcet Center, University of Rennes 1 (France) & DIPES-Università Roma Tre (Italy)
  32. The Extended Hodrick-Prescott (HP) Filter for Spatial Regression Smoothing By Wolfgang Polasek
  33. A BI-LEVEL SCHEME FOR ASSESSING THE IMPACT OF AIR TRANSPORTATION ON LOCAL DEVELOPMENT By Marcella Drummond; Felix Mora-Camino; Luis Gustavo Cruz; Amaranto Pereira
  34. Hedonic Prices and Implicit Markets: Estimating Marginal Willingness to Pay for Differentiated Products Without Instrumental Variables By Kelly C. Bishop; Christopher Timmins
  35. Wealth, Credit Conditions and Consumption: Evidence from South Africa By Janine Aron; John Muellbauer
  36. Road Safety: The Experience of the Transport Accident Commission in Victoria, Australia By Samantha Cockfield
  37. Regional unemployment and norm-induced effects on life satisfaction By Chadi, Adrian
  38. Municipality Size and Efficiency of Local Public Services: Does Size Matter? By P. Bönisch; Peter Haug; A. Illy; L. Schreier
  39. Regional innovation systems revisited: networks, institutions, policy and complexity By Elvira Uyarra
  40. A Framework for Assessing the Marginal External Accident Cost of Road Use and its Implications for Insurance Ratemaking By Lasse Fridstrøm
  41. Refundability and Price: Empirical Analysis on the Airline Industry By Seongman Moon; Makoto Watanabe
  42. Permanent Income and the Black-White Test Score Gap By Jesse Rothstein; Nathan Wozny
  43. Social Interactions and Subjective Well-Being: Evidence from Latin America. By Victoria Ateca-Amestoy; Alexandra Cortés Aguilar; Ana I. Moro-Egido
  44. Determinants of regional productivity growth in Europe: an empirical analysis By Gert-Jan Linders; Tatyana Bulavskaya; Henri De Groot; Ferdinand Paraguas
  45. Skill-biased Technological Change, Earnings of Unskilled Workers, and Crime By Naci H. Mocan; Bulent Unel
  46. Inter-industry linkages in local economies By Frank Neffke; Martin Henning
  47. Road Safety and Insurance Markets Overview By Andrew Fronsko
  48. And Yet they Co-Move! Public Capital and Productivity in OECD: A Panel Cointegration Analysis with Cross-Section Dependence By Anna Bottaso; Carolina Castagnetti; Maurizio Conti

  1. By: Ángel Alañón-Pardo (Facultad de CC. Económicas y Empresariales, Universidad Complutense de Madrid, Departamento de Economía Aplicada I, Campus de Somosaguas, 28223 Pozuelo de Alarcón (Spain),); Josep-Maria Arauzo-Carod (QURE-CREIP (Departament d’Economia, Universitat Rovira i Virgili), Reus & Institut d'Economia de Barcelona (IEB), Barcelona, Spain)
    Abstract: This paper deals with the location decisions of manufacturing firms in Spain. We analyse how agglomeration economies and transport accessibility influence the location decisions of firms at municipality level and in three industries. The main empirical contributions of this paper are the econometric techniques used (spatial econometric models) and some of the explanatory variables (local gross domestic product, road accessibility, and the characteristics of firms in neighbouring municipalities). The results show that agglomeration economies and accessibility are important in industrial location decision-making.
    Keywords: Agglomeration, Accessibility, Industrial location, Spatial econometrics, Spain
    JEL: R10 R12 R15 R30
    Date: 2011
  2. By: Neilson, Christopher (Yale University); Zimmerman, Seth (Yale University)
    Abstract: This paper provides new evidence on the effect of school construction projects on home prices, academic achievement, and public school enrollment. Taking advantage of the staggered implementation of a comprehensive school construction project in a poor urban district, we find that, by six years after building occupancy, $10,000 of per-student investment in school construction raised reading scores for elementary and middle school students by 0.027 standard deviations. For a student receiving the average treatment intensity this corresponds to a 0.21 standard deviation increase. School construction also raised home prices and public school enrollment in zoned neighborhoods.
    Keywords: school construction, test scores, home prices
    JEL: I21 I22 H75 R30
    Date: 2011–11
  3. By: Berliant, Marcus; Watanabe, Hiroki
    Abstract: Zipf’s law is one of the best-known empirical regularities of the city-size distribution. There is extensive research on the subject, where each city is treated symmetrically in terms of the cost of transactions with other cities. Recent developments in network theory facilitate the examination of an asymmetric transport network. Under the scale-free transport network framework, the chance of observing extremes becomes higher than the Gaussian distribution predicts and therefore it explains the emergence of large clusters. City-size distributions share the same pattern. This paper proposes a way to incorporate network structure into urban economic models and explains the city-size distribution as a result of transport cost between cities.
    Keywords: Zipf’s law; city-size distribution; scale-free network
    JEL: R40 R12
    Date: 2011–11–17
  4. By: Duschl, Matthias; Schimke, Antje; Brenner, Thomas; Luxen, Dennis
    Abstract: In this paper the relationship between firm growth and external knowledge sources, such as related firms and universities, is studied. The spatial characteristics of these relationships are examined by geolocating firms into a more realistic relational space using travel time distances and using flexible distance decay function specifications. This approach properly accounts for growth relevant knowledge spillovers and allows for estimating their spatial range and functional form. Applying quantile regression techniques on a large sample of German manufacturing firms, we show that the impact of external factors substantially differ along firms' size, type of knowledge source and growth level. --
    Keywords: Firm growth,external factors,universities,agglomeration,space,spatial range,distance decay functions,knowledge spillovers,high growth firms,quantile regression
    JEL: C31 D92 L25 R11
    Date: 2011
  5. By: Amparo Maset-Llaudes; Ana Mª Fuertes-Eugenio; Pilar Pardo-Forcadell
    Abstract: The current urban planning model for Spanish cities does not meet the criteria for successful urban sustainability, in fact quite the opposite, it follows the disperse city model introduced twenty years ago by the boom in the construction industry and improved communication infrastructures. In this context, one way for Spanish cities to move towards sustainable principles is to consider integrated urban regeneration (IUR) as an alternative to building new housing. To estimate the impact of IUR on the current model, it is important to know firstly, how it is contemplated in Spanish legislation and applied in urban planning throughout Spain. From the normative point of view, territorial and urban planning decisions are the exclusive competence of the self-governing regions, although the Spanish government is responsible for national land use legislation. This study analyses the applicable urban planning legislation in each region by examining the mandatory regulations (laws and development regulations) on urban and territorial planning, the protection of natural areas, natural resource management, the environment and environmental quality, environmental assessment, housing and laws that explicitly refer to sustainability in each self-governing region, using a series of indicators produced for the purpose based on the contents of the 'White Paper on the Sustainability of Spanish Urban Planning'. This information provides an overview of the situation of IUR at national level and in each self-governing region, verifying the levels of compliance to reveal the gaps in Spanish sustainability legislation. The results of this study are linked to the lines of action in the Leipzig Charter on integrated urban development policy and in particular for deprived urban areas within cities.
    Date: 2011–09
  6. By: Inder Ruprah (Interamerican Development Bank, Washington, DC)
    Keywords: Housing Policy, Targeting, ABC, Poverty, Homeownership
    JEL: O2 I3
    Date: 2011–05
  7. By: Verena Dill; Uwe Jirjahn; Georgi Tsertvadze
    Abstract: Using data from the German Socio-Economic Panel, this study examines the relationship between immigrant residential segregation and immigrants’ satisfaction with the neighborhood. The estimates show that immigrants living in segregated areas are less satisfied with the neighborhood. This is consistent with the hypothesis that housing discrimination rather than self-selection plays an important role in immigrant residential segregation. Our result holds true even when controlling for other influences such as household income and quality of the dwelling. It also holds true in fixed effects estimates that account for unobserved time-invariant influences.
    Keywords: Immigrant Residential Segregation, Housing Discrimination, Self-Segregation, Neighborhood Satisfaction
    JEL: J15 J61 R23 R30
    Date: 2011
  8. By: Thomas K. Bauer; Michael Fertig; Matthias Vorell
    Abstract: Using a unique dataset for Germany that links individual longitudinal data from the SOEP 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 identification problems which are present in this strand of literature. The empirical results indicate that there is a significant negative impact of neighborhood unemployment on the individual employment probability.
    Keywords: Social interactions; unemployment; neighborhood characteristics
    JEL: J64 R23
    Date: 2011
  9. By: Ignazio Vinci
    Abstract: For decades the Italian system of planning has been strongly characterized by a regulatory approach and the question of cities’ development had been taken into account within general land use plans. In the 1990s this approach has been considered a strong constraint on the regeneration of cities and the revitalization of their economic potential. Therefore, in the last decade the improvement of flexibility and participation within planning processes were considered primary objectives both at regional and local levels. In addition to spatial regulatory plans, large and medium sized cities became increasingly interested in developing urban strategic plans following the model of some European “success stories†of urban regeneration (such as Barcelona, Lyon, Glasgow). In a first phase, these planning experiments were prevalently carried out by the cities of the Northern regions (such us Torino, Firenze, Venezia, Trento) and supported by strong voluntary public-private partnerships. In a second phase, after a financial programme by the Ministry of Economy, more then 150 cities in the Southern regions started strategic planning processes. These latest strategic plans (at present under observation both from policy makers and urban-regional scientists) should be evaluated in a very different way in comparison with the strategic plans carried out in Northern Italy. That’s for two main reasons: • First, because the majority of Southern cities still lag behind from an economic point of view, in addiction to very problematic governance environments and fragmented local societies; • Secondly, as a consequence of the financial support provided to municipalities, because the national and the regional authorities require Southern cities to improve, through strategic planning, their capacity to implement effective regeneration programmes and to increase their access to the EU structural funds. Starting from these distinctive issues, this paper aims to critically discuss the spreading of strategic planning in Southern Italian regions, trying to analyse the ongoing process of innovation as regards the objectives undertaken at national level.
    Date: 2011–09
  10. By: Guglielmo Maria Caporale (Centre for Empirical Finance); Ricardo M. Sousa (Universidade do Minho - NIPE)
    Abstract: In this paper, we show, using the consumer’s budget constraint, that the residuals of the trend relationship among consumption, aggregate wealth, and labour income should predict both stock returns and housing returns. We use quarterly data for a panel of 31 emerging economies and find that, when agents expect future stock returns to be higher, they will temporarily allow consumption to rise. Regarding housing returns, if housing assets are complementary to stocks, then investors react in the same way. If, however, the increase in the exposure through risky assets is achieved by lowering the share of wealth held in the form of housing (i.e., when stock and housing assets are substitutes), then they will temporarily reduce their consumption.
    Keywords: consumption, wealth, stock returns, housing returns, emerging markets
    JEL: E21 E44 D12
    Date: 2011
  11. By: Deborah Cobb-Clark (Melbourne Institute of Applied Economic and Social Research, University of Melbourne, and Institute for the Study of Labor (IZA)); Mathias Sinning (Australian National University, RWI, and Institute for the Study of Labor (IZA)); Steven Stillman (University of Otago and Institute for the Study of Labor (IZA))
    Abstract: We use 2009 Programme of International Student Assessment (PISA) data to link institutional arrangements in OECD countries to the disparity in reading, math, and science test scores for migrant and native-born students. We find that achievement gaps are larger for those migrant youths who arrive later and for those who do not speak the test language at home. Institutional arrangements often serve to mitigate the achievement gaps of some migrant students while leaving unaffected or exacerbating those of others. For example, earlier school starting ages help migrant youths in some cases, but by no means in all. Limited tracking on ability appears beneficial for migrants' relative achievement, while complete tracking and a large private school sector appear detrimental. Migrant students' achievement relative to their native-born peers suffers as educational spending and teachers' salaries increase, but is improved when examination is a component of the process for evaluating teachers.
    Keywords: Migrant Youths; PISA Test Scores; Schools; Institutions; Academic Achievement.
    Date: 2011–11
  12. By: Catarina Cardoso (School of Business and Economics, Loughborough University, UK); Eric J. Pentecost (School of Business and Economics, Loughborough University, UK)
    Abstract: Human capital is believed to be an important conditioning factor in explaining the convergence and the speed of convergence of regional economies, although it is usually excluded from the estimated models due to a lack of consistent data. In contrast this paper, using a newly constructed series on human capital at the NUTS III level for Portugal, evaluates the role of human capital on the speed of convergence using a spatial econometric methodology, for a sample of Iberian NUTS III regions over the period 1991-2006. This is the first study to consider human capital effects at the NUTS III level and the results show convergence, both absolute and conditional, occurs mainly in the peripheral group of regions, while human capital plays a positive role only in the club of the richest regions, in contrast with an insignificant effect in the periphery. There is also evidence of important regional spillovers between the regions and evidence of the importance of EU regional policy in enhancing the convergence of the NUTS III regions.
    Keywords: Regional growth, beta-convergence, Human Capital, Spatial Effects
    JEL: C23 I21 O18 R11
    Date: 2011–11
  13. By: Luisa Gagliardi
    Abstract: What is the effect of an increase in the stock of human capital on the innovative performance of a local economy? This paper tests the hypothesis of a causal link between an increase in the average stock of human capital, due to skilled migration inflows, and the innovative performance of local areas using British data. The paper examines the role of human capital externalities as crucial determinant of local productivity and innovative performance, suggesting that the geographically bound nature of these valuable knowledge externalities can be challenged by the mobility of skilled individuals. Skilled migration becomes a crucial channel of knowledge diffusion broadening the geographical scope of human capital externalities and fostering local innovative performance.
    Keywords: Innovation, migration, education, externalities
    JEL: O15 O31 I2 H22
    Date: 2011–11
  14. By: Elisabete Tomaz; Catarina Selada; Inês Vilhena da Cunha
    Abstract: During the last decades, creative and cultural approaches have been implemented in regional and urban development strategies as key drivers for competitiveness and growth. However, research literature tends to focus mainly in big cities and metropolis, not recognizing the potential of small cities in intermediate and rural regions in fostering territorial cohesion. Nevertheless, public policies based on creativity and innovation are being experienced in non-metropolitan and rural contexts around Europe, Canada and USA focused on economic revitalisation, urban regeneration and reversing de-population trends. These approaches are mainly based on historic precedents (‘path dependency’), in the exploitation of distinctive local attributes and assets regarding culture, environment, lifestyle and quality of life, besides specific investments in infrastructures or support programmes (such as incubators, live-work houses, and specific financing systems), which intend to induce the attraction of talent and the development of creative businesses. The main aim of this investigation is to examine the recent approaches to cultural and creative economy that are being implemented by small and medium-sized cities in Europe that still remain largely unstudied. The objective is to establish a typology of creative-based strategies through the analysis of the definitions adopted by regional and local authorities as well as the justifications and planning instruments used that reflect different priority goals or purposes. The paper engages the debate on rural and urban relationships as well as on the regional interdependencies. It is also stressed the demand for adapting widespread development policies to local specificities and to build up innovative forms of governance for a fully engagement of the local actors at different levels, in search of a competitive but also cohesive society. As a result, it is our intention to contribute to the theoretical thinking about the crucial factors for the sustainability of small local economies in regional development.
    Date: 2011–09
  15. By: Dessi, Roberta (IDEI, Toulouse School of Economics)
    Abstract: Innovative start-ups and venture capitalists are highly clustered, benefiting from localized spillovers: Silicon Valley is perhaps the best example. There is also substantial geographical variation in venture capital contracts: California contracts are more "incomplete". This paper proposes an economic explanation for these observations, often attributed to regional cultural differences. In the presence of significant spillovers, it becomes optimal for an innovative start-up and its financier to adopt contracts with fewer contingencies: these contracts maximize their ability to extract (part of) the surplus they generate through positive spillovers. This relaxes ex-ante financing constraints and makes it possible to induce higher innovative effort.
    JEL: D82 D86 G24 L22
    Date: 2011–09–13
  16. By: Stefano Magrini; Margherita Gerolimetto
    Abstract: In this paper we present a spatial nonparametric analysis of local multipliers. Following Moretti (2010), we estimate the effect of an exogenous shock in the employment of the tradable sector on the employment in either the nontradable sector or the rest of the tradable sector using a nonparametric procedure that allows for spatial effects. In addition, due to its nonparametric nature, the adopted procedure is robust not only to possibly nonlinear functional forms but also to endogeneity in the regressors. Our analysis shows that the inclusion of spatial effects reveals the presence of a nonlinear relationship between tradable on nontradable.
    Date: 2011–09
  17. By: Albornoz-Crespo, Facundo; Cabrales, Antonio; Hauk, Esther
    Abstract: Immigration is an important problem in many societies, and it has wide-ranging eects on the educational systems of host countries. There is a now a large empirical literature, but very little theoretical work on this topic. We introduce a model of family immigration in a framework where school quality and student outcomes are determined endogenously. This allows us to explain the selection of immigrants in terms of parental motivation and the policies which favor a positive selection. Also, we can study the eect of immigration on the school system and how school quality may self-reinforce immigrants' and natives' choices.
    Keywords: education; immigrant sorting; immigration; parental involvement; school resources
    JEL: I20 I21 I28 J24 J61
    Date: 2011–11
  18. By: Auriol, Emmanuelle (TSE, ARQADE and IDEI); Demonsant, Jean-Luc (Universidad Autonoma de Nuevo Leon)
    Abstract: The paper aims at studying determinants of schooling in traditional hierarchical societies confronted with an established history of outmigration. In the village, a ruling caste controls local political and religious institutions. For children who do not belong to the ruling caste, migration is a social mobility factor that is enhanced by formal schooling. Since formally educated children tend not to return, the ruling caste seeks to develop family loyalty by choosing religious education instead. The theory hence predicts that the social status of the family has a signicant impact on educational choice. Children from the ruling caste who are sent abroad have a lower probability of being sent to formal school. They are more likely to be sent to Koranic schools that emphasize religious and family values. The theoretical predictions are tested on data from Matam region in Senegal, a region where roughly one of every two children have ever attended school.
    Keywords: Schooling, Migration, Social Status, Haalpulaar
    JEL: I21 O12 O15 O17 Z13
    Date: 2011–03–28
  19. By: Deborah A. Cobb-Clarke; Mathias Sinning; Steven Stillman
    Abstract: We use 2009 Programme of International Student Assessment (PISA) data to link institutional arrangements in OECD countries to the disparity in reading, math, and science test scores for migrant and native-born students. We find that achievement gaps are larger for those migrant youths who arrive later and for those who do not speak the test language at home. Institutional arrangements often serve to mitigate the achievement gaps of some migrant students while leaving unaffected or exacerbating those of others. For example, earlier school starting ages help migrant youths in some cases, but by no means in all. Limited tracking on ability appears beneficial for migrants' relative chievement, while complete tracking and a large private school sector appear detrimental. Migrant students' achievement relative to their native-born peers suffers as educational spending and teachers' salaries increase, but is improved when examination is a component of the process for evaluating teachers.
    JEL: F22
    Date: 2011–11
  20. By: Guglielmo Maria Caporale (Centre for Empirical Finance); Ricardo M. Sousa (Universidade do Minho - NIPE)
    Abstract: In this paper we use a representative consumer model to analyse the equilibrium relation between the transitory deviations from the common trend among consumption, aggregate wealth, and labour income, cay, and focus on the implications for both stock returns and housing returns. The evidence based on data for 15 OECD countries shows that when agents expect future stock returns to be higher, they will temporarily allow consumption to rise. Regarding housing returns, if housing assets are seen as complements to stocks, then investors react in the same way, but if they are instead treated as substitutes consumption will be temporarily reduced.
    Keywords: consumption, wealth, stock returns, housing returns, OECD countries
    JEL: E21 E44 D12
    Date: 2011
  21. By: Zumbro, Timo
    Abstract: The article investigates the relationship between life satisfaction and homeownership in Germany using, SOEP data from 1992 to 2009. While controlling for personal characteristics as well as various regional and dwelling attributes, ordered logit models support a marginal, though positive relationship. In addition, other household attributes such as the condition of the dwelling and the neighborhood area, exert a significant effect on life satisfaction. Further, the results confirm a significant interaction between homeownership and the condition of the dwelling as well as homeownership and the financial burden of the household. However, regression models with fixed effects also reveal, unobserved differences between homeowners and renters. --
    Keywords: homeownership,housing,subjective well-being,life satisfaction
    JEL: D1 R20 R21
    Date: 2011
  22. By: J. Ignacio García-Pérez (University Pablo de Olavide, Seville, Spain.); Marisa Hidalgo-Hidalgo (University Pablo de Olavide, Seville, Spain.); J. Antonio Robles-Zurita (University Pablo de Olavide, Seville, Spain.)
    Abstract: Grade retention practices are at the forefront of the educational debate. In this paper, we use PISA 2009 data for Spain to measure the effect of grade retention on students achievement. One important problem when analyzing this question is that school outcomes and the propensity to repeat a grade are likely to be determined simultaneously. We address this problem by estimating a Switching Regression Model. We …find that grade retention has a negative impact on educational outcomes, but we confi…rm the importance of endogenous selection, which makes observed differences between repeaters and non-repeaters appear 14.6% lower than they actually are. The effect on PISA scores of repeating is much smaller (-10% of non-repeaters average) than the counterfactual reduction that non-repeaters would suffer had they been retained as repeaters (-24% of their average). Furthermore, those who repeated a grade during primary education suffered more than those who repeated a grade of secondary school, although the effect of repeating at both times is, as expected, much larger.
    Keywords: Grade retention, educational scores, PISA
    JEL: D63 I28 J24
    Date: 2011–11
  23. By: Thomas Bossuroy (SALDRU, School of Economics, University of Cape Town)
    Abstract: This paper examines the individual determinants of ethnic identification using large sample surveys (about 30,000 respondents) representative of seven capitals of West-African countries. A small model that relates ethnic identification to an investment in ethnic capital suggests that individuals initially deprived of social or human capital resort to ethnicity to get socially inserted, and do even more so if their ethnic group itself is well inserted. Empirical results are consistent with this simple theory. First, education lowers ethnic salience. Second, ethnic identification is higher for uneducated unemployed or informal workers who seek a new or better job, and is further raised by the share of the individual’s ethnic group integrated on the job market. Third, ethnic identification is higher among migrants, and raised by the share of the migrant’s ethnic group that is employed. Group solidarity makes ethnic identity more salient for individuals deprived of other means for upward mobility.
    Keywords: Ethnicity, Identity, Social capital, Networks, Africa.
    JEL: A13 A14 D74 O17
    Date: 2011–11
  24. By: Friebel, Guido (Goethe University Frankfurt); Ivaldi, Marc (Toulouse School of Economics); Pouyet, Jérôme (Paris School of Economics)
    Abstract: This paper investigates various options for the organization of the railway industry when network operators require the access to multiple national networks to provide international (freight or passenger) transport services. The EU rail system provides a framework for our analysis. Returns-to-scale and the intensity of competition are key to understanding the impact of vertical integration or separation between infrastructure and operation services within each country in the presence of international transport services. We also consider an option in which a transnational infrastructure manager is in charge of offering a coordinated access to the national networks. In our model, it turns out to be an optimal industry structure.
    Keywords: Network access, Vertical separation, Transport economics
    JEL: L14 L42 L51 L92
    Date: 2011–07–18
  25. By: Riccardo Crescenzi; Luisa Gagliardi; Marco Percoco
    Abstract: Social capital has remained relatively underexplored in innovation literature. Existing studies have failed to reach a consensus on its impact on local innovative performance: some empirical analyses emphasize a positive effect, others speak about a 'dark side' of social capital. This paper aims to fill this gap by shedding new light on the differential role of 'bonding' and 'bridging' social capital. The quantitative analysis of the innovative performance of the Italian provinces shows that social capital is an important predictor of innovative performance after controlling for 'traditional' knowledge inputs (R&D investments and human capital endowment) and other characteristics of the local economy. However, only 'bridging' social capital - based on weak ties - can be identified as the key driver of the process of innovation while 'bonding' social capital is shown to be negative for innovation. Instrumental variable analysis makes it possible to identify clear causal links between bridging (positive) and bonding (negative) social capital and innovation.
    Keywords: Innovation, social capital, knowledge transfer, regional development
    JEL: O31 O33 R15
    Date: 2011–11
  26. By: Emanuela Marrocu; Raffaele Paci
    Abstract: There is a large consensus among social researchers on the positive role played by human capital on economic performances. The standard way to measure the human capital endowment is to consider the educational attainments by the resident population, usually the share of people with a university degree. Recently, Florida (2002) suggested a different measure of human capital - the “creative class†- based on the actual occupations of individuals in specific jobs like science, engineering, arts, culture, entertainment. However, the empirical analyses carried out so far overlooked a serious measurement problem concerning the clear identification of the education and creativity components of human capital. The main purpose of this paper is to try to disentangle this issue by proposing a disaggregation of human capital into three non-overlapping categories of creative graduates, bohemians and non creative graduates. By using a spatial econometric framework to account for spatial dependence, we assess the concurrent effect of the human capital indicators on total factor productivity for 257 regions of EU27. Our main results indicate that the highly educated creative group is the most relevant one in explaining production efficiency, while the other two categories - non creative graduates and bohemians - exhibit negligible effects. Moreover, a relevant influence is exerted by technological capital and by the level of tolerance providing robust evidence that an innovative, open, inclusive and culturally diverse environment is becoming more and more crucial for productivity enhancements.
    Date: 2011–09
  27. By: Fernandes, Cristina; Ferreira, João
    Abstract: Knowledge is increasingly perceived as a central factor for company competitiveness. With the transfer of knowledge one of the core functions of knowledge intensive business service (KIBS) companies, the objective of our research incorporates analysis on how the transfer of knowledge takes place between the higher education sector and the KIBS universe. Our empirical results demonstrate that cooperation between KIBS and universities occurs independent of their location (rural or urban) and typology (professional or technological). We furthermore found that rural KIBS have increased their levels of graduate employment faster than their urban KIBS peers.
    Keywords: knowledge; spillovers; cooperation; universities; KIBS
    JEL: L84 M1 O32 O3
    Date: 2011
  28. By: Donze, Jocelyn; Gunnes, Trude
    Abstract: This paper sheds light on the role of student motivation in the success of schooling. We develop a model in which a teacher engages in the management of student moti- vation through the choice of the classroom environment. We show that the teacher is able to motivate high-ability students, at least in the short run, by designing a com- petitive environment. For students with low ability, risk aversion, or when engaged in a long-term relationship, the teacher designs a classroom environment that is more focused on mastery and self-referenced standards. In doing so, the teacher helps to develop the intrinsic motivation of students and their capacity to overcome failures.
    Keywords: Education; Student achievement; Intrinsic and extrinsic motivation
    JEL: I21
    Date: 2011–05–22
  29. By: Meyborg, Mirja
    Abstract: In recent years, it has widely been accepted that the ability to create, access and use knowledge and technology is becoming a fundamental determinant of long-term development and competitiveness. Thus, it is not surprising that universities have increasingly become involved in economic development and are often believed to play a key role in regional economic development. This paper firstly examines how far all West-German universities are already involved in close network collaborations. Second, it demonstrates how many distinct linkages 45 chosen West-German universities already possess within the innovation network, and third, to what extent they are already needed as a link in the chains of contacts. Thereby, special attention is given to the eight West-German elite-universities. We basically found out that university interactions, especially university-enterprise networks, become much more important over the last 20 years, as their cooperation activity strongly increased over time. Besides, their distinct linkages to other actors as well as their importance as an intermediary within the innovation network highly increased over the last decade, too; this especially holds for the eight West-German elite universities. --
    Keywords: Human Capital,Economic Growth,Social Network Analysis,Patent Analysis,Patent Collaboration,Network Interaction,West-German University,Elite-University
    Date: 2011
  30. By: Antonio Acconcia (Università di Napoli Federico II and CSEF); Alfredo Del Monte (Università di Napoli Federico II); Luca Pennacchio (University of Rome III)
    Abstract: We provide international evidence on the relationship between the extent of underpricing related to initial public offerings (IPOs) and the distance of the issuing firm from the financial centre of a country: for France, Germany and Italy, the higher the distance, the higher the level of underpricing. Under the maintained assumption that headquarters of institutional investors and underwriters are part of a financial centre, our evidence is consistent with the hypothesis that ex ante uncertainty regarding the value per share of an issuing firm increases with the firm’s physical distance from the underwriter. As financial centres are usually located in the richest areas of the countries concerned, spatial difference in the cost of equity financing may contribute to the persistence or the widening of local disparities.
    Keywords: Asymmetric information, Distance, IPO, Underpricing
    JEL: G24 O16 O18
    Date: 2011–11–14
  31. By: Fabio Padovano, CREM-CNRS and Condorcet Center, University of Rennes 1 (France) & DIPES-Università Roma Tre (Italy)
    Abstract: This paper examines the strategic interactions among the central and a subcentral government where incomplete information forces both to form expectations about the other’s behaviour, especially the probability that the central government will bail out the local one. Various determinants and outcomes of the strategic interaction are explored. The model generates empirical restrictions about the central government’s transfer decisions and the lower government’s spending behaviour. These restrictions are tested on a sample of 20 Italian Regions. Data show that bailing out expectations are a quantitatively important component of local government spending.
    Keywords: Expectations; intergovernmental relations; transfers; local public spending; bailing out; positive analysis
    JEL: H71 H73 H77 D78
    Date: 2011–10
  32. By: Wolfgang Polasek (Institute for Advanced Studies, Vienna, Austria; University of Porto, Porto, Portugal)
    Abstract: The Hodrick-Prescott (HP) method is a popular smoothing method for economic time series to get a longterm component of stationary series like growth rates. The new extended HP smoothing model is applied to data-sets with an underlying metric and requires a Bayesian linear regression model with a strong prior based on differencing matrices for the smoothness parameter and a weak prior for the regression part. We define a Bayesian spatial smoothing model with neighbors for each observation and we define a smoothness prior similar to the HP filter in time series. This opens a new approach to model-based smoothers for time series and spatial models based on MCMC. We apply it to the NUTS-2 regions of the European Union for regional GDP and GDP per capita, where the fixed effects are removed by an extended HP smoothing model.
    Keywords: Hodrick-Prescott (HP) smoothers, smoothed square loss function, spatial smoothing, smoothness prior, Bayesian econometrics
    JEL: C11 C15 C52 E17 R12
    Date: 2011–11
  33. By: Marcella Drummond; Felix Mora-Camino; Luis Gustavo Cruz; Amaranto Pereira
    Abstract: An approach to assess the impact of the creation or expansion of an air transport infrastructure over regional development is proposed in this paper. Effective long term planning of this costly investment requires performing an overall analysis of socio-economic consequences through long term forecasting, scenario generation and risk analysis. One of main aspects of this task is related with the estimation of future demand over the modified transportation network which attends the considered region. The proposed approach makes use of two complementary models: One model is devoted to demand forecasting taking into account the modified accessibility of the multimodal transportation network, the other one defines the global transport supply according to a profit maximization behavior for the involved transport system. The demand forecasting process is based on an entropy maximization approach with flexible origin-destination levels to determine the intensity and the distribution of new origin-destination vectors. A two level solution technique considering vehicle flows at the first level and the payload/passengers flows at the second level is introduced. The proposed solution scheme is composed of an iterative process between the current solution for demand forecasting and the supply optimization problem: the entropy maximizing distribution problem provides the origin-destination matrix given a cost/capacity structure, while the supply optimization problem provides this cost/capacity structure resulting from the accessibility level, given the updated origin-destination vectors. The proposed approach is illustrated in the case of a fast developing rural agro-industrial area in central Brazil, where the consequences of the installation of a medium size airport are assessed.
    Date: 2011–09
  34. By: Kelly C. Bishop; Christopher Timmins
    Abstract: The hedonic model of Rosen (1974) has become a workhorse for valuing the characteristics of differentiated products despite a number of well-documented econometric problems. For example, Bartik (1987) and Epple (1987) each describe a source of endogeneity in the second stage of Rosen's procedure that has proven difficult to overcome. In this paper, we propose a new approach for recovering the marginal willingness-to-pay function that altogether avoids these endogeneity problems. Applying this estimator to data on large changes in violent crime rates, we find that marginal willingness-to-pay increases by ten cents with each additional violent crime per 100,000 residents.
    JEL: Q51 R0
    Date: 2011–11
  35. By: Janine Aron; John Muellbauer
    Abstract: There is widespread disagreement about the role of housing wealth in explaining consumption. This paper exploits liquid and illiquid wealth time series from household balance sheet data for South Africa, previously constructed by the authors, to explain fluctuations in the ratios of consumption and household debt to income in South Africa, from 1971 to 2005. The paper emphasizes the role of substantial credit liberalization and of wealth, treating credit conditions as a latent variable with key interactions with drivers of consumption and debt. Credit conditions are proxied by a spline function entering jointly estimated consumption, debt and income expectations equations in a ‘latent interactive variable equation system’ (LIVES). The empirical results corroborate the theory in the paper, confirming that consumption relative to income is driven by credit liberalization, fluctuations in a range of asset values and asset accumulation, uncertainty and income expectations, inter alia. The paper confirms a collateral interpretation of housing wealth on consumption as opposed to a life-cycle interpretation. The paper also throws important light on the monetary policy transmission mechanism in South Africa.
    Keywords: Consumption, Household debt, Credit market liberalization, Credit conditions, Liquid and illiquid wealth, Housing collateral and housing wealth
    JEL: C52 E21 E27 E32 E44 E51 E52 E58
    Date: 2011
  36. By: Samantha Cockfield
    Abstract: The Transport Accident Commission of Victoria (TAC) was established, and is governed by, the Transport Accident Act 1986. The TAC administers a comprehensive no-fault compensation scheme for Victorians who are injured or die as a result of a transport accident. The Act also provides the TAC with a role in accident prevention and reducing the cost of transport accidents to the Victorian Community...
    Date: 2011–09–20
  37. By: Chadi, Adrian
    Abstract: While rising unemployment generally reduces people's happiness, researchers argue that there is a compensating social-norm effect for the unemployed individual, who might suffer less when it is more common to be unemployed. This empirical study, however, rejects this thesis for German panel data and finds individual unemployment to be even more hurtful when aggregate unemployment is higher. On the other hand, an extended model that separately considers individuals who feel stigmatised from living off public funds yields strong evidence that this group of people does in fact suffer less when the normative pressure to earn one's own living is lower. --
    Keywords: social norms,unemployment,well-being,social benefits,labour market policies
    JEL: I3 J6
    Date: 2011
  38. By: P. Bönisch; Peter Haug; A. Illy; L. Schreier
    Abstract: Similarly to western Germany in the 1960s and 1970s, the eastern part of Germany has experienced a still ongoing process of numerous amalgamations among counties, towns and municipalities since the mid-1990s. The evidence in the economic literature is mixed with regard to the claimed expenditure reductions and efficiency gains from municipal mergers. We therefore analyze the global efficiency of the municipalities in Saxony-Anhalt, for the first time in this context, using a double-bootstrap procedure combining DEA and truncated regression. This allows including environmental variables to control for exogenous determinants of municipal efficiency. Our focus thereby is on institutional and fiscal variables. Moreover, the scale efficiency is estimated to find out whether large units are necessary to benefit from scale economies. In contrast to previous studies, we chose the aggregate budget of municipal associations (“Verwaltungsgemeinschaften”) as the object of our analysis since important competences of the member municipalities are settled on a joint administrative level. Furthermore, we use a data set that has been carefully adjusted for bookkeeping items and transfers within the communal level. On the “eve” of a mayor municipal reform the majority of the municipalities were found to have an approximately scale-efficient size and centralized organizational forms (“Einheitsgemeinden”) showed no efficiency advantage over municipal associations.
    Keywords: efficiency, local government, DEA, bootstrap, demographic change, local institutions
    JEL: H11 H72
    Date: 2011–11
  39. By: Elvira Uyarra
    Abstract: Despite the popularity of the concept 'regional innovation system' (RIS) in the academic literature and in policy practice, multiple interpretations and uses of the term coexist. For instance while some scholars view RIS as subsystems of national or sector-based systems presenting particular spatial features, other portray them as smaller-scale versions of national systems (Lagendijk, 1999; Howells, 1999; Iammarino, 2005, Uyarra, 2010). Doloreux & Parto (2005) identify three dimensions of regional innovation systems, namely: the interactions between different actors in the innovation process, the role of institutions, and the use of regional innovation systems analysis to inform policy decisions. More generally, Werker & Athreye (2004) differentiate between micro and meso approaches explaining regional innovation; while the former concentrate on the entrepreneurial behaviour of innovative firms, the latter focus on the structural elements manifested in the institutional set-up of regional and industrial systems. Boschma & Frenken (2006) distinguish between institutional and evolutionary views to innovation and geography as alternatives to neoclassical views. Related literature on national innovation systems (NIS) is no less heterogeneous, with numerous usages and interpretations (Miettinen, 2002; Balzat & Hanusch, 2004; Sharif, 2006; Lundvall, 2007). Despite the popularity of the concept ‘innovation system’ in the academic literature and in policy practice, the term itself remains ambiguous (Doloreux & Parto 2005; Uyarra, 2010). This fuzziness (Markusen, 2003), even ‘black boxing’ of the term, may have obscured certain aspects influencing regional development while overstating others (Uyarra & Flanagan, 2010).
    Keywords: Regional systems of innovation, institutions,innovation policy
    JEL: B52 R1 O31
    Date: 2011
  40. By: Lasse Fridstrøm
    Abstract: The external accident cost of road use is a function of the marginal relationship between road use and accidents, as expressed, for instance, by the elasticity. This elasticity is, however, not necessarily constant, but may be assumed to depend on the traffic volume as seen in relation to road capacity. Dense or congested traffic may force speed levels down, decreasing the risk of accidents or at least the average loss incurred given that an accident takes place. Relying on a large econometric accident model based on monthly cross-section/time-series data for all provinces of Norway, we derive non-linear empirical functions describing the relationship between road use and accidents and discuss their implications in terms of accident costs and externalities. The analysis reveals that there is probably a large accident externality generated by heavy vehicle road use, but that the marginal external accident cost of private car use is quite small, perhaps even negative. To the extent that it is positive, it is so in large part on account of public and private insurance. Contrary to what is frequently believed and maintained, auto insurance does not serve to internalise the cost of accidents. In fact, its primary purpose and effect is exactly the opposite. The adverse incentives created by insurance could, however, be mitigated by certain innovative approaches to ratemaking. Such schemes would ideally involve more decision variables than just the decision to drive. Incentives could, in principle, be attached to speeding, route choice, vehicle choice, safety equipment, or time of day/week/year.
    Date: 2011–10–18
  41. By: Seongman Moon (Universidad Carlos III de Madrid); Makoto Watanabe (Universidad Carlos III de Madrid)
    Abstract: This paper provides new evidence on price dispersion in the US airline industry. Using the observed fare differences between refundable and non-refundable tickets, we first document evidence on the prices passengers pay for a refund option. We find that the factors related to the value of refund option and customers¡¯ individual demand uncertainty have a significant effect on the relative refund fares. This finding is robust for various market structures. Further, taking into account the variations of the relative refund fares, we investigate the effects of market structure on price dispersion.
    Keywords: Price discrimination, Refundability, Competition, Airline industry
    JEL: D43 L13 L93
    Date: 2011
  42. By: Jesse Rothstein; Nathan Wozny
    Abstract: Analysts often examine the black-white test score gap conditional on family income. Typically only a current income measure is available. We argue that the gap conditional on permanent income is of greater interest, and we describe a method for identifying this gap using an auxiliary data set to estimate the relationship between current and permanent income. Current income explains only about half as much of the black-white test score gap as does permanent income, and the remaining gap in math achievement among families with the same permanent income is only 0.2 to 0.3 standard deviations in two commonly used data sets. When we add permanent income to the controls used by Fryer and Levitt (2006), the unexplained gap in 3rd grade shrinks below 0.15 standard deviations, less than half of what is found with their controls.
    JEL: I21 J15
    Date: 2011–11
  43. By: Victoria Ateca-Amestoy (University of the Basque Country); Alexandra Cortés Aguilar (Universidad Industrial de Santander); Ana I. Moro-Egido (University of Granada)
    Abstract: In this paper, we seek to examine the effect of comparisons and social capital on subjective well-being. Furthermore, we test if, through social influence and exposure, social capital is either an enhancer or appeaser of the comparison effect. Using the Latinobarómetro Survey (2007) we find that in contrast to most previous studies, the comparison effect on well-being is positive; that is, the better others perform, the happier the individual is. We also find that social capital is among the strongest correlates of individuals’ subjective well-being in Latin American countries. Furthermore, our findings suggest that social contacts may enhance the comparison effect on individual’s happiness, which is more intense for those who perform worse in their reference group.
    Keywords: Comparison effect, social capital, subjective well-being, social interactions
    JEL: D31 I31 O54 Z10
    Date: 2011–11–18
  44. By: Gert-Jan Linders; Tatyana Bulavskaya; Henri De Groot; Ferdinand Paraguas
    Abstract: Discussion on the possibilities for and barriers to income convergence and catch-up growth is at the heart of the debate on European regional economic policy. This study presents an empirical analysis of the determinants of regional productivity growth in Europe, using the most recent Cambridge Econometrics regional database, EU KLEMS growth and productivity accounts and EuroStat R&D data. We apply a reduced-form empirical specification for semi-endogenous productivity growth that allows for differences in steady state income levels and long-run growth rates. Productivity growth in a region depends on its level of human capital, the investments in R&D, and the productivity gap with the technology frontier. Empirical findings show that these factors are interrelated. Apart from a technology gap, absorptive capacity is important to realize catch-up. Both convergence and divergence of productivity across regions are possible. Results show that all considered factors have significant effect on disparity in regional productivity growth, although effects across manufacturing and service sectors are different. The estimated model also features stable dynamic properties in response to an exogenous shock. Keywords: Semi-endogenous Growth, Regional Convergence, International Transfer of Technology, human capital, R&D.
    Date: 2011–09
  45. By: Naci H. Mocan; Bulent Unel
    Abstract: This paper investigates the impact of unskilled workers' earnings on crime. Following the literature on wage inequality and skill-biased technological change, we employ CPS data to create state-year as well as state-year-and (broad) industry specific measures of skill-biased technological change, which are then used as instruments for unskilled workers' earnings in crime regressions. Regressions that employ state panels reveal that technology-induced variations in unskilled workers' earnings impact property crime with an elasticity of -1, but that wages have no impact on violent crime. The paper also estimates, for the first time in this literature, structural crime equations using micro panel data from NLSY97 and instrumenting real wages of young workers. Using state-year-industry specific technology shocks as instruments yields elasticities that are in the neighborhood of -2 for most types of crime, which is markedly larger than previous estimates. In both data sets there is evidence for asymmetric impact of unskilled workers' earnings on crime. A decline in earnings has a larger effect on crime in comparison to an increase in earnings by the same absolute value.
    JEL: J23 J24 J31 K42 O3
    Date: 2011–11
  46. By: Frank Neffke; Martin Henning
    Abstract: We investigate the extent to which a local industry is affected by an overrepresentation of related industries in the local economy. We focus on two types of inter-industry relatedness, namely, the degree to which two industries can employ a similarly skilled labor force and the degree to which two industries are connected in the value chain. We decompose changes in the employment of a local industry into the employment generated or destroyed in incumbent plants and the employment changes due to plant entry and exit. Furthermore, we classify new plants by the type and geographical origins of the plants’ founders. We find that entrepreneurs have a stronger tendency than existing firms to set up plants in local industries that can draw on a strong local presence of labor market and value chain linked industries. The same holds for local founders compared to founders from outside the region. In the second part of the paper, we investigate the relative importance of the two relatedness types and whether the two types reinforce each other. We find that, in general, the growth of old plants and the employment generated in new plants is more strongly associated with the relatedness through the labor market. Moreover, for in new plant formation, the two relatedness types indeed tend to reinforce each other. In fact, local value chain linkages seem to be only important if client and supplier firms can also engage in labor sharing.
    Date: 2011–09
  47. By: Andrew Fronsko
    Abstract: Road trauma is the biggest killer of young people in the world. Reductions in the incidence and severity of road related trauma is of paramount importance to society, aimed at reducing the personal and economic burden to injured people and flow-on impact to families and the broader community...
    Date: 2011–09–20
  48. By: Anna Bottaso (Department of Economics and Quantitative Methods, University of Genova); Carolina Castagnetti (Department of Economics and Quantitative Methods, University of Pavia); Maurizio Conti (Department of Economics and Quantitative Methods, University of Genova)
    Abstract: In this paper we add to the debate on the public capital - productivity link by exploiting very recent developments in the panel time series literature that take into account cross sectional correlation in non-stationary panels. In particular we evaluate the productive effect of public capital by estimating various production functions for a panel of 21 OECD countries over the period 1975-2002. We find strong evidence of common factors that drive the cointegration relationship among variables; moreover, our results suggest a public capital elasticity of GDP in the range 0.05-0.15, depending on model specification. Results are robust to the evidence of spillovers from public capital investments in other countries and to controlling for other productivity determinants like human capital, the stock of patents and R&D capital.
    Keywords: Public capital; Productivity; Panel Cointegration; Cross-section Dependence.
    JEL: C33 C15 H54 O47
    Date: 2011–11

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