nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2012‒02‒01
twenty-two papers chosen by
Steve Ross
University of Connecticut

  1. Human Capital in Cities and Suburbs By Stolarick, Kevin; Mellander, Charlotta; Florida, Richard
  2. Low-income housing tax credit developments and neighborhood property conditions By Kelly D. Edmiston
  3. A Core-Periphery Model of Urban Economic Growth: Empirical Evidence using Chinese City-Level Data, 1990-2006 By Zhao Chen; Ming Lu; Zheng Xu
  4. Supply constraints and housing market dynamics By Andrew D. Paciorek
  5. Second-Best Cost-Benefit Analysis in Monopolistic Competition Models of Urban Agglomeration By Yoshitsugu Kanemoto
  6. From Russia with Love: The Impact of Relocated Firms on Incumbent Surv ival By Falck, Oliver; Guenther, Christina; Heblich, Stephan; Kerr, William R.
  7. Agglomeration Bonus in Local Networks: A laboratory examination of spatial coordination failure By Banerjee, Simanti; Kwasnica, Anthony M.; Shortle, James S.
  8. Commercial Revitalization in Low-Income Urban Communities: General Tax Incentives vs. Direct Incentives to Developers By Zhou, Li
  9. Ethnic Networks and Employment Outcomes By Eleonora Patacchini; Yves Zenou
  10. How immigrant children affect the academic achievement of native Dutch children By Asako Ohinata; Jan C van Ours
  11. Does bullying reduce educational achievement? An evaluation using matching estimators By Ponzo, Michela
  12. Product innovation and logistic optimization in a novel urban-type model By Stefano Colombo; Luigi Filippini
  13. The Inventive, the Educated, and the Creative: How Do They Affect Metropolitan Productivity? By Lobo, José; Mellander, Charlotta; Stolarick, Kevin; Strumsky, Deborah
  14. Urban Local Government and Environmental Management in Bangladesh: A Study on Chunarughat Paurashava By Mohammad Shahjahan Chowdhury; Purnendu Deb
  15. Energy Balance Climate Models and the Spatial Structure of Optimal Mitigation Policies By Gustav Engstrom; William Brock; Anastasios Xepapadeas
  16. Variables influencing transport mode choice: a generalized cots approach By Monica Grosso
  17. Who offers tax-based business development incentives? By R. Alison Felix; James R. Hines, Jr.
  18. Friends’ Networks and Job Finding Rates By Lorenzo Cappellari; Konstantinos Tatsiramos
  19. Automatic Grade Promotion and Student Performance: Evidence from Brazil By Martin Foureaux Koppensteiner
  20. Spatial Spillover of Governance and Institutional Quality: A Spatial Econometric Approach By Hossein Mirshojaeian Hosseini; Shinji Kaneko
  21. Ethnic Concentration, Cultural Identity and Immigrant Self-Employment in Switzerland By G. Guerra; R. Patuelli; R. Maggi

  1. By: Stolarick, Kevin (University of Toronto); Mellander, Charlotta (Jönköping International Business School); Florida, Richard (University of Toronto)
    Abstract: Research on human capital generally focuses on the regional level, and neglects the relative effects of its distribution between center cities and surrounding suburbs. This research examines the effects of this intra-metropolitan distribution on economic performance. The findings indicate that this distribution matters significantly to US regional performance. Suburban human capital matters more than center city human capital. However, this varies by regional size. Suburban human capital has the biggest effect on regional economic performance in smaller and medium size metros. Center city human capital has a relatively larger effect on economic performance in regions with over one million people.
    Keywords: Human Capital; Density; Intra-metropolitan distribution; Income; Housing prices
    JEL: J24 O30 R10 R20
    Date: 2012–01–20
  2. By: Kelly D. Edmiston
    Abstract: Public housing has long been a contentious issue for cities and regions. While there is a great need for affordable housing in many communities, neighbors of low-income housing developments fret about neighborhood decay. This paper evaluates the notion that low-income housing developments damage the communities in which they are placed. The focus is on the evaluation of low-income housing tax credit (LIHTC) financed developments, and the neighborhood indicator of interest is the physical condition of nearby properties. The results of the empirical analysis suggest that proximity to LIHTC developments generally has a positive impact on neighborhood property conditions. However, extended analysis that separates LIHTC developments by type and size suggests that only small new construction developments and large rehab developments impact neighborhood property conditions. Further analysis reveals that when the model does not control for crime, the effect of proximity to LIHTC developments on property conditions is negative.
    Date: 2011
  3. By: Zhao Chen; Ming Lu; Zheng Xu
    Abstract: The core-periphery (CP) model of urban systems lacks evidence from real data for the nonlinear relationship between distance to core and market potential. China remains in the process of industrialization and globalization, thereby making it suitable for practical application of the CP model of urban systems. Using Chinese city-level data from 1990 to 2006, this paper estimates the impact of spatial interactions in China's urban system on urban economic growth, and fills the gap between CP model of urban systems and reality. Our results show that a proximity to major ports and international markets is essential for urban growth. Moreover, the geography-growth relationship follows the U-shaped nonlinear pattern implied by the CP model in a monocentric urban system. We also find "border effect" in the administrative boundaries between Chinese provinces. As a centrifugal force, this prevents the absorption of urban economic activities by large cities in other provinces.
    Keywords: Core-Periphery Model, Urban Systems, Trade Policy, China
    Date: 2011–10
  4. By: Andrew D. Paciorek
    Abstract: Although the volatility of house prices is often ascribed to demand-side factors, constraints on housing supply have important and little-studied implications for housing dynamics. I illustrate the strong relationship in city-level data between the volatility of house prices and the regulation of new housing supply. I then employ a dynamic structural model of housing investment to estimate the effect of supply constraints on both the level of new construction and the responsiveness of investment to house prices. I find that supply constraints increase volatility through two channels: First, regulation lowers the elasticity of new housing supply by increasing lags in the permit process and adding to the cost of supplying new houses on the margin. Second, geographic limitations on the area available for building houses, such as steep slopes and water bodies, lead to less investment on average relative to the size of the existing housing stock, leaving less scope for the supply response to attenuate the effects of a demand shock. My estimates and simulations confirm that regulation and geographic constraints play critical and complementary roles in decreasing the responsiveness of investment to demand shocks, which in turn amplifies house price volatility.
    Keywords: Housing - Prices ; Housing - United States
    Date: 2012
  5. By: Yoshitsugu Kanemoto (National Graduate Institute for Policy Studies)
    Abstract: Many sources of urban agglomeration involve departures from the first-best world. By modeling the microstructure of agglomeration economies, we derive second-best benefit evaluation formulae for urban transportation improvements. Previous work has investigated the same problem, but without explicitly modeling the sources of agglomeration economies. Accordingly, our analysis examines whether earlier results remain valid when monopolistic competition with differentiated products provides the microfoundation of the agglomeration economies. By explicitly introducing the rural sector and multiple cities, we also show that the agglomeration benefits depend on where the new workers are from.
    Date: 2012–01
  6. By: Falck, Oliver; Guenther, Christina; Heblich, Stephan; Kerr, William R.
    Abstract: We identify the impact of local firm concentration on incumbent performance with a quasi natural experiment. When Germany was divided after World War II, many firms in the machine tool industry fled the Soviet occupied zone to prevent expropriation. We show that the regional location decisions of these firms upon moving to western Germany were driven by non-economic factors and heuristics rather than existing industrial conditions. Relocating firms increased the likelihood of incumbent failure in destination regions, a pattern that differs sharply from new entrants. We further provide evidence that these effects are due to increased competition for local resourc es.
    Keywords: Germany; labor; firm dynamics; competition; Agglomeration
    Date: 2011–07
  7. By: Banerjee, Simanti; Kwasnica, Anthony M.; Shortle, James S.
    Abstract: The Agglomeration Bonus (AB) - a subsidy mechanism can incentivize neighboring landowners to spatially coordinate their land use decisions for effective provision of ecosystem services such as biodiversity protection. In this paper we explore individual AB performance on a local network in a laboratory setting. In our experiments, we vary the local network size while keeping the number of neighbors for each player same. Results suggest better AB performance and greater spatial coordination in smaller groups relative to bigger ones. In bigger groups however we observe localized areas of coordinated land use choices which indicate partial AB effectiveness.
    Keywords: experiments; local networks; coordination failure; Agglomeration Bonus
    Date: 2011–11
  8. By: Zhou, Li (University of Alberta, Department of Economics)
    Abstract: This paper proposes a commercial development model, based on Fujitas (1988) monopolistic com- petition model of spatial agglomeration, to examine storesdecisions to enter urban communities. The model focuses on commercial developers and large stores, and identi fies a potential holdup problem in the commercial development market arising because developers incur costs before negotiating with anchor tenants over pro fit sharing; the holdup problem is more likely to occur in low-income communities where the pro fitability of commercial projects is small. The model predicts that direct incentives to developers are preferred to general tax incentives for addressing this market failure.
    Keywords: urban redevelopment programs; economic agglomeration; holdup problem
    JEL: H50 H76 R58
    Date: 2012–01–01
  9. By: Eleonora Patacchini (Universita  di Roma "La Sapienza", EIEF and CEPR); Yves Zenou (Stockholm University)
    Abstract: This paper explores the relationship between residential proximity of individuals from the same ethnic group and the probability of finding a job through social networks, relative to other search methods. Using individual-level data from the UK Labour Force survey and spatial statistics techniques, we find that (i) the higher is the percentage of a given ethnic group living nearby, the higher is the probability of finding a job through social contacts; (ii) this effect decays very rapidly with distance. The magnitude, statistical significance and spatial decay of such an effect differ depending on the ethnic group considered. We provide an interpretation of our findings using the network model of Calvó-Armengol and Jackson (2004).
    Keywords: Ethnic minorities, population density, social interactions, weak and strong ties,spatial statistics.
    JEL: A14 C21 J15 R12 R23
    Date: 2012–01
  10. By: Asako Ohinata (Tilburg University); Jan C van Ours (Tilburg University)
    Abstract: In this paper, we analyze how the share of immigrant children in the classroom affects the educational attainment of native Dutch children. Our analysis uses data from various sources, which allow us to characterize educational attainment in terms of reading literacy, mathematical skills and science skills. We do not find strong evidence of negative spill-over effects from immigrant children to native Dutch children. Immigrant children themselves experience negative language spill-over effects from a high share of immigrant children in the classroom but no spill-over effects on maths and science skills.
    Keywords: educational attainment, immigrant children, peer effects.
    JEL: I21 J15
    Date: 2012–01
  11. By: Ponzo, Michela
    Abstract: Using data from the Progress in International Reading Literacy Study (2006-PIRLS) and the Trends in International Mathematics and Science Study (2007-TIMSS), we investigate the impact of being a victim of school bullying on educational achievement for Italian students enrolled at the fourth and eighth grade levels. Firstly, we apply an OLS estimator controlling for a number of individual characteristics and school fixed effects. Secondly, in order to attenuate the impact of confounding factors, we use propensity score matching techniques. Our empirical findings based on average treatment effects suggest that being a victim of school bullying has a considerable negative effect on student performance at both the fourth and the eighth grade level. Importantly, the adverse effect of bullying on educational achievement is larger at age 13 than at age 9. Hence, school violence seems to constitute a relevant factor in explaining student performance.
    Keywords: Bullying; Educational Achievement; School; TIMSS; PIRLS
    JEL: J13 I21 I28
    Date: 2012–01–02
  12. By: Stefano Colombo (DISCE, Università Cattolica); Luigi Filippini (DISCE, Università Cattolica)
    Abstract: We consider the strategic choice between product innovation and logistic optimization in a novel urban framework where consumers are distributed across the city and have different incomes depending on their location in the town. Depending on the relative efficiency of the product innovation process and the logistic innovation process as well as on the degree of spatial symmetry between the firms, both symmetric and asymmetric business strategy equilibria may arise, as well as both unique and multiple business strategy equilibria.
    Keywords: Product innovation; logistic optimization; linear town
    JEL: L13 R12 R41
    Date: 2012–01
  13. By: Lobo, José (Arizona State University); Mellander, Charlotta (Jönköping International Business School); Stolarick, Kevin (University of Toronto); Strumsky, Deborah (University of North Carolina-Charlotte)
    Abstract: A longstanding research tradition assumes that endogenous technological development increases regional productivity. It has been assumed that measures of regional patenting activity or human capital are an adequate way to capture the endogenous creation of new ideas that result in productivity improvements. This process has been conceived as occurring in two stages. First, an invention or innovation is generated, and then it is developed and commercialized to create benefits for the individual or firm owning the idea. Typically these steps are combined into a single model of the “invention in/productivity out” variety. Using data on Gross Metropolitan Product per worker and on inventors, educational attainment, and creative workers (together with other important socio-economic controls), we unpack the model back to the two-step process and use a SEM modeling framework to investigate the relationships among inventive activity and potential inventors, regional technology levels, and regional productivity outcomes. Our results show almost no significant direct relationship between invention and productivity, except through technology. Clearly, the simplification of the “invention in/productivity out” model does not hold, which supports other work that questions the use of patents and patenting related measures as meaningful innovation inputs to processes that generate regional productivity and productivity gains. We also find that the most effective measure of regional inventive capacity, in terms of its effect on technology, productivity, and productivity growth is the share of the workforce engaged in creative activities.
    Keywords: Innovation; Productivity; Regional Technology; Patents; Human Capital; Creative Class
    JEL: C31 O10 O31 O47 R11 Z10
    Date: 2012–01–20
  14. By: Mohammad Shahjahan Chowdhury (Department of Public Administration, Shahjalal University of Science and Technology (SUST)); Purnendu Deb (Department of Public Administration, Shahjalal University of Science and Technology (SUST))
    Abstract: Urban local government is a vital part for the delivery of services to people. Along with other responsibilities, urban local government in Bangladesh is also responsible for environmental management. This study aims to identify the role of Paurashavas (which are administrative units at every municipality composed of elected members) in protecting a healthy and clean environment. Examining Chunarughat Paurashava, the study finds that Paurashavas have an important role in environmental management such as garbage collection, waste disposal, sewerage construction, public park protection, and so on. However, the provision of these kinds of services is hindered by various lacks, like infrastructure, logistic support, trained manpower, and funds, as well as peoples’ participation. The study makes various recommendations to overcome these problems.
    Keywords: local government, environmental management, Bangladesh, Paurashava, Chunarughat
    Date: 2012–01
  15. By: Gustav Engstrom; William Brock; Anastasios Xepapadeas
    Abstract: We develop a one-dimemsional energy balance climate model with heat transportation across locations. We introduce the concept of po- tential world GDP at time t, and we introduce, through the temper- ature function, spatial characteristics into the damage function which make damages latitude dependent. We solve the social planner��s prob- lem and characterize the competitive equilibrium. We de��ne optimal taxes on fossil fuels and pro��t taxes on ��rms that extract fossil fuels. Our results suggest that if the implementation of international trans- fers across latitudes is not possible, then optimal taxes are spatially non homogeneous and tend to be lower at the poor latitudes. The degree of spatial di�¤erentiation of optimal taxes depend on heat trans- portation. We also locate su�¢ cient conditions for optimal mitigation policies to have rapid ramp-up initially and then decrease over time. By employing the properties of the spatial model and approximating solutions, we show how to study the impact of thermal transport across latitudes on welfare inequality.
    Keywords: Energy Balance Climate Models, Heat Di¤usion, Tem- perature Distribution, Spatial Optimal Taxes
    JEL: Q54 Q58
    Date: 2012–01–22
  16. By: Monica Grosso (Università degli Studi di Genova, DIEM (Dipartimento di Economia e Metodi Quantitativi) e Università di Anversa, (Dipartimento di Economia dei trasporti e regionale))
    Abstract: The decision variables that influence transport mode choice are numerous. From a careful appraisal of the literature review it appears that two main typologies of variables can be identified: costs related to the transport of the goods and other service’s attributes that play a crucial role in the selection. Each of these two categories has been already revised in previous researches and some fundamental findings are reported in this paper as a preliminary base for the development of the present study. The analysis of the literature review will revise the internal costs variables, or out of pocket money, and the influence of qualitative attributes as decision variables. The paper will conclude with a review of the external costs and their hypothetical internalization in the calculation of transport cost. The paper will be organized as follows: a literature review on elements affecting mode choice, the third paragraph will deal with the methodological approach of generalized cost function that will be applied in paragraph four on the selected corridors. Some conclusions and further recommendations for research will terminate the paper.
    Keywords: Intermodal transport, Generalized costs, External cost
    Date: 2011
  17. 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.
    Date: 2011
  18. By: Lorenzo Cappellari; Konstantinos Tatsiramos
    Abstract: Social interactions are believed to have important consequences for labor market outcomes. Yet the growing literature has been forced to rely on indirect definitions of a network. We present what we believe to be the first evidence that is able to use direct information on the role of close friends. In doing so, we address issues of correlated effects with instrumental variables and panel data. Our estimates suggest that there are large effects from friendship networks, which persist even after controlling for family networks. One additional employed friend increases a person’s job finding probability by approximately 13 percent. This is a result of endogenous social interactions. By testing among alternative mechanisms, our study provides the first evidence that network effects seem to be due to information transmission rather than to social norms or leisure complementarities.
    Keywords: Social Interactions; Unemployment; Friendship ties
    JEL: J64
    Date: 2011–09
  19. By: Martin Foureaux Koppensteiner
    Abstract: This paper examines the effect of the introduction of automatic grade promotion on student performance in 1,993 public primary schools in the Brazilian state of Minas Gerais. A difference-in-difference approach that exploits variation over time in the adoption of the policy allows the identification of the treatment effect of automatic promotion. I find a negative and significant effect of about 6% of a standard deviation. Under plausible identifying assumptions the estimates can be interpreted as the disincentive effect on student effort associated with the introduction of automatic promotion.
    Keywords: Grade retention; automatic promotion; incentives for effort.
    JEL: I28 I21 O15 H52
    Date: 2011–11
  20. By: Hossein Mirshojaeian Hosseini (Graduate School for International Development and Cooperation, Hiroshima University); Shinji Kaneko (Graduate School for International Development and Cooperation, Hiroshima University)
    Abstract: The failure of Washington consensus increased the attention of researchers and policymakers on improving institutional quality of countries. Different empirical studies have been done to find determinants of institutional quality especially at global scales. This paper represents a complementary approach on previous efforts by developing spatial spillover of governance as a determinant of institutional quality. In fact, this paper attempts to answer to the question: how much can the institutional quality of neighboring countries explain good governance of a country and what is the share of this variable among the other determinants? To answer these questions, spatial econometric approach is adopted. Paper reveals that spatial governance spillover can explain about 20% of governance quality of countries and consequently is one of the serous determinants of institutional quality when the concept of contiguity gets wider than land borders.
    Keywords: Institutional quality; Governance spillover; Spatial econometrics
    JEL: C31 C52 H11
    Date: 2012–01
  21. By: G. Guerra; R. Patuelli; R. Maggi
    Abstract: Immigrant self-employment rates vary considerably across regions in Switzerland. Business ownership provides an alternative to wage labour, where immigrants have to face structural barriers such as the limited knowledge of the local language, or difficulties in fruitfully making use of their own human capital. Despite their historically high unemployment rates with respect to natives, immigrants in Switzerland are less entrepreneurial. It is therefore important to uncover factors that may facilitate the transition from the status of immigrant to the one of economic agent. Among others factors, concentration in ethnic enclaves, as well as accumulated labour market experience and time elapsed since immigration, have been associated to higher business ownership rates. In this paper, we use a cross-section of 2,490 Swiss municipalities in order to investigate the role played by the ethnic concentration of immigrants, as well as cultural factors, in determining self-employment rates.
    JEL: C21 J24 J61 O15 R23
    Date: 2012–01
  22. By: Yuki Tanaka (National Graduate Institute for Policy Studies); Alistair Munro (National Graduate Institute for Policy Studies)
    Abstract: Experiments measuring risk and time preferences in developing countries have tended to have relatively small samples and geographically concentrated sampling. This large-scale field experiment uses a Holt-Laury mechanism to elicit the preferences of 1289 randomly selected subjects from 94 villages covering six out of seven agro-climatic zones across rural Uganda. As in previous studies we find evidence of risk aversion and loss aversion amongst most subjects. In addition we find significant heterogeneity in risk attitudes across agro-climatic zones. Especially, the farmers in the agro-climatically least favourable zone, the uni-modal rainfall zone, are the most risk averse, loss averse and impatient. We also find significant relationships between risk attitudes and village level predictors such as the distance to town and the road conditions. After controlling for the village level factors, we find that the level of schooling still positively correlates with the individual’s level of loss tolerance and patience. The main results are not altered by allowing for probability weighting in subjects’ choices. Overall the results provide clear evidence that within one country there may be significant regional variations in risk and time attitudes. We conjecture that the agro-climatic conditions that affect farmers’ livelihoods may also affect their risk and time preferences and village level development in infrastructure could improve the household perception of investment related policies.
    Date: 2012–01

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