|
on Urban and Real Estate Economics |
| By: | P. Nijkamp; A. Reggiani |
| Abstract: | An avalanche of empirical studies has addressed the validity of the rank-size rule (or Zipf’s law) in a multi-city context in many countries. City size in most countries seems to obey Zipf’s law, but the question under which conditions (e.g. sample size, spatial scale) this ‘law’ holds remained largely underinvestigated. Another complementary question is whether socio-economic networks in space also show a similar hierarchical pattern. Against this background, the present paper investigates – from a methodological viewpoint – the relationship between network connectivity and the rank-size rule (or Zipf’s law) in an urban-economic network constellation. After a review of the literature, we address in particular the following methodological issues: (i) the (aggregate) behavioural foundation underlying the rank-size rule/Zipf’s law in the light of spatial-economic network theories (e.g. entropy maximization, spatial interaction theory, etc.); (ii) the nature of the analytical relationship between social-spatial network analysis and the rank-size rule/Zipf’s law. We argue that the rank size rule is compatible with conventional economic foundations of spatial network models. Consequently, a spatial-economic interpretation – as well as a network connectivity interpretation – of the rank-size rule coefficient is provided. Our methodological contribution forms the foundation for the subsequent empirical analysis applied to spatial networks in a socio-economic context. The aim here is to test the sensitivity of empirical findings for changes in scale, functional forms, time periods, and network structures. Our application is concerned with an extensive spatio-temporal panel database related to the evolution of urban population in Germany. We test the relevance of the rank-size rule/Zipf’s law, and its evolution over the years, and – in parallel – the related ‘socio-economic’ connectivity in these urban networks. In particular, we will show that Zipf’s law (i.e., with the rank-size coefficient equal to 1) is only valid under particular conditions of the sample size. The paper concludes with some retrospective and prospective remarks. |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp816&r=ure |
| 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 appropriate 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: | 2012–03–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:37121&r=ure |
| By: | Marie-Estelle Binet (University of Rennes 1 - CREM, (UMR 6211 CNRS)); Alain Guengant (University of Rennes 1 - CREM, (UMR 6211 CNRS)); Matthieu Leprince (University of Rennes 1 - CREM, (UMR 6211 CNRS)) |
| Abstract: | This paper aims to test the existence of vertical interactions in terms of public spending between overlapping local jurisdictions in France using a data set of 110 French municipalities and their corresponding departments in 2001 and 2005. To do so, we consider that demand for municipal services is conditioned by the services provided by departments. We then estimate two specifications which allow spatial heterogeneity to be modeled and which are compared with a simple spatial error specification (without spatial heterogeneity). The two estimated spatial regimes models are able to eradicate spatial autocorrelation in the error term. The estimation results show that an appropriate consideration of spatial heterogeneity can lead to new insights. The spatial error specification reveals a robust complementary demand relationship between services provided by departmental and municipal governments. However, these results are not in accord with the results produced by the spatial regime models, which provide evidence of heterogeneity with independence, complementarity or substitution between the services offered by the two overlapping jurisdictions. |
| Keywords: | Local public expenditures; Overlapping jurisdictions; Spatial heterogeneity; Spatial econometrics |
| JEL: | C21 H72 H77 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:tut:cremwp:201213&r=ure |
| By: | Burton A. Abrams (Department of Economics, university pf Delaware); Jing Li; James G. Mulligan (Department of Economics, University of Delaware) |
| Abstract: | The United States witnessed substantial growth in manufacturing and urban populations during the last half of the nineteenth century. To date, no convincing evidence has been presented to explain the shift in population to urban areas. We find evidence that capital intensity, particularly new capital in the form of steam horsepower, played a significant role in drawing labor into counties and by inference into urban areas. This provides support for the hypothesis that the locational decisions of manufacturers and their placement of capital in urban areas fueled urban growth in the nineteenth century. |
| Keywords: | urbanization, capital intensity, regional population growth, technological change |
| JEL: | J61 N11 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:dlw:wpaper:12-02.&r=ure |
| By: | Sumon Datta (Krannert School of Management, Purdue University); K. Sudhir (Cowles Foundation and Yale School of Management) |
| Abstract: | This paper investigates the impact of spatial zoning restrictions on retail market outcomes. We estimate a structural model of entry, location and format choice across a large number of markets in the presence of zoning restrictions. The paper contributes to the literature in three ways: First, the paper demonstrates that estimates of factors affecting market potential and competitive intensity in the extant literature on entry and location choice that do not account for zoning restrictions are significantly biased. Second, the cross-market variations in zoning regulations helps us test and provide evidence for the theory that constraints on spatial differentiation will lead to greater product differentiation. Finally, we provide qualitative insight on how zoning impacts retail entry and format variety; in particular we evaluate the impact of prototypical zoning arrangements such as "centralized," "neighborhood," and "outskirt" zoning on entry and format variety. |
| Keywords: | Product Variety, Zoning, Entry, Location Choice, Retail Competition, Discrete Games, Multiple Equilibria, Structural Modeling |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:1851&r=ure |
| By: | Wedemeier, Jan |
| Abstract: | The creative sector is frequently regarded as one of the driving forces of total employment growth. Empirical studies suggest that the clustering of human capital might result in the polarization of employment growth. Since the creative sector's definition is motivated from the insights of the economics of human capital, this effect might also be relevant to the creative sector. Following these ideas, the objective of the present paper is to analyze the impact of the creative sector on total employment and on creative sector's employment growth in Western Germany's regions from 1977 to 2004. For the analysis, the definitions of the creative sector follow a technologically and culturally oriented definition and, alternatively, Florida's creative class (2002). These approaches focusing on human capital are contrasted with a skill-based approach. Using a fixed-effects panel model with time lags, I find evidence that the creative sector fosters the regional growth rate of total employment. The results show, moreover, that an initially large share of regional creative professionals pushes further the regional concentration of those professions in agglomerated regions. Driving force for the concentration of creative professionals are local amenities, measured by bohemians, and it is assumed that knowledge spillovers - possibly accelerated by the diversified composition of employment - contribute to this polarization. These results are as well confirmed for the high-skilled agents. -- |
| Keywords: | regional employment growth,creative sector,human capital,bohemians,externalities |
| JEL: | J21 J24 R11 Z1 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:hwwirp:119&r=ure |
| By: | Bauchmüller, Robert (UNU-MERIT/MGSoG, University of Maastricht) |
| Abstract: | Early Childhood Education (ECE) programmes are presumed to have positive effects in particular for children who are at risk of failing during their school careers. However, there is disagreement on whether such programmes should be more teacher and curriculum based or rather centred on the individual child. In this paper I study child-centred ECE programmes that are used at preschools in the Dutch province of Limburg, which is in fact mainly a study of 'Speelplezier', a new child-centred programme which has recently been certified as being 'in theory' effective in raising children's school readiness, but which has not yet been evaluated. I use a rich dataset covering the first three grades at elementary schools in the Southern part of Limburg for the year 2008/09 to evaluate the impact of child-centred ECE versus alternative preschool options. I estimate ordinary least squares effects of attending a preschool applying child-centred ECE onto test scores from the beginning of elementary schooling, under the control of alternative childcare experiences and various child and family related characteristics and re-weighing observations of the studied sample to represent population averages. I argue that access to a preschool kindergarten applying child-centred ECE is to some degree exogenously determined. In a further effort to identify causal effects, I also use propensity score matching and instrumental variable estimation techniques. I find no evidence of the expected short-term effects on language or on cognitive development who attended a child-centred ECE preschool as compared to preschools applying other or no early education programmes. In order to reach measurable benefits, the child-centred methods and their applications need to be intensified and extended to all disadvantaged groups of children. Yet I find some evidence that children of low educated parents who have been placed in a child-centred ECE preschool tend to have higher language and cognitive outcomes. |
| Keywords: | early childhood education (ECE), child-centred programme, cognitive and language development, school readiness, distance to preschool |
| JEL: | I21 J13 J24 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:unumer:2012016&r=ure |
| By: | Kodrat Wibowo (Department of Economics, Padjadjaran University); Bagdja Muljarijadi (Department of Economics, Padjadjaran University); Rullan Rinaldi (Department of Economics, Padjadjaran University) |
| Abstract: | As one of central government’s tools to equalize fiscal disparities between regions in Indonesia, current allocation mechanism of intergovernmental grant has been a major issue in regional public finance. Specifically, specific grant (DAK) was proven not much more specific than general block grant (DAU). Furthermore, the effectiveness of the specific grant allocation mechanism on poverty alleviation, economic growth, unemployment, and several others specific indicator has not met the desirable condition of the program’s outcome. This paper tries to propose alternatives on the allocation mechanism of specific grant that could effectively fulfill the objectives of affecting the local policy of poverty alleviation, economic growth, and unemployment. Employing sub national data at city and district level, we perform a simulation utilizing panel data regression of 458 cities/districts during period of 2001-2007. The result shows that existing DAK allocation on public investment program has not been able to meet development objectives in the long term economic development. Specifically, specific grant (DAK) was proven not much more specific than general block grant (DAU). This study also provides an efficiently simple, matching grant allocation mechanism which is conditional open-ended matching grants, along with intensive ongoing evaluation and monitoring to align the allocation of funds to regions with regional macroeconomic targets and promoting the level of community welfare; and at a certain level, using a bottom-up approach where the allocation of the fund should was based on local government interests and initiatives. The study consider that DAU per capita is a better main criteria for determining which areas are considered eligible as a recipient of DAK is districts that have a low fiscal capacity (general criteria). The simulation provides better estimation result than one from existing mechanism; the expected sign of DAK toward economic growth, poverty rate, and unemployment are in accordance with the theory and common knowledge. This brings consequences that DAK should be give to less region with higher amounts. |
| Keywords: | Allocation Mechanism, Transfer, Sub National, Public Finance |
| JEL: | H0 H7 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:unp:wpaper:201108&r=ure |
| By: | Boudhayan Sen (Yale School of Management); Jiwoong Shin (Yale School of Management); K. Sudhir (Cowles Foundation and Yale School of Management) |
| Abstract: | We illustrate an approach to measure demand externalities from co-location by estimating household level changes in grocery spending at a supermarket among households that also buy gas at a co-located gas station, relative to those who do not. Controlling for observable and unobserved selection in the use of gas station, we find significant demand externalities; on average a household that buys gas has 7.7% to 9.3% increase in spending on groceries. Accounting for differences in gross margins, the profit from the grocery spillovers is 130% to 150% the profit from gasoline sales. The spillovers are moderated by store loyalty, with the gas station serving to cement the loyalty of store-loyal households. The grocery spillover effects are significant for traditional grocery products, but 23% larger for convenience stores. Thus co-location of a new category impacts both inter-format competition with respect to convenience stores (selling the new category) and intra-format competition with respect to other supermarkets (selling the existing categories). |
| Keywords: | Revenue economies of scope, Demand externalities, One stop shopping, Co-location, Selection, Retail industry |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:1850&r=ure |
| By: | Kodrat Wibowo (Department of Economics, Padjadjaran University); Astia Dendi (The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ)); Zulhanif (Department of Statistics, Padjadjaran University) |
| Abstract: | Theoretically, according to Shah (1994), the specific purpose transfer fund suited for correcting inefficiencies in financing of public facilities with externalities (spillovers) to communities outside the recepient regions. Various types of matching grant: open-ended and closed-ended are in fact not intended to address the fiscal imbalance or insufficiency of fiscal capacity among regions. The central government of Indonesia prefers the closed-ended specific purpose transfer (specific grant) fund, so called Dana Alokasi Khusus (DAK) in its inter-governmental balancing fund system considering that problem of moral hazard occured in open-ended approach. By definition, the DAK is a fund sourced from the central budget revenues allocated to specific regions in order to help funding, also specific activities that are of regional affairs and in accordance with national priorities. In fact, the number of the DAK-funded priority areas has been increasing from only 5 fields at the beginning of the year 2003 and became 14 fields in 2010. Moreover, the number of DAK recipient regions always reaches almost 90% of total regions in Indonesia in the same period. There appears a question of how the essential of ‘specificness’ of DAK can be evidenced from these facts? This study will use the 2003-2009 DAK fund allocation of 33 provinces in Indonesia and ultilize statistics analysis to analyze the ‘specificness’ of DAK. Based on the evaluation during the period 2003 – 2010 the essence of specificness is drowned out by more sightings of the essence of 'equalization' fiscal capacity both horizontally and vertically which are more functions of the block grant (DAU) and Revenue Sharing Transfer (DBH). The results of our study also shows that the pattern and magnitude of DAK allocation is applied over the years, do not contribute significantly to the goals (outcomes and impact) of national development. |
| Keywords: | Public Finance, Transfer Fund, Fiscal Decentralization |
| JEL: | H0 H7 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:unp:wpaper:201109&r=ure |
| By: | Tuukka Saarimaa; Janne Tukiainen |
| Abstract: | We analyze empirically the coalition formation of local governments using a novel reduced form econometric procedure that allows for multi-partner mergers. Using Finnish municipal merger data where mergers were decided independently at the local level, we find that merger decisions are largely in line with voter preferences. Most importantly, mergers are clearly less likely when the distance of the median voter to the coalition centre is large. However, councillors seem also to prefer mergers where post-merger political competition is lower which indicates a concern for re-election. Interestingly, municipalities do not seem to be seeking economies of scale through merging. This is possibly due to existing cooperation in service production which we find to be a strong predictor of merging. |
| Keywords: | Coalition formation, local politics, choice based sampling |
| JEL: | H77 H72 C35 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0102&r=ure |
| By: | Vatter, Johannes |
| Abstract: | This paper examines regional differences in subjective well-being (SWB) in Germany. Inferential statistics indicate a diminishing but still significant gap between East andWest Germany, but also differing levels of SWB within both parts of Germany. The observed regional pattern of life satisfaction reflects macroeconomic fundamentals, where labour market conditions play a dominant role. Differing levels of GDP and economic growth have contributed rather indirectly to well-being such that the period since the reunification can be considered as a period of joyless growth. Moreover, the effects of unemployment and income differ in size between regions in such a way that one can assume increasing marginal disutility of unemployment. In total, approximately half of 'satisfaction gap' between East and West Germany can be attributed to differing macroeconomic conditions. In contrast, the comparably high levels of life satisfaction in Northern Germany are driven mostly by couples and go along with significantly higher fertility rates. Overall, I conclude that comparisons of SWB within a single country provide valid information. -- |
| Keywords: | subjective well-being,regional disparities,unemployment,economic growth,fertility rate |
| JEL: | R10 I31 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fzgdps:50&r=ure |
| By: | Goggin, Jean (Central Bank of Ireland); Holton, Sarah (Central Bank of Ireland); Kelly, Jane (Central Bank of Ireland); Lydon, Reamonn (Central Bank of Ireland); McQuinn, Kieran (Central Bank of Ireland) |
| Abstract: | This paper examines the changing manner in which Irish financial institutions set their variable interest rates over the period 2003 - 2011. In particular, the onset of the financial crisis clearly results in a break in the pass-through relationship between market rates and variable rates at the end of 2008 in the Irish mortgage market. Until the end of 2008 variable rates for all lenders closely followed changes in the ECB’s policy rates, short-term wholesale rates and tracker rate mortgages. Thereafter, the relationship breaks down, in part due to banks’ increased market funding costs. It appears that some lenders with higher mortgage arrears rates and a greater proportion of tracker rate loans on their books exhibit higher variable rates. After controlling for these factors and additional funding costs, most of the divergence between banks’ variable rates is explained, but there are some exceptions. There is also some evidence of asymmetric adjustment in rate setting behaviour: that is, rates tend to adjust slowly when they are above the long-run predicted level but more quickly when they are below this level. This asymmetric adjustment behaviour appears to increase in the post-2008 period. |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:cbi:wpaper:01/rt/12&r=ure |
| By: | Gianmarco I. P. Ottaviano |
| Abstract: | This paper studies how firm heterogeneity in terms of productivity affects the balance between agglomeration and dispersion forces in the presence of pecuniary externalities through a selection model of monopolistic competition with variable mark-ups. It shows that firm heterogeneity matters. However, whether it shifts the balance from agglomeration to dispersion or the other way round depends on its specific features along the two defining dimensions of diversity: 'richness' and 'evenness'. Accordingly, the role of firm heterogeneity in selection models of agglomeration cannot be fully understood without paying due attention to various moments of the underlying firm productivity distribution. |
| Keywords: | agglomeration, trade, heterogeneity, selection, economic geography |
| JEL: | F12 R11 R12 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1129&r=ure |
| By: | Opolot, Daniel (UNU-MERIT, University of Maastricht,) |
| Abstract: | This paper studies the impact of interaction topologies on individual and aggregate behavior in environments with social interactions. We study social interaction games of an infnitely large population with local and global externalities. Local externalities are limited within agents' ego-networks while the global externality is derived from aggregate distribution in a feedback manner. We consider two forms of heterogeneity, that due to individual intrinsic tastes and that due to ego-networks. The agents know the potential number of other agents they will interact with but do not posses complete information about their neighbors' types and strategies so they base their decisions on expectations and beliefs. We characterize the existence, uniqueness and multiplicity of equilibrium distribution of strategies. By considering arbitrary interaction topologies, we show that the interaction structure greatly determines the uniqueness and multiplicity of equilibrium outcomes, as well as the equilibrium aggregate distribution of strategies as measured by the mean strategy. |
| Keywords: | Complex networks, Partial information, Local externality, Global externality, Adoption |
| JEL: | C72 D82 D84 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:unumer:2012014&r=ure |
| By: | Hammitt, James; Liu, Jin-Tan; Tsou, Meng-Wen |
| Abstract: | This paper examines the causal effect of parental schooling on children’s schooling using a large sample of adoptees from Taiwan. Using birth-parents’ education to help control for selective placement of children with adoptive parents, we find that adoptees raised with more highly educated parents have higher educational attainment, measured by years of schooling and probability of university graduation. We also find evidence that adoptive father’s schooling is more important for sons’ and adoptive mother’s schooling is more important for daughters’ educational attainment. These results support the notion that family environment (nurture) is important in determining children’s educational outcomes, independent of genetic endowment. |
| Keywords: | intergenerational transmission, education, schooling, adoption |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:25462&r=ure |
| By: | Baskaran, Thushyanthan |
| Abstract: | Theory suggests that transfers should have an effect on local fiscal policy that is similar to an equivalent increase in local incomes. Yet much of the empirical literature shows that local governments use transfers primarily to increase expenditures. Recent contributions have revisited this so called flypaper effect by using quasi-experimental methods, and some have found that the evidence for the flypaper effect dissipates once endogeneity of transfer receipts is accounted for. This paper contributes to the growing body of quasi-experimental research on the flypaper effect by exploiting a natural experiment in the German state of Hesse. Using discontinuities in the Hessian municipal transfer allocation formula to construct a set of instruments for municipal transfer receipts during the 2001-2010 period, it provides strong evidence in favor of the flypaper effect. |
| Keywords: | Equalization transfers; Local fiscal policy; Population thresholds |
| JEL: | H70 H72 H71 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:37144&r=ure |
| By: | Giampaolo Arachi (Deparment of Economics and Mathematical Statistics, University of Salento); Valeria Bucci (Deparment of Economics and Mathematical Statistics, University of Salento); Ernesto Longobardi (Department of Economics and Quantitative Methods, University of Bari); Paolo Panteghini (Department of Economics, University of Brescia); Maria Laura Parisi (Department of Economics, University of Brescia); Simone Pellegrino (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy); Alberto Zanardi (Department of Economics, University of Bologna) |
| Abstract: | In this paper we aim to discuss the strengths and weaknesses of the fiscal consolidation package adopted recently by the Italian Government in order to achieve a balanced budget by 2013. Revenues are forecasted to increase by more than 3.3 GDP percentage points; these stem mostly from indirect and property taxation. The analysis of the Italian case is interesting since it seems to be consistent with a recent strand of the literature which, in order to foster both short and long-term economic growth, advocated a shift of the tax burden from capital and labour income to consumption and property. Through a set of micro simulation models, this paper evaluates the effects of the Italian fiscal package on households and firms. We show that, in respect of households’ income, indirect and property tax reforms are highly regressive, whilst the reform makes limited resources available for growth enhancing policies (reduction in the effective corporate tax burden). Then, we propose an alternative fiscal package. We show that a less regressive reform on households can be obtained by shifting taxation from personal and corporate income tax to indirect taxation. Our proposal allows the tax burden on firms to be reduced substantially and, in the meantime, offers lower personal income tax rates on households in the lowest deciles of income distribution since they are penalized most by the increase in indirect taxation. |
| Keywords: | Tax reforms, Fiscal consolidation, Micro simulation models, Italy |
| JEL: | H2 D22 D31 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:tur:wpapnw:2&r=ure |
| By: | Bilger, M.; Carrieri.; |
| Abstract: | Using a rich Italian cross-sectional data set, we estimate the effect of a neighborhood quality index based on pollution, crime, and noise on self-assessed health, presence of chronic conditions and limitations in daily activities. We address the self-selection of the residents in their neighborhoods, as well as the possible endogeneity of income with respect to health, through instrumental variable methods and several endogeneity tests. The main novelty is the sound estimation of the neighborhood effect on health using observational data, which has the advantage of providing general results that are not dependent on any experimental design. This allows us to fully compare the neighborhood effect with the traditional socioeconomic determinants of health. Our main findings are that low quality neighborhoods are strongly health damaging. This effect is comparable to the primary/upper secondary education health differential and is even higher than the impact that poor economic circumstances have on health. |
| Keywords: | Neighborhood quality; Health; Endogeneity; Instrumental Variables; |
| JEL: | I10 R23 C31 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:yor:hectdg:11/33&r=ure |