nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2012‒03‒21
43 papers chosen by
Steve Ross
University of Connecticut

  1. The Spatial Extent of Agglomeration Economies: Evidence from Three U.S. Manufacturing Industries By Joshua Drucker
  2. Are My Neighbours Ageing Yet? Local Dimensions of Demographic Change in German Cities By Uwe Neumann
  3. Determining the impact of low-cost housing development on nearby property prices using discrete choice analysis By M. Du Preez; M.C. Sale
  4. The impact of the Great Recession on school district finances: evidence from New York By Rajashri Chakrabarti; Elizabeth Setren
  5. Tax and the city: A theory of local tax competition and evidence for Germany By Janeba, Eckhard; Osterloh, Steffen
  6. Within-city variation in urban decline: the case of Detroit By Veronica Guerrieri; Daniel Hartley; Erik Hurst
  7. Crime, house prices, and inequality: the effect of UPPs in Rio By Claudio Frischtak; Benjamin R. Mandel
  8. Class Assignment and Peer Group Effects: Evidence from Brazilian Primary Schools By Martin Foureaux Koppensteiner
  9. Fiscal Zoning, Sales Taxes, and Employment: Do Higher Sales Taxes Lead to More Jobs in Retailing and Fewer Jobs in Manufacturing? By Burnes, Daria; Neumark, David; White, Michelle J.
  10. Funding, school specialisation and test scores By S Bradley; Jim Taylor; G Migali
  11. A Longitudinal Study of Migration Propensities for Mixed Ethnic Unions in England and Wales By Feng, Zhiqiang; van Ham, Maarten; Boyle, Paul; Raab, Gillian M.
  12. Lost in Translation? Teacher Training and Outcomes in High School Economics Classes By Valletta, Rob; Hoff, K. Jody; Lopus, Jane S.
  13. Housing prices and transaction volume By Arslan, Yavuz; Akkoyun, H. Cagri; Kanik, Birol
  14. Why are migrant students better off in certain types of educational systems or schools than in others? By Dronkers, Jaap; van der Velden, Rolf; Dunne, Allison
  15. Understanding booms and busts in housing markets By Craig Burnside; Martin Eichenbaum; Sergio Rebelo
  16. Investing in Local Roads for Economic Growth By Llanto, Gilberto M.
  17. Getting at Systemic Risk via an Agent-Based Model of the Housing Market By John Geanakoplos; Robert Axtell; Doyne J. Farmer; Peter Howitt; Benjamin Conlee; Jonathan Goldstein; Matthew Hendrey; Nathan M. Palmer; Chun-Yi Yang
  18. Do House Prices Impact Consumption and Interest Rate?: Evidence from OECD Countries Using an Agnostic Identification Procedure By Christophe André; Rangan Gupta; Patrick T. Kanda
  19. Precarious slopes? The Great Recession, federal stimulus, and New Jersey schools By Rajashri Chakrabarti; Sarah Sutherland
  20. Wealth, Composition, Housing, Income, and Consumption By William Hardin; Sheng Guo
  21. The English Baccalaureate: how not to measure school performance By Jim Taylor
  22. Measuring the knowledge base of regional innovation systems in Sweden By Martin, Roman
  23. From creativity to innovativeness: micro evidence from Italy By Roberto Antonietti
  24. Diversity, choice and the quasi-market: An empirical analysis of secondary education policy in England By S Bradley; Jim Taylor
  25. Geography and exporting behavior : evidence from India By Mukim, Megha
  26. Revolutionizing transport: modern infrastructure, agriculture and development in Ghana. By Jedwab, Remi; Moradi, Alexander
  27. Can the Mortensen-Pissarides Model Match the Housing Market Facts ? By Gaetano Lisi
  29. Founders and Financially Affiliated Directors on Charter School Boards and Their Impact on Financial Performance and Academic Achievement By Charisse A. Gulosin; Elif Sisli-Ciamarra
  30. Economic integration and regional inequality in Iberia (1900-2000) : a geographical approach By Daniel Tirado; Marc Badia-Miró
  31. Railroads and Micro-regional Growth in Prussia By Hornung, Erik
  32. Systematic and Liquidity Risk in Subprime-Mortgage Backed SecuritiesM By Thomas Flavin; Gerald P. Dwyer; Mardi Dungey
  33. “Price differences between domestic and international air markets: an empirical application to routes from Gran Canaria” By Xavier Fageda; Juan Luis Jiménez; Carlos Díaz Santamaría
  34. House price booms, current account deficits, and low interest rates By Andrea Ferrero
  35. Workforce skills across the urban-rural hierarchy By Jaison R. Abel; Todd M. Gabe; Kevin Stolarick
  36. Structural Estimation and Interregional Labour Migration: Evidence from Japan By Keisuke Kondo; Toshihiro Okubo
  37. Earthquakes and Economic Growth By Peter Simonsen
  38. Does Cluster Policy Trigger R&D Activity? – Evidence from German Biotech Contests By Dirk Engel; Timo Mitze; Roberto Patuelli; Janina Reinkowski
  39. Heterogeneity in the Correlates of Motorized and Non-Motorized Travel in Germany – The Intervening Role of Gender By Vivien Procher; Colin Vance
  40. Police and Crime: Evidence from Dictated Delays in Centralized Police Hiring By Paolo Buonanno; Giovanni Mastrobuoni
  41. Cluster quo vadis? The future of the cluster concept By Koschatzky, Knut
  42. Public-Private Co-operation for Gas Provision in Poor Neighbourhoods of Buenos Aires: Impact on Housing Improvements and Health By Cynthia Goytia; Ricardo Pasquini; Pablo Sanguinetti
  43. Defaults and losses on commercial real estate bonds during the Great Depression era By Tyler Wiggers; Adam B. Ashcraft

  1. By: Joshua Drucker
    Abstract: The spatial extent of localized agglomeration economies constitutes one of the central current questions in regional science. It is crucial for understanding firm location decisions and for assessing the influence of proximity in shaping spatial patterns of economic activity, yet clear-cut answers are difficult to come by. Theoretical work often fails to define or specify the spatial dimension of agglomeration phenomena. Existing empirical evidence is far from consistent. Most sources of data on economic performance do not supply micro-level information containing usable geographic locations. This paper provides evidence of the distances across which distinct sources of agglomeration economies generate benefits for plants belonging to three manufacturing industries in the United States. Confidential data from the Longitudinal Research Database of the United States Census Bureau are used to estimate cross-sectional production function systems at the establishment level for three contrasting industries in three different years. Along with relevant establishment, industry, and regional characteristics, the production functions include variables that indicate the local availability of potential labor and supply pools and knowledge spillovers. Information on individual plant locations at the county scale permits spatial differentiation of the agglomeration variables within geographic regions. Multiple distance decay profiles are investigated in order to explore how modifying the operationalization of proximity affects indicated patterns of agglomeration externalities and interfirm interactions. The results imply that industry characteristics are at least as important as the type of externality mechanism in determining the spatial pattern of agglomeration benefits. The research methods borrow from earlier work by the author that examines the relationships between regional industrial structure and manufacturing production.
    Date: 2012–01
  2. By: Uwe Neumann
    Abstract: In the discussion about demographic change, the regional dimension so far has played a subordinate role. Based on municipal data for the period between 1998 and 2008, this paper examines to what extent recent demographic change has affected the population of cities and neighbourhoods, focusing on the largest urban agglomeration in Germany, the Rhine-Ruhr conurbation in North Rhine-Westphalia. The local outcomes of demographic change are modified considerably by regional migration and interrelate closely with regional prosperity. The survey provides a precise outline of the interrelation between basic demographic characteristics and shifts in the composition of neighbourhood populations over the study period. The analysis shows that in the most thriving cities, there is a particularly strong tendency of young adults to separate from other demographic groups. In neighbourhoods where there is no such influx of younger people, particularly in low-density residential areas on the urban fringe, rapid demographic ageing aff ects neighbourhood populations and local economies.
    Keywords: Demographic change; neighbourhoods; segregation; migration
    JEL: J11 R23
    Date: 2012–02
  3. By: M. Du Preez; M.C. Sale
    Abstract: This paper presents an application of the conditional logit model to a small, Nelson Mandela Bay neighbourhood housing data set, with the objective of determining the impact of proximity to a low-cost housing development on nearby property prices. The results of this pilot study show that the average household in the neighbourhood of Walmer is willing to pay between R27 262 and R195 564 to be located 86m further away from an existing low—cost housing development. In addition to this, the probability of choosing a specific house increases if the house has a swimming pool, an electric fence, the lower its price and the closer it is to the nearest school.
    Date: 2012
  4. By: Rajashri Chakrabarti; Elizabeth Setren
    Abstract: Despite education’s fundamental role in human capital formation and growth, there is no research that examines the effect of the Great Recession (or any other recession) on schools. Our paper begins to fill this gap. Exploiting detailed data on school finance indicators and an analysis of trend shifts, we examine how the Great Recession affected school funding in New York State. While we find no evidence of effects on either total revenue or expenditure, there were important compositional changes to both. There is strong evidence of substitution of funds on the revenue side—the infusion of funds from the federal stimulus occurred simultaneously with statistically and economically significant cuts in state and local financing, especially the former. On the expenditure side, instructional expenditure was maintained, while other categories such as transportation, student activities, and utilities suffered. Important heterogeneities in experiences are also observed by poverty level, metropolitan area, school district size, and urban status. Affluent districts were hurt the most; the New York City metro area, especially Nassau County, sustained the largest losses in terms of both revenue and expenditure. Our findings promise to facilitate an understanding of how recessions affect schools and of the role policy can play in mitigating the consequences.
    Keywords: Recessions ; Education - New York (State) ; Education - Economic aspects ; State finance ; Municipal finance ; State finance ; Public schools ; Government spending policy
    Date: 2011
  5. By: Janeba, Eckhard; Osterloh, Steffen
    Abstract: Despite the well-developed empirical literature on local tax competition, little is known about the actual spatial structure of inter-municipal competition. Assuming that competition takes place only among neighbours (as in the empirical literature) is at odds with the theoretical approaches where all jurisdictions compete simultaneously. In this paper we use a survey conducted among mayors in the German state of Baden-Württemberg to show that the perceived intensity of competition for firms varies considerably between jurisdictions and can mainly be explained by the size and location of the jurisdiction. Based on these findings, we develop a sequential tax competition model in which urban centres compete with other urban centres and rural jurisdictions in their own neighbourhood. This model predicts that larger jurisdictions do not necessarily rely more on capital taxes; in case they face strong competition with more distant competitors, larger cities even have lower capital taxes. In addition, we discuss how the model compares to a standard simultaneous approach and show that results from our sequential model are in line with trends in local taxation in Baden-Württemberg. --
    Keywords: Local tax competition,survey,intensity of competition,asymmetric tax competition
    JEL: H71 H73 H77
    Date: 2012
  6. By: Veronica Guerrieri; Daniel Hartley; Erik Hurst
    Abstract: When a city experiences a decline in income or population, do all neighborhoods within the city decline equally? Or do some neighborhoods decline more than others? What are the characteristics of the neighborhoods that decline the most? We answer these questions by looking at what happened to neighborhoods within Detroit as the city experienced a sharp decline in income and population from the 1980s to the late 2000s. We find patterns of changes in income and population that are consistent with the model and empirical patterns of gentrification presented in Guerrieri, Hartley, and Hurst (2011), only playing out in reverse.
    Keywords: Housing ; Demography ; Regional economics ; Detroit (Mich.)
    Date: 2012
  7. By: Claudio Frischtak; Benjamin R. Mandel
    Abstract: We use a recent policy experiment in Rio de Janeiro, the installation of permanent police stations in low-income communities (or favelas), to quantify the relationship between a reduction in crime and the change in the prices of nearby residential real estate. Using a novel data set of detailed property prices from an online classifieds website, we find that the new police stations (called UPPs) had a substantial effect on the trajectory of property values and certain crime statistics since the beginning of the program in late 2008. We also find that the extent of inequality among residential prices decreased as a result of the policy. Both of these empirical observations are consistent with a dynamic model of property value in which historical crime rates have persistent effects on the price of real estate.
    Keywords: Crime ; Housing - Prices ; Law enforcement ; Wealth
    Date: 2012
  8. By: Martin Foureaux Koppensteiner
    Abstract: Students in Brazil are typically assigned to classes based on their age ranking in their school grade. I exploit this rule to estimate the effects on maths achievement of being in a class with older peers for students in fifth grade of primary school. Because grade repetition is widespread in Brazil, the distribution of age is skewed to the right and hence age heterogeneity is typically higher in older classes. I provide evidence that heterogeneity in age is the driving factor behind the large negative estimated effect of being in an older class. Information on teaching practices and student behaviour sheds light on how class heterogeneity harms learning.
    Keywords: Peer effects; regression discontinuity; educational production; group heterogeneity.
    JEL: I20 I21
    Date: 2012–03
  9. By: Burnes, Daria (University of California, Irvine); Neumark, David (University of California, Irvine); White, Michelle J. (University of California, San Diego)
    Abstract: We test the hypothesis that local government officials in jurisdictions that have higher local sales taxes are more likely to use fiscal zoning to attract retailing. We find that total retail employment is not significantly affected by local sales tax rates, but employment in big box and anchor stores is higher significantly in jurisdictions with higher sales tax rates. This suggests that local officials in jurisdictions with higher sales tax rates concentrate on attracting large stores and shopping centers. We also find that the effect of local sales taxes on big box and anchor store retail employment is larger in county interiors, where residents tend to be captive to local retailers. Finally, fiscal zoning has the opposite effect on manufacturing employment, suggesting that local officials' efforts to attract shopping centers and large stores crowd out manufacturing.
    Keywords: fiscal zoning, sales taxes, retail employment, manufacturing employment
    JEL: R3 R5 J2 H2
    Date: 2012–02
  10. By: S Bradley; Jim Taylor; G Migali
    Abstract: We evaluate the effect on test scores of a UK education reform which has increased <br/>funding of schools and encouraged their specialisation in particular subject areas, enhancing pupil choice and competition between schools. Using several data sets, we apply cross-sectional and difference-in-differences matching models, to confront issues of the choice of an appropriate control group and different forms of selection bias. We demonstrate a statistically significant causal effect of the specialist schools policy on test score outcomes. The duration of specialisation matters, and we consistently find that the longer a school has been specialist the larger is the impact on test scores. We finally disentangle the funding effect from a specialisation effect, and the latter occurs yielding relatively large improvements in test scores in particular subjects.
    Date: 2011
  11. By: Feng, Zhiqiang (University of St. Andrews); van Ham, Maarten (Delft University of Technology); Boyle, Paul (University of St. Andrews); Raab, Gillian M. (University of St. Andrews)
    Abstract: Most studies investigating residential segregation of ethnic minorities ignore the fact that the majority of adults live in couples. In recent years there has been a growth in the number of mixed ethnic unions that involve a minority member and a white member. To our knowledge, hardly any research has been undertaken to explicitly examine whether the ethnic mix within households has an impact on the residential choices of households in terms of the ethnic mix of destination neighbourhoods. Our study addresses this research gap and examines the tendencies of migration among mixed ethnic unions in comparison with their co-ethnic peers. We used data from the Longitudinal Study for England and Wales. Our statistical analysis supports the spatial assimilation theory: ethnic minorities move towards less deprived areas and to a lesser extent also towards less ethnically concentrated areas. However, the types of destination neighbourhood of minority people living in mixed ethnic unions varied greatly with the ethnicity of the ethnic minority partner.
    Keywords: ethnic concentration, deprivation, migration, mixed ethnic unions, longitudinal analysis
    JEL: J12 J15 J61 R23
    Date: 2012–02
  12. By: Valletta, Rob (Federal Reserve Bank of San Francisco); Hoff, K. Jody (Federal Reserve Bank of San Francisco); Lopus, Jane S. (California State University, East Bay)
    Abstract: Using data on 24 teachers and 982 students from a 2006 survey of California high school economics classes, we assess the effects of student and teacher characteristics on student achievement. We estimate value-added models of outcomes on multiple choice and essay exams, with matched classroom pairs for each teacher enabling random effects and fixed-effects estimation. Students' own and peer GPAs and their attitudes towards economics have the largest effects on value-added scores. We also find a substantial impact of specialized teacher experience and college-level coursework in economics, although the effects of the latter are positive for the multiple choice test and negative for the essay test.
    Keywords: high school economics, teacher training
    JEL: A21 I21
    Date: 2012–03
  13. By: Arslan, Yavuz; Akkoyun, H. Cagri; Kanik, Birol
    Abstract: We use annual, quarterly and monthly data from the US to show that the correlation between housing prices and transaction volume (number of existing houses sold) differs across different frequencies. While the correlation is high at low frequencies it declines to the levels close to zero at high frequencies. Granger causality tests for different frequencies show the way of causality in housing market goes from transactions to housing prices. Our findings provide a litmus test for the existing theories that are proposed to explain the positive correlation between housing prices and transaction volume.
    Keywords: Housing prices; Transaction volume
    JEL: G1 E3 C1
    Date: 2011–10–01
  14. By: Dronkers, Jaap; van der Velden, Rolf; Dunne, Allison
    Abstract: The main research question of this paper is the combined estimation of the effects of educational systems, school composition, track level, and country of origin on the educational achievement of 15-year-old migrant students. We focus specifically on the effects of socioeconomic and ethnic background on achievement scores and the extent to which these effects are affected by characteristics of the school, track, or educational system in which these students are enrolled. In doing so, we examine the ‘sorting’ mechanisms of schools and tracks in highly stratified, moderately stratified, and comprehensive education systems. We use data from the 2006 Programme for International Student Assessment (PISA) wave. Compared with previous research in this area, the paper’s main contribution is that we explicitly include the tracks-within-school level as a separate unit of analyses, which leads to less biased results concerning the effects of educational system characteristics. The results highlight the importance of including factors of track level and school composition in the debate surrounding educational inequality of opportunity for students in different education contexts. The findings clearly indicate that the effects of educational system characteristics are flawed if the analysis only uses a country- and a student level and ignores the tracks-within-school level characteristics. From a policy perspective, the most important finding is that educational systems are neither uniformly ‘good’ nor ‘bad’, but they can result in different consequences for different migrant groups. Some migrant groups are better off in comprehensive systems, while others are better off in moderately stratified systems.
    Keywords: migrants; educational performance; educational systems; schools; destination country; origin country; cross-national; PISA
    JEL: F22 O1 O15 I21
    Date: 2011–08
  15. By: Craig Burnside; Martin Eichenbaum; Sergio Rebelo
    Abstract: Some booms in housing prices are followed by busts. Others are not. In either case it is difficult to find observable fundamentals that are correlated with price movements. We develop a model consistent with these observations. Real estate agents have heterogeneous expectations about long-run fundamentals but change their views because of "social dynamics." Agents meet randomly with one another. Those with tighter priors are more likely to convert others to their beliefs. The model generates a "fad": The fraction of the population with a particular view rises and then falls. Depending on which agent is correct about fundamentals, these fads generate boom-busts or protracted booms.
    Date: 2012
  16. By: Llanto, Gilberto M.
    Abstract: Local road investments work for growth and poverty reduction in local areas. The paper highlights the importance of investing in local roads and directs attention to the critical role of local government units (LGUs) in improving the local road network. Raising additional monies to fund local roads is only partly a solution. Much more will depend on the quality and strength of governance and adherence to good planning, budgeting, and procurement practices in the national government and local government units. This paper identifies what local government units can do to improve local road networks.
    Keywords: Philippines, road network, logistics, local governments, fiscal capacity
    Date: 2011
  17. By: John Geanakoplos (Cowles Foundation, Yale University); Robert Axtell (George Mason University); Doyne J. Farmer (Santa Fe Institute); Peter Howitt (Brown University); Benjamin Conlee (Ellington Management Group); Jonathan Goldstein (George Mason University); Matthew Hendrey (George Mason University); Nathan M. Palmer (George Mason University); Chun-Yi Yang (George Mason University)
    Abstract: Systemic risk must include the housing market, though economists have not generally focused on it. We begin construction of an agent-based model of the housing market with individual data from Washington, DC. Twenty years of success with agent-based models of mortgage prepayments give us hope that such a model could be useful. Preliminary analysis suggests that the housing boom and bust of 1997-2007 was due in large part to changes in leverage rather than interest rates.
    Keywords: Agent based models, Housing prices, Boom and bust, Leverage, Interest rates, Foreclosures, Systemic risk
    JEL: E3 E31 E32 E37 E44 E63 R2 R20 R21 R23 R28 R3 R30 R31 R38
    Date: 2012–03
  18. By: Christophe André; Rangan Gupta; Patrick T. Kanda
    Abstract: This paper investigates the existence of significant spillovers from the housing sector onto the wider economy for the seven major OECD countries using Uhlig's (2005) agnostic identification procedure. This method allows a housing demand shock to be identified in a six-variable VAR model by imposing sign restrictions on the impulse responses of consumer prices, residential investment, real house prices and mortgage loans, while private consumption and nominal interest rate responses are left unrestricted. The results suggest that consumption responds positively and significantly to a house price shock in Canada, France, Japan and the UK. A significant positive delayed response of nominal interest rates follows a house price shock in Germany, Japan, the UK and the US, suggesting that while central banks do not seem to respond instantly and systematically to a housing demand shock, their repercussions on the economy tend to translate into higher policy rates after a few quarters.<P>Les prix des logements affectent-ils la consommation et le taux d'intérêt ? : Une étude empirique sur des pays de l'OCDE utilisant une procédure d'identification agnostique<BR>Cet article étudie l'existence d’une inflence significative du secteur du logement sur l'économie dans son ensemble pour les sept grands pays de l’OCDE, en utilisant la procédure d'identification agnostique d’Uhlig (2005). Cette méthode permet l'identification d'un choc de demande de logement dans un modèle VAR à six variables en imposant des restrictions sur les signes des fonctions de réaction aux innovations des prix à la consommation, de l'investissement résidentiel, des prix réels des logements et des prêts hypothécaires, tandis que les réponses de la consommation privée et des taux d'intérêt nominaux sont laissées libres. Les résultats suggèrent que la consommation réagit positivement et significativement à un choc de prix des logements au Canada, en France, au Japon et au Royaume-Uni. D'autre part, une réponse positive, significative et retardée des taux d'intérêt nominaux suit un choc de prix des logements en Allemagne, au Japon, au Royaume-Uni et aux Etats-Unis, suggérant que si les banques centrales ne semblent pas réagir instantanément et systématiquement à un choc de demande de logement, les répercussions de ce dernier sur l'économie ont tendance à se traduire par des taux directeurs plus élevés après quelques trimestres.
    Keywords: consumption, house prices, monetary policy, agnostic identification, consommation, prix des logements, politique monétaire, identification agnostique
    JEL: C32 E31 E32 E44 E52
    Date: 2012–03–09
  19. By: Rajashri Chakrabarti; Sarah Sutherland
    Abstract: While sparse literature exists investigating the impact of the Great Recession on various sectors of the economy, there is virtually no research that studies the effect of the Great Recession, or past recessions, on schools. This paper starts to fill the void. Studying school funding during the recession is of paramount importance because schools have a fundamental role in fostering human capital formation and economic growth. We exploit unique panel-data and trend-shift analysis to analyze how New Jersey school finances were affected during the Great Recession and the ARRA federal stimulus period. Our results show strong evidence of downward shifts in both revenue and expenditure following the recession. Federal stimulus seemed to have helped in 2010, however, both revenue and expenditure still declined. While total revenue declined, the various components of revenue did not witness symmetric changes. The infusion of funds with the federal stimulus occurred simultaneously with statistically and economically significant cuts in state and local financing, especially the former. Our results also show a compositional shift in expenditures in favor of categories that are linked most closely to instruction, while several noninstruction categories, including transportation and utilities, declined. Interestingly, budgetary stress seems to have led to significant layoffs for untenured teachers, leading to a rightward shift of the teacher salary and experience distributions. Heterogeneity analysis shows that high-poverty and urban districts sustained the largest falls in the post-recession era, with Abbott Districts specifically falling the furthest from prerecession trends. Of importance, the Abbott Districts were the only group in our expansive analysis to show statistically significant negative shifts in instructional expenditure even with the federal stimulus. The findings of this paper contribute valuable insight regarding schools’ financial situations during recessions and can serve as a guide to aid future policy decisions.
    Keywords: Recessions ; Education - New Jersey ; Education - Economic aspects ; State finance ; Public schools ; Government spending policy
    Date: 2012
  20. By: William Hardin (Department of Finance and Real Estate, Florida International University); Sheng Guo (Department of Economics, Florida International University)
    Abstract: The present research, which covers the latest residential boom and bust cycle, highlights that there are no uniform or constant time invariant wealth, housing, and income relations. Even more important, wealth composition is shown to be a significant determinant of consumption. The marginal effects of housing wealth, financial wealth, and income differ substantially with wealth composition. Households with the highest percentage of net worth in financial assets have much lower income effects, have substantially higher marginal effects associated with stock holdings, and have housing equity effects that differ noticeably from other households. Income effects for groups with the smallest amounts of relative financial wealth are dramatically higher than for households with greater financial wealth. Wealth and its composition affect consumption.
    Keywords: Consumption, Income, Wealth Composition, Wealth Effect, Housing Effect
    JEL: E21 D11 D12 D14 D91 G11
    Date: 2012–03
  21. By: Jim Taylor
    Abstract: This paper challenges the view held by the UK Government that the introduction of the English Baccalaureate will lead to an improvement in educational outcomes in secondary education. Evidence is presented to show that this new qualification is biased against disadvantaged pupils from low-income families, pupils with special needs, and pupils who have little inclination to study a foreign language. Furthermore, the English Baccalaureate is deeply flawed when used as a school performance indicator and should not be included in the School Performance Tables.
    Date: 2011
  22. By: Martin, Roman (CIRCLE, Lund University)
    Abstract: Within the literature on innovation systems, there are a growing number of scholars emphasizing the importance of differentiated knowledge bases underlying innovation activities. The existing work on knowledge bases is largely grounded on in-depth case studies; while surprisingly little effort has been done so far to operationalize the concept in a more systematic manner. In this paper, an attempt is made to develop a scheme of analysis to identify the knowledge base of a regional economy. We suggest using occupation data in association with a location quotient analysis, to assess whether a regional economy has a particular strength in one (or more) knowledge bases. To bring the analytical scheme into practice and assess it, we apply it on the county level in Sweden. The results are explained and contrasted with insights on the regional economies taken from secondary sources. We conclude that the proposed scheme of analysis leads to fairly reliable results, and could stimulate further empirical research on differentiated knowledge bases.
    Keywords: differentiated knowledge base; regional innovation system; Sweden
    JEL: O32
    Date: 2012–02–27
  23. By: Roberto Antonietti
    Abstract: In this paper I assess the existence, and the magnitude, of technological externalities in the form of creativity spillovers that affect individual firms’ innovative intensity. Relying on a large sample of Italian manufacturing firms, I first estimate a knowledge production function; from this, I extract the residuals, which represent the unexplained part of the actual observed share of innovative sales, namely ‘innovativeness’. Then, I regress such a measure of firm innovativeness on a set of occupation-based, as well as density-based, indicators of creativity at the NUTS3 level, while controlling for firm localization, size and industry. I also control for endogeneity and non-linearity by estimating a two-stage least squares model and a generalized additive model respectively. My estimates show that: (i) there is a positive and highly statistically significant effect of creativity on innovativeness; (ii) the effect of creativity on actual innovative sales is weak, whereas I find a strong positive effect played by internal R&D labour; (iii) occupation-based measures of creativity outperform education-based measures of human capital; (iv) when controlling for the education content of jobs, firms’ innovativeness is affected more by the local availability of non-graduated creative workers than of graduated ones; (v) rather, a higher local availability of graduated creative workers affects the invention intensity of a city; (vi) the relationship between firm innovativeness and the local density of creative people is U-shaped, so that proximity-based knowledge externalities emerge only after a certain density threshold is reached, this occurring typically in larger urban areas, typically hosting design and service-based creative industries.
    Keywords: creativity; innovativeness; innovative sales; knowledge production function; proportions
    JEL: L60 O31 R10
    Date: 2011
  24. By: S Bradley; Jim Taylor
    Abstract: This paper investigates the extent to which exam performance at the end of compulsory education has been affected by three major education reforms: the introduction of a quasi-market following the Education Reform Act (1988); the specialist schools initiative introduced in 1994; and the Excellence in Cities programme introduced in 1999. We use data for all state-funded secondary schools in England over the period 1992-2006. The empirical analysis, which is based on the application of panel data methods, indicates that the government and its agencies have substantially overestimated the benefits flowing from these three major reforms. Only about one-third of the improvement in GCSE exam scores during 1992-2006 is directly attributable to the combined effect of the education reforms. The distributional consequences of the policy, however, are estimated to have been favourable, with the greatest gains being achieved by schools with the highest proportion of pupils from poor families. But there is evidence that resources have not been allocated efficiently.
    Date: 2012
  25. By: Mukim, Megha
    Abstract: This paper examines locational factors that increase the odds of a firm's entry into export markets and affect the intensity of its participation. It differentiates between two different sources of spillovers: clustering of general economic activity and that of export-oriented activity. It also focuses on the effect of the business environment and that of institutions at the spatial unit of districts in India. The study disentangles the within-industry effect from the within-firm effect. A simple logit specification is used to model the probability of entry. The analysis is based on a panel of manufacturing firms in India, which allows for the introduction of firm-specific controls and a battery of fixed effects. The findings suggest that exporter-specific clustering, general economic agglomeration, and institutional factors affect firms'export behavior.
    Keywords: Microfinance,Transport Economics Policy&Planning,Water and Industry,Economic Theory&Research,E-Business
    Date: 2012–02–01
  26. By: Jedwab, Remi; Moradi, Alexander
    Abstract: We study the impact of colonial investments in modern transportation in- frastructure on agriculture and development in Ghana. Two railway lines were built between 1901 and 1923 to connect the coast to mining areas and the large hinterland city of Kumasi. This unintendedly opened vast expanses of tropical forest to cocoa cultivation, allowing Ghana to become the world's largest producer. Using data at a very fine spatial level, we find a strong effect of railroad connectivity on cocoa production in 1927, generating rents in the order of 4.5% of GDP. We show that the economic boom in cocoa-producing areas was associated with demographic growth and urbanization. We find no effect for lines that were not built yet, and lines that were planned but never built. Lastly, railway construction had a persistent impact: railway districts are more developed today despite a complete displacement of rail by other means of transport
    Date: 2012–03
  27. By: Gaetano Lisi (University of Cassino - Creativity and Motivations (CreaM) Economic Center)
    Abstract: This paper examines whether the baseline Mortensen-Pissarides matching model can account for the housing market facts, namely, the existence of price dispersion, the positive correlation between housing price and trading volume, and between housing price and time-on-the-market. Our main finding is that the model can account for these three basic facts of the housing market, thus showing that the Mortensen-Pissarides framework can be seen as the benchmark macroeconomic model not only for the labour market but for any market with frictions.
    Keywords: housing price dispersion; time-on-the-market; trading volume; search and matching process.
    Date: 2012–02–26
  28. By: Beatrice D. Simo-Kengne (Department of Economics, University of Pretoria); Rangan Gupta (Department of Economics, University of Pretoria); Manoel Bittencourt (Department of Economics, University of Pretoria)
    Abstract: This paper provides an empirical analysis of the role of house prices in determining the dynamic behaviour of consumption in South Africa using a panel vector autoregression (PVAR) approach to provincial level panel data covering the period of 1996 to 2010. With the shocks being identified using the standard recursive identification scheme, we find that the response of consumption to house prices shock is positive, but short-lived. In addition, we find that a positive shock to house price growth has a positive and significant effect on consumption, while the negative impact of an anticipated house price decrease causes an insignificant reduction in consumption. This suggests that house prices exhibit an asymmetric effect on consumption, with the positive effect following an increase in house prices being dominant in magnitude in comparison to a decline in consumption resulting from a negative shock to house prices.
    Keywords: House prices, consumption, panel vector autoregressions
    JEL: C33 E21 E31 R31
    Date: 2012–03
  29. By: Charisse A. Gulosin (Columbia University); Elif Sisli-Ciamarra (International Business School, Brandeis University)
    Abstract: This study uses a hand-collected dataset for charter school boards in Massachusetts between 2001 and 2009 to examine the relationship between financial performance and the presence of founders and financially affiliated directors. School-level financial performance suggests that founder presence on a board has a negative effect on both financial and academic performance of a charter school. On the other hand, the presence of financially affiliated directors on the charter school governing board is positively related to financial performance, but unrelated to academic achievement. The results are consistent with the literature on corporate and nonprofit boards that have attributed financially affiliated directors with greater incentives to monitor financial targets, while founders are less likely to achieve performance expectations.
    Keywords: Charter schools, Board governance, Financial performance, Achievement
    JEL: H75 I20 L29
    Date: 2012–02
  30. By: Daniel Tirado; Marc Badia-Miró
    Abstract: This paper studies the evolution of regional inequality in Iberia from 1900 to 2000 from a geographical perspective. For doing that the text presents a new dataset of historical regional GDPs for Spanish NUTS III and Portuguese Historical Districts (HD), synthetic indices of regional inequality and different measures of spatial correlation across regional pc GDPs. The results show that Portuguese and Spanish national economic integration processes initially favored the economic specialization across Iberian regions fostering the divergence in terms of their regional pc GDPs. Notwithstanding, ulterior advances in the integration of national markets and the subsequent first stages in the process of adhesion of these two national economies into the UE coexisted with a progressive reduction in Iberian regional inequality. So, Iberian regional inequality depicts a long term U-shaped evolution. Nevertheless, at the same time, Iberian regional inequality evolution followed a significant geographical pattern. The poorest regions cluster in inland territories of the south and west, with regions belonging to this cluster sited on the two sides of the political border. On the contrary, richest regions cluster along the coasts, especially in the north-east corner of the Iberian Peninsula. Besides, the data show that this pattern was well established in the middle of the XX century, before the reciprocal openness of national markets in the 1980s. In this respect, the adhesion of both economies to the UE in 1986 seems to have just caused an ulterior deepening in this historical pattern
    Keywords: Regional inequality, Market integration, Border regions, New economic geography
    JEL: N93 N94 R11
    Date: 2012–02
  31. By: Hornung, Erik (Ifo Institute)
    Abstract: We study the e ect of railroad access on urban population growth. Using GIS techniques, we match triennial population data for roughly 1000 cities in nineteenth-century Prussia to georeferenced maps of the German railroad network. We nd positive short- and long-term e ects of having a station on urban growth for di erent periods during 1840-1871. Causal e ects of (potentially endogenous) railroad access on city growth are identi ed using instrumentalvariable and xed-e ects estimation techniques. Our instrument identi es exogenous variation in railroad access by constructing straight-line corridors between terminal stations. Counterfactual models using pre-railroad growth yield no evidence in support of the hypothesis that railroads appeared as a consequence of a previous growth spurt.
    Keywords: Railroads, Technological Di usion, City Growth, Prussian Economic History
    Date: 2012
  32. By: Thomas Flavin (Department of Economics Finance and Accounting, National University of Ireland, Maynooth); Gerald P. Dwyer (Federal Reserve Bank of Atlanta, University of Carlos III, Madrid and CAMA); Mardi Dungey (University of Tasmania, CFAP, University of Cambridge and CAMA)
    Abstract: The misevaluation of risk in securitized …nancial products is central to understand- ing the Financial Crisis of 2007-2008. This paper characterizes the evolution of factors a¤ecting collateralized debt obligations (CDOs) based on subprime mortgages. A key feature of subprime-mortgage backed indices is that they are distinct in their vintage of issuance. Using a latent factor framework that incorporates this vintage e¤ect, we show the increasing importance of a common factor on more senior tranches during the crisis. We examine this common factor and its relationship with spreads. We estimate the e¤ects on the common factor of the …nancial crisis.
    Keywords: asset backed securities, subprime mortgages, financial crisis, factor mod-els, Kalman filter
    JEL: G12 G01 C32
    Date: 2011
  33. By: Xavier Fageda (Faculty of Economics, University of Barcelona); Juan Luis Jiménez (Department of Applied Economic Analysis. University of Las Palmas de Gran Canaria); Carlos Díaz Santamaría (Faculty of Economics, University of Barcelona)
    Abstract: In this paper we examine whether airline prices on national routes are higher than those charged on international routes. Drawing on a database prepared specifically for this study, we estimate a pricing equation for all routes originating from Gran Canaria (Canary Islands, Spain), differentiating between national and international routes. A key difference between these two route types is that island residents benefit from discounts on domestic flights. When controlling for variables related to airline characteristics, market structure and demand, we find that national passengers who are non-residents on the islands are paying higher prices than international passengers.
    Keywords: Air transport, discounts, prices. JEL classification: L93, H2, L13.
    Date: 2012–03
  34. By: Andrea Ferrero
    Abstract: One of the most striking features of the period before the Great Recession is the strong positive correlation between house price appreciation and current account deficits, not only in the United States but also in other countries that have subsequently experienced the highest degree of financial turmoil. A progressive relaxation of credit standards can rationalize this empirical observation. Lower collateral requirements facilitate access to external funding and drive up house prices. The current account turns negative because households borrow from the rest of the world. At the same time, however, the world real interest rate counterfactually increases. The two key ingredients that reconcile a demand-based explanation of house price booms and current account deficits with the evidence on real interest rates are nominal interest rates lower than the predictions of a standard monetary policy rule in leveraged economies and foreign exchange rate pegs in saving countries.
    Keywords: Housing - Prices ; Credit ; Interest rates ; Monetary policy ; Balance of payments
    Date: 2012
  35. By: Jaison R. Abel; Todd M. Gabe; Kevin Stolarick
    Abstract: This paper examines differences in the skill content of work throughout the United States, ranging from densely populated city centers to isolated and sparsely populated rural areas. To do so, we classify detailed geographic areas into categories along the entire urban-rural hierarchy. An occupation-based cluster analysis is then used to measure the types of skills available in the regional workforce, which allows for a broader measure of human capital than is captured by conventional measures. We find that the occupation clusters most prevalent in urban areas—scientists, engineers, and executives—are characterized by high levels of social and resource-management skills, as well as the ability to generate ideas and solve complex problems. By contrast, the occupation clusters that are most prevalent in rural areas—machinists, makers, and laborers—are among the lowest in terms of required skills. These differences in the skill content of work shed light on the pattern of earnings observed across the urban-rural hierarchy.
    Keywords: Demography ; Labor supply ; Population ; Human capital ; Wages ; Rural areas ; Urban economics
    Date: 2012
  36. By: Keisuke Kondo (Graduate School of Economics, Kobe University); Toshihiro Okubo (Faculty of Economics, Keio University)
    Abstract: This paper empirically tests relationships among interregional labour migration, wage, and real market potential (RMP) based on a multi-region economic geography model, which describes bilateral migration flows. We estimate a nonlinear gravity model using manufacturing workers' migration flows across the 47 Japanese prefectures. Estimates of structural parameters enable us to compute key variables of the model: price index, RMP, and real wage. We show that higher RMP regions can offer higher nominal wages. Furthermore, we find that an increase in the relative real wage of a region brings about a net increase in workers into the region.
    Date: 2012–03
  37. By: Peter Simonsen (Institute for Advanced Development Studies)
    Abstract: This study explores the economic consequences of earthquakes. In particular, it is investigated how exposure to earthquakes aects economic growth both across and within countries. The key result of the empirical analysis is that while there are no observable eects at the country level, earthquake exposure signicantly decreases 5-year economic growth at the local level. Areas at lower stages of economic development suer harder in terms of economic growth than richer areas. In addition, the analysis proposes an explanation to the paradox that there is a pronounced negative eect at the regional level while no eect appears at the country level. To this end, the eects of earthquake exposure is investigated not only for the impact zones, but also for areas with an average distance to the epicenter of around 100 km. The results indicate that the decrease in production in one part of a country is (partially) o-set by an increase in production in the surrounding regions.
    Keywords: Economic growth,naturaldisasters,spatial distribution
    JEL: O11 O49 R11 R12
    Date: 2012–01
  38. By: Dirk Engel; Timo Mitze; Roberto Patuelli; Janina Reinkowski
    Abstract: This paper evaluates the R&D enhancing effects of two large public grant schemes for the German biotechnology industry (BioRegio, BioProfi le). Both grant schemes are organized in the form of contents for cooperation with the goal to foster the performance of innovative firms by their organization in research clusters. We apply a Difference-in-Differences estimation technique in a generalized linear model framework, which allows us to control for different initial regional conditions in R&D activity of the biotech sector. Our econometric findings support the view that winners generally outperform non-winning participants during the treatment period, thus indicating that exclusive funding as well as the stimulating effect of being a “winner” have positive effects on R&D activity in the short-term. Apart from this direct winner effect, for the non-winning participants no beneficial indirect effect due to a mobilization of local actors during the application phase could be detected. Finally, first attempts in estimating the long-term effects of the contests for cooperation approach on the winner regions’ R&D activity in the post-treatment period show ambiguous results.
    Keywords: Biotechnology; R&D policies; cluster; difference-in-differences estimation
    JEL: O38 C23
    Date: 2012–01
  39. By: Vivien Procher; Colin Vance
    Abstract: Drawing on individual-level mobility data from Germany between 1996 and 2009, this analysis econometrically investigates the determinants of automobile, public transit, and non-motorized travel against the backdrop of two questions: 1) Does gender play a role in determining the relative use of motor and non-motorized modes? 2) If so, how is this role mitigated or exacerbated by other socioeconomic attributes of the individual and the household? The results indicate that women display a relatively higher use of public transit and non-motorized modes coupled with a lower use of the car. However, it is important to qualify conclusions drawn with respect to the effect of gender given the range of confounding factors that mediate its impact, including age, the presence of children, the proximity to public transit, and the commute distance. The econometric estimates indicate that fare pricing and infrastructure provision have a significant influence on how individuals reach mode allocation decisions, and that women, in particular, stand to benefi t from the maintenance of an effi cient and dense public transportation network.
    Keywords: Automobile travel; public transit; gender
    JEL: D13 R20 R41
    Date: 2012–01
  40. By: Paolo Buonanno; Giovanni Mastrobuoni
    Abstract: This paper exploits dictated delays in local police hiring by a centralized national authority to break the simultaneity between police and crime. In Italy police o?cers can only be hired through lengthy national public contests which the Parliament, the President, and the Court of Auditors need to approve. Typically it takes three years before the requested police o?cers are recruited and become operational. We show that this endogeneity vanishes once, controlling for countrywide year e?ects, we use positive changes in the number of police o?cers. The availability of data on two police forces, specialized in ?ghting di?erent crimes, provides convincing counterfactual evidence on the robustness of our results. Despite the ine?cient hiring system, regular Italian police forces seem to be as e?cient in ?ghting crimes as the US ones, with two notable exceptions: auto thefts and burglaries.
    Keywords: police, crime
    JEL: H7 H72 H76
    Date: 2012
  41. By: Koschatzky, Knut
    Abstract: Although other regional- and sector-oriented promotional approaches exist alongside cluster promotion, from today's perspective the popularity of the cluster approach appears undiminished. At the global scale, no funding approach is as much discussed and implemented as the cluster concept. It must therefore be assumed that cluster support will still be a central innovation policy approach in the coming years. This view is strengthened by the fact that at present no successor for cluster promotion is apparent in the recent scientific theoretical discussion. Although improvements in the con-ceptual clarity and in the cluster policy approaches are being discussed, a new paradigm at a comparable level (as for instance the concept of innovation systems or also network funding before the diffusion of the cluster approach) is not recognizable. Cluster funding will however in future have to be more specific (and selective) than previously and have to network with other funding levels and funding approaches (e.g. European excellence clusters; promotion of excellence in universities in clusters; collaborative research and network promotion; new (heterogeneous) cooperation models). All empirical evidence shows that successfully operating clusters are characterized by a great diversity of actors and activities. These qualify the cluster as a platform to develop new cooperation forms and partnerships, as well as for further education and training measures, by learning from the experiences gathered in the cluster promotion programmes and building on the interactions in clusters. In this sense, new cooperation forms at the micro level, i.e. between single partners, and at the meso level in regional partnerships are not a substitute, but rather a supplement and extension of cluster promotion. --
    Date: 2012
  42. By: Cynthia Goytia; Ricardo Pasquini; Pablo Sanguinetti
    Abstract: This study examines the programme Redes Solidarias, a public-private initiative that connected to natural pipelined gas 4,000 households in the Great Buenos Aires Area during 2005. The main features of the institutional framework are described and the main results of an impact estimation analysis are reported. The mechanism of selection of neighbourhoods for the connection represents a ‘natural experiment’, which allows the estimation of the causal effects of the programme on several indicators, including housing improvements, health and happiness related variables. We perform this analysis using data from two surveys we collected on the neighbourhoods in 2006 and 2007. The programme was found to generate improvements on dwelling walls, and the …
    Keywords: infrastructure provision, gas, impact evaluation
    Date: 2011
  43. By: Tyler Wiggers; Adam B. Ashcraft
    Abstract: We employ a unique data set of public commercial real estate (CRE) bonds issued during the Great Depression era (1920-32) to determine their frequency of default and total loss given default. Default rates on these bonds far exceeded those originated in subsequent periods, driven in part by the greater economic stress of the Depression as well as the lower level of financial sophistication of investors and structures that prevailed in 1920-32. Our results confirm that making loans with higher loan-to-value ratios results in higher rates of default and loss. They also support the business cycle’s significance to the performance of CRE assets. Despite the large number of defaults in the early 1930s, the losses, which typically occurred after 1940, are comparable to those for contemporary loans, largely due to the rapid recovery of the economy from the Depression. This finding has relevance today, as numerous entities have a large amount of sub-performing CRE assets to work out. While the data point to better loss performance the quicker a problem loan is worked out, this may not hold true when there is a rapid recovery around the corner.
    Keywords: Bonds ; Depressions ; Default (Finance) ; Real estate investment
    Date: 2012

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