nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2012‒04‒03
forty-two papers chosen by
Steve Ross
University of Connecticut

  1. Economic Impacts of Cultural Diversity in the Netherlands: Productivity, Utility, and Sorting By Jessie Bakens; Peter Mulder; Peter Nijkamp
  2. Does fiscal cooperation increase local tax rates in urban areas By Charlot, S.; Paty, S.; Piguet, V.
  3. Optimal portfolio choice with predictability in house prices and transaction costs By Corradin, Stefano; Fillat, Jose L.; Vergara, Carles
  4. Spatial Commuting Patterns of German Regional Labour Markets: A Sustainability Perspective By F. Tedeschi; A. Reggiani; P. Nijkamp
  5. How should we treat under-performing schools? A regression discontinuity analysis of school inspections in England By Rebecca Allen; Simon Burgess
  6. Increasing Returns, Land Use Controls and Housing Prices By Dingsheng Zhang; Wenli Cheng; Yew-Kwang Ng
  7. "The Determinants and Consequence of School Choice Errors in Kenya" By Adrienne Lucas; Isaac M. Mbiti
  8. What drives Ireland's housing market? A Bayesian DSGE approach By Gareis, Johannes; Mayer, Eric
  9. Are Compact Cities Environmentally (and Socially) Desirable? By Gaigne, Carl; Riou, Stephane; Thisse, Jacques-Francois
  10. Inefficiencies in regional commuting policy By Toon VANDYCK; Stef PROOST
  11. Housing credit and female labour supply: assessing the evidence from Greece By Sarantis Lolos; Evangelia Papapetrou
  12. Regional investment under uncertain costs of location By Broll, Udo; Roldán-Ponce, Antonio; Wahl, Jack E.
  13. School achievement and failure of immigrant children in Flanders By Nonneman W.
  14. Determinants of Transport Costs for Inter-regional Trade By KONISHI Yoko; Se-il MUN; NISHIYAMA Yoshihiko; Ji Eun SUNG
  15. Coping with Change: The Need to Restructure Urban Governance and Finance in India By Richard M. Bird; M. Govinda Rao
  16. The Long-term Effects of School Quality on Labor Market Outcomes and Educational Attainment By Christian Dustmann; Patrick A. Puhani; Uta Schönberg
  17. Domestic transport infrastructure and firms’ export market participation. By Albarrán, Pedro; Carrasco, Raquel; Holl, Adelheid
  18. Reexamining The Determinants Of Fiscal Decentralization: What Is The Role Of Geography? By Gustavo Canavire-Bacarreza; Jorge Martinez-Vazquez
  19. A methodology approach to delineate functional economic market areas: With an iterative three-step spatial clustering procedure By Oberst, Christian A.
  20. Local Government Cooperation for Joint Provision: The Experiences of Brazil and Spain with Inter-Municipal Consortia By Luiz de Mello; Santiago Lago-Peñas
  21. Sub-national Revenue Mobilization in Peru By Gustavo Canavire-Bacarreza; Jorge Martinez-Vazquez; Cristian Sepúlveda
  22. Rent distribution in a simple model of housing price formation By R\'emi Lemoy; Eric Bertin
  23. All students left behind: an ambitious provincial school reform in Canada, but poor math achievements from grade 2 to 10 By Catherine HAECK; Pierre LEFEBVRE; Philip MERRIGAN
  24. Agglomeration and Dispersion in China and ASEAN: a Geographical Simulation Analysis By Ikumo Isono; Satoru Kumagai; Fukunari Kimura
  26. Public debt consolidation with multi-tier governments: rules matter By Paul VAN ROMPUY
  27. Does Local Government Size Matter? Privatization and Hybrid Systems of Local Service Delivery By Mildred E. Warner
  28. The effect of working conditions on teachers’sickness absence By Marte Rønning
  29. House-price crash and macroeconomic crisis: a Hong Kong case study By Zhang, Hewitt; Hu, Yannan; Hu, Bo
  30. South-South Migration and the Labor Market: Evidence from South Africa By Giovanni Facchini; Anna Maria Mayda; Mariapia Mendola
  31. Voluntary amalgamation of local governments: the Swiss debate in the European context By Bernard Dafflon
  32. Does Family Composition Affect Social Networking? By Heizler, Odelia; Kimhi, Ayal
  33. Local Government Size and Efficiency in Capital Intensive Services: What Evidence is There of Economies of Scale, Density and Scope? By Germà Bel
  35. Are There Trends in Local Finance? A Comparative Look at Data and Normative Models of Local Government Finance By Richard M. Bird
  36. Willingness to Pay for Downtown Public Goods Generated by Large, Sports-Anchored Development Projects: The CVM Approach. By Bruce K. Johnson; John C. Whitehead; Daniel S. Mason; Gordon J. Walker
  38. Structural Change and Regional Convergence: The Case of Declining Transport Costs By Trevor Tombe
  39. Sorting and local wage and skill distributions in France By Combes, Pierre-Philippe; Duranton, Gilles; Gobillon, Laurent; Roux, Sébastien
  40. Social Identity and Inequality: The Impact of China's Hukou System By Afridi, Farzana; Li, Sherry Xin; Ren, Yufei
  41. The European road pricing game: how to enforce optimal pricing in high-transit countries under asymmetric information By Saskia VAN DER LOO; Stef PROOST
  42. Options for Rationalizing Local Government Structure: A Policy Agenda By Brian Dollery; Michael Kortt; Bligh Grant

  1. By: Jessie Bakens (VU University Amsterdam); Peter Mulder (VU University Amsterdam); Peter Nijkamp (VU University Amsterdam)
    Abstract: This paper identifies the role of cultural diversity in explaining spatial disparities in wages and housing prices across Dutch cities, using unique individual panel data of home owners. We distinguish between the effects of interactions-based productivity, consumption amenities and sorting of heterogeneous home owners while controlling for interactions between the labor and housing market. We find that an increase in the cultural diversity of the population positively impacts equilibrium wages and housing prices, particularly in the largest and most densely populated cities. This result is largely driven by spatial sorting of individuals in both the labor and housing market. After controlling for home owner heterogeneity we find that increasing cultural diversity no longer impacts local labor markets and negatively impacts local housing markets. The latter result is likely to be driven by a negative causal effect of increased cultural diversity on neighb orhood quality that outweighs a positive effect of increased cultural diversity in consumption goods.
    Keywords: cultural diversity; immigrants; local amenities; sorting; housing prices; productivity
    JEL: J31 R21 R23 R31
    Date: 2012–03–19
  2. By: Charlot, S.; Paty, S.; Piguet, V.
    Abstract: The main purpose of this paper is to assess the effects of fiscal cooperation on local taxation in a decentralized country, using the French experience in urban municipalities. We estimate a model of tax setting for local business tax using spatial and dynamic econometric techniques, for the period 1993-2003 and an unbalanced data set. As predicted by the theory, we find that reducing the number of municipalities is likely to limit tax competition and, as a consequence, increase local business tax rates.
    JEL: H2 H3 H7
    Date: 2012
  3. By: Corradin, Stefano (European Central Bank); Fillat, Jose L. (Federal Reserve Bank of Boston); Vergara, Carles (IESE Business School)
    Abstract: Are housing returns predictable? If so, do households take them into account when making their housing consumption and portfolio decisions? We document the existence of housing return predictability in the U.S. at the aggregate, census region, and state level. We study a portfolio choice model in which housing returns are predictable and adjustment costs must be paid when a house is purchased or sold. We show that two state variables affect the agent's decisions: 1) her wealth-to-housing ratio; and 2) the time-varying expected growth rate of house prices. The agent buys (sells) her housing assets only when the wealth-to-housing ratio reaches an optimal upper (lower) bound. These bounds are time-varying and depend on the expected growth rate of house prices. Finally, we use household level data from the PSID and SIPP surveys to test and support the model's main implications.
    Keywords: Portfolio choice; predictability; house prices; household finance;
    Date: 2012–02–03
  4. By: F. Tedeschi; A. Reggiani; P. Nijkamp
    Abstract: This paper aims to investigate the relationship between commuting and spatial labour market developments in the framework of sustainability issues. To do so, we propose, first, an exploratory investigation of the effects of inbound commuter flows on employment in regional labour markets in Germany. Next, we address sustainability issues as a common umbrella for the relationship ‘economy-transportation’. In this context, we show that the German production system is faced with negative environmental externalities, which are clearly associated with a specific transport mode, viz. the private car. Negative environmental externalities as a result of modal choices in Germany are confirmed by data from EU-15 countries. Public transport, in particular the train, appears to be more environmentally-benign. Our results bring to light that, on average, commuter flows have a positive and robust effect on employment in the receiving German labour market districts, while, for commuting flows, public transport, especially the train, is a more environmentally-benign mode of transport, compared with the car, in reducing greenhouse gas emissions and energy consumption. In the light of possible policy strategies, the paper argues that sustainability may lead to positive economic effects; in particular, the improvement of the public transport system, which can provide more opportunities for sustainable commuting patterns, may lead to favourable employment perspectives for the local or regional labour force.
    JEL: R41 R23 J61
    Date: 2012–03
  5. By: Rebecca Allen (Institute of Education, University of London, 20 Bedford Way, London WC1H 0AL, UK.); Simon Burgess (Centre for Market and Public Organisation, University of Bristol.)
    Abstract: School inspections are an important part of the accountability framework for education in England. In this paper we use a panel of schools to evaluate the effect of a school failing its inspection. We collect a decade’s worth of data on how schools are judged across a very large range of sub-criteria, alongside an overall judgement of effectiveness. We use this data within a fuzzy regression discontinuity design to model the impact of ‘just’ failing the inspection, relative to the impact of ‘just’ passing. This analysis is implemented using a time-series of school performance and pupil background data. Our results suggest that schools only just failing do see an improvement in scores over the following two to three years. The effect size is moderate to large at around 10% of a pupil-level standard deviation in test scores. We also show that this improvement occurs in core compulsory subjects, suggesting that this is not all the result of course entry gaming on the part of schools. There is little positive impact on lower ability pupils, with equally large effects for those in the middle and top end of the ability distribution.
    Keywords: school inspection, school accountability, school attainment, regression discontinuity
    JEL: I20 I28
    Date: 2012–03–26
  6. By: Dingsheng Zhang; Wenli Cheng; Yew-Kwang Ng
    Abstract: The Chinese government has been active in trying to cool the alleged bubbles in its housing markets, especially in urban areas. This paper argues that the high housing prices are at least partly caused by some real factors, including the policy of restricting land uses, in particular the maintenance of a minimum overall agricultural acreage. A simple model of three sectors (housing, agriculture, and others) is constructed to examine the effects of the artificial constraint. The role of increasing returns in the non-agricultural sectors in exacerbating the policy biases is also examined. The model is then calibrated to estimate the effects of land use control policy on housing prices in China.
    Keywords: increasing returns; land use controls in China; housing prices in China
    JEL: R31 R38
    Date: 2012–03
  7. By: Adrienne Lucas (Department of Economics, Unversity of Delaware); Isaac M. Mbiti (Department of Economics, Southern Methodist University)
    Abstract: The benefits of school choice systems designed to help disadvantaged groups might be hindered by information asymmetries. Kenyan elite secondary schools admit students from the entire country based on a national test score, district quotas, and stated school choices. We find even the highest ability students make school choice errors. Girls, students with lower test scores, and students from public and low quality primary schools are more likely to make such errors. Net of observable demographic characteristics, these errors are associated with a decrease in the probability that students are admitted to elite secondary schools, relegating them to schools of lower quality.
    Keywords: school choice, education, secondary schooling, kenya
    JEL: I21 I25 O15
    Date: 2012
  8. By: Gareis, Johannes; Mayer, Eric
    Abstract: In this paper we study the drivers of fluctuations in the Irish housing market by developing a dynamic stochastic general equilibrium (DSGE) model of Ireland as a member of the European Monetary Union (EMU). We estimate the model with Bayesian methods using time series for both Ireland and the rest of the EMU for the period from 1997:Q1 to 2008:Q2. We find that housing preference (demand) and technology shocks are the main drivers of fluctuations in house prices and residential investment. Moreover, we find that adding housing collateral does not improve the fit of our model to the data. A standard regression analysis shows that a good part of the variation of housing preference shocks is explained by unmodeled demand factors that have been considered in the empirical literature as important determinants of Irish house prices. --
    Keywords: housing,monetary policy,Bayesian estimation
    JEL: E44 E52 F41
    Date: 2012
  9. By: Gaigne, Carl; Riou, Stephane; Thisse, Jacques-Francois
    Abstract: There is a wide consensus among international institutions and national governments in favor of compact (i.e. densely populated) cities as a way to improve the ecological performance of the transport system. Indeed, when both the intercity and intra-urban distributions of activities are given, a higher population density makes cities more environmentally friendly as the average commuting length is reduced. However, when we account for the possible relocation of activities within and between cities in response to a higher population density, the latter may cease to hold. Because changes in population density affect land rents and wages, firms and workers re-optimize and choose new locations. We show that this may reshape the urban system in a way that generates both a higher level of pollution and welfare losses. As cities become more compact, agglomeration occurs and, eventually, the secondary business centers vanish. By increasing the average commuting length, these changes in the size and structure of cities may be detrimental to both the ecological and welfare objectives even if intercity trade flows decrease. This means that compact is not always desirable, and thus an increasing-density policy should be supplemented with instruments that impact the intra- and inter-urban distributions of activities. We argue that a policy promoting the creation of secondary business centers can raise welfare and decrease emissions.
    Keywords: Greenhouse gas, commuting costs, transport costs, cities, Environmental Economics and Policy, D61, F12, Q54, Q58, R12,
    Date: 2012–03
  10. By: Toon VANDYCK; Stef PROOST
    Abstract: This paper discusses investments in transport infrastructure and incentives for commuting taxes in a multiregional setting. We study the horizontal and vertical interactions between governments. We identify incentives for strategic and tax exporting behavior that might lead to underinvestment in transport infrastructure. Furthermore, we show that the intensity of the strategic behavior is affected by geographic firm ownership structure, the number of labor-supplying regions and the revenue-sharing mechanism in the federation. A numerical example applies the insights on commuting in Belgium.
    Date: 2011–08
  11. By: Sarantis Lolos (Panteion University); Evangelia Papapetrou (Bank of Greece and University of Athens)
    Abstract: This paper brings new evidence on the relationship between housing credit and female labour participation decisions by investigating the possible interdependence between the two variables in the case of Greece. This relationship is analysed through the estimation of a probit model with endogenous regressors using household data of the Income and Living Conditions (EU-SILC) survey for 2008. The empirical results show that mortgage and female labour participation decisions are interrelated. In a broader perspective, the evidence provided in our analysis supports the existence of a finance (housing credit) and real economy activity (female labour supply) nexus.
    Keywords: Mortgage market; female labour market participation; endogeneity
    JEL: J2 D91 J21
    Date: 2011–11
  12. By: Broll, Udo; Roldán-Ponce, Antonio; Wahl, Jack E.
    Abstract: Due to globalization competitive firms face increasing economic opportunities for locating their activities in countries, regions and cities that provide the best business environment for their specific needs. In our study we focus on the impact of economic risk and risk preferences upon regional allocation of investments. The source of risk stems from the difference in stochastic costs of location across regions. A comparative static analysis shows that capital allocation depends upon the firms' risk preferences. As a result regional agglomeration of investments may occur although the objective of the regional policy is aimed at the opposite. Our findings demonstrate the suitability of the two-moment approach as an alternative to the expected utility approach. The impact of changes in distribution parameters, such as the expected costs of location, the variance of costs of location and the correlation between locational costs, can be fully characterized via the elasticity of risk aversion. Elements of risk preferences beyond risk aversion prove to be very important to evaluate regional politics. This insight is of interest for empirical research in regional economics. --
    Keywords: regional allocation,regional economics,regional policy,agglomeration,two-moment decision model
    JEL: R12 R30 R38
    Date: 2012
  13. By: Nonneman W.
    Abstract: 15% of the total Belgian school population has an immigrant background. PISA 2009 results show that Belgium – despite being in the top 15 performers of all OECD participants - has one of the highest performance differences in Europe between children with and without an immigrant background. Furthermore, second generation immigrant children are doing worse than first generation immigrant children. This paper explores the determinants of school achievement, school failure and sorting of children with an immigrant background, using a new large survey of Flemish school children. The theoretical framework is based on the education production function literature and specific empirical socioeconomic literature on immigrant children, suggesting that personal factors, family conditions, school, peers, neighborhood, type of acculturation and history of migration matter to explain school achievement and failure. The empirical results show that unexplained differences between students with a Flemish, Turkish and Moroccan background remain after controlling for personal and background influences. A key finding is the large impact of innate ability and individual effort for all groups.
    Date: 2012–03
  14. By: KONISHI Yoko; Se-il MUN; NISHIYAMA Yoshihiko; Ji Eun SUNG
    Abstract: This paper presents a microeconomic model of inter-regional freight transportation based on careful formulation of the cost structure in trucking firms and market equilibrium, which takes into account the feature of transport service as a bundle of multiple characteristics. We estimate the parameters of the model using the micro-data of inter-regional freight flows from the 2005 Net Freight Flow Census in Japan. Estimation results show that the determinants of transport cost incorporated in the model have significant effects in the ways that the model predicts. The degree of competition also has significant effect on freight charge. It is shown that there exist significant scale economies with respect to lot size and long-haul economies. Quantitative extents of these effects are also demonstrated.
    Date: 2012–03
  15. By: Richard M. Bird (University of Toronto); M. Govinda Rao (National Institute of Public Finance and Policy, New Delhi)
    Abstract: Over 330 million people live in India’s 5,165 cities, with 35 cities having a population of over a million. Three (Mumbai, Delhi, and Kolkata) of the 10 largest metropolises in the world are in India. Over two-thirds of GDP originates in urban agglomerations in the country. However, urban governance and finance in India leave much to be desired in terms of providing services to the country’s burgeoning urban population and with respect to its flexibility in accommodating different needs and pressures and its lack of resiliency in adapting to shocks, whether natural or manmade. This paper draws on lessons from fiscal federalism theory and experiences of governance institutions and financing systems around the world to identify some key reforms needed to ensure more citizen participation and greater accountability in urban governance, and to augment and strengthen the capacity of Indian cities to deliver more adequate services and provide needed urban infrastructure.
    Keywords: India; metropolitan areas; governance; finance
    Date: 2012–01–13
  16. By: Christian Dustmann (University College London); Patrick A. Puhani (Leibniz Universität Hannover); Uta Schönberg (University College London, Institute for Employment Research (IAB))
    Abstract: We study the long-term causal effects of attending a "better" school - defined as one with more advanced peers, more highly paid teachers, and a more academic curriculum - on the highest degree completed, wages, occupational choice, and unemployment. We base our analysis on a regression discontinuity design, generated by a school entry age rule, that assigns students to different types of schools based on their date of birth. We find that, even though our case involves larger inter-school differences in peer quality and teaching curricula than in most previous studies, the long-term effect of school quality is very small and not significantly different from zero. This surprising finding is partly explainable by the substantial amount of student up- and downgrading between schools of varying quality at the end of middle school (age 15/16) and at the end of high school (age 18/19). This suggests that giving people a "second chance" during their education can make up for several years of schooling with a less challenging peer group and a less challenging teaching curriculum.
    Keywords: School quality, peer effects, regression discontinuity design
    JEL: I21 J10
    Date: 2012–03
  17. By: Albarrán, Pedro; Carrasco, Raquel; Holl, Adelheid
    Abstract: Investment in transport infrastructure reduces the cost of distance and enables firms to establish contacts over larger distances. Using data from a panel of Spanish manufacturing firms and geographic information system techniques, this article studies the impact of domestic transport cost reductions on firms’ export market participation, taking into account the role of entry costs and other firm characteristics. We estimate dynamic probability models, controlling for the unobserved heterogeneity of firms and for the simultaneity of firms’ export and location decisions. Our results demonstrate a positive effect of domestic transport infrastructure improvements on small and medium-sized firms’ probability of exporting
    Keywords: Export decisions; Road transport infrastructure; Accessibility; Dynamic panel data; Geographic information systems;
    JEL: F14 R1 R4 L26
    Date: 2011
  18. By: Gustavo Canavire-Bacarreza (International Center for Public Policy. Andrew Young School of Policy Studies, Georgia State University); Jorge Martinez-Vazquez (International Center for Public Policy. Andrew Young School of Policy Studies, Georgia State University)
    Abstract: This paper contributes to the existing literature on the determinants of fiscal decentralization by motivating theoretically and exploring in depth the empirical relevance that geography has as determinant of fiscal decentralization. The relationship between decentralization and geography is based on the logic that more geographically diverse countries show greater heterogeneity among their citizens, including their preferences and needs for public goods and services provision. Communications and physical distance are also a very important issue and play a key role on the effect of geography over time. The theoretical model builds on the work by Arzaghi and Henderson (2002) and Panizza (1999). For the empirical estimation we use a panel data set for approximately 91 countries for the period 1960-2005. Physical geography is measured along several dimensions including elevation, land area, and climate. We construct a geographical fragmentation index and test its effect on fiscal decentralization. In addition, we interact the geographical fragmentation index with time variant infrastructure variables, in order to test the effect that infrastructure and communications have on the relationship between geography and fiscal decentralization. For robustness, we construct Gini coefficients for in-country elevation and climate. We find a positive and strong correlation between geographical factors and fiscal decentralization. We also find that while the development of infrastructure (in transportation, communications, etc.) tends to reduce the effect of geography on decentralization, this effect is rather small and mostly statistically insignificant, meaning that the impact of geography survives over time. The additional value added of this strategy is that geography and its interaction with infrastructure development may be used as an instrument for decentralization in future econometric estimations, where decentralization is used as an explanatory variable but it may be suspected to be endogenous to the economic process being studied (economic growth, political instability, macroeconomic stability, income distribution, etc.)
    Keywords: revenue mobilization, fiscal decentralization, Peru
    Date: 2012–02–08
  19. By: Oberst, Christian A.
    Abstract: This paper proposes an iterative three-step spatial clustering procedure to define Functional Economic Market Areas (FEMAs) with an evolutionary computational approach using flow data on economic linkages. FEMAs are needed as basic observation units in disaggregated economic data analysis, since those have to be taken at the spatial level at which the markets operate. Only then can analyses provide accurate and consistent results and allow useful interpretations of variables and the measurement of spillover effects between markets. Therefore FEMAs should, besides their use as analysis regions, serve as basic areas for regional policy or coordination of these. Although functional markets are particularly used in regional science, the proposed concept with the spatial clustering procedure is transferable to other economic fields like business management and marketing research, network or competition analyses. The presented methodology approach is a generalized and ubiquitous, disjunctive and contiguous delineation extended application based on the suggestion in RUSCHE (2009) of a joint application of the AMOEBA clustering procedure by ALDSTADT/GETIS (2006) and an interaction indicator on flow data. The methodology will be illustrated with real-world applications on German commuting data. Also presented is a possible way of computation and illustration of fuzzy market borders (differentiated border densities) as an extension to the procedure. --
    Keywords: AMOEBA,functional regional markets,fuzzy set theory,market delineation,regionalisation,labor markets regions,travel-to-work areas
    JEL: R12 R23 J61 M3 Z0
    Date: 2011
  20. By: Luiz de Mello (OECD Economics Department); Santiago Lago-Peñas (REDE. IEB, and University of Vigo)
    Abstract: Local governments often set up inter-municipal consortia to provide public services jointly, rather than individually. The main benefits of joint provision include the potential for improved cost-effectiveness arising from gains from economies of scale and the internalisation of costs and/or benefits of provision, which could otherwise spill over inter-municipal borders and discourage provision. To shed further light on this issue, this paper tests for the presence of scale and spillover effects in local government provision and estimates the determinants of the probability of local government participation in inter-municipal consortia in Brazil and Spain. Empirical evidence suggests that in some cases smaller jurisdictions operate at sub-optimal scale and are indeed more likely than their larger counterparts to participate in inter-municipal consortia. In the case of Brazil, governance arrangements between the municipalities and the state governments and/or private-sector providers, but not the federal government, are also associated with a higher probability of participation in inter-municipal consortia, suggesting the presence of “participation spillovers” among governance arrangements.
    Keywords: inter-municipal cooperation, local public finance, Brazil, Spain, federalism, probit
    Date: 2012–03–23
  21. By: Gustavo Canavire-Bacarreza (International Center for Public Policy. Andrew Young School of Policy Studies, Georgia State University); Jorge Martinez-Vazquez (International Center for Public Policy. Andrew Young School of Policy Studies, Georgia State University); Cristian Sepúlveda (International Center for Public Policy. Andrew Young School of Policy Studies, Georgia State University)
    Abstract: This paper analyses the problem of sub-national revenue mobilization in Peru and proposes several policy reforms to improve collection performance while maintaining a sound revenue structure. We analyze the current revenues of regional and municipal governments and identify the main priorities of reform. Among the most important problems are the acute inequalities and inefficiencies associated with the revenue sharing from extractive industries. These revenues represent a significant share of sub-national budgets and currently they are distributed without consideration of the relative expenditure needs or fiscal capacity of sub-national units. In order to address this problem we propose the incorporation of a measure of fiscal capacity in the formula of the FONCOMUN, the municipal equalization transfer program. Other reforms explored include the reassignment of revenue sources between municipal provincial and district governments and the assignment of new taxes to regional governments.
    Keywords: revenue mobilization, fiscal decentralization, Peru
    Date: 2012–02–02
  22. By: R\'emi Lemoy; Eric Bertin
    Abstract: We consider a simple stochastic model of a urban housing market, in which the interaction of tenants and landlords induces rent (or price) fluctuations. We simulate the model numerically and measure the equilibrium price distribution, which is found to be well-described by a lognormal law. We also study the influence of the density of agents (or equivalently, the vacancy rate) on the price distribution. A simplified version of the model, amenable to analytical treatment, is proposed and allows us to recover a normal distribution for the logarithm of the price. The predicted equilibrium value agrees quantitatively with numerical simulations, while a qualitative agreement is obtained for the standard deviation.
    Date: 2012–03
  23. By: Catherine HAECK; Pierre LEFEBVRE; Philip MERRIGAN
    Abstract: We investigate the impact of an ambitious provincial school reform in Canada on students. mathematical achievements. This reform provides advantages for the purpose of evaluation and cuts across some of the methodological difficulties of previous research. First, the reform was implemented in every school across the province in both primary and secondary schools. Second, we can differentiate impacts according to the number of years students are affected by the reform. Third, our data set provides a longer observation period than typically encountered in the literature. We find negative effects on students’ mathematical achievements at all points of the skills distribution.
    Date: 2011–10
  24. By: Ikumo Isono (Ikumo Isono Economic Research Institute for ASEAN and East Asia (ERIA)); Satoru Kumagai (Satoru Kumagai Institute of Developing Economies, Japan External Trade Organization (IDE-JETRO)); Fukunari Kimura (Fukunari Kimura Economic Research Institute for ASEAN and East Asia (ERIA))
    Abstract: Spatial designing of economic development with enhancing connectivity has become essential to pursue both sustained growth and the narrowing of development gaps. The issue of agglomeration and dispersion in China and its neighboring countries is an example of requiring such an approach. This paper introduces the Geographical Simulation Model (GSM) based on the new economic geography setting and presents illustrative simulations on Asian Highway No. 3 and Kyaukpyu deep sea port development in order to analyze the economic implication of developing hard and soft infrastructure as well as lowering national border barriers for inclusive growth at the sub-national level.
    Date: 2012–02–01
  25. By: Birol TOPUZ Author_Email: (UWIC, Uk and Qafqaz University in Azerbaijan)
    Keywords: Locus of control job satisfaction, personal qualification, time management, primary, secondary school education, school administrative, teacher
    JEL: M0
    Date: 2011–06
  26. By: Paul VAN ROMPUY
    Abstract: This paper investigates the relationship between fiscal decentralization and budgetary performance in a sample of 28 OECD countries over the period 1995-2008, characterized by a consolidation of their average debt ratio. Two empirical questions are addressed: first, did expenditure and revenue decentralization contribute to aggregate subnational discipline and did cooperative agreements between the central and subcentral layers of government have a positive impact on the budgetary performance of the latter? And second, did tax autonomy of regions and local governments guarantee fiscal discipline and to what extent did subnational fiscal rules contribute to this objective? The empirical analysis proceeds in two stages; the first stage concerns aggregate subnational fiscal balances, whereas disaggregated deficits at the regional and local level are investigated in the second stage.
    Date: 2012–02
  27. By: Mildred E. Warner (Cornell University)
    Date: 2012–02–10
  28. By: Marte Rønning (Statistics Norway)
    Abstract: This paper investigates the effect of working conditions on the amount of teachers’sickness absence in Norway. Exploiting intertemporal variation within teachers who have not changed schools, the findings indicate that teachers lower their amount of sickness absence if the school’s resource use increases. Increased workload and permanent employment contract are associated with higher sickness absence. When stratifying on teachers’age, increased workload appears to have a larger impact on old teachers.
    Keywords: Teachers; absence; working conditions
    JEL: I10 I20 J28
    Date: 2012–03
  29. By: Zhang, Hewitt; Hu, Yannan; Hu, Bo
    Abstract: The crash of house prices has become an important feature of macroeconomic crisis. We argue that the crash of house prices driven by contractionary monetary policy is not only a reaction, but also accelerates and amplifies the fluctuations of major macroeconomic variables. The impulse response of consumption to the house price shock estimated from Bayesian VAR is of same level as that of investment in Hong Kong, which is distinct from the United States. Therefore, in this paper we conduct a case study of Hong Kong in the 1997-1998 financial crisis and quantitatively analyze the mechanism by developing a general equilibrium model incorporating financial accelerator in both household and entrepreneur sectors. In addition, we introduce real estate producers in order to modify the unrealistic mechanism in existing literature. After estimating the parameters with a combination of calibration and Bayesian method, the simulated impulse responses imply that our model can explain the co-movement of house prices, consumption and investment much better than alternative ones. Moreover, the results of variance decomposition show that interest rate shock can explain most of the house price fluctuations, and a substantial fraction of fluctuations in major macroeconomic variables.
    Keywords: house prices; fianncial accelerator; consumption; investment; Hong Kong
    JEL: E32 E44 E37
    Date: 2012–03
  30. By: Giovanni Facchini (Erasmus University Rotterdam, University of Milan, CEPR, CES-Ifo, CReAM, IZA and LdA); Anna Maria Mayda (Georgetown University, Centro Studi Luca d’Agliano, CEPR and IZA); Mariapia Mendola (University of Milan Bicocca and Centro Studi Luca d’Agliano)
    Abstract: Using census data for 1996, 2001 and 2007 we study the labor market effect of immigration in South Africa. In this period the share of foreign born over the total population has grown by almost fifty percent, and both the characteristics and geographical distribution of immigrants show substantial variation over time. We exploit these features of the data to carry out an analysis that combines both the “spatial correlation” approach pioneered by Card (1990) and the variation across schooling and experience groups used by Borjas (2003). We estimate that increased immigration has a negative effect on natives’ employment outcomes, but not on total income. Furthermore, we find that skilled South Africans appear to be the most negatively affected subgroup of the population.
    Keywords: Immigration, Labor market effects, South Africa
    JEL: F22 J61
    Date: 2012–03–27
  31. By: Bernard Dafflon (University of Fribourg)
    Abstract: The debate about the amalgamation of local government units (thereafter LGUs for simplicity – in Switzerland: “communes” or “Gemeinden”) usually stems from the fact that LGUs’ political borders (the institutional territory) do no longer coincide with the economic boundaries required for an efficient provision of most local public services (the functional territory). And both do not correspond with the relational territory which arises out of the private and professional activities of LGUs’ residents as they commute daily or periodically for work, shopping and leisure (Dafflon and Ruegg, 2003: 890). Additional problems are the openness of economic activities and the emergence of industrial clusters which largely overlap local boundaries. Finally, urban areas and agglomerations usually regroup several neighbouring LGUs whereas the needs for specific public services are identical in each of them and require horizontal cooperation. The core question of this paper is how to reform the institutional and functional territories in such a way that public services are delivered efficiently, according to local preferences and in a way that responds to the needs expressed in the larger relational territory. For the local public sector, the main concern is the reorganisation in a new, coherent public institution of the three circles of deciders, beneficiaries and payers, that is: -the residents in the commune that vote the provision of a public service (admittedly, corporate business and business units have no vote), -the users whose residence or domiciliation can be in but also outside the territory of the LGU which provides the service and -the taxpayers when according to the principle of origin, taxation is attributed to the commune of residence of individuals or legal domiciliation of business companies
    Date: 2012–01–13
  32. By: Heizler, Odelia; Kimhi, Ayal
    Abstract: This paper analyzes the effect of family composition, and in particular the number of children, the age gap between the oldest and youngest child and the age of the youngest child, on parents’ involvement in social networks. The predictions of a simple theoretical model are confirmed by an empirical analysis of Israeli Social Survey data for 2002- 2006. The number of children has a U -shaped effect on parents' involvement in social networks, with substantial differences between fathers and mothers. The negative effect is dominant on the mothers’ involvement in social networks, while the positive effect is dominant on the father's involvement in social networks. The age gap between children has a positive effect on both parents’ involvement in social networks, while the age of the youngest child has a positive effect on the father's involvement in social networks. These results imply that social network considerations might be important for fertility decisions.
    Keywords: Social Networks, Family Composition, Children., Community/Rural/Urban Development,
    Date: 2011
  33. By: Germà Bel (Universitat de Barcelona & GiM-IREA)
    Date: 2012–03–23
  34. By: Martin Lusticky Author_Email: (University of Economics, Prague, Czech Republic)
    Keywords: regional management, planning, quality, Benchmarking, tourism
    JEL: M0
    Date: 2011–06
  35. By: Richard M. Bird (University of Toronto)
    Abstract: There is little evidence of regional, let alone worldwide, trends in local finances, although trends within particular countries certainly exist. Given the path-dependent and context-specific nature of country experiences, one must be very careful both in categorizing the local finance systems found in different countries and in making cross-country empirical studies of local finances. In analyzing and comparing country experiences, it is important to be clear about the different (implicit or explicit) normative models to be found in the literature and exemplified in practice in different countries.
    Date: 2012–01–13
  36. By: Bruce K. Johnson; John C. Whitehead; Daniel S. Mason; Gordon J. Walker
    Abstract: North American cities have long encouraged redevelopment of their downtown cores to counteract the flight of residents and business to the suburbs in the postwar period. Building subsidized arenas and stadiums for professional sports teams downtown became common in the 1960s. In recent years, downtown stadiums and arenas have been proposed as components in larger redevelopment projects containing a number of other amenities, as well, including housing and other entertainment attractions. The justification for such developments rests in part on the public goods generated by vibrant, prosperous downtowns. Yet little is known about the value of such downtown public goods. This paper reports the results of two Contingent Valuation Method surveys to determine willingness to pay for new National Hockey League arenas in downtown Edmonton and Calgary in the Canadian province of Alberta. The hypothetical scenarios in both surveys varied to include affordable housing, a casino, and cultural space in addition to the arena. The surveys provide the first estimates of willingness to pay for downtown public goods for sports arenas, and also provide the first estimates of scope effects, that is, the willingness to pay for expansions of public goods, in the sports economics literature. Key Words:
    Date: 2012
  37. By: Takehiro Usui (Faculty of Economics,Soka University); Kenji Takeuchi (Graduate School of Economics,Kobe University)
    Abstract: Municipalities introduced unit-based pricing (UBP) with the aim of achieving a decrease in household waste generation and for the replacement of unsorted waste with recycling. Although many studies have shown that UBP has a short-run effect on recycling, few works have tackled the long-run effect on waste generation and recycling. By using panel data for 665 Japanese cities over 8 years, we examine the long-run effect of UBP on waste generation and recycling. The estimation results in waste generation suggest that there is a rebound effect, though a small one. We confirm that the effect of UBP on recycling sustains for the long run. We also find that the short- and long-run responses to an economic incentive for recycling activities differ with income groups. Recycling among the high-income group has not been promoted by implementation of UBP, but people in that group are willing to participate in recycling without an economic incentive. In contrast, recycling activity within the low-income group is strongly motivated by UBP for many years.
    Keywords: Unit-based pricing, Waste reduction, Recycling, Panel data analysis, Long-run effect
    JEL: R20 Q53 Q58
    Date: 2012–03
  38. By: Trevor Tombe (Wilfrid Laurier University)
    Abstract: Regional income inequality within countries is an important contributor to global inequality. I investigate its relationship to economic growth using the US experience since 1880. I modify a multi-sector general equilibrium growth model and highlight two important forces: (1) structural change, which disproportionately benefit poor agricultural regions; and (2) transport cost reductions, which shrinks regional price and wage differences. Structural change contributes to Southern growth but is offset in the Midwest by transport cost reductions. The Midwest case is of greater relevance for developing countries with high transport costs, and suggests growth may not significantly reduce global income inequality.
    Keywords: Regional Convergence, Dual-Economy Models, Transportation Costs
    JEL: O11 R11
    Date: 2012
  39. By: Combes, Pierre-Philippe; Duranton, Gilles; Gobillon, Laurent; Roux, Sébastien
    Abstract: This paper provides descriptive evidence about the distribution of wages and skills in denser and less dense employment areas in France. We confirm that on average, workers in denser areas are more skilled. There is also strong overrepresentation of workers with particularly high and low skills in denser areas. These features are consistent with patterns of migration including negative selection of migrants to less dense areas and positive selection towards denser areas. Nonetheless migration, even in the longrun, accounts for little of the skill differences between denser and less dense areas. Finally, we find marked differences across age groups and some suggestions that much of the skill differences across areas can be explained by differences between occupational groups rather than within.
    Keywords: skill distribution; sorting; wage distribution
    JEL: J31 J61 R12 R23
    Date: 2012–03
  40. By: Afridi, Farzana (Indian Statistical Institute); Li, Sherry Xin (University of Texas at Dallas); Ren, Yufei (Union College)
    Abstract: We conduct an experimental study to investigate the causal impact of social identity on individuals' response to economic incentives. We focus on China's household registration (hukou) system which favors urban residents and discriminates against rural residents in resource allocation. Our results indicate that making individuals' hukou status salient and public significantly reduces the performance of rural migrant students on an incentivized cognitive task by 10 percent, which leads to a significant leftward shift of their earnings distribution. The results demonstrate the impact of institutionally imposed social identity on individuals' intrinsic response to incentives, and consequently on widening income inequality.
    Keywords: social identity, inequality, field experiment, hukou, China
    JEL: C93 D03 O15 P36
    Date: 2012–03
  41. By: Saskia VAN DER LOO; Stef PROOST
    Abstract: A federal government tries to force local governments to implement welfare optimal tolling and investment. Welfare optimal tolling requires charging for marginal external costs. Local governments have an incentive to charge more than the marginal social cost whenever there is transit traffic. We analyse the pricing and investment issue in an asymmetric information setting where the local governments have better information than the federal government. The case of air pollution and of congestion are discussed.
    Date: 2011–09
  42. By: Brian Dollery (Centre for Local Government, University of New England and Yokohama National University); Michael Kortt (Southern Cross University School of Business); Bligh Grant (Bligh Grant Research Lecturer and Deputy Director, Centre for Local Government, University of New England)
    Abstract: Controversy surrounds structural reform in local government, especially on the question of whether efforts aimed at reducing the number of local authorities enhance the effective operation of the newly created consolidated local government entities. However, the weight of extant conceptual and empirical evidence suggests that while amalgamation typically improves the capacity of local government, it is not only costly, but also has other deleterious consequences. Local council collaboration through resource sharing and joint service provision aimed at capturing the advantages attendant upon scale, but without the adverse democratic and economic effects of consolidation, represents the main alternative form of structural change which still retains local government activity within the public sphere. This paper considers the foundations of shared services, including the embryonic theoretical literature and available empirical evidence, as background to considering the problem of developing policies to promote inter-municipal collaboration.
    Date: 2012–01–23

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