nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2012‒05‒02
thirty-six papers chosen by
Steve Ross
University of Connecticut

  1. Demographics, house prices and mortgage design By Miles, David
  2. Do large agglomerations lead to economic growth? evidence from urban India By Tripathi, Sabyasachi
  3. What underlies localization and urbanization economies? Evidence from the location of new firms By Jordi Jofre-Monseny; Raquel Marín-López; Elisabet Viladecans-Marsal
  4. Income Inequality, School Choice and the Endogenous Gentrification of US Cities By Paololo Melindi Ghidi
  5. Spatial division of labor in Chile 1992-2002 By Miguel Atienza; Marcelo Lufin; Mauricio Sarrias
  6. The estimation of urban premium wage using propensity score analysis: some considerations from the spatial perspective By Dusan Paredes; Marcelo Lufin; Patricio Aroca
  7. Geography and high-tech employment growth in U.S. counties By Fallah, Belal; Partridge, Mark
  8. Do local amenities affect the appeal of regions in Europe for migrants? By Andrés Rodríguez-Pose; Tobias D. Ketterer
  9. Large Mining Enterprises and Regional Development: Between the Enclave and Cluster By Andres Vallone; Miguel Atienza
  10. Status Competition and Housing Prices By Shang-Jin Wei; Xiaobo Zhang; Yin Liu
  11. Positive but also negative effects of ethnic diversity in schools on educational performance? An empirical test using PISA data By Jaap Dronkers; Rolf van der Velden
  12. Are American homeowners locked into their houses?: the> impact of housing market conditions on state-to-state migration By Alicia Sasser Modestino; Julia Dennett
  13. Seasonal Cycles in the Housing Market By Selcuk, Cemil
  14. Integrating regional economic development analysis and land use economics By Partridge, Mark D.; Rickman , Dan S.
  15. Public investment and regional growth and convergence: Evidence from Greece By Andrés Rodríguez-Pose; Yannis Psycharis; Vassilis Tselios
  16. Alternative theories for explaining the spatial wage inequality: a multilevel competition among human capital, NEG and amenities By Dusan Paredes
  17. Costs and benefits of logistics pooling for urban freight distribution: scenario simulation and assessment for strategic decision support By Jesus Gonzalez-Feliu
  18. Local Job Accessibility Measurement: When the Model Makes the Results. Methodological Contribution and Empirical Benchmarking on the Paris Region By Matthieu Bunel; Elisabeth Tovar
  19. Large Mining Enterprises and Regional Development: Between the Enclave and Cluster By Martin Ignacio Arias; Miguel Atienza; Jan Cademartori
  20. The Effect of Mortgage Broker Licensing On Loan Origination Standards and Defaults: Evidence from U.S. Mortgage Market 2000-2007 By Lan Shi
  21. Country Road Take Me Home: Migration Patterns in the Appalachia America and Place-Based Policy By Partridge, Mark; Betz, Mike
  22. Transportation policy networks in cross-border regions. First results from a social network analysis in Luxembourg and the Greater Region By DÖRRY Sabine; DECOVILLE Antoine
  23. Regional Effects of Federal Tax Shocks By Bernd Hayo; Matthias Uhl
  24. Estimating a Model of Strategic Network Choice: The Convenience-Store Industry in Okinawa By Mitsukuni Nishida
  25. Measuring Test Measurement Error: A General Approach By Donald Boyd; Hamilton Lankford; Susanna Loeb; James Wyckoff
  26. The Two Faces of R&D and Human Capital: Evidence from Western European Regions By Johanna Vogel
  27. Transactions as a Source of Agglomeration Economies: Buyer-seller matching in the Japanese manufacturing industry By NAKAJIMA Kentaro
  28. Rural Household Income in China: Spatial-Temporal Disparity and Its Interpretation By Li, Yuheng
  29. Local Multipliers and Human Capital in the US and Sweden By Moretti, Enrico; Thulin, Per
  30. Public Sector Wage Bargaining, Unemployment, and Inequality By Gabriele Cardullo
  31. First Time Underwater: The Impact of the First-time Homebuyer Tax Credit By Dean Baker
  32. Breaking the Cycle of Deprivation: An Experimental Evaluation of an Early Childhood Intervention By Orla Doyle
  33. The Knowledge Multiplier By Mário Alexandre Patrício Martins da Silva
  34. Economic Discrimination and Cultural Differences as Barriers to Migrant Integration: Is Reverse Causality Symmetric? By Pierre Kohler
  35. Migration Networks in Senegal By Isabelle Chort
  36. Natural Resource Curse and Poverty in Appalachian America By Partridge, Mark; Betz, Mike; Lobao, Linda

  1. By: Miles, David (Monetary Policy Committee Unit, Bank of England)
    Abstract: This paper develops a model of the housing market that takes account of population density to assess the impact of population changes on the value and size of the housing stock. The model implies that if population density is on an upward trajectory, rises in population and in incomes increasingly generate price responses and diminishing rises in the stock of housing. This has implications for the optimal structure of housing finance. It amkes equity financing of home purchase more desirable. The properties of hybrid debt-equity contracts for financing house purchase are explored.
    Keywords: demographics; house prices; mortgage design; population density; housing; debt-equity; equity financing
    JEL: J11 R31 R34
    Date: 2012–04–19
  2. By: Tripathi, Sabyasachi
    Abstract: The cities and towns of India constitute the world’s second largest urban system besides contributing over 50 per cent of the country’s Gross Domestic Product (GDP). This phenomenon has been neglected by the existing studies and writings on urban India. By considering 59 large cities in India and employing new economic geography models, this paper investigates the relevant state and city-specific determinants of urban agglomeration. In addition, the spatial interactions between cities and the effect of urban agglomeration on India’s urban economic growth are estimated. The empirical results show that agglomeration economies are policy-induced as well as market-determined and offer evidence of the strong positive effect of agglomeration on urban economic growth and support for the non-linearity of the Core-Periphery (CP) model in India’s urban system.
    Keywords: Urban Agglomeration; Urban Economic Growth; New Economic Geography; India
    JEL: O18 R12 R11
    Date: 2012–03–04
  3. By: Jordi Jofre-Monseny (Universitat de Barcelona & IEB); Raquel Marín-López (Universitat de Barcelona & IEB); Elisabet Viladecans-Marsal (Universitat de Barcelona & IEB)
    Abstract: The objective of this paper is to analyze why firms in some industries locate in specialized economic environments (localization economies) while those in other industries prefer large city locations (urbanization economies). To this end, we examine the location decisions of new manufacturing firms in Spain at the city level and for narrowly defined industries (three-digit level). First, we estimate firm location models to obtain estimates that reflect the importance of localization and urbanization economies in each industry. In a second step, we regress these estimates on industry characteristics that are related to the potential importance of three agglomeration theories, namely, labor market pooling, input sharing and knowledge spillovers. Localization effects are low and urbanization effects are high in knowledge-intensive industries, suggesting that firms (partly) locate in large cities to reap the benefits of inter-industry knowledge spillovers. We also find that localization effects are high in industries that employ workers whose skills are more industry-specific, suggesting that industries (partly) locate in specialized economic environments to share a common pool of specialized workers.
    Keywords: Agglomeration economies, manufacturing industries, localization economies, urbanization economies, specialization
    JEL: L25 L60 R12 R30
    Date: 2012
  4. By: Paololo Melindi Ghidi (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: Why in some urban areas do rich and poor households cohabit at the community level while, in others, we observe a sorting by income? To answer this question I develop a two-community general equilibrium framework of school quality, residential choice and tax decision. The model predicts that in highly unequal societies low and high income households choose to live in the same community but segregate by schooling. When inequality is smaller, we observe the typical sorting by income across communities. The effect of inequality on the quality of public schools depends on the relative size of the housing market of each community. When inequality increases, if the housing conditions of the community in which rich and poor households cohabit are affordable, then an inflow of high income middle class households towards this community emerges (gentrification). As a consequence, inequality impacts negatively the quality of the public school because both rich and poor households vote for lower taxation.
    Keywords: Gentrification; Housing; Inequality; Segregation; Stratification
    JEL: D72 H42 I24 R21
    Date: 2012–04–17
  5. By: Miguel Atienza (IDEAR - Department of Economics, Universidad Católica del Norte - Chile); Marcelo Lufin (IDEAR - Department of Economics, Universidad Católica del Norte - Chile); Mauricio Sarrias (IDEAR - Department of Economics, Universidad Católica del Norte - Chile)
    Abstract: The article describes functional specialization of the Chilean municipalities ("comunas"), controlling for their industrial mix between 1992 and 2002 with information from the Population and Housing Censuses. The analysis of global and local spatial auto-correlation of indices of functional specialization shows the existence of a pattern of spatial division of labor characterized by the strong specialization of the Metropolitan Region in occupations of higher cognitive-cultural skills. In contrast, the other "comunas" are specialized in routine physical functions that require medium or low levels of qualification. This pattern raises doubts about the validity of the current development strategy of the country.
    Keywords: Division of labor, industrial mix, occupational mix, regional inequality
    JEL: L23 O15 O18 R11
    Date: 2012–03
  6. By: Dusan Paredes (IDEAR - Department of Economics, Universidad Católica del Norte - Chile); Marcelo Lufin (IDEAR - Department of Economics, Universidad Católica del Norte - Chile); Patricio Aroca (IDEAR - Department of Economics, Universidad Católica del Norte - Chile)
    Abstract: This paper estimates the Urban Wage Premium for the Chilean case, but proposing three contributions to the literature. First, the geographical space is reconfigured using functional regions instead administrative regions. This process is carried out using techniques from the spatial econometric literature. Second, we exploit the use of micro data. We estimate the wage equation using a survey at individual level that avoids problems associated with regional aggregated specifications. Finally, we set the comparability among observations using matching comparison. Thus, we isolate the urban effect from other alternative sources. Our results suggest a Urban Wage Premium between 4 and 21%.
    Keywords: Size and Spatial Distributions of Regional Economic Activity
    JEL: R12
    Date: 2012–04
  7. By: Fallah, Belal; Partridge, Mark
    Abstract: This paper investigates the role of geography in high-tech employment growth across U.S. counties. The geographic dimensions examined include industry cluster effects, urbanization effects, proximity to a research university, and proximity in the urban hierarchy. Growth is assessed for overall high-tech employment and for employment in various high-tech sub-sectors. Econometric analyses are conducted separately for samples of metropolitan and nonmetropolitan counties. Among our primary findings, we do not find evidence of positive localization or within-industry cluster growth effects, generally finding negative growth effects. We instead find evidence of positive urbanization effects and growth penalties for greater distances from larger urban areas. Universities also appear to play their primary role in creating human capital rather than knowledge spillovers for nearby firms. Quantile regression analysis confirms the absence of within-industry cluster effects and importance of human capital for counties with fast growth in high-tech industries.
    Keywords: High-tech industries; employment growth; regional growth
    JEL: O18
    Date: 2012
  8. By: Andrés Rodríguez-Pose (IMDEA Social Sciences); Tobias D. Ketterer (University of Nottingham)
    Abstract: This paper delves into the factors which determine the attractiveness of regions in Europe for migrants. Contrary to the literature on the US which has increasingly focused on the role of amenities, existing research in Europe tends to highlight the predominance of economic conditions as the main drivers of migration. Differentiating between economic, sociodemographic and amenity-related territorial features, we examine the appeal of various regional characteristics for migrants by analyzing net migration data for 133 European regions between 1990 and 2006. Our results show that, in addition to economic, human capital-related and demographic aspects, network effects and – in contrast to existing literature – different types of regional amenities exert an important influence on the relative attractiveness of sub-national territories across the European Union (EU). Our findings therefore indicate that locational choices in Europe may be much more similar to place-based preferences in the US than originally thought.
    Keywords: location choice; inter-regional migration; economic conditions; amenities; social networks; regions; Europe
    Date: 2012–04–25
  9. By: Andres Vallone (IDEAR - Department of Economics, Universidad Católica del Norte - Chile); Miguel Atienza (IDEAR - Department of Economics, Universidad Católica del Norte - Chile)
    Abstract: Over the last century, Chile has experienced a demographic and economic transformation that has shaped its economic geography. This article examines the evolution of the chilean urban system between 1885 and 2002. We estimate changes in the Zipf coefficient and the stability of the hierarchy of urban centers based on information from the Population and Housing Censuses. The results show a marked trend towards the formation of an increasingly asymmetrical system of cities that does not satisfy Zipf's law in the last two decades. At the same time, the hierarchy of cities has tended to be more stable, with a clear dominance of large cities that existed at the end of the nineteenth century and an increasing reduction in the variability among low-ranking cities.
    Keywords: Zipf law, urban economics, development
    JEL: R11 R12 O10
    Date: 2012–03
  10. By: Shang-Jin Wei; Xiaobo Zhang; Yin Liu
    Abstract: While in standard housing economics housing is regarded as an asset and a consumption good, we study in this paper the consequences for housing prices if housing is also a status good. More concretely, if a family’s housing wealth relative to others is an important marker for relative status in the marriage market, then competition for marriage partners might motivate people to pursue a bigger and more expensive house/apartment beyond its direct consumption (and financial investment) value. To test the empirical validity of the hypothesis, we have to overcome the usual difficulty of not being able to observe the intensity of status competition. Our innovation is to explore regional variations in the sex ratio for the pre-marital age cohort across China, which likely has triggered variations in the intensity of competition in the marriage market. The empirical evidence appears to support this hypothesis. We estimate that due to the status good feature of housing, a rise in the sex ratio accounts for 30-48% of the rise in real urban housing prices in China during 2003-2009.
    JEL: G12 R2 R3
    Date: 2012–04
  11. By: Jaap Dronkers (Maastricht University); Rolf van der Velden (Maastricht University)
    Abstract: In this chapter, we will estimate the effects on language skills of two characteristics of school populations: average/share and diversity, on both the ethnic and the sociocultural dimensions. We will use the cross-national Program for International Student Assessment (PISA) 2006 data for native students and students with an immigrant background, in which both cohorts are 15 years old. A greater ethnic diversity of school populations in secondary education hampers the educational performance of students with an immigrant background but does not significantly affect that of native students. The sociocultural diversity of schools has no effect on educational performance. However, the level of the curriculum attended by the students and the average parental sociocultural status of schools are important variables that explain the educational performance of children. A higher share of students of non-Islamic Asian origin in a school increases the educational performance of both native and immigrant students of other origins in that school. Students from non-Islamic Asian countries in schools with higher shares of students of non-Islamic Asian origin perform better than do comparable students originating from other regions. Students originating from Islamic countries have substantially lower language scores than do equivalent students with an immigrant background from other regions. This cannot be explained by individual socioeconomic backgrounds, school characteristics, or educational systems.
    Date: 2012–04
  12. By: Alicia Sasser Modestino; Julia Dennett
    Abstract: U.S. policymakers are concerned that negative home equity arising from the severe housing market decline may be constraining geographic mobility and consequently serving as a factor in the nation's persistently high unemployment rate. Indeed, the widespread drop in house prices since 2007 has increased the share of homeowners who are underwater on their mortgages. At the same time, migration across states and among homeowners has fallen sharply. Using a logistic regression framework to analyze data from the Internal Revenue Service on state-to-state migration between 2006 and 2009, the authors discover evidence that "house lock" decreases mobility but find it has a negligible impact on the national unemployment rate. A one-standard deviation increase in the share of underwater nonprime households in the origin state reduces the outflow of migrants from the origin to the destination state by 2.9 percent. When aggregated across the United States, this decrease in mobility reduces the national state-to-state migration rate by 0.05 percentage points, resulting in roughly 110,000 to 150,000 fewer individuals migrating across state lines in any given year. Assuming that all of these discouraged migrants were job-seekers who were previously unemployed before relocating and then found a job in their new state would reduce the nation's unemployment rate by at most one-tenth of a percentage point in a given year. The cumulative effect over this period would yield an unemployment rate of 9.0 percent versus 9.3 percent in 2009. Recognizing that not all state-to-state migrants are job-seekers, not all job-seekers were previously unemployed, and not all previously unemployed job-seekers will successfully find work in their new location yields an unemployment rate that is virtually unchanged from the actual one that prevailed from 2006 to 2009.
    Keywords: Housing - Prices ; Migration, Internal ; Unemployment
    Date: 2012
  13. By: Selcuk, Cemil (Cardiff Business School)
    Abstract: The housing market exhibits a puzzling yet repetitive seasonal boom and bust cycle where prices and trade volume rise in summers and fall in winters. This paper presents a search model that analytically generates the observed deterministic cycle.
    Keywords: housing; search; thin and thick markets; seasonality
    JEL: D39 D49 D83
    Date: 2012–01
  14. By: Partridge, Mark D.; Rickman , Dan S.
    Abstract: Two largely separate literatures exist on regional economic development and land use economics. In this chapter, we argue that a full understanding of each of the two areas requires greater knowledge of their interrelationship. We review key studies of the two literatures, particularly those related to the close interconnectedness of regional economic development and land use. We contend that a critical shortcoming in the literatures is that key features that affect both land use and economic activity are typically not systematically considered. We then posit that the spatial equilibrium framework is especially suited for understanding the various feedback mechanisms that affect both. Also particularly promising are the increased availability of GIS and micro data, as well as recent methodological advances in empirical estimation and modeling.
    Keywords: Regional Economic Development; Land Use Economics
    JEL: O18 R14
    Date: 2012
  15. By: Andrés Rodríguez-Pose (IMDEA Social Sciences); Yannis Psycharis (Panteion University); Vassilis Tselios (University of Groningen)
    Abstract: This paper estimates the impact of public investment on regional economic growth and convergence at the NUTS III level in Greece. Using a new database of public expenditure per region for the period 1978-2007, it proposes a model which captures not just the impact of public investment in Greek prefectures, but also the spillover effects related to the existence of externalities from neighbouring regions. The results point to a positive long-run impact of public investment per capita on regional economic growth – but not on convergence – which also generates considerable spillover effects. However, the returns vary according to different types of public investment, with education and infrastructure spillovers having the highest impact. In general, public investment externalities seem to be more relevant for regional growth than direct public investment in each region. Finally, the impact of different types of public investment in Greece is mediated by politics and political factors, but the effect of politics disappears once we control for political-period-specific spatial-invariant variables.
    Keywords: public investment; economic growth; spillover effects; convergence; spatial econometrics; regional economics; regional policy; Greece
    JEL: R11 R12 R53 R58
    Date: 2012–04–25
  16. By: Dusan Paredes (IDEAR - Department of Economics, Universidad Católica del Norte - Chile)
    Abstract: This paper presents an empirical framework for analyzing the spatial wage inequality in a Latin American country: Chile. This country is mainly characterized by two stylized facts: the high spatial concentration around metropolitan areas and the key role of natural resources. We consider both elements with a competition between NEG versus amenity framework. Both theories are combined with human capital through a Multilevel Analysis. The results show the low performance of NEG for Chile and how the natural resources are a winner causal mechanism for the case. Additionally, the spatial wage variability is extremely small when it is compared with the wage variation at individual level.
    Keywords: Spatial wage inequality, spatial concentration, natural resources, NEG, amenity framework, wage variation at individual level
    Date: 2012–04
  17. By: Jesus Gonzalez-Feliu (LET - Laboratoire d'économie des transports - CNRS : UMR5593 - Université Lumière - Lyon II - Ecole Nationale des Travaux Publics de l'Etat)
    Abstract: Collaborative transportation and logistics pooling are relatively new concepts in research, but are very popular in practice. In the last years, collaborative transportation seems a good city logistics alternative to classical urban consolidation centres, but it is still in a development stage. This paper proposes a framework for urban logistics pooling ex-ante evaluation. This framework is developed with two purposes. The first is to generate comparable contrasted or progressive scenarios representing realistic situations; the second to simulate and assess them to make a "before-after" comparative analysis. In this framework, a demand generation model is combined with a route optimization algorithm to simulate the resulting routes of the proposed individual or collaborative distribution schemes assumed by each scenario. Then, several indicators can be obtained, mainly travelled distances, working times, road occupancy rates and operational monetary costs. To illustrate that framework, several scenarios for the urban area of Lyon (France) are simulated and discussed to illustrate the proposed framework possible applications.
    Keywords: urban logistics; resource sharing; freight transport pooling; policy-oriented modelling; simulation-based comparative analysis
    Date: 2011–11–09
  18. By: Matthieu Bunel; Elisabeth Tovar
    Abstract: This paper focuses on local job accessibility measurement. We propose an original model that uses national exhaustive micro data and allows for i) a full estimation of job availability according to an extensive set of individual characteristics, ii) a full appraisal of job competition on the labour market and iii) a full control of frontier effects. By matching several exhaustive micro data sources on the Paris region municipalities, we compare the results produced by this benchmark model to a representative set of alternative models, we show that the model may indeed make the results as far as local job accessibility is concerned. Significant empirical differences do stem from the use of different Local Job Accessibility measures. Moreover, these differences are spatially differentiated across the Paris region municipalities. In particular, we show that failing to use a model where job availability is fully estimated according to individual characteristics may lead to the over-estimation of the job accessibility levels of notably under-privileged municipalities.
    Keywords: job accessibility measurement, Paris Region, benchmarking, geo-referenced microdata
    JEL: R11 J61
    Date: 2012
  19. By: Martin Ignacio Arias (IDEAR - Department of Economics, Universidad Católica del Norte - Chile); Miguel Atienza (IDEAR - Department of Economics, Universidad Católica del Norte - Chile); Jan Cademartori (ORDHUM - Department of Economics, Universidad Católica del Norte - Chile)
    Abstract: Various regions have recently proposed the creation of clusters around large-scale mining. However, until the 1986s, mining regions were predominantly considerer productive enclaves. This article analyzes the case of the Antofagasta Region, the main mining region in Chile. A descriptive analysis is put forward that addresses the ideal types of the mining cluster and enclave, establishing as criteria of comparison the mechanisms proposed by Marshall as sources of agglomeration economies. Despite strong growth, the Antofagasta Region approximates more a mining enclave than a cluster. This implies the need to revise and adapt the concept of enclave to the current reality.
    Keywords: Enclave, cluster, multi-national corporations, minig regions
    JEL: O13 O19 Q32 R5
    Date: 2012–03
  20. By: Lan Shi
    Abstract: We study the U.S. origination-to-distribution mortgage financing market from the mid 1990s to the late 2000s. Mortgage loan brokers originated close to two thirds of the mortgage loans in this period. We examine whether stricter licensing requirements of loan brokers raise lending standards by i) admitting only higher quality brokers who benefit more from a long-term career and thus have greater incentives to protect borrowers and lenders' long-term interests, ii) raising entry costs and thus generating higher future rents that reduce brokers' incentives to chase short-term profits, e.g., by lowering loan origination standards, that jeopardize their likelihood of winning future business from borrowers and lenders. We exploit the cross-state and over time variations in licensing requirements and find that originated loans in states with more stringent requirements had higher standards: FICO score were higher, and LTV and DTI were lower and there were fewer negative amortization, interest only, balloon, ARM, Low Doc, and subprime loans. The requirements on surety bonds and net worth, education, and office in state have the greatest impact on loan origination standards. The education (and exam) requirements for employees are more effective than those for licensees. The effect of licensing on loan origination standards is greater for neighborhoods with greater minority percentages and lower income, and for lenders that specialize in sub-prime lending. Corroborating findings on loan origination standards, states with more stringent licensing requirements had lower default rates: Moving from the 25th to the 75th percentile in licensing requirements is associated with close to 20 percent reduction from the mean of the 90 days or more delinquency rate. These findings point to the value of broker licensing when lenders' incentives to screen are compromised with the securitization of mortgages. Key words: Mortgage; brokers; securitization; information asymmetry; moral hazard; incentives; occupational licensing JEL codes: D82; G21; G28; J44; L1
    Date: 2012–04
  21. By: Partridge, Mark; Betz, Mike
    Abstract: This research fills a void in the regional development literature by assessing how labor force migration affects regional adjustment in peripheral regions and whether it differs than the rest of the country. We do this by comparing patterns for the lagging Appalachian region to the U.S. as a whole for the 1990s and post-2000 periods. We appraise whether successful job creation helps the original residents seeking employment, or primarily goes to outsiders, rendering place-based development policy ineffective. In a novel addition, we also appraise whether local job creation is associated with attracting relatively wealthier net-migrants. Because different relative migration elasticities imply different responses for other labor market outcomes, we also assess whether employment growth supports original residents in terms of lifting median household incomes and employment/population rates and reducing unemployment rates and poverty rates. We find that migration post-2000 has become less responsive to employment growth differentials, which allows successful economic development to lift the employment prospects of original residents, which also produces a stronger response in reducing local poverty rates.
    Keywords: Migration; appalachia; regional economic development
    JEL: O18 R23
    Date: 2012
  22. By: DÖRRY Sabine; DECOVILLE Antoine
    Abstract: Despite continuing processes of economic and political integration in the European Union (EU), borders have been proven to be persistent. Politically backed and financially supported by the EU, cross-border regions are subject to economic and cultural coalescence. However, the established top-down crossborder policy network structures do not necessarily lead to the results originally aimed at. Policy networks are supposed to make the proclaimed economic, socio-cultural, and spatial EU integration process work on a local level. By empirically analysing cross-border policy networks in one specific though highly central policy domain – the public transportation – we reveal contradictions/inconsistencies and impediments caused by the „border effect? and the complex nature of a specific cross-border policy network in the field of public transportation. With the technique of the social network analysis we trace and discuss such a kind of network. Our empirical findings lead us to critically examine what Hooghe and Marks (2003) describe as „type-II-governance? in crossborder regions.
    Keywords: Cross-border metropolitan regions; public transportation; Luxembourg and the Greater Region; social network analysis; multi-level governance
    JEL: F15 F16 R50 R58
    Date: 2012–04
  23. By: Bernd Hayo (University of Marburg); Matthias Uhl (University of Marburg)
    Abstract: This paper studies regional output asymmetries following U.S. federal tax shocks. We estimate a vector autoregressive model for each U.S. state, utilizing the exogenous tax shock series recently proposed by Romer and Romer (2010) and find considerable variations: estimated output multipliers lie between –0.2 in Utah and –3.3 in Hawaii. Statistically, the difference between state and national output effect is significant in about half the U.S. states. Analyzing the determinants of differences in the magnitude of regional tax multipliers suggests that industry composition of output and sociodemographic characteristics help explain the observed asymmetry across U.S. states in the transmission of federal tax policy.
    Keywords: Fiscal Policy Tax Policy Narrative Approach U.S. States Regional Effects Asymmetries in Fiscal Policy Transmission
    JEL: E32 E62 H20 R10 R11
    Date: 2012
  24. By: Mitsukuni Nishida
    Abstract: Spatial competition among multi-store firms is ubiquitous in a wide range of retail industries. However, little is known about how those firms optimize their networks of stores after a merger due to the computational burden of solving for an equilibrium in store networks. This paper proposes an empirical framework for estimating a game of network choice by two multi-store firms, which allows us to examine the impact of a hypothetical merger on store configurations, costs, and profits. The model explicitly incorporates a fundamental determinant of location choice for multi-store firms: the trade-off between the business-stealing effect and the cost- saving effect from clustering their own stores. The method integrates the static entry game of complete information with post-entry outcome data while using simulations to correct for the selection of entrants. I use lattice-theoretical results to deal with the huge number of possible network choices. Using unique cross-sectional data on store networks and revenues from the convenience-store industry in the Okinawa Island, Japan, I estimate the firms. revenue and cost functions. Parameter estimates suggest a retailer's trade-off between cost savings and lost revenues from clustering its stores is positive across markets and negative within a market. I find an acquirer of a hypothetical horizontal merger of two multi-store firms would decrease its number of stores in suburbs but increase its number in the city center, affecting consumers in different locations differently. The trade-off from clustering plays a central role in explaining this result.
    Date: 2012–04
  25. By: Donald Boyd; Hamilton Lankford; Susanna Loeb; James Wyckoff
    Abstract: Test-based accountability including value-added assessments and experimental and quasi-experimental research in education rely on achievement tests to measure student skills and knowledge. Yet we know little regarding important properties of these tests, an important example being the extent of test measurement error and its implications for educational policy and practice. While test vendors provide estimates of split-test reliability, these measures do not account for potentially important day-to-day differences in student performance. We show there is a credible, low-cost approach for estimating the total test measurement error that can be applied when one or more cohorts of students take three or more tests in the subject of interest (e.g., state assessments in three consecutive grades). Our method generalizes the test-retest framework allowing for either growth or decay in knowledge and skills between tests as well as variation in the degree of measurement error across tests. The approach maintains relatively unrestrictive, testable assumptions regarding the structure of student achievement growth. Estimation only requires descriptive statistics (e.g., correlations) for the tests. When student-level test-score data are available, the extent and pattern of measurement error heteroskedasticity also can be estimated. Utilizing math and ELA test data from New York City, we estimate the overall extent of test measurement error is more than twice as large as that reported by the test vendor and demonstrate how using estimates of the total measurement error and the degree of heteroskedasticity along with observed scores can yield meaningful improvements in the precision of student achievement and achievement-gain estimates.
    JEL: I21
    Date: 2012–04
  26. By: Johanna Vogel
    Abstract: This paper investigates two channels through which research and development (R&D) and human capital may affect regional total factor productivity growth in the manufacturing sector, using panel data on 159 EU-15 regions from 1992 to 2005. Based on the endogenous growth model of Griffith, Redding and Van Reenen (2003), we allow R&D and human capital to influence productivity growth both directly, reflecting own innovation, and indirectly, reflecting imitation of frontier technology. Further, the model allows for conditional convergence to a long-run level of TFP relative to the frontier. We also develop an extension that captures geographically localised technology spillovers. Our preferred system-GMM estimates provide evidence of a positive and significant direct effect of human capital, and a positive and significant indirect effect of R&D on productivity growth. This may be interpreted as lending support to the recent focus of EU regional policy on raising educational attainment and R&D expenditures, although their channels of influence appear to differ. Our results also suggest that TFP convergence has taken place over our sample period and that geographic distance to the technology frontier matters.
    Keywords: Total factor productivity, Convergence, Human capital, Research and development, European regions
    JEL: O30 O47 I25 C23
    Date: 2012
  27. By: NAKAJIMA Kentaro
    Abstract: This paper empirically examines whether the geographical proximity of transaction partners improves firms' profits by using actual microdata on inter-firm transactions. I model the formation of transaction partners between newly entering firms and existing ones as a two-sided, many-to-many matching game with transferable utility and estimate the structural parameters of the model. The results show that the average distance to the transaction partners negatively affects firms' structural revenues. This strongly suggests that the existence of agglomeration economies results from inter-firm transactions that occur between geographically close firms. Furthermore, this effect is larger for entrant firms than for existing ones.
    Date: 2012–04
  28. By: Li, Yuheng (China Economic Research Center)
    Abstract: This paper investigates the spatial-temporal disparity evident in rural household incomes at the provincial level in China in the period 1978-2007. The research is introduced through a framework comprising the transitional processes of decentralization, marketization, urbanization, and globalization. The research uses Moran’s I index and the spatial regression model. Research results show a clear spatial-temporal disparity in rural household incomes in China in the post-reform era, whereby the eastern provinces possess higher rural household incomes in comparison to the lower rural household incomes of the inland provinces. This disparity is attributed to the joint influence of processes of marketization, urbanization, and globalization upon household incomes derived from the non-agricultural industries. Decentralization proves to be non-significant in explaining the disparity in rural household incomes across China, as a result of the agricultural income generated from the limited household land allocated to each rural household.
    Keywords: Rural household income; spatial-temporal; Moran’s; transitional process; China
    JEL: N95 O11 R11 R58
    Date: 2012–04–18
  29. By: Moretti, Enrico (Department of Economics); Thulin, Per (Swedish Entrepreneurship Forum)
    Abstract: We show that every time a local economy generates a new job by attracting a new business in the traded sector, a significant number of additional jobs are created in the non-traded sector. This multiplier effect is particularly large for jobs with high levels of human capital and for high tech industries. These findings are important for local development policies, as they suggest that in order to increase local employment levels, municipalities should target high tech employers with high levels of human capital.
    Keywords: Local multipliers; Local labor markets; Labor demand
    JEL: J23 R11 R12 R23
    Date: 2012–04–13
  30. By: Gabriele Cardullo (DIEM, Faculty of Economics, University of Genoa, Italy)
    Abstract: In many countries, the government pays almost identical nominal wages to workers living in regions with notable economic disparities. In most cases this is the result of highly centralized pay systems. By developing a two-region general equilibrium model with unions and search frictions in the labour market, I study the differences in terms of unemployment, real wages, and inequality between a regional wage bargaining process and a national one in the public sector. Adopting the former lowers public sector real salaries but it also decreases unemployment and jacks up private sector real earnings. Simulations conducted on the basis of Italian data show that, compared to a national negotiation process, a regional one also increases inequality both within and between regions.
    Keywords: public sector wages; unemployment; economic integration; local labour markets
    JEL: H53 J38 J64 R12 R13
    Date: 2012–02
  31. By: Dean Baker
    Abstract: One of the items that Congress added to the American Recovery and Reinvestment Act of 2009, President Obama’s stimulus package, was a first-time homebuyer tax credit. The tax credit gave people buying their first home, or who had not been homeowners for at least three years, a tax credit equal to 10 percent of the purchase price of the home, up to $8,000. The intention was to spur home buying and put an end to the plunge in home prices, which were dropping at an annual rate of close to 20 percent at the time. According to the Government Accountability Office, 2.3 million people took advantage of the credit, at a cost to the government of $16.2 billion. This delayed the deflation of the bubble, but did not stop it. By the end of 2011, nationwide home prices had fallen by 8.4 percent since the credit-induced peak reached in the second quarter of 2010. They are continuing to fall into 2012. The temporary boost to the market from the credit allowed many homeowners to sell their homes at prices that were still partially inflated by the bubble. This was good for these homeowners, as well as their creditors, who might have otherwise been forced to accept short sales. However, it was bad news for homebuyers who were persuaded to buy homes at prices that were often still above trend values This paper briefly outlines the impact of the homebuyer credit. The first part produces a set of calculations of the amount of wealth transferred to sellers and creditors as a result of the credit. These calculations are intended to determine the additional amount that homebuyers paid for homes as a result of the credit, as opposed to a situation in which the housing market had been allowed to continue its decline unchecked. The second part of the paper focuses on some of the cities where the credit appears to have had the greatest impact. It looks at the extent to which buyers of less expensive homes – the segment of the market most influenced by the credit – experienced losses as a result of buying homes at bubble-inflated prices.
    Keywords: housing, tax credit, ARRA, housing bubble
    JEL: E E6 E62 H H2 R R2 R21 R28 R3 R38
    Date: 2012–04
  32. By: Orla Doyle (School of Economics and Geary Institute, Univeristy College Dublin)
    Abstract: Deprivation early in life has multiple long term consequences for both the individual and society. An increasing body of evidence finds that targeted, early interventions aimed at at-risk children and their families can reduce socioeconomic inequalities in children’s skills and capabilities. This paper describes a randomised control trial (RCT) evaluation of a five-year preventative programme which aims to improve the school readiness skills of socioeconomically disadvantaged children. The Preparing for Life (PFL) programme is one of the first studies in Ireland to use random assignment to experimentally modify the environment of high risk families and track its impact over time. This paper describes the design and motivation for the study, the randomisation procedure adopted and the baseline data collected. Using Monte Carlo permutation testing, it finds that the randomisation procedure was successful as there are no systematic differences between the treatment and control groups at baseline. This indicates that future analysis of treatment effects over the course of the five year evaluation can be causally attributed to the programme and used to determine the impact of Preparing for Life on children’s school readiness skills
    Keywords: Early childhood intervention; RCT; school readiness; permutation testing
    Date: 2012–04–26
  33. By: Mário Alexandre Patrício Martins da Silva (Faculdade de Economia, Universidade do Porto)
    Abstract: The paper develops a formal model of external knowledge and identifies the role of knowledge multipliers. Social interactions and knowledge multipliers play a crucial role in the determination of the rate of technological change. The analytical identification of the knowledge multiplier expression constitutes a key step in the appreciation of the crucial role of knowledge interactions. First, social considerations endogenously change the knowledge production function of each firm. The knowledge multiplier is the specific mechanism by means of which external knowledge contributes to enhance the innovative capacity of each firm. The production function of knowledge shows that the knowledge multiplier is larger, the stronger the cumulative positive effects of external knowledge on the generation of new knowledge. Second, social considerations explain the long-run dynamics of innovation. Social reinforcement and the knowledge multiplier determine the rise or fall of the rate of accumulation of technological knowledge.
    Keywords: External knowledge, social interactions, social multiplier, localized knowledge, innovation network, interactive learning, sustainable growth
    JEL: O30
    Date: 2012–04
  34. By: Pierre Kohler (Graduate Institute of International Studies)
    Abstract: This paper examines the endogenous relationship between the economic and cultural integration of migrants in Switzerland or, more precisely, how economic and cultural barriers to integration reinforce each other. Are cultural differences preventing the successful integration of migrants or does the root of integration failures lie in unequal economic opportunities and discrimination? How legitimate are claims arguing migrants are economically discriminated because they don't integrate culturally compared to claims that migrants don't integrate because they are discriminated? And are Muslim communities, which currently often lie at the centre of this debate, different in this regard? Implementing an empirical method to build indices of economic discrimination and cultural differences (\cultural distance"), the findings of this paper show that, at the aggregate level, population groups facing higher economic discrimination are culturally more distant from the natives. Muslim communities are no different in this regard: their specificity resides more in the stronger discrimination they face in the labour market than in cultural differences separating them from natives. Using an instrumental variable approach, evidence at the individual level reveals that there is an asymmetric causal relationship between economic discrimination and “cultural distance", the former clearly dominating the latter. It also shows that the asymmetry is at least twice as acute for second-generation compared to first-generation migrants.
    Keywords: migration, labor market, unemployment, Muslim, religious, ethnic, discrimination, culture, integration
    JEL: F22 J15 J31 J60 J68 J71 Z10 Z13
    Date: 2012–04–22
  35. By: Isabelle Chort (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: This paper investigates the importance and role of migration networks in Senegal using a new nationally representative survey conducted in 2006-2007. Using a sample of 1707 Senegalese households I explore potentially differential effects of networks on international migration depending on their characteristics in terms of composition and destination. Results from logit and multinomial logit regressions show that household networks seem to be destination-specific and have a greater positive influence on migration than community networks. Networks also seem to have heterogeneous effects on migration depending on gender, household wealth or size which is consistent with previous findings in the literatureand backs up a networks effects story.
    Keywords: Migration ; Migrant Networks ; Senegal
    Date: 2012–04
  36. By: Partridge, Mark; Betz, Mike; Lobao, Linda
    Abstract: The Appalachian mountain region has long been characterized by deep poverty which led to the formation of the Appalachian Regional Commission (ARC) in 1965. The ARC region covers West Virginia and parts of 12 other states, running from New York to Mississippi (Ziliak 2012). The ARC region had an average county poverty rate of over 40 percent in 1960, about double the national average (Deaton and Niman 2012; Ziliak 2012). While the poverty gap between the ARC region and the rest of the nation closed significantly by 1990, it remained nearly twice as large in Central Appalachia. There are many reasons for higher poverty in Appalachia in general and Central Appalachia in particular. Possible causes include a low-paying industry structure, below average education, low household mobility, and remoteness from to cities (Weber et al. 2005; Partridge and Rickman 2005; Lobao 2004). A key distinction between Central Appalachia and the rest of the ARC region is its historic dependence on coal mining. There is long literature arguing that the area’s dependence on coal mining has contributed to its deep poverty through weaker local governance, entrepreneurship, and educational attainment, as well as degrading the environment, poor health outcomes, and limitations on other economic opportunities (Deaton and Niman 2012; James and Aadland 2011). These factors are broadly associated with the natural resources curse in the international development literature. More recently, the process of mountain top mining (MTM) has expanded coal mining’s environmental footprint in the region, possibly increasing health risks and further reducing the chances for long-term amenity-led growth that can alleviate poverty (Deller 2010; Woods and Gordon 2011). This study reinvestigates the causes of county poverty rates in Appalachia with a special focus on coal mining’s role. Using data over the 1990-2010 period we assess whether coal mining continues to have a positive association with poverty rates, even as the industry’s relative size has declined. We also appraise whether MTM is associated with higher poverty. We do this by comparing the ARC region to the rest of the U.S. and by using more disaggregated employment data that allows us to differentiate the effects of coal mining from other mining (versus aggregating all mining together as in past research). The results suggest that any potential adverse effects of coal mining on poverty have declined over time. Below, we first develop an empirical model followed by the empirical results. The final section provides our concluding thoughts.
    Keywords: natural resource curse; poverty; Appalachia
    JEL: O18 O13 I32
    Date: 2012

This nep-ure issue is ©2012 by Steve Ross. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.