|
on Urban and Real Estate Economics |
| By: | Valter Di Giacinto (Bank of Italy); Matteo Gomellini (Bank of Italy); Giacinto Micucci (Bank of Italy); Marcello Pagnini (Bank of Italy) |
| Abstract: | We compare the magnitude of local productivity advantages associated with two different spatial concentration patterns in Italy – urban areas and industrial districts. The former have high population density and host a wide range of economic activities, while the latter are marked by a high concentration of small firms producing relatively homogenous goods. Using data from a large sample of Italian manufacturing firms observed over the 1995-2006 period, we detect local productivity advantages for both urban areas and industrial districts. However, firms located in urban areas reap a larger productivity premium than those operating within districts. The advantages of industrial districts have declined over time; those of urban areas have remained stable. Differences in the composition of firm employees between white- and blue-collars explain a small fraction of the urban productivity premium. The quantile regressions show how more productive firms gain larger benefits by locating in urban areas. Our analysis raises the question of whether Italian industrial districts are less fit than urban areas to prosper in a world characterized by advancing globalization and the growing use of ICT. |
| Keywords: | urban areas, industrial districts, agglomeration economies, productivity, white- and blue-collars, Italian economy |
| JEL: | C52 D24 R12 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_850_12&r=ure |
| By: | Desmet, Klaus; Ghani, Ejaz; O'Connell, Stephen; Rossi-Hansberg, Esteban |
| Abstract: | In the last two decades the Indian economy has been growing unabatedly, with memories of the Hindu rate of growth rapidly fading. But this unprecedented growth has also resulted in widening spatial disparities. While cities such as Hyderabad have emerged as major clusters of high development, many rural areas have been left behind with little development benefits accruing to them. India's mega-cities have continued to grow. This situation raises a number of important policy questions. Should India aim to spread development more equally across space? Are India's cities becoming too large? Should the government invest in infrastructure in the large cities to reduce congestion or in medium-sized locations to facilitate the emergence of new economic clusters? What are the tradeoffs between agglomeration economies and congestion costs? How different is India’s experience compared with China and USA? |
| Keywords: | Labor Markets,Urban Slums Upgrading,Housing&Human Habitats,E-Business,Labor Policies |
| Date: | 2012–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6060&r=ure |
| By: | Daniel Albalate (Faculty of Economics, University of Barcelona) |
| Abstract: | Interest in public accountability and government transparency is increasing worldwide. The literature on the determinants of transparency is evolving but is still in its early stages. So far, it has typically focused on national or regional governments while neglecting the local government level. This paper builds on the scarce knowledge available in order to examine the economic, social, and institutional determinants of local government transparency in Spain. We draw on a 2010 survey and the transparency indexes constructed by the NGO Transparency International (Spain) in order to move beyond the fiscal transparency addressed in previous work. In so doing, we broaden the analysis of transparency to the corporate, social, fiscal, contracting, and planning activities of governments. Our results on overall transparency indicate that large municipalities and left-wing local government leaders are associated with better transparency indexes; while the worst results are presented by provincial capitals, cities where tourist activity is particularly important and local governments that enjoy an absolute majority. The analysis of other transparency categories generally shows the consistent impact of these determinants and the need to consider a wider set of variables to capture their effect. |
| Keywords: | Transparency; Local Government; Corruption. JEL classification: H11; H70; Z18. |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:ira:wpaper:201210&r=ure |
| By: | Asirvatham, Jebaraj; Nayga, Rodolfo M., Jr.; Thomsen, Michael R. |
| Abstract: | We examine the role of peer effects in childhood obesity outcomes by investigating whether obesity rates among the highest graders in a public school has an effect on obesity rates among younger grades. We use a panel dataset with obesity prevalence measured at the grade level. Our data are from Arkansas public schools. Results provide evidence that changes in the obesity prevalence at the highest grade are associated with changes in obesity prevalence at younger grades. The magnitude of the peer effect depends on the type of school, and we find statistically significant peer effects in both elementary and high schools but not in middle schools. These effects are also larger in high schools than in elementary schools. We use falsification tests to provide evidence that these peer effects are more than just a statistical correlation or an association. |
| Keywords: | peer-effects, obesity, childhood obesity, overweight, Food Consumption/Nutrition/Food Safety, D10, D71, I10, Z13, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaeafe:122732&r=ure |
| By: | Hugh Macartney |
| Abstract: | Recent education accountability reforms feature school-level performance targets that condition on prior scores to account for student heterogeneity. Yet doing so introduces potential dynamic distortions to incentives: teachers may be less responsive to the reform today to avoid more onerous future targets--an instance of the so-called `ratchet effect.' Guided by a dynamic model and utilizing rich educational panel data from North Carolina, I exploit school grade span variation to identify any dynamic gaming, finding compelling evidence of ratchet effects. I then directly estimate the structural parameters of the corresponding model, uncovering complementarities between teacher effort and student ability. |
| Keywords: | Public, Education, Personnel, Dynamic Gaming, Dynamic Incentives, Ratchet Effects, Education Production, Educational Accountability |
| JEL: | D82 I21 J24 J33 M52 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:duk:dukeec:12-09&r=ure |
| By: | Craig Burnside; Martin Eichenbaum; Sergio Rebelo |
| Abstract: | Some booms in housing prices are followed by busts. Others are not. In either case it is difficult to find observable fundamentals that are correlated with price movements. We develop a model consistent with these observations. Real estate agents have heterogeneous expectations about long-run fundamentals but change their views because of "social dynamics." Agents meet randomly with one another. Those with tighter priors are more likely to convert others to their beliefs. The model generates a "fad": The fraction of the population with a particular view rises and then falls. Depending on which agent is correct about fundamentals, these fads generate boom-busts or protracted booms. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedacq:2012-02&r=ure |
| By: | Facundo Albornoz; Antonio Cabrales; Esther Hauk |
| Abstract: | Immigration is an important problem in many societies, and it has wide-ranging effects on the educational systems of host countries. There is a now a large empirical literature, but very little theoretical work on this topic. We introduce a model of family immigration in a frame- work where school quality and student outcomes are determined endogenously. This allows us to explain the selection of immigrants in terms of parental motivation and the policies which favor a positive selection. Also, we can study the effect of immigration on the school system and how school quality may self-reinforce immigrants' and natives' choices. |
| Keywords: | education, immigration, school resources, parental involvement, immigrant sorting |
| JEL: | I20 I21 I28 J24 J61 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:590&r=ure |
| By: | Nicola Gennaioli; Rafael Laporta; Florencio López-de-Silanes; Andrei Schleifer |
| Abstract: | We investigate the determinants of regional development using a newly constructed database of 1569 sub-national regions from 110 countries covering 74 percent of the worlds surface and 96 percent of its GDP. We combine the cross-regional analysis of geographic, institutional, cultural, and human capital determinants of regional development with an examination of productivity in several thousand establishments located in these regions. To organize the discussion, we present a new model of regional development that introduces into a standard migration framework elements of both the Lucas (1978) model of the allocation of talent between entrepreneurship and work, and the Lucas (1988) model of human capital externalities. The evidence points to the paramount importance of human capital in accounting for regional differences in development, but also suggests from model estimation and calibration that entrepreneurial inputs and human capital externalities are essential for understanding the data. |
| Keywords: | productivity, entrepreneurial education, regional externalities |
| JEL: | I25 O11 O15 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:581&r=ure |
| By: | Francisco Sancho; Luis Rivera; Julio Rosales |
| Abstract: | This paper surveys housing finance in Costa Rica, El Salvador and Panama. The development of a secondary mortgage-backed securities market in Costa Rica is very limited despite a broad legal framework, while in El Salvador it is nonexistent and in Panama has not grown due to high liquidity. In Costa Rica’s subsidy policy, core institutions responsible for housing policy act as facilitators of private agents. This contrasts with the dispersion of policy and institutional efforts identified in Panama and El Salvador. Government subsidies are especially directed to households where more of 90 percent of the housing deficit is concentrated. A solution based on public budgets is not sustainable, requiring an active role of the private housing finance sector. Increasing the purchase capacity of families and reducing the cost of financing are necessary conditions to reduce housing deficits. |
| JEL: | G10 G18 G28 H81 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:idb:wpaper:4761&r=ure |
| By: | Kano, Kazuko; Kano, Takashi; Takechi, Kazutaka |
| Abstract: | This paper empirically establishes the significant roles of transport costs in price dispersions across regions. We identify and estimate the iceberg-type distance-elastic transport costs as a parameter of a structural model of cross-regional price differentials featuring product delivery decisions. Utilizing a data set of wholesale prices and product delivery patterns of agricultural products in Japan, our structural estimation approach finds large distance elasticities of the transport costs. The result confirms that geographical barriers are an economically significant contributor to the failures of the law of one price. |
| Keywords: | Law of one price, Regional price dispersion, Transport cost, Geographical distance, Agricultural wholesale price, Sample-selection bias |
| JEL: | F11 F14 F41 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:hit:econdp:2012-01&r=ure |
| By: | UNAYAMA Takashi |
| Abstract: | This paper investigates the effectiveness and problems of the temporary housing program, which is being applied to the victims of the Great East Japan Earthquake. While prefab homes are usually distributed as temporary housing, rent subsidies have become an additional option. Subsidies would be a better measure to help the victims if enough vacant units are available since the existing units are a more timely option; victims can choose size, location, and structure based on their needs; and there is no need for determining priority among the refugees. Moreover, subsidies would cost less than giving out prefab homes. However, careful plan designing is required to control population mobility, which is desirable for victims but may cause population decline in the stricken areas. |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rdpsjp:12011&r=ure |
| By: | Corrado, L.; Fingleton, B. |
| Abstract: | Spatial econometrics has been criticized by some economists because some model speci ca- tions have been driven by data-analytic considerations rather than having a rm foundation in economic theory. In particular this applies to the so-called W matrix, which is integral to the structure of endogenous and exogenous spatial lags, and to spatial error processes, and which are almost the sine qua non of spatial econometrics. Moreover it has been suggested that the signi cance of a spatially lagged dependent variable involving W may be misleading, since it may be simply picking up the e¤ects of omitted spatially dependent variables, incorrectly suggesting the existence of a spillover mechanism. In this paper we review the theoretical and empirical rationale for network dependence and spatial externalities as embodied in spatially lagged variables, arguing that failing to acknowledge their presence at least leads to biased inference, can be a cause of inconsistent estimation, and leads to an incorrect understanding of true causal processes. |
| Keywords: | Spatial econometrics, endogenous spatial lag, exogenous spatial lag, spatially dependent errors, network dependence, externalities, the W matrix, panel data with spatial effects, multilevel models with spatial effect, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:edn:sirdps:244&r=ure |
| By: | Renata Bottazzi (Institute for Fiscal Studies); Thomas Crossley (Institute for Fiscal Studies and University of Cambridge); Matthew Wakefield (Institute for Fiscal Studies and University of Bologna) |
| Abstract: | England has very volatile house prices. Using survey data spanning multiple house-price cycles over nearly forty years, we document the association between house prices and homeownership at age thirty. We then use synthetic cohort methods to assess whether differences in early ownership rates persist in later life. We find that ownership rates at age thirty have varied substantially, with a significant negative association with prices. Measurement error problems - attenuation and other biases - complicate an analysis of the persistence of these differences in ownership. We use two methods to deal with this. Both indicate that cohorts with low ownership rates at age thirty close about 80% of the ownership gap by age forty. |
| Keywords: | Home ownership, synthetic cohort data, measurement error. |
| JEL: | R21 R31 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:12/10&r=ure |
| By: | Christopher L. Foote; Kristopher S. Gerardi; Paul S. Willen |
| Abstract: | We present 12 facts about the mortgage crisis. We argue that the facts refute the popular story that the crisis resulted from finance industry insiders deceiving uninformed mortgage borrowers and investors. Instead, we argue that borrowers and investors made decisions that were rational and logical given their ex post overly optimistic beliefs about house prices. We then show that neither institutional features of the mortgage market nor financial innovations are any more likely to explain those distorted beliefs than they are to explain the Dutch tulip bubble 400 years ago. Economists should acknowledge the limits of our understanding of asset price bubbles and design policies accordingly. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2012-07&r=ure |
| By: | Volker Grossmann |
| Abstract: | This paper develops a two-sector R&D-based growth model with congestion effects from increasing urban population density. We show that endogenous technological progress causes structural change if there are positive productivity spillovers from the modern to the traditional sector and Engel’s law holds. In turn, urban congestion effects cause a productivity slowdown in the modern sector. Eventually, economic growth may cease in the long-run. We also show that land dilution from a higher workforce may give rise to negative scale effects on GDP per capita. Finally, we investigate how the optimal land allocation depends on the strength of urban congestion effects. |
| Keywords: | Congestion, Endogenous growth, Engel’s law, Structural change, Urbanization |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:deg:conpap:c016_005&r=ure |
| By: | H. Spencer Banzhaf; Wallace E. Oates |
| Abstract: | We re-evaluate two forms of fiscal illusion in local public finance: debt illusion and renter illusion. The Ricardian Equivalence Theorem for local governments suggests the form of finance of a public program (tax or debt finance) has no effects on substantive outcomes. For the local case, this results from the capitalization of local fiscal differentials into property values. We show that this version of the model is quite restrictive. In particular, in the U.S, context, where state and local interest is exempt from federal taxation, rational behavior may be inconsistent with Ricardian equivalence if local governments can borrow on more favorable terms than individuals. We also suggest a new test for renter illusion (or the renter effect). In particular, whether or not renters are more likely to support public investments in general, the renter effect suggests that renters are more likely to support them when financed with property taxes than with sales taxes. Using data from hundreds of open space referenda in the U.S. using a variety of finance mechanisms, we find evidence that households do prefer debt financing to tax financing, but find no evidence of the renter effect. |
| JEL: | H3 H4 H7 Q2 R2 R5 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18040&r=ure |
| By: | Dana Burde; Leigh L. Linden |
| Abstract: | We conduct a randomized evaluation of the effect of village-based schools on children’s academic performance using a sample of 31 villages and 1,490 children in rural northwestern Afghanistan. The program significantly increases enrollment and test scores among all children, eliminates the 21 percentage point gender disparity in enrollment, and dramatically reduces the disparity in test scores. The intervention increases formal school enrollment by 42 percentage points among all children and increases test scores by 0.51 standard deviations (1.2 standard deviations for children that enroll in school). While all students benefit, the effects accrue disproportionately to girls. Evidence suggests that the village-based schools provide a comparable education to traditional schools. Estimating the effects of distance on academic outcomes, children prove very sensitive: enrollment and test scores fall by 16 percentage points and 0.19 standard deviations per mile. Distance affects girls more than boys—girls’ enrollment falls by 6 percentage points more per mile (19 percentage points total per mile) and their test scores fall by an additional 0.09 standard deviations (0.24 standard deviations total per mile). |
| JEL: | I25 I28 O12 O22 O38 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18039&r=ure |
| By: | Jennifer Hunt |
| Abstract: | Using a state panel based on census data from 1940-2010, I examine the impact of immigration on the high school completion of natives in the United States. Immigrant children could compete for schooling resources with native children, lowering the return to native education and discouraging native high school completion. Conversely, native children might be encouraged to complete high school in order to avoid competing with immigrant high-school dropouts in the labor market. I find evidence that both channels are operative and that the net effect is positive, particularly for native-born blacks, though not for native-born Hispanics. An increase of one percentage point in the share of immigrants in the population aged 11-64 increases the probability that natives aged 11-17 eventually complete 12 years of schooling by 0.3 percentage points, and increases the probability for native-born blacks by 0.4 percentage points. I account for the endogeneity of immigrant flows by using instruments based on 1940 settlement patterns. |
| JEL: | J15 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18047&r=ure |
| By: | Elizabeth U. Cascio; Douglas O. Staiger |
| Abstract: | Educational interventions are often evaluated and compared on the basis of their impacts on test scores. Decades of research have produced two empirical regularities: interventions in later grades tend to have smaller effects than the same interventions in earlier grades, and the test score impacts of early educational interventions almost universally “fade out” over time. This paper explores whether these empirical regularities are an artifact of the common practice of rescaling test scores in terms of a student’s position in a widening distribution of knowledge. If a standard deviation in test scores in later grades translates into a larger difference in knowledge, an intervention’s effect on normalized test scores may fall even as its effect on knowledge does not. We evaluate this hypothesis by fitting a model of education production to correlations in test scores across grades and with college-going using both administrative and survey data. Our results imply that the variance in knowledge does indeed rise as children progress through school, but not enough for test score normalization to fully explain these empirical regularities. |
| JEL: | I20 I21 I28 J24 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18038&r=ure |
| By: | Kröll, Alexandra; Farhauer, Oliver |
| Abstract: | "Despite large-scale governmental efforts to combat homelessness, homelessness rates can only be reduced but not eliminated completely by the measures usually applied. Hence, there is an obvious need to investigate additional factors which contribute to homelessness and gain insights on how to further reduce homelessness. To begin with, the relationship between the conditions prevailing on the housing market and homelessness levels is made out with the help of a theoretical model. From this model, a critical income ensuring positive housing consumption can be deduced; individuals with an income below this critical threshold end up homeless. The empirical analysis draws on a panel data set comprising information on all districts (Kreise) of North Rhine-Westphalia from 2004-2009. The regression analysis underpins the theoretical results: High (net market) rents as well as low vacancy rates among small flats lead to rising homelessness. Homelessness also increases when the share of long-term unemployed and of those with a monthly income below EURO 700 is higher, since this makes it more difficult to reach the critical income needed to rent a flat. Finally, some policy conclusions resulting from the analysis are pointed out." (Author's abstract, IAB-Doku) ((en)) |
| JEL: | R21 R31 R38 I38 |
| Date: | 2012–05–08 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabdpa:201213&r=ure |
| By: | Giorgio Brunello; Maria De Paola; Giovanna Labartino |
| Abstract: | We use scanner data of supermarket sales to investigate the effects of the EU School Fruit campaign, conducted in a sample of primary schools in the city of Rome during 2010 and 2011, on the consumption of unhealthy snacks. We allocate supermarkets to treatment and control groups depending on whether they are located or not near treated schools and estimate the causal effect of the program by comparing the changes in the sales of snacks in treated stores with the changes in control stores. We find evidence that the campaign reduced the consumption of unhealthy snacks bought in stores located in high income areas. No effect is found in poorer areas. Repeated treatment does not strengthen the effects of the program. |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:0840&r=ure |
| By: | Diana Hancock; Wayne Passmore |
| Abstract: | We provide an empirical analysis of the effects of the Federal Reserve's asset holdings on MBS yields and mortgage rates. We argue that understanding the particulars of the U.S. mortgage markets, particularly the linkages between the secondary and primary mortgage markets, is important. We find evidence that the Federal Reserve's portfolio holdings influence mortgage markets, through both a "portfolio balancing channel" and an "excess reserves" channel. These two channels can work in opposite directions and their magnitudes are difficult to estimate, but on net, larger Federal Reserve's portfolio holdings seem to have placed a significant downward influence on MBS yields and mortgage rates. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2012-22&r=ure |
| By: | Ian Gordon |
| Abstract: | This paper examines the relation between ambition, as a form of dynamic human capital, and the escalator role of high order metropolitan regions, as originally identified by Fielding (1989). It argues that occupational progression in such places particularly depends on concentrations both of people with more of this asset and of jobs offering preferential access to valued elements of tacit knowledge, interacting in thick, competitive labour markets. This is partially confirmed with analyses of BHPS data on long term progression showing that only the more ambitious gain from residence in the extended London region, and that they only progress faster there. |
| Keywords: | Escalator region, migration, urban labour market, London, social mobility, human capital |
| JEL: | J24 J61 J62 R23 |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0107&r=ure |
| By: | Neil Bhutta |
| Abstract: | One of the major reasons hypothesized for the tepid economic recovery thus far is the ongoing "deleveraging" process. From 2009:Q3 to 2011:Q3, aggregate household debt declined by about $1.5 trillion in real terms, with mortgage debt falling by about $1 trillion. Other than defaults, the factors driving the decline in aggregate debt are not precisely understood, in large part because the necessary data are not widely available. This paper draws on panel data consisting of individual credit records to better understand why mortgage debt has declined. I decompose changes in aggregate mortgage debt over two-year periods spanning the past decade into inflows (from individuals whose mortgage debt increases during a given two-year period) and outflows (from those who reduce or eliminate their mortgage debt over a period). The principal finding is that the drop in outstanding mortgage debt has more to do with shrinking inflows than with expanding outflows, including defaults. Even if outflows had not grown at all, mortgage debt would have declined over the past two years because inflows have been so weak. One factor dampening inflows is historically weak first-time homebuying, especially among those with less-than-excellent credit scores, suggesting tight credit supply has limited debt accumulation even among those who have little debt. On the outflows side, most of the expansion can be traced to financially distressed borrowers and mortgage defaults, with real estate investors playing a disproportionate role. Otherwise, there has not been much of an increase in outflows, implying that borrowers generally are not paying down their balances more aggressively than in the past. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2012-14&r=ure |
| By: | Börjesson, Maria (KTH, ABE) |
| Abstract: | The parameters for travel time and travel cost are central in travel demand forecasting models. Since valuation of infrastructure investments requires prediction of travel demand for future evaluation years, inter-temporal variation of the travel time and travel cost parameters is a key issue in forecasting. Using two identical stated choice experiments conducted among Swedish drivers with an interval of 13 years, 1994 and 2007, this paper estimates the inter-temporal variation in travel time and cost parameters. It is found that the travel time parameter has remained constant over time but that the travel cost parameter has declined in real terms. The trend decline in the cost parameter can be entirely explained by higher average income level in the 2007 sample compared to the 1994 sample. The results support the recommendation to keep the travel time parameter constant over time in forecast models but to deflate the travel cost parameter according to forecasts of income increases among travellers and the relevant income elasticity of the cost parameter. Evidence from this study further suggests that the inter-temporal and the cross-sectional income elasticity of the cost parameter are equal. The average elasticity is found to be -0.8- -0.9 in the present sample of drivers, and the elasticity is found to increases with real income level, both in the cross-section and over time. |
| Keywords: | Travel demand forecasting; Inter-temporal income elasticity; Marginal disutility of time; Marginal disutility of cost; Time parameter; Cost parameter; Stated preference; Replicated survey |
| JEL: | C25 D61 J22 R41 R42 |
| Date: | 2012–05–04 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ctswps:2012_016&r=ure |
| By: | Fernandes, Ana M.; Sharma, Gunjan |
| Abstract: | This paper uses plant-level data to examine the impact of industrial and trade policy reforms on the geographic concentration of manufacturing industries in India from 1980 to 1999. First, the research shows that de-licensing and liberalization in foreign direct investment significantly reduced spatial concentration, but trade reforms had no significant effect on spatial concentration. Second, plants respond differently to policy reforms based on their size. Liberalization in foreign direct investment and de-licensing caused small plants to disperse, while trade liberalization had the opposite effect. However, for large plants trade liberalization led to lower spatial concentration. |
| Keywords: | Economic Theory&Research,Water and Industry,Industrial Management,Emerging Markets,Labor Policies |
| Date: | 2012–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6062&r=ure |
| By: | Baumgarten Skogstrøm, Jens Fredrik (Ragnar Frisch Centre for Economic Research,) |
| Abstract: | I present a theory on the relationship between educational choice and entrepreneurship in a labour market with asymmetric information. The model shows that, in a labour market where education is used as a signalling device, an imperfect relationship between productivity in education and in the labour market can lead to an equilibrium where a fraction of the high-ability individuals choose to quit school and become entrepreneurs. Using a comprehensive set of Norwegian register data, I find that this is prediction is confirmed empirically: Individuals combining low education with high ability have the highest entrepreneurship rates in the population. |
| Keywords: | Entrepreneurship; self-employment; education; ability |
| JEL: | J24 L26 M13 |
| Date: | 2012–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2012_010&r=ure |
| By: | Andersson, Åke E. (Jönköping International Business School) |
| Abstract: | One of the claims of this paper is that three Austro-Swedish schools of economics provided much of the foundations for almost all of economic analysis developed after the second world war. Important representatives of the first school are Böhm-Bawerk and Wicksell, Schumpeter and Hayek of the second school, and Cassel, Wald and von Neumann of the third Austro-Swedish school of economics. However, there are serious omissions in all the three approaches to economic theory. The most striking is the lack of an analysis of the role of non-material and material public capital (or infrastructure) in the growth and development of economies. In this paper I demonstrate the theoretical approaches necessary for an extension of economic dynamics to develop the theories and models of these schools of economics. In this paper I furthermore show that a proper refocusing on the time dimension can also shed light on the dynamics of economies in space. Three approaches are necessary for such a synthesis. 1.Subdivision of products and systems of production according to their different and always positive durability, implying that everything produced is capital. 2.Subdivision of products according to the time used in their production. 3.Subdivision into private and public goods, allowing for non-linearity. 4.Allowing for differences in time scales of economic processes. With these distinctions it can be shown that the economic development in time and space is determined by the impact of economies of scale, duration of the production process, durability of products and the - relative to most other kinds of capital - much slower growth of public capital (i.e. material and non-material infrastructure). |
| Keywords: | Public capital; time scale; economic theory; Austro Swedish schools |
| JEL: | B13 B23 C62 D21 E10 E22 E58 F10 F12 H41 L23 N01 O40 R12 |
| Date: | 2012–05–07 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0275&r=ure |
| By: | Tsubota, Kenmei |
| Abstract: | A typical implicit assumption on monopolistic competition models for trade and economic geography is that firms can produce and sell only at one place. This paper fallows endogenous determination of the number of plants in a new economic geography model and examine the stable outcomes of organization choice between single-plant and multi-plant in two regions. We explicitly consider the firms' trade-off between larger economies of scale under single plant configuration and the saving in interregional transport costs under multi-plant configuration. We show that organization change arises under decreasing transportation costs and observe several organization configurations under a generalized cost function. |
| Keywords: | Industrial management, Business enterprises, Multi-plant firms, Transaction costs, New economic geography |
| JEL: | D21 F12 L23 R12 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper346&r=ure |
| By: | Willi Semmler; Lucas Bernard |
| Abstract: | Recent history suggests that many boom-bust cycles are naturally driven by linkages between the credit market and asset prices. Additionally, new structured securities have been developed, e.g., MBS, CDOs, and CDS, which have acted as instruments of risk transfer. We show that there is a certain non-robustness in the pricing of these instruments and we create a model in which their role in the recent financial market meltdown, and in which the mechanism by which they exacerbate leverage cycles, is explicit. We first discuss the extent to which complex securities can amplify boom-bust cycles. Then, we propose a model in which distinct financial market boom-bust cycles emerge naturally. We demonstrate the interaction of leveraging and asset pricing in a dynamical model and spell out some implications for monetary policy. |
| Keywords: | Credit, Leverage, Mortgage, Credit Risk, Structured Finance, Leveraged Financing, Mortgage-backed Security, Collateral, Collateralized Default Obligation, Booms, Busts, Dynamic, Cycles |
| JEL: | C61 C63 G21 D83 D92 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:deg:conpap:c016_034&r=ure |
| By: | Paul C. Cheshire (London School of Economics); Christian A. L. Hilber (London School of Economics & Spatial Economics Research Centre (SERC)); Ioannis Kaplanis (Universitat Rovira i Virgili & Spatial Economics Research Centre (SERC)) |
| Abstract: | We use unique store-specific data for a major UK supermarket chain to estimate the impact of planning, which restricts both the size and location of stores, on store output. Using the quasi-natural experiment of the variation in planning policies between England and other UK countries and a difference-in-difference approach, we isolate the impact of Town Centre First (TCF) policies. We find that space contributes directly to the productivity of stores and planning policies in England directly reduce output both by reducing store sizes and forcing stores onto less productive sites. Our results suggest that since the late 1980s planning policies have imposed a loss of total output of at least 18.3 to 24.9%. This is equivalent to more than a ‘lost decade’ of output growth in a major sector generated directly by government policy. |
| Keywords: | Land use regulation, regulatory costs, firm productivity, retail |
| JEL: | D2 L51 L81 R32 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2012/5/doc2012-15&r=ure |
| By: | Sylvain Leduc; Daniel Wilson |
| Abstract: | We examine the dynamic macroeconomic effects of public infrastructure investment both theoretically and empirically, using a novel data set we compiled on various highway spending measures. Relying on the institutional design of federal grant distributions among states, we construct a measure of government highway spending shocks that captures revisions in expectations about future government investment. We find that shocks to federal highway funding has a positive effect on local GDP both on impact and after 6 to 8 years, with the impact effect coming from shocks during (local) recessions. However, we find no permanent effect (as of 10 years after the shock). Similar impulse responses are found in a number of other macroeconomic variables. The transmission channel for these responses appears to be through initial funding leading to building, over several years, of public highway capital which then temporarily boosts private sector productivity and local demand. To help interpret these findings, we develop an open economy New Keynesian model with productive public capital in which regions are part of a monetary and fiscal union. We show that the presence of productive public capital in this model can yield impulse responses with the same qualitative pattern that we find empirically. |
| JEL: | E62 H54 R11 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18042&r=ure |
| By: | Stephan Litschig; Kevin Morrison |
| Abstract: | Does additional government spending improve the electoral chances of incumbent political parties? This paper provides the first quasi-experimental evidence on this question. Our research design exploits discontinuities in federal funding to local governments in Brazil around several population cutoffs over the period 1982-1985. We find that extra fiscal transfers resulted in a 20% increase in local government spending per capita, and an increase of about 10 percentage points in the re-election probability of local incumbent parties. We also find positive effects of the government spending on education outcomes and earnings, which we interpret as indirect evidence of public service improvements. Together, our results provide evidence that electoral rewards encourage incumbents to spend part of additional revenues on public services valued by voters, a finding in line with agency models of electoral accountability. |
| Keywords: | Government spending, voting, regression discontinuity |
| JEL: | H40 H72 D72 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:515&r=ure |
| By: | Jose Apesteguia; Miguel A. Ballester |
| Abstract: | Two main school choice mechanisms have attracted the attention in the literature: Boston and deferred acceptance (DA). The question arises on the ex-ante welfare implications when the game is played by participants that vary in terms of their strategic sophistication. Abdulkadiroglu, Che and Yasuda (2011) have shown that the chances of naive participants getting into a good school are higher under the Boston mechanism than under DA, and some naive participants are actually better off. In this note we show that these results can be extended to show that, under the veil of ignorance, i.e. students not yet knowing their utility values, all naive students may prefer to adopt the Boston mechanism. |
| Keywords: | School Choice; Naive Players; Welfare; Veil of Ignorance |
| JEL: | C7 D0 D6 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:575&r=ure |
| By: | Krüger, Niclas (VTI) |
| Abstract: | This paper investigates the relationship between infrastructure investments and economic activity in Sweden for the period 1800-2000. In order to overcome the problem of endogeneity, independent time scales are used to analyze the relationship. The paper also examines the dynamics between the variables by testing for causality in the Granger sense and constructing a vector autoregressive model separately for each time scale. The finding is that the causality nexus between growth and transport infrastructure investment is timescale-dependent since it reverses in a comparison of the short-run dynamics (2-4 years) and the longer-run dynamics (8-16 years). This causality reversal is unique for infrastructure investments compared to investments in other sectorsof the economy. |
| Keywords: | Infrastructure; GDP growth; Investment; Time scale decomposition |
| JEL: | E22 E32 N70 |
| Date: | 2012–05–04 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ctswps:2012_015&r=ure |
| By: | Börjesson, Maria (KTH) |
| Abstract: | It is sometimes argued that standard state-of-practice logit based models cannot forecast the demand for substantially reduced travel times, for instance due to High Speed Rail (HSR). The present paper investigates this issue by reviewing travel time elasticities for long-distance rail travel in the literature and comparing these with elasticities observed when new HSR lines have opened. This paper also validates the Swedish official long-distance model and its forecasted demand for a proposed new HSR track, using aggregate data revealing how the air-rail modal split varies with the difference in generalized travel time between rail and air. The official linear-in-parameters long-distance model is also compared to a model applying Box-Cox transformations. The paper contributes to the empirical literature on long-distance travel, long-distance elasticities and HSR passenger demand forecasts. Results indicate that the Swedish state-of-practice model, and similar models, is indeed able to predict the demand for a HSR reasonably well. The non-linear model, however, has better model fit and slightly higher elasticities. |
| Keywords: | High speed rail; Travel demand; Forecasting; Air-rail share; Cost-benefit analysis |
| JEL: | C25 D61 J22 R41 R42 |
| Date: | 2012–05–03 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ctswps:2012_012&r=ure |
| By: | Emran, M. Shahe; Shilpi, Forhad |
| Abstract: | India experienced sustained economic growth for more than two decades following the economic liberalization in 1991. While economic growth reduced poverty significantly, it was associated with an increase in inequality. Does this increase in inequality reflect deep-seated inequality of opportunity or efficient incentive structure in a market oriented economy? This paper provides evidence on economic mobility in post-reform India by focusing on the educational attainment of children. It uses two related measures of immobility: sibling and intergenerational correlations. The paper analyzes the trends in and patterns of educational mobility from 1992/93 to 2006, with a special emphasis on the roles played by gender and geography. The evidence shows that family background plays a strong role; the estimated sibling correlation in India in 2006 is higher than the available estimates for Latin American countries. There is a persistent gender gap in rural and less-developed areas. The only group that experienced substantial improvements is women in urban and developed areas, with the lower caste women benefiting the most. Almost 70 percent of the variance in children's education can be accounted for by parental education and geographic location. The authors provide possible explanations for the apparently puzzling improvements for urban women in a country with strong son preference. |
| Keywords: | Population Policies,Primary Education,Education and Society,Population&Development,Rural Development Knowledge&Information Systems |
| Date: | 2012–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6055&r=ure |
| By: | Cowan, Robin (UNU-MERIT / MGSOG, Maastricht University, and BETA, Université de Strasbourg); Kamath, Anant (UNU-MERIT / MGSOG, Maastricht University, and University of Georgia, United States) |
| Abstract: | When agents use informal interaction to exchange knowledge, their production relations may develop as emergent properties of their social relations and may exhibit homophily. The Saliyar community cluster in India is an archetype of this. This cluster’s experience is investigated on how its thickly homophilous networks have steered it from dominance to decline, in the market for a product which calls for constant improvement of knowhow, under unchanging production technology. A network analysis of the Saliyars community cluster — in comparison with the networks of the communities in a cluster of a similar population at Payattuvila, which has surged ahead of the Saliyar Cluster in performance in handloom weaving — provides evidence that it is not simply social embeddedness alone, but the homophily in socially embedded links that are detrimental to clusters dependent upon informal knowledge exchanges. Hence, we provide evidence that social embeddedness is not as detrimental unless combined with homophily. The conceptual ambit of embeddedness has to broaden out to recognise that social relations come in various ‘homophilies’. This has many policy implications too as it involves studying embeddedness and homophily in rural traditional technology clusters intensively involving community social capital; such clusters being ubiquitous in India and whose experiences have not been scrutinised in this perspective. |
| Keywords: | Clusters, Handloom, Networks, Social Embeddedness, Homophily, Kerala |
| JEL: | D83 D85 O33 Z13 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:unumer:2012031&r=ure |
| By: | Stephan Litschig |
| Abstract: | This paper uses a regression discontinuity design to estimate the impact of additional unrestricted grant financing on local public spending, public service provision, schooling, literacy, and income at the community (municipio) level in Brazil. Additional transfers increased local public spending per capita by about 20% with no evidence of crowding out own revenue or other revenue sources. The additional local spending increased schooling per capita by about 7% and literacy rates by about 4 percentage points. The implied marginal cost of schooling accounting for corruption and other leakagesamounts to about US$ 237, which turns out to be similar to the average cost of schooling in Brazil in the early 1980s. In line with the effect on human capital, the poverty rate was reduced by about 4 percentage points, while income per capita gains were positive but not statistically significant. Results also suggest that additional public spending had stronger effects on schooling and literacy in less developed parts of Brazil, while poverty reduction was evenly spread across the country. |
| Keywords: | Intergovernmental grants, decentralization, economic development |
| JEL: | D70 H40 H72 O15 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:510&r=ure |
| By: | Ian Gordon; Ioannis Kaplanis |
| Abstract: | Growth of 'global cities' in the 1980s was supposed to have involved an occupational polarisation, including growth of low paid service jobs. Though held to be untrue for European cities, at the time, some such growth did emerge in London a decade later than first reported for New York. The question is whether there was simply a delay before London conformed to the global city model, or whether another distinct cause was at work in both cases. This paper proposes that the critical factor in both cases was actually an upsurge of immigration from poor countries providing an elastic supply of cheap labour. This hypothesis and its counterpart based on growth in elite jobs are tested econometrically for the British case with regional data spanning 1975-2008, finding some support for both effects, but with immigration from poor countries as the crucial influence in late 1990s London. |
| Keywords: | regional labour markets, wages, employment, international migration, consumer demand |
| JEL: | J21 J23 F22 R12 |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0106&r=ure |
| By: | Dutko, Paula; Ver Ploeg, Michele; Farrigan, Tracey L. |
| Abstract: | Applying a census tract-level definition of food deserts, areas with limited access to affordable and healthy food, ERS has identified over 6,500 food desert tracts in the U.S. based on data from the 2000 Census of the Population. In this report, we examine the socioeconomic and demographic characteristics of these tracts to see how they differ from other tracts. We describe the demographic and socioeconomic characteristics of food desert census tracts compared with all other census tracts and how these tract characteristics have changed over time. Then, using multivariate logit analysis and data from the 1990 Census and 2000 Census, we attempt to isolate which characteristics separate food desert tracts from other low-income census tracts, to help distinguish areas that are vulnerable to low access problems in the future. Descriptive results indicate that relative to all other census tracts, food desert tracts tend to have smaller populations, higher rates of abandoned or vacant homes and residents with lower levels of education, lower incomes, and lower labor force participation. Multivariate analysis indicates that census tracts with higher poverty rates are more likely to be food deserts than otherwise similar low-income census tracts in rural and in very dense urban areas. For less dense urban areas, census tracts with higher concentrations of minority populations are more likely to be food deserts, while tracts with substantial decreases in minority populations between 1990 and 2000 were less likely to be food deserts in 2000. |
| Keywords: | Food Consumption/Nutrition/Food Safety, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaeafe:123201&r=ure |
| By: | Troeger, Vera (University of Warwick); Plumper, Thomas (University of Essex) |
| Abstract: | Contrary to the belief of many, tax competition did not undermine the foundations of the welfare state and did not even abolish the taxation of capital. Instead, tax competition caused governments to shift the tax burden from capital to labor, thereby increasing income inequality in liberal market economies that traditionally redistribute income by relatively high effective capital taxes and relatively low effective labor taxes. In contrast, income inequality did increase little or not at all in social welfare states that dominantly use social security transfers to redistribute income. Governments in social welfare states found it easy to maintain high social expenditures because they increasingly taxed labor, which is relatively immobile, to finance social security transfers. We test the predictions of this theory using a simultaneous equation approach that accounts for the endogeneity of tax policies, fiscal policies, and deficits. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:cge:warwcg:82&r=ure |
| By: | de Jaeger, Simon (Hogeschool-Universiteit Brussel (HUB)) |
| Abstract: | In this paper we set up a stylized theoretical model of consumers’ preference regarding the price for residual municipal solid waste collection and processing services set by the local municipalities. As we are not sure about the information content taken into account by the electorate when judging the incumbents performance, we distinguish between three scenarios prevailing in the political economics literature. In the first scenario a representative consumer maximizes its utility subject to its waste balance equation and its budget constraint. Inspired by the median voter literature, the second scenario adds the local policy makers budget constraint to the basic consumers’ choice problem. In the third scenario we assume the representative consumer compares the price for residual municipal solid waste they pay with the price in neighbouring municipalities and use this price as a yardstick when judging the performance of their incumbent. The predictions from our models are tested using observation for all 308 municipalities in Flanders (Belgium) in 2006 and 2009. The results clearly indicate that consumers hold the local policy makers responsible for residual waste prices, but they do so without using prices in neighbouring municipalities as a yardstick. Political costs in terms of popularity scores rather seem to depend on absolute price levels and (recent) changes in the price levels. Our data also show that local policymakers engage in price mimicking, but apparently this has little influence on re-election chances |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:hub:wpecon:201219&r=ure |