nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2012‒06‒05
38 papers chosen by
Steve Ross
University of Connecticut

  1. Spatial Interactions in Hedonic Pricing Models: The Urban Housing Market of Aveiro, Portugal By Bhattacharjee, Arnab; de Castro, Eduardo Anselmo; Marques, João Lourenço
  2. Metropolitan Land Values and Housing Productivity By David Albouy; Gabriel Ehrlich
  3. Do Homeowners Benefit Urban Neighborhoods? Evidence from Housing Prices By Mika Kortelainen; Tuukka Saarimaa
  4. Estimation of the Spatial Weights Matrix under Structural Constraints By Bhattacharjee, Arnab; Jensen-Butler, Chris
  5. Location, location, location: Extracting location value from house prices By Jens Kolbe; Rainer Schulz; Martin Wersing; Axel Werwatz
  6. What drives urban consumption in mainland china? The role of property price dynamics By Chen, Yu-Fu; Funke, Michael; Mehrotra, Aaron
  7. When Walmart Comes to Town: Always Low Housing Prices? Always? By Devin G. Pope; Jaren C. Pope
  8. Micro-geographies of clusters of creative industries in Europe By Rafael Boix; Jose-Luis Hervas-Oliver; Blanca De Miguel-Molina
  9. The Contribution of Housing to the Dynamics of Inequalities By Modibo Sidibé
  10. Amenity Value of Urban Forest Landscapes Attributed to Houses within a 10-Minute Driving Distance By Kim, Seung Gyu; Cho, Seong-Hoon; Roberts, Roland K.; Claassen, Roger
  11. How do geographically mobile innovators influence network formation? By Ernest Miguélez
  12. Do Significant Immigrant Inflows Create Negative Education Impacts? Lessons from the North Carolina Public School System By Diette, Timothy M.; Uwaifo Oyelere, Ruth
  13. Quality of Life, Firm Productivity, and the Value of Amenities across Canadian Cities By David Albouy; Fernando Leibovici; Casey Warman
  14. The effects of agglomeration on wages: evidence from the micro-level By Fingleton, Bernard; Longhi, Simonetta
  15. Why are migrant students better off in certain types of educational systems or schools than in others? On the effects of educational systems, school composition, track level, parental background, and country of origin on the achievement of 15-year- old migrant students. By Jaap Dronkers; Rolf van der Velden; Allison Dunne
  16. The Effects of “Girl-Friendly” Schools: Evidence from the BRIGHT School Construction Program in Burkina Faso By Harounan Kazianga; Dan Levy; Leigh L. Linden; Matt Sloan
  17. In brief: Language barriers? The impact of non-native English speakers in the classroom By Charlotte Geay; Sandra McNally; Shqiponja Telhaj
  18. Ecological Fiscal Incentives and Spatial Strategic Interactions: the Case of the ICMS-E in the Brazilian state of Paraná By Sébastien MARCHAND; Alexandre SAUQUET; José Gustavo FERES
  19. Export decisions of services firms between agglomeration effects and market-entry costs By Kox, Henk L.M.
  20. Regional productivity variation and the impact of public capital stock: an analysis with spatial interaction, with reference to Spain By Gómez-Antonio, Miguel; Fingleton, Bernard
  21. Regional Policy Spillovers: The National Impact of Demand-Side Policy in an Interregional Model of the UK Economy By Gilmartin, Michelle; Learmonth, David; McGregor, Peter; Swales, Kim; Turner, Karen
  22. Transport Infrastructure and the Road to Statehood in Somaliland. By Azam, Jean-Paul
  23. Local Spending, Transfers and Costly Tax Collection By Fernando Aragon
  24. In brief: Urban schools: does money make a difference? By Steve Gibbons; Sandra McNally; Martina Viarengo
  25. In brief: Can industrial policy boost jobs? By Chiara Criscuolo; Ralf Martin; Henry Overman; John Van Reenen
  26. When the Cat is Near, the Mice Wonft Play: The Effect of External Examiners in Italian Schools By Marco Bertoni; Giorgio Brunello; Lorenzo Rocco
  27. Multilevel Modelling with Spatial Effects By Corrado, L.; Fingleton, B.
  28. All About Priorities: No School Choice under the Presence of Bad Schools By Caterina Calsamiglia; Antonio Miralles
  29. Does Self-Employment Measure Entrepreneurship? Evidence from Great Britain By Giulia Faggio; Olmo Silva
  30. Linking competitiveness clusters with public higher education and research: the French puzzle By Philippe Lefebvre; Frédérique Pallez; Daniel Fixari
  31. Hospital Staffing and Local Pay: an Investigation into the Impact of Local variations in the Competitiveness of Nurses Pay on the Staffing of Hospitals in France By Eric Delattre; Jean-Baptiste Combès; Bob Elliott; Diane Skatun
  32. Intergenerational Transmission of Neighbourhood Poverty in Sweden: An Innovative Analysis of Individual Neighbourhood Histories By van Ham, Maarten; Hedman, Lina; Manley, David; Coulter, Rory
  33. Does Immigration into Their Neighborhoods Incline Voters Toward the Extreme Right? The Case of the Freedom Party of Austria By Halla, Martin; Wagner, Alexander F.; Zweimüller, Josef
  34. Falling poverty rates in inner London raise questions about inequality and segregation for a growing city in transition . By Fenton, Alex
  35. Networks and Selection in International Migration to Spain By Nina Neubecker; Marcel Smolka; Anne Steinbacher
  36. Mortgage contracts in Islamic home finance: Musharakah Mutanaqisah program vs. Zubair diminishing balance model By Hasan, Zubair
  37. Mandatory pension savings, private savings, homeownership, and financial stability By Asgeir Danielsson
  38. Another Effect of Group Diversity: Educational Composition and Workers’ Pay By Simone N. Tuor Sartore; Uschi Backes-Gellner

  1. By: Bhattacharjee, Arnab; de Castro, Eduardo Anselmo; Marques, João Lourenço
    Abstract: Spatial heterogeneity, spatial dependence and spatial scale constitute key features of spatial analysis of housing markets. However, the common practice of modelling spatial dependence as being generated by spatial interactions through a known spatial weights matrix is often not satisfactory. While existing estimators of spatial weights matrices are based on repeat sales or panel data, this paper takes this approach to a cross-section setting. Specifically, based on an a priori definition of housing submarkets and the assumption of a multifactor model, we develop maximum likelihood methodology to estimate hedonic models that facilitate understanding of both spatial heterogeneity and spatial interactions. The methodology, based on statistical orthogonal factor analysis, is applied to the urban housing market of Aveiro, Portugal at two different spatial scales.
    Keywords: Spatial econometrics, Spatial heterogeneity, Spatial dependence, Spatial scale, Hedonic pricing, Statistical factor analysis, Spatial weights matrix,
    Date: 2011
  2. By: David Albouy; Gabriel Ehrlich
    Abstract: We present the first nationwide index of directly-measured land values by metropolitan area and investigate their relationship with housing prices. Construction prices and geographic and regulatory constraints are shown to increase the cost of housing relative to land. On average, approximately one-third of housing costs are due to land, with an increasing share in higher-value areas, implying an elasticity of substitution between land and other inputs of about one-half. Conditional on land and construction prices, housing productivity is relatively low in larger cities. The increase in housing costs associated with greater regulation appears to outweigh any benefits from improved quality-of-life.
    JEL: D24 R31 R52
    Date: 2012–05
  3. By: Mika Kortelainen; Tuukka Saarimaa
    Abstract: Homeownership is heavily subsidized in many countries mainly through the tax code. The adverse effects of lenient tax treatment of owner-occupied housing on economic efficiency and growth are large and well documented in the economics literature. The main argument in favor of subsidizing owner-occupied housing is that it creates positive externalities that offset these adverse effects. This paper tests whether homeowners create positive externalities to their immediate neighborhood that capitalize into housing prices in multi-storey buildings. Using semiparametric hedonic regressions with and without instrumental variables we find no evidence of positive externalities from neighborhood homeownership rate. This result is robust to relaxing the identification assumptions of our instrument using a recently developed set identification method. Our results suggest that the adverse efficiency effects of lenient tax treatment of owner-occupied housing are not offset by positive externalities.
    Keywords: Homeownership, neighborhood effects, partial linear model, set identification
    JEL: D62 R21 R28
    Date: 2012–05
  4. By: Bhattacharjee, Arnab; Jensen-Butler, Chris
    Abstract: While estimates of models with spatial interaction are very sensitive to the choice of spatial weights, considerable uncertainty surrounds de nition of spatial weights in most studies with cross-section dependence. We show that, in the spatial error model the spatial weights matrix is only partially identi ed, and is fully identifi ed under the structural constraint of symmetry. For the spatial error model, we propose a new methodology for estimation of spatial weights under the assumption of symmetric spatial weights, with extensions to other important spatial models. The methodology is applied to regional housing markets in the UK, providing an estimated spatial weights matrix that generates several new hypotheses about the economic and socio-cultural drivers of spatial di¤usion in housing demand.
    Keywords: Spatial econometrics, Spatial autocorrelation, Spatial weights matrix, Spatial error model, Housing demand, Gradient projection,
    Date: 2011
  5. By: Jens Kolbe; Rainer Schulz; Martin Wersing; Axel Werwatz
    Abstract: The price for a single-family house depends both on the characteristics of the building and on its location. We propose a novel semiparametric method to extract location values from house prices. After splitting house prices into building and land components, location values are estimated with adaptive weight smoothing. The adaptive estimator requires neither strong smoothness assumptions nor local symmetry. We apply the method to house transactions from Berlin, Germany. The estimated surface of location values is highly correlated with expert-based land values and location ratings. The semiparametric method can therefore be used for applications where no other location value information exists or where this information is not reliable.
    Keywords: location value, adaptive weight smoothing, spatial modeling
    JEL: R31 C14
    Date: 2012–05
  6. By: Chen, Yu-Fu; Funke, Michael; Mehrotra, Aaron
    Abstract: This paper adds to the literature on wealth effects on consumption by disentangling house price effects on consumption for mainland China. In a stochastic modelling framework, the riskiness, rate of increase and persistence of house price movements have different implications for the consumption/housing ratio. We exploit the geographical variation in property prices by using a quarterly city-level panel dataset for the period 1998Q1 – 2009Q4 and rely on a panel error correction model. Overall, the results suggest a significant long run impact of property prices on consumption. They also broadly confirm the predictions from the theoretical model.
    Keywords: Consumption, China, house prices, panel data,
    Date: 2011
  7. By: Devin G. Pope; Jaren C. Pope
    Abstract: Walmart often faces strong local opposition when trying to build a new store. Opponents often claim that Walmart lowers nearby housing prices. In this study we use over one million housing transactions located near 159 Walmarts that opened between 2000 and 2006 to test if the opening of a Walmart does indeed lower housing prices. Using a difference-in-differences specification, our estimates suggest that a new Walmart store actually increases housing prices by between 2 and 3 percent for houses located within 0.5 miles of the store and by 1 to 2 percent for houses located between 0.5 and 1 mile.
    JEL: R20
    Date: 2012–05
  8. By: Rafael Boix; Jose-Luis Hervas-Oliver; Blanca De Miguel-Molina
    Abstract: What makes special the geography of the clusters of creative industries (CI)? This paper considers the symbolic knowledge-base and the preference for location in urban spaces observed in those clusters. The study avoids classic research designs based on synthetic knowledge bases and regional-based administrative-constrained design, using instead micro-data (550,000 firms in creative industries) and geo-statistical algorithms. Results contribute to the economic geography by: (i) providing a specific observation of the spatial dimension (where) in the cluster theory; (ii) identifying and mapping the clusters of CI in Europe; (iii) exploring particular forms of agglomeration and co-location (urban and non-urban) followed by clusters of CI. Results present implications for scholars and policy-makers suggesting to stress the articulation of within and between-cluster policy strategies for existing clusters rather than fostering the generation of new clusters.
    Keywords: creative industries, clusters, symbolic knowledge, micro-data, geolocalization
    JEL: R12 C49 Z0
    Date: 2012–05
  9. By: Modibo Sidibé (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon)
    Abstract: This paper proposes a unified framework for the analysis of inequalities. In contrast to the former literature on inequalities, housing is included as a major determinant of individual saving behavior. Disparities across locations affect individual outcomes in both labor and education markets. In a Bewley-Huggett-Aiyagari type model where several frictions are represented, the model allows for segmentation between homeowners and renters in the housing market, imperfection in the capital market and residential mobility over the life-cycle. Moreover, individual location is assumed to affect labor productivity, wealth accumulation via the dynamics of housing prices and the human capital acquisition process of the next generation. The dynamics of prices combined to bequest motive provide the perfect framework to understand the tenure choice of individuals. Furthermore, the fixity of housing supply in each neighborhood combined with borrowing constraints prevent some households from living in their preferred area, which leads to segregation. Using this general framework, the paper contributes to the understanding of the complex relationships between labor, housing and education markets. Finally, several experiments aimed at decreasing the level of inequalities at the individual and location level are provided.
    Keywords: Heterogeneous Agents; Inequalities; Wealth distribution; Housing
    Date: 2012–05–24
  10. By: Kim, Seung Gyu; Cho, Seong-Hoon; Roberts, Roland K.; Claassen, Roger
    Abstract: The main objective of this research is to propose a data-driven approach to estimate the amenity values of restoring urban forest landscapes at potential target sites. The approach allows establishing the overall price-driving time relationship between the amenity values attributable to both deforested and forested areas and their proximities to housing locations within a given community. Establishing the overall price-driving time relationship is important because the hedonic price model cannot be used to estimate the amenity values of yet to be restored urban forest landscapes that do not exist at the time of housing sales transactions. We estimated the sum of the differences between amenity values of deforested and forested areas on housing prices across different proximities to a potential restoration site. It can be viewed as a proxy for the value added to nearby houses resulting from a given urban forest restoration project at a potential target site.
    Keywords: urban forest landscapes, spatial hedonic model, travel distance, Land Economics/Use,
    Date: 2012
  11. By: Ernest Miguélez
    Abstract: In this paper, I aim to assess the influence of spatial mobility of knowledge workers on the formation of ties of scientific and industrial collaboration across European regions. Co-location has been traditionally invoked to ease formal collaboration between individuals and firms. Tie formation is costly and decreases as distance between the partners involved increases, making ties between co-located individuals more likely than between spatially separated peers. In some instances, highly-skilled actors might become mobile and bridge regional networks across long physical distances. The effect of trust and mutual understanding between members of a co-located community may well survive the end of their co-localisation, and therefore the formation of networks across the space may overcome long distances. In this paper I estimate a fixed effects logit model to ascertain whether there exists a ‘previous co-location premium’ in the formation of networks across European regions. The role of mobility in network formation has been lately discussed elsewhere, but, to my knowledge, barely empirically tested.
    Keywords: inventors’ mobility, technological collaborations, co-location, brain drain, panel data
    JEL: C8 J61 O31 O33 R0
    Date: 2012–05
  12. By: Diette, Timothy M. (Washington and Lee University); Uwaifo Oyelere, Ruth (Georgia Tech)
    Abstract: The influx of immigrants has shifted the ethnic composition of public schools in many states. Given the perceived negative impact of significant immigrant inflows, we are interested in investigating if these inflows into a school affect the academic performance of native students who remain. To address this question, we analyze education data from North Carolina, a state that has experienced a significant immigrant influx in the last two decades. We focus on the share of the English Language Learners in the student population for students between fourth and eighth grade over the period from 1999 to 2006 and the potential effects of the presence of these students on the level of achievement in math and reading for native students. Our analysis suggests some evidence of immigrant peer effects though the effects are heterogeneous. Specifically, we find some evidence of positive effects among those in the middle and bottom portions of the achievement distribution while we find small negative effects at the top of the distribution.
    Keywords: immigrants, student achievement, peer effects, education
    JEL: I20 I21 J15 J24
    Date: 2012–05
  13. By: David Albouy; Fernando Leibovici; Casey Warman
    Abstract: We present hedonic general-equilibrium estimates of quality-of-life and productivity differences across Canada’s metropolitan areas. These are based off of the estimated willingness-to-pay of heterogeneous households and firms to locate in various cities, which differ in their wage levels, housing costs, and land values. Using 2006 Canadian Census data, our metropolitan quality-of-life estimates are somewhat consistent with popular rankings, but find Canadians care more about climate and culture. Quality-of-life is highest in Victoria for Anglophones, Montreal for Francophones, and Vancouver for Allophones, and lowest in more remote cities. Toronto is Canada’s most productive city; Vancouver is the overall most valuable city.
    JEL: J31 J61 Q51 R1
    Date: 2012–05
  14. By: Fingleton, Bernard; Longhi, Simonetta
    Abstract: This paper estimates individual wage equations in order to test two rival non-nested theories of economic agglomeration, namely New Economic Geography (NEG), as represented by the NEG wage equation and urban economic (UE) theory , in which wages relate to employment density. The paper makes an original contribution by evidently being the first empirical paper to examine the issue of agglomeration processes associated with contemporary theory working with micro-level data, highlighting the role of gender and other individual-level characteristics. For male respondents, there is no significant evidence that wage levels are an outcome of the mechanisms suggested by NEG or UE theory, but this is not the case for female respondents. We speculate on the reasons for the gender difference.
    Keywords: urban economics, new economic geography, household panel data,
    Date: 2011
  15. By: Jaap Dronkers (Maastricht University); Rolf van der Velden (Maastricht University); Allison Dunne (GHK Consulting Ltd)
    Abstract: The main research question of this paper is the combined estimation of the effects of educational systems, school composition, track level, and country of origin on the educational achievement of 15-year-old migrant students. We focus specifically on the effects of socioeconomic and ethnic background on achievement scores and the extent to which these effects are affected by characteristics of the school, track, or educational system in which these students are enrolled. In doing so, we examine the ‘sorting’ mechanisms of schools and tracks in highly stratified, moderately stratified, and comprehensive education systems. We use data from the 2006 Programme for International Student Assessment (PISA) wave. Compared with previous research in this area, the paper’s main contribution is that we explicitly include the tracks-within-school level as a separate unit of analyses, which leads to less biased results concerning the effects of educational system characteristics. The results highlight the importance of including factors of track level and school composition in the debate surrounding educational inequality of opportunity for students in different education contexts. The findings clearly indicate that the effects of educational system characteristics are flawed if the analysis only uses a country- and a student level and ignores the tracks-within-school level characteristics. From a policy perspective, the most important finding is that educational systems are neither uniformly ‘good’ nor ‘bad’, but they can result in different consequences for different migrant groups. Some migrant groups are better off in comprehensive systems, while others are better off in moderately stratified systems.
    Date: 2012–05
  16. By: Harounan Kazianga; Dan Levy; Leigh L. Linden; Matt Sloan
    Abstract: We evaluate the causal effects of a program that constructed high quality “girl-friendly” primary schools in Burkina Faso, using a regression discontinuity design 2.5 years after the program started. We find that the program increased enrollment of all children between the ages of 5 and 12 by 20 percentage points and increased their test scores by 0.45 standard deviations. The change in test scores for those children caused to attend school by the program is 2.2 standard deviations. We also find that the program was particularly effective for girls, increasing their enrollment rate by 5 percentage points more than boys’, although this did not translate into a differential effect on test scores. Disentangling the effects of school access from the unique characteristics of the new schools, we find that the unique characteristics were responsible for a 13 percentage point increase in enrollment and 0.35 standard deviations in test scores, while simply providing a school increased enrollment by 26.5 percentage points and test scores by 0.323 standard deviations. The unique characteristics of the school account for the entire difference in the treatment effect by gender.
    JEL: I24 I25 I28 O15
    Date: 2012–05
  17. By: Charlotte Geay; Sandra McNally; Shqiponja Telhaj
    Abstract: In recent years there has been an increase in the number of children going to school in England who do not speak English as a first language. We investigate whether this has an impact on the educational outcomes of native English speakers at the end of primary school. We show that the negative correlation observed in the raw data is mainly an artefact of selection: non-native speakers are more likely to attend school with disadvantaged native speakers. We attempt to identify a causal impact of changes in the percentage of non-native speakers within the year group. In general, our results suggest zero effect and rule out negative effects.
    Keywords: primary school education, UK, educational attainment, curriculum, immigration, language
    Date: 2012–05
  18. By: Sébastien MARCHAND (Centre d'Etudes et de Recherches sur le Développement International); Alexandre SAUQUET; José Gustavo FERES
    Abstract: The ICMS-Ecológico is a fiscal transfer mechanism from states to municipalities, implemented in the early 1990's in Brazil, to reward municipalities for the creation and management of protected areas. This paper investigates the efficiency of this mechanism by testing for the presence of interactions among Brazilian municipalities in their decision to create conservation units, in the state of Paraná, between 2000 and 2010. We estimate a Bayesian spatial Tobit model in order to analyze the behavior of municipalities. The empirical investigation reveals strategic substitutability in municipalities conservation decisions.
    Keywords: biodiversity, Land use, Fiscal Federalism, Interactions, Spatial Tobit model, Brazil
    JEL: Q57 O13 H23
    Date: 2012
  19. By: Kox, Henk L.M.
    Abstract: The paper tests the role of agglomeration effects on the export decision of services firms. Recent theories on trade with heterogeneous firms predict that export participation goes along with sunk market-entry costs. Only the more productive firms will be able to overcome these sunk costs. This leads to a process of - ex ante - self selection. These predictions are tested for the services industry, with due account for the possible role of agglomeration effects in large-city areas. Standard empirical tests of the new trade models consistently find productivity-based ex ante self selection by exporters, and this effect is mostly explained by unobserved sunk entry costs that exporters have to absorb in new foreign markets. Recent research by urban economists (e.g. Combes et al., 2012) suggests, however, that operating in large-city areas also goes along with positive productivity sorting. Ignoring this leads to upwardly biased estimates of the effect of foreign market entry costs. A large set of micro-data for establishments in Dutch services is used to investigate this hypothesis. I find evidence that positive productivity self-selection is based on the combined effects of agglomeration and anticipated market-entry cost for export starters. This effect is strongest in markets with more or less homogeneous products. I also find evidence that the productivity self-selection effect (of exporters compared to non-traders) is stronger in non-urban areas and smaller agglomerations.
    Keywords: services; export; heterogeneous firms; agglomeration effects; productivity
    JEL: L8 F12 R12 D4
    Date: 2012–05
  20. By: Gómez-Antonio, Miguel; Fingleton, Bernard
    Abstract: In this paper we examine whether variations in the level of public capital across Spain's Provinces affected productivity levels over the period 1996-2005. The analysis is motivated by contemporary urban economics theory, involving a production function for the competitive sector of the economy ('industry') which includes the level of composite services derived from 'service' firms under monopolistic competition. The outcome is potentially increasing returns to scale resulting from pecuniary externalities deriving from internal increasing returns in the monopolistic competition sector. We extend the production function by also making (log) labour efficiency a function of (log) total public capital stock and (log) human capital stock, leading to a simple and empirically tractable reduced form linking productivity level to density of employment, human capital and public capital stock. The model is further extended to include technological externalities or spillovers across provinces. Using panel data methodology, we find significant elasticities for total capital stock and for human capital stock, and a significant impact for employment density. The finding that the effect of public capital is significantly different from zero, indicating that it has a direct effect even after controlling for employment density, is contrary to some of the earlier research findings which leave the question of the impact of public capital unresolved.
    Keywords: Public capital, urban economics, spatial econometrics,
    Date: 2011
  21. By: Gilmartin, Michelle; Learmonth, David; McGregor, Peter; Swales, Kim; Turner, Karen
    Abstract: UK regional policy has been advocated as a means of reducing regional disparities and stimulating national growth. However, there is limited understanding of the interregional and national effects of such a policy. This paper uses an interregional computable general equilibrium model to identify the national impact of a policy-induced regional demand shock under alternative labour market closures. Our simulation results suggest that regional policy operating solely on the demand side has significant national impacts. Furthermore, the effects on the non-target region are particularly sensitive to the treatment of the regional labour market.
    Keywords: regional CGE modelling, migration, regional development policy,
    Date: 2011
  22. By: Azam, Jean-Paul
    Date: 2011
  23. By: Fernando Aragon (Simon Fraser University)
    Abstract: This paper studies the effect of costly taxation on the fiscal response of local governments to intergovernmental transfers. Using a panel dataset of Peruvian municipalities, I find robust evidence that central government's grants have a greater stimulatory effect in municipalities facing higher tax collection costs. The results are consistent with costly taxation partially explaining the flypaper effect.
    Keywords: Flypaper effect; Intergovernmental transfers; Fiscal decentralization
    JEL: H71 H77
    Date: 2012–05
  24. By: Steve Gibbons; Sandra McNally; Martina Viarengo
    Abstract: This research paper is motivated by a long tail at the bottom of the educational distribution, educational inequality between those from high and low socio-economic groups and the question as to what role an increase in school resources has in changing all this. The issue about whether investing more money in schools is effective has long been controversial in the academic literature. It is also a controversial policy issue in this time of public expenditure cuts and reforms to educational finance. With regard to the latter, the Pupil Premium is an important new policy introduced this year - and this paper is useful for considering the potential effects.
    Keywords: education, government policy, pupil premium, education funding, inequality
    Date: 2012–05
  25. By: Chiara Criscuolo; Ralf Martin; Henry Overman; John Van Reenen
    Abstract: Business support policies designed to raise productivity and employment are common worldwide, but rigorous micro-econometric evaluation of their causal effects is rare. We exploit multiple changes in the area-specific eligibility criteria for a major program to support manufacturing jobs ("Regional Selective Assistance"). Area eligibility is governed by pan-European state aid rules which change every seven years and we use these rule changes to construct instrumental variables for program participation. We match two decades of UK panel data on the population of firms to all program participants. IV estimates find positive program treatment effect on employment, investment and net entry but not on TFP. OLS underestimates program effects because the policy targets underperforming plants and areas. The treatment effect is confined to smaller firms with no effect for larger firms (e.g. over 150 employees). We also find the policy raises area level manufacturing employment mainly through significantly reducing unemployment. The positive program effect is not due to substitution between plants in the same area or between eligible and ineligible areas nearby. We estimate that "cost per job" of the program was only $6,300 suggesting that in some respects investment subsidies can be cost effective.
    Keywords: industrial policy, regional policy, employment, investment, productivity
    JEL: H25 L52 L53 O47
    Date: 2012–05
  26. By: Marco Bertoni; Giorgio Brunello; Lorenzo Rocco
    Abstract: Using a natural experiment designed by the Italian national test administrator (INVALSI) to monitor test procedures in Italian primary schools, this paper shows that the presence of an external examiner who monitors test procedures has both a direct and an indirect effect on the measured performance of monitored classes and schools. The direct effect is the difference in the test performance between classes of the same school with and without external examiners. The indirect effect is instead the difference in performance between un-monitored classes in a school with an external examiner and un-monitored classes in schools without external monitoring. We find that having an external examiner in the class reduces the proportion of correct answers by 5.5 to 8.6 percent compared to classes in schools with no external monitor, and by 1.2 to 1.9 percent compared to un-monitored classes of the same school. The size of the overall effect of external supervision varies significantly across regions and it is highest in Southern Italy.
    Date: 2012–05
  27. By: Corrado, L.; Fingleton, B.
    Abstract: In multilevel modelling, interest in modeling the nested structure of hierarchical data has been accompanied by increasing attention to different forms of spatial interactions across different levels of the hierarchy. Neglecting such interactions is likely to create problems of inference, which typically assumes independence. In this paper we review approaches to multilevel modelling with spatial effects, and attempt to connect the two literatures, discussing the advantages and limitations of various approaches.
    Keywords: Multilevel Modelling, Spatial Effects, Fixed Effects, Random Effects, IGLS, FGS2SLS,
    Date: 2011
  28. By: Caterina Calsamiglia; Antonio Miralles
    Abstract: When school choice is implemented it is often implied that parents' preferences will a ffect the school their children attend. The matching literature in school choice shows how the design of the norms that govern the allocation process can have different desirable properties but that no unique mechanism has them all. The literature has ignored a crucial aspect in this process, which is the importance of the priorities that the administration give for the different schools in determining the final allocation. We show that if all individuals agree on what the worse schools are, the two most debated mechanisms, the Boston mechanism and the Gale Shapley (DA), will provide an allocation that fully corresponds to those priorities independently of families' listed preferences. Top Trading Cycles, a third proposal presented in the literature but not implemented yet, improves upon the allocation determined by priorities and therefore is the only responding to parents' preferences. Another interpretation of the results is that if the authorities have some preferences over where families should go to school they can implement them fully through setting priorities accordingly and choosing the Boston or DA mechanisms, which are the two most commonly used mechanisms.
    Keywords: priorities, school choice
    Date: 2012–05
  29. By: Giulia Faggio; Olmo Silva
    Abstract: Research on entrepreneurship often uses information on self-employment to proxy for business creation and innovative behaviour. However, little evidence has been collected on the link between these measures. In this paper, we use data from the UK Labour Force Survey (LFS) combined with data from the Business Structure Database (BSD), and the Community Innovation Survey (CIS) to study the relation between self-employment, business creation and innovation. In order to do so, we aggregate individual and firm-level data at the Travel-to-Work Area (TTWA) and investigate how the incidence of self-employment correlates with the density of business start-ups and innovative firms. Our results show that in urban areas a higher incidence of self-employment positively and strongly correlates with more business creation and innovation, but this is not true for rural areas. Further analysis suggests that this urban/rural divide is related to lack of employment opportunities in rural areas, which might push some workers into self-employment as a last resort option.
    Keywords: Entrepreneurship, self-employment, spatial distribution
    JEL: L26 J21 R12 R23
    Date: 2012–05
  30. By: Philippe Lefebvre (CGS - Centre de Gestion Scientifique - Mines ParisTech); Frédérique Pallez (CGS - Centre de Gestion Scientifique - Mines ParisTech); Daniel Fixari (CGS - Centre de Gestion Scientifique - Mines ParisTech)
    Abstract: The importance of proximity in the field of innovation has been highlighted, notably, in studies which emphasize the growing role of the third mission of the universities, namely, regional economic development. Using an empirical approach, we have attempted to gain an insight into the ways in which networks involving local economic and academic actors are created. This study focuses on France, where the State has recently promoted an aggressive policy designed to develop clusters and reform higher education and research, with a view to bringing together universities, creating centres of excellence, research networks at the local level and promoting connections of both to clusters. The study reveals the existence of a wide variety of configurations and, in spite of globally positive dynamics, highlights areas in which insufficiently well coordinated governmental approaches could be improved. The study also underlines a number of hitherto neglected aspects: a less global approach to institutions should be taken, and analyses of the variety of possible links between science and innovation should be more nuanced. Lastly, the study highlights a profound transformation in the approaches taken by governmental agencies.
    Keywords: Clusters ;Territories; Regional studies;Universities;Science and Innovation ;Public policy
    Date: 2011
  31. By: Eric Delattre; Jean-Baptiste Combès; Bob Elliott; Diane Skatun (THEMA, Universite de Cergy-Pontoise; Health Economics Research Unit, University of Aberdeen; Health Economics Research Unit, University of Aberdeen; Health Economics Research Unit, University of Aberdeen)
    Abstract: Research has shown that where nurses’ wages are regulated but wages in other sectors are not this results in spatial variations in the competitiveness of nurses pay and that in England these are correlated with spatial differences in nurses’ labour supply. In France there is general regulation of wages and public hospitals compete with the private hospital and non hospital sectors for nurses. We construct and employ a unique dataset on nurses pay and the characteristics of hospitals in France. We undertake the first study of the impact of spatial wage differentials on nursing supply to French public hospitals. We show that nurse assistants’ labour supply is sensitive to spatial wage differentials, the more competitive their pay the smaller the shortage of nurse assistants, and that registered nurses and nurse assistants labour supply are interdependent, the greater the supply of nurse assistants the greater the supply of registered nurses.
    Keywords: Wage regulation, local pay, standardised spatial wage differentials, nursing shortage, nursing labour supply
    JEL: I12 I18 J31
    Date: 2012
  32. By: van Ham, Maarten (Delft University of Technology); Hedman, Lina (Uppsala University); Manley, David (University of Bristol); Coulter, Rory (University of St. Andrews)
    Abstract: The extent to which socioeconomic (dis)advantage is transmitted between generations is receiving increasing attention from academics and policymakers. However, few studies have investigated whether there is a spatial dimension to this intergenerational transmission of (dis)advantage. Drawing upon the concept of a neighbourhood biography, this study contends that there are links between the places individuals live in with their parents and their subsequent neighbourhood experiences as independent adults. Using individual level register data tracking the whole Swedish population from 1990 to 2008, and bespoke neighbourhoods, this study is the first to use innovative sequencing techniques to construct individual neighbourhood histories. Through visualisation methods and ordered logit models, we demonstrate that the socioeconomic composition of the neighbourhood children lived in before they left the parental home is strongly related to the status of the neighbourhood they live in 5, 12 and 18 years later. Children living with their parents in high poverty concentration neighbourhoods are very likely to end up in similar neighbourhoods much later in life. The parental neighbourhood is also important in predicting the cumulative exposure to poverty concentration neighbourhoods over a long period of early adulthood. Ethnic minorities were found to have the longest cumulative exposure to poverty concentration neighbourhoods. These findings imply that for some groups, disadvantage is both inherited and highly persistent.
    Keywords: intergenerational transmission, neighbourhood poverty, neighbourhood histories, sequence analysis, Sweden
    JEL: I30 J60 R23
    Date: 2012–05
  33. By: Halla, Martin (University of Linz); Wagner, Alexander F. (University of Zurich); Zweimüller, Josef (University of Zurich)
    Abstract: This paper explores one potentially important channel through which immigration may drive support for extreme right-wing parties: the presence of immigrants in one's neighborhood. We study the case of the Freedom Party of Austria (FPÖ). Under the leadership of Jörg Haider, this party increased its share of votes from less than 5 percent in the early 1980s to 27 percent by the year 1999. Using past regional settlement patterns as a source of exogenous variation, we find a significantly positive effect of the residential proximity of immigrants on FPÖ votes, explaining roughly a quarter of the cross-community variance in FPÖ votes. It is the presence of low- and medium-skilled immigrants that drives this result; high-skilled immigrants have no (or even a negative) effect on FPÖ votes.
    Keywords: immigration, political economy, voting
    JEL: P16 J61
    Date: 2012–05
  34. By: Fenton, Alex
    Abstract: Falling poverty rates could indicate gentrification, or they could mean that London is now a more fair, socially mixed and cohesive city. Alex Fenton looks at what happened to poor neighbourhoods under New Labour in the 2000s, and argues that shifting rates in poverty fail to tell the whole story.
    Date: 2012–04–18
  35. By: Nina Neubecker; Marcel Smolka; Anne Steinbacher
    Abstract: This paper analyzes the role of ethnic communities in shaping the recent immigration boom to Spain. We find that ethnic communities exerted a strong positive effect on the scale and a strong negative effect on the skill structure of this immigration. Unlike previous studies, we explicitly acknowledge similarities among final migration destinations and thus partly relax the independence of irrelevant alternatives assumption. We strengthen our causal interpretation by controlling for observed and unobserved heterogeneity in bilateral migration costs, and by adopting an instrumental variables approach. Our results suggest that previous estimates of the scale effect are upward-biased by approximately 50%.
    Keywords: international migration, ethnic networks, family and friends effect, skill structure of migration, Spain
    JEL: F22
    Date: 2012–05
  36. By: Hasan, Zubair
    Abstract: The present paper attempts two demonstrations. First, it shows that the Excel formula Islamic banks invariably use to determine the fixed installment payments in home financing amortization has explicit compounding of return. Once the installment is based on that formula, the subsequent claims that in implementation the charge becomes free of interest hardly remain tenable. Second, the paper proposes an alternative home finance model where the mortgage contract has several merits over the structure in common use i.e. the musharakah mutanaqisa program or the MMP. The proposed model is cheaper for the buyer while the margin of return for the banker is not reduced; thus, painting a win-win situation for both. It attracts no juristic doubts. Some bankers of international repute have already hailed the model as an innovative useful breakthrough in the area of Islamic finance. Finally, the model aligns better than others with the maqasid or the objectives of the Islamic law.
    Keywords: Home finance; conventional model; mortgages; MMP; ZDBM; Social view
    JEL: G21
    Date: 2012–06
  37. By: Asgeir Danielsson
    Abstract: This paper contributes to the discussion of effects of mandatory pension savings and house price risk on aggregate household savings, homeownership, and risks in lending to homeowners. The analysis is theoretical and based on the life-cycle hypothesis. It is shown that mandatory pension savings based on defined benefits will increase risk in lending to homeowners. Households that remain homeowners will increase their personal savings while those that prefer renting will decrease their savings as renters take on less risk from house price volatility than homeowners. The relative size of the two effects on savings depends on households‘ preferences over homeownership and renting. The assets of the mandatory pension funds in Iceland are among the highest in the world. This country also scores very high in homeownership with around 80% of households living in own homes. For these reasons data on the Icelandic pension system and on homeownership in this country provide a convenient background for discussion of the theoretical issues.
    Date: 2012–05
  38. By: Simone N. Tuor Sartore (University of Zurich, Department of Business Administration); Uschi Backes-Gellner (University of Zurich, Department of Business Administration)
    Abstract: Drawing on an unusually large set of employer-employee data, we examine how workers’ pay is related to the educational composition within their occupational group. We find that educational composition as measured by the educational diversity and the educational level of an occupational group is positively related to its workers’ pay within that group. In addition, our findings suggest that the educational level moderates the positive effect of educational diversity, i.e. that pay increases related to diversity are higher in occupational groups with higher levels of education. We also discuss implications for management practice and possible further theoretical developments.
    Keywords: Knowledge spillovers, educational diversity, pay, work groups
    JEL: I21 J24 J31 L20 M52
    Date: 2012–05

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.