nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2012‒10‒27
thirty-six papers chosen by
Steve Ross
University of Connecticut

  1. Does higher economic growth reduce poverty and increase inequality? Evidence from Urban India By Tripathi, Sabyasachi
  2. Modeling Spatial Equilibrium in Cities: the Isobenefit Lines By Luca D'Acci
  3. Spatial spillovers from FDI agglomeration : evidence from the Yangtze River Delta in China By Tanaka, Kiyoyasu; Hashiguchi, Yoshihiro
  4. Spatial Disparities in Hospital Performance By Gobillon, Laurent; Milcent, Carine
  5. Housing supply and foreclosures By William Hedberg; John Krainer
  6. Human Capital Mobility and Convergence – A Spatial Dynamic Panel Model of the German Regions By A. Kubis; Lutz Schneider
  7. Evolving localization patterns of company foundations - Evidence from the German MST-industry By Tobias Scholl; Thomas Brenner; Martin Wendel
  8. Immigrant students and educational systems. Cross-country evidence from PISA 2006 By Marina Murat; Davide Ferrari; Patrizio Frederic
  9. The Neighbor is King: Customer Discrimination in the Housing Market By Pierre-Philippe Combes; Bruno Decreuse; Benoît Schmutz; Alain Trannoy
  10. Housing and Liquidity By Yu Zhu; Randall Wright; Chao He
  11. School Segregation, Educational Attainment and Crime: Evidence from the end of busing in Charlotte-Mecklenburg By Stephen B. Billings; David J. Deming; Jonah E. Rockoff
  12. What explains big gender disparities in India ? local industrial structures and female entrepreneurship By Ghani, Ejaz; Kerr, William R.; O'Connell, Stephen D.
  13. The Impact of Immigration on the Educational Attainment of Natives By Hunt, Jennifer
  14. Understanding the Internal Structure of Self-Organizing Cities By Stephen L. Ross; Xiaofang Dong
  15. Gender, Single-Sex Schooling and Maths Achievement By Doris, Aedin; O'Neill, Donal; Sweetman, Olive
  16. Regional density of private dentists: Empirical evidence from Austria By Gächter, Martin; Schwazer, Peter; Theurl, Engelbert; Winner, Hannes
  17. The dynamics of urban traffic congestion and the price of parking By Mogens Fosgerau; André De Palma
  18. The Ins and Arounds of the Housing Market By Daniel Cooper; Ruediger Bachmann
  19. Knowledge-bases, places, spatial configurations and the performance of knowledge-intensive professional service firms By Li, QC; Tether, BS; Mina, A
  20. Wages, Amenities and Negative Attitudes By Waisman, Gisela; Larsen, Birthe
  21. The Role of Social Networks and Peer Effects in Education Transmission By Sebastian Bervoets; Antoni Calvó-Armengol; Yves Zenou
  22. The Effect of Schooling on Cognitive Skills By Magnus Carlsson; Gordon B. Dahl; Dan-Olof Rooth
  23. Land-Price Dynamics and Macroeconomic Fluctuations By pengfei Wang; Tao Zha; Zheng Liu
  24. Social Interactions and the Labor Market By Zenou, Yves
  25. Mortgage companies and regulatory arbitrage By Yuliya Demyanyk; Elena Loutskina
  26. Econometric regime shifts and the US subprime bubble By André K. Anundsen
  27. Peer Effects in Young Adults' Marital Decisions By Effrosyni Adamopoulou
  28. Immigration and the UK Labour Market: The latest evidence from economic research By Jonathan Wadsworth
  29. Social Interactions and Crime Revisited: An Investigation Using Individual Offender Data in Dutch Neighborhoods By Wim Bernasco; Thomas de Graaff; Jan Rouwendal; Wouter Steenbeek
  30. Do Ethnic Enclaves Impede Immigrants' Integration? Evidence from a Quasi-Experimental Social-Interaction Approach By Danzer, Alexander M.; Yaman, Firat
  31. Popularity By Gabriella Conti; Andrea Galeotti; Gerrit Mueller; Stephen Pudney
  32. The Effect of Weather-Induced Internal Migration on Local Labor Markets: Evidence from Uganda By Strobl, Eric; Valfort, Marie-Anne
  33. Do Schooling Laws Matter? Evidence from the Introduction of Compulsory Attendance Laws in the United States By Karen Clay; Jeff Lingwall; Melvin Stephens, Jr.
  34. Intergenerational Income Persistency in Urban China By Quheng, Deng; Gustafsson, Björn Anders; Li, Shi
  35. Diversification of Geographic Risk in Retail Bank Networks: Evidence from Bank Expansion after the Riegle-Neal Act By Victor Aguirregabiria; Robert Clark; Hui Wang
  36. Trip timing and scheduling preferences By Mogens Fosgerau; André De Palma; Anders Karlstrom; Kenneth A. Small

  1. By: Tripathi, Sabyasachi
    Abstract: This paper calculates select urban inequality and poverty indices and finds their policy linkages. In addition, the determinants of urban poverty and inequality are estimated by using data of 52 large cities in India. The main results show that higher city economic growth and large city population agglomeration are associated with reduction in city poverty and increase in inequality between cities.
    Keywords: Urban Economic Growth; Inequality; Poverty; Urban India
    JEL: A10 I32
    Date: 2012–07
  2. By: Luca D'Acci
    Abstract: I propose and briefly define the concept of Urban Isobenefit Lines by using functions as easy as efficient, whose results can offer a rich tool to use into spatial equilibrium analysis involving cities. They are line joining urban points with equal level of positional advantage from city amenities. The results which one obtain by implementing a chosen function, gave specific scenarios: numerically described by indicators and graphically visualized by efficient city matrix views. This is also a theoretical concept for the Urban Economics theory and Spatial Equilibrium analysis in cities.
    Date: 2012–10
  3. By: Tanaka, Kiyoyasu; Hashiguchi, Yoshihiro
    Abstract: Foreign firms have clustered together in the Yangtze River Delta, and their impact on domestic firms is an important policy issue. This paper studies the spatial effect of FDI agglomeration on the regional productivity of domestic firms, using Chinese firm-level data. To identify local FDI spillovers, we estimate the causal impact of foreign firms on domestic firms in the same county and similar industries. We then estimate a spatial-autoregressive model to examine spatial spillovers from FDI clusters to other domestic firms in distant counties. Our results show that FDI agglomeration generates positive spillovers for domestic firms, which are stronger in nearby areas than in distant areas.
    Keywords: China, Foreign investments, International business enterprises, Productivity, FDI, Multinational firms, Spillovers
    JEL: C21 F21 F23 R12 R58
    Date: 2012–06
  4. By: Gobillon, Laurent (INED, France); Milcent, Carine (Paris School of Economics)
    Abstract: Using a French exhaustive dataset, this paper studies the determinants of regional disparities in mortality for patients admitted to hospitals for a heart attack. These disparities are large, with an 80% difference in the propensity to die within 15 days between extreme regions. They may reflect spatial differences in patient characteristics, treatments, hospital characteristics, and local healthcare market structure. To distinguish between these factors, we estimate a flexible duration model. The estimated model is aggregated at the regional level and a spatial variance analysis is conducted. We find that spatial differences in the use of innovative treatments play a major role whereas the local composition of hospitals by ownership does not have any noticeable effect. Moreover, the higher the local concentration of patients in a few large hospitals rather than many small ones, the lower the mortality. Regional unobserved effects account for around 20% of spatial disparities.
    Keywords: spatial health disparities, economic geography, stratified duration model
    JEL: I11 C41
    Date: 2012–10
  5. By: William Hedberg; John Krainer
    Abstract: We explore the role of foreclosure inventories in a model of housing supply. The foreclosure variable is necessary to account for the steep and sustained drop in new construction activity following the U.S. housing market bust beginning in 2006. There is modest evidence that local banking conditions play a role in determining housing starts. Even with state-level foreclosures and banking variables in the model, there is a sizeable post-2006 residual common to all states. We argue that, in addition to observable macro and local factors, housing starts in the Great Recession have been weighed down in part by aggregate uncertainty factors.
    Keywords: Housing ; Foreclosure
    Date: 2012
  6. By: A. Kubis; Lutz Schneider
    Abstract: Since the fall of the iron curtain in 1989, the migration deficit of the Eastern part of Germany has accumulated to 1.8 million people, which is over ten percent of its initial population. Depending on their human capital endowment, these migrants might either – in the case of low-skilled migration – accelerate or – in high-skilled case – impede convergence. Due to the availability of detailed data on regional human capital, migration and productivity growth, we are able to test how geographic mobility affects convergence via the human capital selectivity of migration. With regard to the endogeneity of the migration flows and human capital, we apply a dynamic panel data model within the framework of β-convergence and account for spatial dependence. The regressions indicate a positive, robust, but modest effect of a migration surplus on regional productivity growth. After controlling for human capital, the effect of migration decreases; this decrease indicates that skill selectivity is one way that migration impacts growth.
    Keywords: human capital mobility, regional growth, spatial panel models
    JEL: R23 R11 C23
    Date: 2012–10
  7. By: Tobias Scholl (University Frankfurt); Thomas Brenner (Department of Geography, Philipps University Marburg); Martin Wendel (University Mainz)
    Abstract: We investigate company foundations in the German micro technology industry by means of a spatial-temporal micro-geographic analysis. In order to deal with our unusual detailed data, we develop a new distance-based framework for a logistic regression that is able to present results in a continuous space. Locations of company foundations are investigated with respect to their spatial proximity to similar firms, patent owner, related industries and research institutions and are benchmarked with the overall distribution of company foundations in Germany. We demonstrate that spatial proximity has a clear influence on where new companies are founded. Furthermore, the influence of proximity to different agents is not constant over times but evolves with the industry’s life cycle.
    Keywords: Spatial concentration, localization, clusters, MAUP, distance-based measures
    JEL: C40 M13 R12
    Date: 2012–10–18
  8. By: Marina Murat; Davide Ferrari; Patrizio Frederic
    Abstract: Using data from PISA 2006 on 29 countries, this paper analyses immigrant school gaps (difference in scores between immigrants and natives) and focuses on tracking and comprehensive educational systems. Results show that the wider negative gaps are present where tracking is sharp and less frequently in countries with comprehensive schooling. In both cases, negative gaps are concentrated in continental Western Europe, where they are also often related to immigrants and natives attending different schools, or are significant within schools.
    Keywords: Immigrant students; educational systems; PISA;
    JEL: F22 I21
    Date: 2012–05
  9. By: Pierre-Philippe Combes (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS); Bruno Decreuse (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS); Benoît Schmutz (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS and Georgetown University); Alain Trannoy (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS)
    Abstract: This paper provides a method to single out customer-based discrimination in the housing market. We build a matching model with ethnic externalities where landlords differ in the number of housing units they own within the same building. Multiple-dwelling landlords discriminate more often than single-dwelling landlords only if some tenants are prejudiced against the minority group. By testing the null hypothesis whereby minority tenants are equally likely to have a multiple-dwelling landlord, we can test whether there is customer discrimination or not. We run the test on French data and show evidence of customer discrimination in the rental market.
    Keywords: Customer Discrimination, Matching frictions, Neighborhood Externalities, Housing Market.
    JEL: R21 J71
    Date: 2012–09–24
  10. By: Yu Zhu (Wisconsin); Randall Wright (U Wisconsin); Chao He (University of Wisconsin-Madison)
    Abstract: We study economies where houses, in addition to providing utility as shelter, may also facilitate credit transactions, since home equity can be used as collateral. We document there were big increases in home-equity-backed consumption loans coinciding with the start of the house price boom, and suggest an explanation. When it can be used as collateral, housing can bear a liquidity premium. Since liquidity is endogenous, even when fundamentals are constant and agents fully rational house prices can display complicated equilibrium paths resembling bubbles. Our framework is tractable, with exogenous or with endogenous supply, yet captures several salient features of housing markets. The effects of monetary policy are also discussed.
    Date: 2012
  11. By: Stephen B. Billings; David J. Deming; Jonah E. Rockoff
    Abstract: We study the impact of the end of race-based busing in Charlotte-Mecklenburg schools (“CMS”) on academic achievement, educational attainment, and young adult crime. In 2001, CMS was prohibited from using race in assigning students to schools. School boundaries were redrawn dramatically to reflect the surrounding neighborhoods, and half of its students received a new assignment. Using addresses measured prior to the policy change, we compare students in the same neighborhood that lived on opposite sides of a newly drawn boundary. We find that both white and minority students score lower on high school exams when they are assigned to schools with more minority students. We also find decreases in high school graduation and four-year college attendance for whites, and large increases in crime for minority males. The impacts on achievement and attainment are smaller in younger cohorts, while the impact on crime remains large and persistent for at least nine years after the re-zoning. We show that compensatory resource allocation policies in CMS likely played an important role in mitigating the impact of segregation on achievement and attainment, but had no impact on crime. We conclude that the end of busing widened racial inequality, despite efforts by CMS to mitigate the impact of increases in segregation.
    JEL: I20 I21 I24
    Date: 2012–10
  12. By: Ghani, Ejaz; Kerr, William R.; O'Connell, Stephen D.
    Abstract: Despite rapid economic growth, gender disparities in women's economic participation have remained deep and persistent in India. What explains these huge gender disparities? Is it poor infrastructure, limited education, and gender composition of the labor force and industries? Or is it deficiencies in social and business networks and a low share of incumbent female entrepreneurs?This paper analyzes the spatial determinants of female entrepreneurship in India in the manufacturing and services sectors. Good infrastructure and education predict higher female entry shares. There are strong agglomeration economies in both manufacturing and services, where higher female ownership among incumbent businesses within a district-industry predicts a greater share of subsequent entrepreneurs will be female. Moreover, higher female ownership of local businesses in related industries (similar labor needs, input-output markets) predicts greater relative female entry rates. Gender networks thus clearly matter for women's economic participation. However, there is a need to develop a better understanding of how gender networks influence aggregate efficiency. There is no doubt that gender empowerment can be the escalator to realizing human potential and for creating a robust platform for growth and job creation.
    Keywords: Banks&Banking Reform,Housing&Human Habitats,Water and Industry,E-Business,Gender and Law
    Date: 2012–10–01
  13. By: Hunt, Jennifer (Rutgers University)
    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.
    Keywords: immigration, education
    JEL: J15 I21
    Date: 2012–10
  14. By: Stephen L. Ross (University of Connecticut); Xiaofang Dong (Xiamen University)
    Abstract: Lucas and Rossi-Hansberg (2002) and Fujita and Ogawa (1982, 1989) develop urban models in which economic activity self-organizes due to spillovers in production. However, Fujita and Ogawa (1982, 1989) show that rents and employment density are flat or falling as the city center is approached, while in the simulations of Lucas and Rossi-Hansberg (2002) rents rise at an increasing rate towards the center suggesting a concentration of employment near the center. For the Lucas and Rossi-Hansberg model, we prove that land rents and density must be flat or falling near the center. We explain how using a polar coordinate system when approximating a two-dimensional integral can create systematic imprecision in their simulations, and then present revised simulations. The proofs and simulations suggest that in urban models where economic activity self-organizes firms do not unduly cluster at the center of a central business district even in monocentric equilibria. JEL Classification: R13, R14, R30 Key words: non-monocentric cities, rent gradient, employment density, polar coordinate simulations
    Date: 2012–10
  15. By: Doris, Aedin (National University of Ireland, Maynooth); O'Neill, Donal (National University of Ireland, Maynooth); Sweetman, Olive (National University of Ireland, Maynooth)
    Abstract: This paper examines the determinants of mathematical achievement among primary school children. Previous studies have found that boys perform better in maths than girls, particularly at the upper end of the distribution. It has been suggested in the literature that differences in the size of the maths gap across countries may be explained by differences in the prevalence of single-sex schooling. The Irish education system is interesting both for the fact that a sizeable proportion of children attend single-sex schools, and because these single-sex schools are part of the general educational system, rather than serving a particular socio-economic group. We exploit this fact to test whether the gender composition of schools affects the maths differential at the top of the distribution. In keeping with research on other countries, we find a significant maths gap in favour of boys, but contrary to suggestions in the literature, our results provide no evidence that single-sex schooling reduces the gap. If anything, the gender differential is larger for children educated in single-sex schools than in co-educational schools. These findings are not affected by the inclusion of a proxy for early childhood ability or by the use of instrumental variables to control for potentially endogenous school choice.
    Keywords: gender maths gap, single-sex schooling
    JEL: J24 I21
    Date: 2012–10
  16. By: Gächter, Martin (Oesterreichische Nationalbank); Schwazer, Peter (Department of Economics and Statistics, University of Innsbruck); Theurl, Engelbert (Department of Economics and Statistics, University of Innsbruck); Winner, Hannes (University of Salzburg)
    Abstract: Objectives: We investigated the determinants of disparities in the regional density of private dentists in Austria. Specifically, we focused on the relationship between the density of private dentists and their public counterparts, thereby controlling for other possible covariates of dentist density. Methods: Dentist density was measured at the district level. We used panel data of dentist density from 121 Austrian districts over the years 2001 to 2008. We applied a Hausman-Taylor framework to cope with possible endogeneity and to control for cross-district effects in the dentist density. Results: A significant negative relationship was found between the density of private and public dentists, indicating a substitution effect between the two dentist groups. A significant positive spatial relationship also existed for private and public dentists in the neighboring regions. Dental capacities in public and private hospitals and dental laboratories run by the public health insurance system did not have a significant effect on private dentist density. Conclusions: Although a strong negative relationship existed between private and public dentists within the districts, one should not draw the conclusion that private dentists in Austria are close substitutes for public dentists. Such a conclusion would require further empirical analysis on the utilization patterns of dental services and their relationships with financing mechanisms.
    Keywords: Competition in health care markets; dentist location and density; models with panel data
    JEL: I11 I18 I23
    Date: 2012–10–19
  17. By: Mogens Fosgerau (Technical University of Denmark - Technical University of Denmark); André De Palma (ENS Cachan - Ecole Normale Supérieure de Cachan - École normale supérieure de Cachan - ENS Cachan)
    Abstract: We consider commuting in a congested urban area. While an efficient time-varying toll may eliminate queuing, a toll may not be politically feasible. We study the benefit of a substitute: a parking fee at the workplace. An optimal time-varying parking fee is charged at zero rate when there is queuing and eliminates queuing when the rate is non-zero. Within certain limits, inability to charge some drivers for parking does not reduce the potential welfare gain. Drivers who cannot be charged travel when there is queuing. In some cases, interaction between morning and evening commutes can be exploited to remove queuing completely.
    Keywords: parking; dynamic; congestion; urban; traffic
    Date: 2012–09–19
  18. By: Daniel Cooper (Federal Reserve Bank of Boston); Ruediger Bachmann (RWTH Aachen University)
    Abstract: This paper uses longitudinal micro data from the Panel Study of Income Dynamics (PSID) to document the turnover behavior in the housing market. Fact 1: moves are procyclical. Fact 2: the gross flows into and out of the owner-occupied segment of the housing market are four times larger than the corresponding net flows. Fact 3: net flows and gross flows into and out of the owner-occupied segment of the housing market are procyclical. Fact 4: rent-to-rent flows lead the cycle, but then become countercyclical. Fact 5: rent-to-own flows tend to lead the cycle. Fact 6: own-to-own flows tend to lag the cycle. Fact 7: own-to-rent flows are acyclical. Fact 8: geographically close moves within the same zip code are procyclical for all households, but acyclical for households with a displaced household head. Fact 9: moves across state lines are procyclical independently of the labor market fate of the household. Fact 10: there is little evidence that labor market flows, in particular flows from employment into unemployment, drive housing flows.
    Date: 2012
  19. By: Li, QC; Tether, BS; Mina, A
    Date: 2012–06
  20. By: Waisman, Gisela (Stockholm University); Larsen, Birthe (Department of Economics, Copenhagen Business School)
    Abstract: We exploit the regional variation in negative attitudes towards immigrants to Sweden in order to analyse the consequences of the attitudes on immigrants welfare. We find that attitudes towards immigrants are of importance: they both affect their labour market outcomes and their quality of life. We interpret the negative effect on wages as evidence of labour market discrimination. We estimate the welfare effects of negative attitudes, through their wage and local amenities, for immigrants with different levels of skills, origin, gender and age.
    Keywords: Attitudes towards immigration; Geographical Mobility; Wages; Amenities
    JEL: J15 J31 J61 J71
    Date: 2012–01–25
  21. By: Sebastian Bervoets (CNRS, Greqam); Antoni Calvó-Armengol (This author is deceased (Date: 03 Nov 2007)); Yves Zenou (Stockholm University, IFN)
    Abstract: We propose a dynastic model in which individuals are born in an educated or uneducated environment that they inherit from their parents. We study the role of social networks on the correlation in the parent-child educational status independent of any parent-child interaction. We show that the network reduces the intergenerational correlation, promotes social mobility and increases the average education level in the population. We also show that a planner that encourages social mobility also reduces social welfare, hence facing a tradeoff between these two objectives. When individuals choose the optimal level of social mobility, those born in an uneducated environment always want to leave their environment while the reverse occurs for individuals born in an educated environment.
    Keywords: Social mobility, strong and weak ties, intergenerational correlation, education.
    JEL: I24 J13 Z13
    Date: 2012–03–30
  22. By: Magnus Carlsson; Gordon B. Dahl; Dan-Olof Rooth
    Abstract: How schooling affects cognitive skills is a fundamental question for studies of human capital and labor markets. While scores on cognitive ability tests are positively associated with schooling, it has proven difficult to ascertain whether this relationship is causal. Moreover, the effect of schooling is difficult to separate from the confounding factors of age at test date, relative age within a classroom, season of birth, and cohort effects. In this paper, we exploit conditionally random variation in the assigned test date for a battery of cognitive tests which almost all 18 year-old males were required to take in preparation for military service in Sweden. Both age at test date and number of days spent in school vary randomly across individuals after flexibly controlling for date of birth, parish, and expected graduation date (the three variables the military conditioned on when assigning test date). We find an extra 10 days of school instruction raises cognitive scores on crystallized intelligence tests (synonym and technical comprehension tests) by approximately one percent of a standard deviation, whereas extra nonschool days have almost no effect. The benefit of additional school days is homogeneous, with similar effect sizes based on past grades in school, parental education, and father's earnings. In contrast, test scores on fluid intelligence tests (spatial and logic tests) do not increase with additional days of schooling, but do increase modestly with age. These findings have important implications for questions about the malleability of cognitive skills in young adults, schooling models of signaling versus human capital, the interpretation of test scores in wage regressions, and policies related to the length of the school year.
    JEL: I20 J24
    Date: 2012–10
  23. By: pengfei Wang (Hong Kong University of Science and Technology); Tao Zha (Federal Reserve Bank of Atlanta); Zheng Liu (Federal Reserve Bank of San Francisco)
    Abstract: We argue that positive co-movements between land prices and business investment are a driving force behind the broad impact of land-price dynamics on the macroeconomy. We develop an economic mechanism that captures the co-movements by incorporating two key features into a DSGE model: We introduce land as a collateral asset in firms' credit constraints and we identify a shock that drives most of the observed fluctuations in land prices. Our estimates imply that these two features combine to generate an empirically important mechanism that amplifies and propagates macroeconomic fluctuations through the joint dynamics of land prices and business investment.
    Date: 2012
  24. By: Zenou, Yves
    Abstract: To better understand the way social networks operate in the labor market, we propose two simple models where individuals help each other finding a job. In the first one, job information flows between individuals having a link with each other and we show that an equilibrium with a clustering of workers with the same status is likely to emerge since, in the long run, employed workers tend to be friends with employed workers. In the second model, individuals interact with both strong and weak ties and decide how much time they spend with each of them. As in Granovetter, this model stresses the strength of weak ties in finding a job because they involve a secondary ring of acquaintances who have contacts with networks outside ego's network and therefore offer new sources of information on job opportunities. We then discuss some policy implications showing how these models can explain why ethnic minorities tend to experience higher unemployment rate than workers from the majority group.
    Keywords: dyads; homophily; social interactions; weak and strong ties
    JEL: A14 J15 J64 Z13
    Date: 2012–10
  25. By: Yuliya Demyanyk; Elena Loutskina
    Abstract: Mortgage companies (MCs) originated about 60% of all mortgages before the 2007 crisis and continue to hold a 30% market share postcrisis. While financial regulations are strictly enforced for depository institutions (banks), they are weakly enforced for MCs even if they are subsidiaries of a bank holding company (BHC). This study documents that the resulting regulatory arbitrage creates incentives for BHCs to engage in risk shifting through their MC affiliates. We show that MCs are established to circumvent the capital requirements and to shield the parent BHCs from loan-related losses. BHCs run the risky mortgage business through their MC affiliates. As compared to bank affiliates of BHCs, the MC affiliates lent more to individuals with lower credit scores, lower incomes, and higher loan-to-income ratios. MC borrowers experienced higher rates of foreclosure and delinquency during the crisis. Our results imply that the regulation in place had the capacity to prevent the deterioration of lending standards widely blamed for the crisis. The inconsistent enforcement of regulation, though, eroded its effectiveness. Higher involvement of mortgage companies in subprime lending and securitization activity do not explain our results.
    Keywords: Banks and banking ; Mortgages ; Foreclosure ; Regulation ; Regulation
    Date: 2012
  26. By: André K. Anundsen (Department of Economics, University of Oslo)
    Abstract: Using aggregate quarterly data for the period 1975q1–2010q4, I find that the US housing market changed from a stable regime with prices determined by fundamentals, to a highly unstable regime at the beginning of the previous decade. My results indicate that these imbalances could have been detected with the aid of real time econometric modeling and that they were caused by the sharp rise in subprime lending in the early to mid 2000s. These results are based on the detection of huge parameter non-constancies and a loss of equilibrium correction in two theory derived cointegrating relationships shown to be very stable for earlier periods. Controlling for the increased subprime exposure during this period, enables me to reestablish the pre-break relationships also for the full sample. This suggests that the US housing bubble was caused by the increased borrowing to a more risky segment of the market, which may have allowed for a latent frenzy behavior that previously was constrained by the lack of financing. With reference to Stiglitz’s general conception of a bubble, I use the econometric results to construct two bubble indicators, which clearly demonstrate the transition to an unstable regime. Such indicators can be part of an early warning system and are shown to Granger cause a set of coincident indicators and financial (in)stability measures.
    Keywords: Cointegration; Regime Shifts; US Housing Bubble; Subprime lending; Bubble Indicator
    JEL: C22 C32 C51 C52 G01 R21
    Date: 2012
  27. By: Effrosyni Adamopoulou
    Abstract: This paper studies peer group effects on marital decisions. We use data from Waves I and III of the National Longitudinal Study of Adolescent Health (Add Health). This database contains detailed information on adolescents’ high school friends as well as their marital behavior later in life. We construct a balanced panel for the years 1995-2002 using the calendar of all past and current relationships of the respondents, which allows us to recover the marital status of each individual and of her friends at any given year. Hence, we are able to analyze how the marital transitions of individuals depend on the marital status of their friends. We use panel data, instrumental variables techniques, and exploit the timing of friendship formation to identify the effect of peers on marital decisions. Our results after controlling for various observable characteristics of individuals and their friends show that peer effects in marital decisions are significant. Robustness checks using former and placebo friends support our results, and indicate that actual peers do matter.
    Keywords: Peer effects, Friends, Marriage, Cohabitation, Marital decisions
    JEL: A14 J12 J16 Z13
    Date: 2012–10
  28. By: Jonathan Wadsworth
    Abstract: During periods of strong economic growth, migration is and has always been important for filling gaps in the labour market. On balance, the evidence for the UK labour market suggests that fears about the consequences of rising immigration have been exaggerated. It is hard to find evidence of much displacement of UK workers or lower wages, on average. Immigrants, especially in recent years, tend to be younger and better educated than the UK-born and are less likely to be unemployed. They certainly do not receive preferential access to housing. But there have been some effects. The less skilled may have experienced greater downward pressure on wages and greater competition for jobs than others, but these effects still appear to have been modest. Unfortunately we do not know much about whether the effects of immigration are different in downturns. We also need to understand more about how capital and sectoral shifts in demand respond to immigration over the longer run. Future migration trends will, as ever, depend on relative economic performance and opportunity. But we still need to know more about the effects of rising immigration beyond the labour market in areas like prices, housing, health, crime and welfare.
    Keywords: immigration, government policy, education, labour market, jobs, wages
    Date: 2012–06
  29. By: Wim Bernasco (NSCR); Thomas de Graaff (VU University Amsterdam); Jan Rouwendal (VU University Amsterdam); Wouter Steenbeek (NSCR)
    Abstract: Using data on the age, sex, ethnicity and criminal involvement of 14.3 million residents aged 10-89 residing in 4,007 neighborhoods in the Netherlands, this article tests whether an individual's decision whether or not to be involved in crime is affected by the number of criminals in the neighborhood. Controlling for unobserved neighborhood heterogeneity and endogeneity of this decision, a small positive effect is found on violent crime, but not on property crime. The results suggest that individual characteristics and other neighborhood characteristics play a much greater role in an individual's decision to be involved in crime.
    Keywords: social interactions; neighborhoods; crime
    JEL: R1 R2
    Date: 2012–10–11
  30. By: Danzer, Alexander M. (University of Munich); Yaman, Firat (City University London)
    Abstract: It is widely debated whether immigrants who live among co-ethnics are less willing to integrate into the host society. Exploiting the quasi-experimental guest worker placement across German regions during the 1960/70s as well as information on immigrants' inter-ethnic contact networks and social activities, we are able to identify the causal effect of ethnic concentration on social integration. The exogenous placement of immigrants "switches off" observable and unobservable differences in the willingness or ability to integrate which have confounded previous studies. Evidence suggests that the presence of co-ethnics increases migrants' interaction cost with natives and thus reduces the likelihood of integration.
    Keywords: immigrants, integration, enclaves, political participation, culture, social interaction, guest workers, natural experiment
    JEL: J15 R23 J61
    Date: 2012–10
  31. By: Gabriella Conti; Andrea Galeotti; Gerrit Mueller; Stephen Pudney
    Abstract: What makes you popular at school? And what are the labor market returns to popularity? We investigate these questions using an objective measure of popularity derived from sociometric theory: the number of friendship nominations received from schoolmates, interpreted as a measure of early accumulation of personal social capital. We develop an econometric model of friendship formation and labor market outcomes allowing for partial observation of networks, and provide new evidence on the impact of early family environment on popularity. We estimate that moving from the 20th to 80th percentile of the high-school popularity distribution yields a 10% wage premium nearly 40 years later.
    JEL: A14 I21 J31
    Date: 2012–10
  32. By: Strobl, Eric (Ecole Polytechnique, Paris); Valfort, Marie-Anne (University of Paris 1 Panthéon-Sorbonne)
    Abstract: Relying on census data collected in 2002 and historical weather data for Uganda, we estimate the impact of weather-induced internal migration on the probability for non-migrants living in the destination regions to be employed. Our results reveal a significant negative impact. Consistent with the prediction of a simple theoretical model, they further show that this negative impact is significantly stronger in regions with lower road density and therefore less conducive to capital mobility: a 10 percentage points increase in the net in-migration rate in these areas decreases the probability of being employed of non-migrants by more than 20 percentage points.
    Keywords: weather shocks, internal migration, labor market, Sub-Saharan Africa
    JEL: E24 J21 J61 Q54 R23
    Date: 2012–10
  33. By: Karen Clay; Jeff Lingwall; Melvin Stephens, Jr.
    Abstract: This paper examines the effects of introducing compulsory attendance laws on the schooling of U.S. children for three overlapping time periods: 1880-1927, 1890-1927, and 1898-1927. The previous literature finds little effect of the laws, which is somewhat surprising given that the passage of these laws coincided with rising attendance. Using administrative panel data, this paper finds that laws passed after 1880 had significant effects on enrollment and attendance. Laws passed after 1890, for which both administrative and retrospective census data are available, had significant effects on enrollment, attendance, and educational outcomes. In both cases, the timing of increases in enrollment and attendance is consistent with a causal effect of the laws. For men in the 1898-1927 period who reported positive wage income in the 1940 census, compulsory attendance laws increased schooling and wage income. The OLS estimates of the return to a year of schooling are 8 percent and the IV estimates are 11 to 14 percent.
    JEL: J24 N21 N22
    Date: 2012–10
  34. By: Quheng, Deng (Chinese Academy of Social Sciences); Gustafsson, Björn Anders (University of Gothenburg); Li, Shi (Beijing Normal University)
    Abstract: Intergenerational income elasticities are estimated using samples for urban China (covering many cities) for the years 1995 and 2002 and compared with results from other studies. We find that the income relation between the pairs: sons and fathers, sons and mothers and daughters and mothers, are in 2002 all similar in magnitude. In contrast the relation between daughters' and fathers' income is weaker. The income relationship between offspring and mothers was weaker in 1995 than in 2002. Our preferred estimates of income persistency for the son-father pairs of 0.47 for 1995 and 0.53 for 2002 are higher than what has been reported in the literature for several high-income countries with large welfare states. The strength of the income link between sons and fathers in urban China appears to be not very different from what has been reported for countries such as Brazil, Chile and the United States.
    Keywords: intergenerational income mobility, China
    JEL: D31 J62 P32
    Date: 2012–10
  35. By: Victor Aguirregabiria; Robert Clark; Hui Wang
    Abstract: The 1994 Riegle Neal (RN) Act removed interstate banking restrictions in the US. The primary motivation was to permit geographic risk diversification (GRD). Using a factor model to measure banks' geographic risk, we show that RN expanded GRD possibilities in small states, but that few banks took advantage. Using our measure of geographic risk and a revealed preference approach, we identify preferences towards GRD separately from the contribution of other factors to branch network configuration. Risk has a negative effect on bank value, but this has been counterbalanced by economies of density/scale, reallocation/merging costs, and concerns for local market power.
    Keywords: Geographic risk diversification; Retail banking; Oligopoly competition; Branch networks; Riegle Neal Act
    JEL: L13 L51 G21
    Date: 2012–10–15
  36. By: Mogens Fosgerau (Technical University of Denmark - Technical University of Denmark); André De Palma (ENS Cachan - Ecole Normale Supérieure de Cachan - École normale supérieure de Cachan - ENS Cachan); Anders Karlstrom (KTH Stockolm - Royal Institute of Technology - Royal Institute of Technology); Kenneth A. Small (University of California - Department of Economics)
    Abstract: This note summarizes the results from the project SURPRICE: Trip timing and scheduling preferences. The general emphasis of this project is the importance of trip timing as a cause of congestion. It is important to recognize that departure time is a choice of travellers and that congestion arises because many travellers choose to travel at the same time. The design and evaluation of pricing schemes should explicitly take changes in departure time patterns into account, in particular with time-varying charges. Failure to take trip timing into account will lead to failure in identifying important benefits and will lead to less efficient pricing schemes.
    Keywords: trip timing; congestion; road pricing; charging; departure time choice; scheduling preferences
    Date: 2012–06–06

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