nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2012‒12‒15
28 papers chosen by
Steve Ross
University of Connecticut

  1. Did local lenders forecast the bust? Evidence from the real estate market By Kristle Romero Cortés
  2. Are Middle Schools Good for Student Academic Achievement? Evidence from Ontario By David R. Johnson
  3. Land Bank 2.0: an empirical evaluation By Stephan Whitaker; Thomas J. Fitzpatrick IV
  4. Specialization and Regional Economic Development By Thomas Kemeny; Michael Storper
  5. Using Student Test Scores to Measure Principal Performance By Jason A. Grissom; Demetra Kalogrides; Susanna Loeb
  6. Co-agglomeration of Knowledge-Intensive Business Services and Multinational Enterprises By Wouter Jacobs; Hans R.A. Koster; Frank van Oort
  7. Original innovation, learnt innovation and cities: Evidence from UK SMEs By Neil Lee; Andrés Rodríguez-Pose
  8. Agglomeration vs. Organizational Reproduction: The Molds Cluster in Portugal By Carla Costa; Rui Baptista
  9. Matching models and housing markets: the role of the zero-profit condition By Gaetano Lisi
  10. Neighborhood Quality and Labor Market Outcomes: Evidence from Quasi-Random Neighborhood Assignment of Immigrants By Anna Piil Damm
  11. Local politics and economic geography By Berliant, Marcus; Tabuchi, Takatoshi
  12. Central banks and house prices in the run-up to the crisis By David Cobham
  13. The Missing "One-Offs": The Hidden Supply of High-Achieving, Low Income Students By Caroline M. Hoxby; Christopher Avery
  14. Energy Inflation and House Price Corrections By Andreas Breitenfellner; Jesús Crespo Cuaresma; Philipp Mayer
  15. Education for Children with Special Needs: A Comparative Study of Education Systems and Parental Guidance Services By Leen Sebrechts
  16. Wage growth through job hopping in China By Kenn Ariga; Fumio Ohtake; Masaru Sasaki; Zheren Wu
  17. The Effects of Meritocracy for Teachers in Colombia By Alejandro Ome V.
  18. Does local economic development really work? Assessing LED across Mexican municipalities By Andrés Rodríguez-Pose; Eduardo I. Palavicini-Corona
  19. Did the Community Reinvestment Act (CRA) Lead to Risky Lending? By Sumit Agarwal; Efraim Benmelech; Nittai Bergman; Amit Seru
  20. Argentina’s Economic and Financial Map: A Geo-referenced System of Financial Services Market, Demand and Supply Indicators at the Local Level. By Emilio Blanco; Andrés Denes; Gastón Repetto
  21. Should defaults be forgotten? By Marieke Bos; Leonard Nakamura
  22. Developing and implementing a smart specialisation strategy at regional level: some open questions By Donato Iacobucci
  23. Understanding the Mechanisms through Which an Influential Early Childhood Program Boosted Adult Outcomes By James J. Heckman; Rodrigo Pinto; Peter A. Savelyev
  24. Do Labor Market Policies Have Displacement Effects? Evidence from a Clustered Randomized Experiment By Bruno Crépon; Esther Duflo; Marc Gurgand; Roland Rathelot; Philippe Zamora
  25. Does State Preschool Crowd-Out Private Provision? The Impact of Universal Preschool on the Childcare Sector in Oklahoma and Georgia By Daphna Bassok; Maria Fitzpatrick; Susanna Loeb
  26. A Federal Long-run Projection Model for Germany By Oliver Holtemöller; Maike: Schultz Irrek
  27. Informal unemployment insurance and labor market dynamics By Kyle F. Herkenhoff
  28. The role of direct taxes in fiscal decentralization By Luca Gandullia

  1. By: Kristle Romero Cortés
    Abstract: This paper shows that mortgage lenders with a physical branch near the property being financed have better information about home-price fundamentals than nonlocal lenders. During the real estate run-up from 2002-06, home price growth negatively correlates with the share of loans made by local lenders, namely lenders with a branch in the respective county. Moreover, home prices fell less from 2006-09 in areas where more of the loans were made by local lenders. California foreclosure rates during the crisis are negatively correlated with local lending during the run-up. A 1 standard deviation increase in local loans is associated with 5 fewer foreclosures for every 1,000 houses. When local lenders retain loans for their portfolio rather than securitizing, the results for both home price growth and foreclosures are even stronger.
    Keywords: Mortgage loans ; Foreclosure ; Housing
    Date: 2012
  2. By: David R. Johnson (Wilfrid Laurier University)
    Abstract: In neighbourhoods with falling student populations, policymakers should place a priority on closing middle schools and, elsewhere, avoid opening new ones. In this report, the author shows that middle school attendance increases the chance that students will fail provincially administered achievement tests, compared to similar students who stay in the same school through Grade 8. The report concludes that in regions with falling student populations, policymakers should place a priority on closing middle schools and, elsewhere, avoid opening new ones.
    Keywords: Social Policy, Ontario, Canada, middle schools, elementary schools, provincial achievement tests
    JEL: I28 H75
    Date: 2012–11
  3. By: Stephan Whitaker; Thomas J. Fitzpatrick IV
    Abstract: Cuyahoga County created a land bank in 2009 explicitly intended to acquire low-value properties, mitigate blighted housing, help stabilize neighborhoods, and slow the decline of property values. This paper evaluates the effectiveness of the land bank by estimating spatially-corrected hedonic price models using sales near the land bank homes. Homes that sold within 500 feet of a property that would be acquired by the land bank in the next six months show a 3 to 5 percent discount versus observationally similar homes. Homes that sold within 500 feet of a land bank owned home sold at prices approximately 5 percent higher than similar homes. A land bank demolition appears to have a positive externality, which adds 9 percent to the value of a nearby home sale. These results are consistent through a wide variety of specifications, but they are not measured precisely enough to be statistically significant.
    Keywords: Housing policy ; Housing
    Date: 2012
  4. By: Thomas Kemeny; Michael Storper
    Abstract: Debates about urban growth and change often center on specialization.However, arguments linking specialization to metropolitan economic development contain diverse, and sometimes conflicting, claims. Is it better to be highly specialized or diversified? Does specialization refer to the absolute scale of an activity in a region, its share within the regional economy, or its share in the nation's economy? Does specialization have static effects, or is its impact chiefly evolutionary? This paper starts by investigating these different theoretical claims. We then turn to an empirical inquiry into the roles of relative and absolute specialization. By analyzing local agglomerations over time, we find that growing absolute specialization is positively linked to wages, while changes in relative concentration are not significantly associated with wage dynamics. This supports notions of specialization based on the absolute size of an agglomeration, and casts doubt on notions of specialization based on shares of an activity in the regional economy.
    Keywords: Specialization, diversification, agglomeration economies, urban wages
    JEL: R11 R12 O21
    Date: 2012–12
  5. By: Jason A. Grissom; Demetra Kalogrides; Susanna Loeb
    Abstract: Expansion of the use of student test score data to measure teacher performance has fueled recent policy interest in using those data to measure the effects of school administrators as well. However, little research has considered the capacity of student performance data to uncover principal effects. Filling this gap, this article identifies multiple conceptual approaches for capturing the contributions of principals to student test score growth, develops empirical models to reflect these approaches, examines the properties of these models, and compares the results of the models empirically using data from a large urban school district. The paper then assesses the degree to which the estimates from each model are consistent with measures of principal performance that come from sources other than student test scores, such as school district evaluations. The results show that choice of model is substantively important for assessment. While some models identify principal effects as large as 0.15 standard deviations in math and 0.11 in reading, others find effects as low as 0.02 in both subjects for the same principals. We also find that the most conceptually unappealing models, which over-attribute school effects to principals, align more closely with non-test measures than do approaches that more convincingly separate the effect of the principal from the effects of other school inputs.
    JEL: I21
    Date: 2012–11
  6. By: Wouter Jacobs; Hans R.A. Koster; Frank van Oort
    Abstract: It has been argued that the relationship between knowledge intensive business services (KIBS) and multi-national enterprises (MNEs) within the regional economy is advantageous for urban and regional dynamics. It is likely that KIBS aim to locate proximate to (internationally operating) MNEs because of agglomeration externalities. The impact of MNEs on the birth of KIBS has rarely been examined, and the research on the new formation of KIBS has mainly adopted a case study approach, thus limiting the opportunity for generalisation. We have taken a more quantitative approach using a continuous space framework to test whether proximity is important for the co-location of KIBS and MNEs in the metropolitan area of Amsterdam in the Netherlands. Our results, controlled for other location factors, indicate that KIBS are co-agglomerated with MNEs and that the presence of a MNE significantly influences the birth of KIBS nearby, but the effect on such start-ups is considerably smaller than the positive effect of the presence of already established KIBS. We discuss the implications for urban and regional development strategies and policy initiatives.
    Keywords: knowledge intensive business services, multi-national enterprises, start-ups, point pattern methodology, Amsterdam.
    JEL: F23 L84 L25 R12
    Date: 2012–12
  7. By: Neil Lee; Andrés Rodríguez-Pose
    Abstract: One of the key benefits of cities is that they allow the exchange of knowledge and information between economic actors. This may have two effects: it may create the conditions for entirely new innovations to emerge, and it may allow firms to learn innovations from those nearby. Yet few studies have considered the impact of an urban location on whether innovations are original or learnt. This paper tests these hypotheses using large-scale survey evidence for over 1,600 UK SMEs. We show that while urban firms tend to be both product and process innovators, urban firms are disproportionately likely to introduce process innovations which are only new to the firm, rather than entirely original. Instead, the urban advantage in product innovation appears to come from a combination of the effects. The results highlight a need for a nuanced view of the link between cities and innovation.
    Keywords: Innovation, Cities, SMEs, Learning, United Kingdom
    JEL: O31 O33 O38
    Date: 2012–11
  8. By: Carla Costa; Rui Baptista
    Abstract: The mechanisms driving regional clustering are examined by exploring two theories: agglomeration economies and organizational reproduction. While organizational reproduction through spinoffs dominates clusters' early stages of growth, in clusters populated by small, vertically disintegrated firms accessing networks of external capabilities, agglomeration economies should emerge as a positive force. We examine just such a cluster: the molds industry in Portugal. Our empirical approach is twofold: first, we examine the early evolution (1946–1986) of the industry; second, we use detailed data on firms and founders for the period 1987–2009 to test the predictions of the two theories. We find that while organizational reproduction has played a major role in clustering, agglomeration economies recently have gained influence.
    Keywords: Clusters, Spinoffs, Agglomeration Economies, Networks, External Capabilities
    Date: 2012–11
  9. By: Gaetano Lisi
    Abstract: The recent and growing literature which has extended the use of search and matching models even to the housing market does not use the free entry or zero-profit assumption as a key condition for solving the equilibrium of the model. This is because a straightforward adaptation of the basic matching model to the housing market seems impossible. However, this paper shows that the zero-profit condition can be easily reformulated to take the distinctive features of the housing market into account. Indeed, it helps to provide a theoretical explanation for well-known empirical regularities in the housing markets.
    Keywords: trust (in) and power (of) tax authorities, tax compliance, tax evasion macroeconomics variables.
    JEL: A12 A13 E26 H26 K34 K42
    Date: 2012–11–22
  10. By: Anna Piil Damm (Aarhus University)
    Abstract: Using survey information about characteristics of personal contacts linked with administrative register information on employment status one year later, I show that unemployed survey respondents with many employed acquaintances have a higher job finding rate. Settlement in a socially deprived neighborhood may, therefore, hamper individual labor market outcomes because of lack of employed contacts. I investigate this hypothesis by exploiting a unique natural experiment that occurred between 1986 and 1998 when refugee immigrants to Denmark were assigned to municipalities quasirandomly, which successfully addresses the methodological problem of endogenous neighborhood selection. Taking account of location sorting, living in a socially deprived neighborhood does not affect labor market outcomes of refugee men. Furthermore, their labor market outcomes are not affected by the overall employment rate of men living in the neighborhood, but positively affected by the employment rate of non-Western immigrant men and co-national men living in the neighborhood. This is strong evidence that immigrants find jobs in part through their employed immigrant and co-ethnic contacts in the neighborhood of residence and that a high quality of contacts increases the individual’s employment chances and annual earnings.
    Keywords: Residential job search networks, referral, contacts, neighborhood quality, labor market outcomes.
    JEL: J60 J31 R30
    Date: 2012–11
  11. By: Berliant, Marcus; Tabuchi, Takatoshi
    Abstract: We consider information aggregation in national and local elections when voters are mobile and might sort themselves into local districts. Using a standard model of private information for voters in elections in combination with a New Economic Geography model, agglomeration occurs for economic reasons whereas voter stratification occurs due to political preferences. We compare a national election, where full information equivalence is attained, with local elections in a three-district model. We show that full information equivalence holds at a stable equilibrium in only one of the three districts when transportation cost is low. The important comparative static is that full information equivalence is a casualty of free trade. When trade is more costly, people tend to agglomerate for economic reasons, resulting in full information equivalence in the political sector. Under free trade, people sort themselves into districts, most of which are polarized, resulting in no full information equivalence in these districts. We examine the implications of the model using data on corruption in the legislature of the state of Alabama and in the Japanese Diet.
    Keywords: information aggregation in elections; informative voting; new economic geography; local politics
    JEL: D82 D72 R12
    Date: 2012–12–04
  12. By: David Cobham
    Abstract: The financial crisis and the role played within it by fluctuations in house prices has reopened the debate about whether monetary policy should respond to asset prices. This paper investigates how the central banks of the euro area, the UK and the US considered, understood and responded to the trends in house prices in the six or seven years preceding the crisis, and how they have analysed those developments since the crisis. It suggests that these central banks, particularly the Anglo-Saxon ones, might have been able to take some useful action if they had devoted more intellectual resources to analysing the possible misalignments of house prices and been willing to act on them.
    Date: 2012
  13. By: Caroline M. Hoxby; Christopher Avery
    Abstract: We show that the vast majority of very high-achieving students who are low-income do not apply to any selective college or university. This is despite the fact that selective institutions would often cost them less, owing to generous financial aid, than the resource-poor two-year and non-selective four-year institutions to which they actually apply. Moreover, high-achieving, low-income students who do apply to selective institutions are admitted and graduate at high rates. We demonstrate that these low-income students' application behavior differs greatly from that of their high-income counterparts who have similar achievement. The latter group generally follows the advice to apply to a few "par" colleges, a few "reach" colleges, and a couple of "safety" schools. We separate the low-income, high-achieving students into those whose application behavior is similar to that of their high-income counterparts ("achievement-typical" behavior) and those whose apply to no selective institutions ("income-typical" behavior). We show that income-typical students do not come from families or neighborhoods that are more disadvantaged than those of achievement-typical students. However, in contrast to the achievement-typical students, the income-typical students come from districts too small to support selective public high schools, are not in a critical mass of fellow high achievers, and are unlikely to encounter a teacher or schoolmate from an older cohort who attended a selective college. We demonstrate that widely-used policies–college admissions staff recruiting, college campus visits, college access programs–are likely to be ineffective with income-typical students, and we suggest policies that will be effective must depend less on geographic concentration of high achievers.
    JEL: I21 I23 I24
    Date: 2012–12
  14. By: Andreas Breitenfellner; Jesús Crespo Cuaresma; Philipp Mayer
    Abstract: Using a dataset for 18 OECD economies spanning the last four decades, we identify periods of downward house price adjustment and estimate conditional logit models to measure the effect of energy inflation on the probability of these house price corrections after controlling for other relevant macroeconomic variables. Our results give strong evidence that increases in energy price inflation raise the probability of such corrective periods taking place. We discuss various channels that could explain this phenomenon as well as the implication of our results to the analysis of macro-financial risks.
    JEL: C33 G01 Q43 R21 R31
    Date: 2012–11
  15. By: Leen Sebrechts
    Abstract: The general and universal right to education has been well established for some time. But despite international agreement, the commitment to education for all is not necessarily linked to obligatory mainstream education for all children with disabilities. The mature European countries have a history of segregating children with special educational needs in special schools and special schools continue to exist in many countries. In addition, initiatives towards more inclusive education systems are taken. So in many countries, children with special needs and their parents are able to choose between segregated special education and inclusive education. However, different factors influence this choice. Using existing research, country profiles and results of analyses on Flemish data, this paper compares the organisation of inclusive and special education systems in the Flemish community of Belgium, Norway, the Netherlands and England. We add a perspective to the existing comparative studies. We proceed from the Network Episode Model developed by Pescosolido (and the importance of the social networks included within this model), focusing specifically on the guidance systems for the social networks of children with special educational needs within the education. The results describe that the choice for a certain school type is influenced by a number of factors, including the country’s education system, the guidance and the characteristics and competences of the family and its social network. Social and socio-economic factors are relevant within the educational field of children with special educational needs. Policy-makers should consider the potential influence of these factors on the overall effectiveness of the measures introduced.
    Keywords: child with special needs, comparative study, Europe, inclusive education, parental guidance, socio-economic position, special needs education
    Date: 2012–11
  16. By: Kenn Ariga (Institute of Economic Research,Kyoto University); Fumio Ohtake (The Institute of Social and Economic Research of Osaka University); Masaru Sasaki (The Graduate School of Economics at Osaka University); Zheren Wu (Faculty of Economics,Kinki University)
    Abstract: This paper uses a unique survey of the Chinese youth to construct a panel data in which we keep track of geographical and job mobilities. Our estimation results deliver the following major findings. (1) The sample individuals are highly mobile. Job quits and relo- cations are frequent and they are closely correlated. We find the job hopping to be highly productive as our estimates indicate each job quit generates more than .2 log increase in monthly wage. .(2) The migrant disadvantage in urban labor market is compensated by their higher job mobility. After four jobs, the expected earnings di¤erentials essentially disappear. We also find that migration and job mobility are highly selective processes. Our evidence indicates that the migrants are positively selected. (3) Job and location mobilities are highly dependent upon family back ground and personal traits which we interpret as representing un- observable characteristics associated with risk taking, active and opti- mistic personality, as well as the implied economic incentives to migrate and keep searching for better jobs.
    JEL: J31 J61 J62
    Date: 2012–11
  17. By: Alejandro Ome V.
    Abstract: Executive Summary. In 2002 the Colombian government issued the Estatuto de Profesionalización Docente (henceforth EPD), introducing a new code for public school teachers. The EPD implements two main strategies in order to improve the quality of education; first, attract capable individuals to the teaching profession; and second, implement recurring evaluations so teachers that are not meeting the expectations are let go and accomplished teachers are promoted. In this report I ask three main questions:  Has the EPD succeeded in attracting qualified individuals to the teaching profession?  Has the EPD improved students’ outcomes?  Is the new system to grant promotions awarding the best teachers? To tackle these issues I exploit the fact that when the reform was issued, incumbent teachers were allowed to remain under the old regime. This old regime provides much more labor stability, and its promotion policy is based on a fixed schedule. The gradualism of EPD’s implementation causes that even by 2009 we observe both EPD and non-EPD teachers in schools, allowing comparisons between these two types of teachers over different outcomes of interest.
    Date: 2012–07–29
  18. By: Andrés Rodríguez-Pose; Eduardo I. Palavicini-Corona
    Abstract: Local economic development (LED) strategies are increasingly being recommended as an alternative or a complement to traditional development strategies. However, beyond a limited number of areas where ‘best practices’ have been identified, there has been little systematic monitoring of whether LED really works. This paper uses a purpose-built database of 898 municipalities in Mexico in order to assess, using a quantitative approach, whether the implementation of seven different components of LED – development plan, sustainability, entrepreneurship, capacity building, participation mechanisms, development links, and autonomy – has delivered greater human development across Mexican local governments. The results of the analysis indicate that municipalities engaging in LED during the last two decades have witnessed significant improvements in human development, relative to those which have overlooked LED strategies. The increase in human development has been greatest for those local authorities which have pursued capacity building, the establishment of additional development links and which have drafted a development plan. Greater independence from federal or state initiative has, by contrast, been detrimental for changes in human development at the local level.
    Keywords: local economic development (LED), human development, capacity building, participation, local authorities, local autonomy, Mexico
    JEL: H76 O11
    Date: 2012–11
  19. By: Sumit Agarwal; Efraim Benmelech; Nittai Bergman; Amit Seru
    Abstract: Yes, it did. We use exogenous variation in banks’ incentives to conform to the standards of the Community Reinvestment Act (CRA) around regulatory exam dates to trace out the effect of the CRA on lending activity. Our empirical strategy compares lending behavior of banks undergoing CRA exams within a given census tract in a given month to the behavior of banks operating in the same census tract-month that do not face these exams. We find that adherence to the act led to riskier lending by banks: in the six quarters surrounding the CRA exams lending is elevated on average by about 5 percent every quarter and loans in these quarters default by about 15 percent more often. These patterns are accentuated in CRA-eligible census tracts and are concentrated among large banks. The effects are strongest during the time period when the market for private securitization was booming.
    JEL: G01 G21 G38 H24 H31
    Date: 2012–12
  20. By: Emilio Blanco (Central Bank of Argentina); Andrés Denes (Central Bank of Argentina); Gastón Repetto (Central Bank of Argentina)
    Abstract: Economist usually think and work taking into account the temporal dimension of economic and financial processes. Time plays a key role in the economic decision making process and is a fundamental input for statistical models useful to analyze and predict social behavior. Thus time invades our practice. By contrast the role of territory in economic analysis is far more neglected. Territory is usually subsumed in other dimensions which are related, but are different. As a generator and promoter of public policies, the Central Bank of Argentina undergoes periodic efforts to measure, study and analyze the access and use of financial services by households and businesses in Argentina. The information gathered for this purposes, although descriptive, presents limitations on the spatial analysis that can be derived from it. Hence, we have systematized the information available to the Central Bank in the last ten years to move beyond that limitation. The result is a set of economic and financial variables and aggregate indicators of financial services market, demand and supply for 3431 Argentine localities. Furthermore, this paper, albeit being preliminary, proposes a system of geo-referenced local indicators which can be used as input for the formulation of economic and financial policies.
    Keywords: financial inclusion, financial policies, financial services, geo-referenced local indicators, spatial analysis
    JEL: C81 G21 R12 R38
    Date: 2012–11
  21. By: Marieke Bos; Leonard Nakamura
    Abstract: Swedish law mandates the removal of information about past credit arrears from the individuals’ credit reports after three years. By exploiting a quasi-experimental variation in retention times caused by a change in the credit bureau’s timing of arrear removal, we are able to examine the causal effect of increased retention time on consumers' short- to medium-run credit scores, loan applications, credit access, and future defaults. ; We find that a prolonged retention time increases the need for and access to credit relative to shorter retention times. Additionally, prolonged retention times seem to reduce the likelihood to default again two years after removal. We also find that in both regimes only a minority of the individuals (less than 27 percent) receive a new arrear within two years after removal, suggesting that only a minority of the individuals who received an arrear may be inherently high risk. ; Alternatively, our results may be interpreted as suggesting that removal of credit arrears may induce borrowers to exert greater effort along the lines of Vercammen (1995) and Elul and Gottardi (2007). Either interpretation opens the possibility that credit arrear removal is welfare enhancing.
    Keywords: Households - Finance ; Consumer credit ; Credit scoring systems
    Date: 2012
  22. By: Donato Iacobucci (Dept. of Information Engineering Università Politecnica delle Marche, Italy)
    Abstract: The smart specialisation strategy (S3) requires the identification in each region of one or more thematic areas where R&D and innovation policy should be focused on to create and sustain a competitive advantage. Not necessarily the chosen areas will belong to the core, general purpose technology that are generally identified as high-tech sectors (ICT, biotech, etc.). For most of the (peripheral) regions the application of the S3 will involve the identification of production domains in which general purpose technology can be applied and adapted. The aim of this paper is to discuss the theoretical underpinning of the S3, focusing the analysis on three concepts: embeddedness, relatedness and connectivity. The analysis is carried out by reviewing the available documents about the definition and implementation of the smart specialisation strategy and the early proposals developed by some European regions. S3 is an important advancement in the design of regional innovation policy. A better clarification of its theoretical basis and implementation problems can improve its effectiveness.
    Keywords: smart specialisation; regional innovation policy; low and medium tech-industries
    JEL: L52 O25 R11
    Date: 2012–12
  23. By: James J. Heckman; Rodrigo Pinto; Peter A. Savelyev
    Abstract: A growing literature establishes that high quality early childhood interventions targeted toward disadvantaged children have substantial impacts on later life outcomes. Little is known about the mechanisms producing these impacts. This paper uses longitudinal data on cognitive and personality traits from an experimental evaluation of the influential Perry Preschool program to analyze the channels through which the program boosted both male and female participant outcomes. Experimentally induced changes in personality traits explain a sizable portion of adult treatment effects.
    JEL: I21 I28 I29 J13 J15 J16 J24 O15
    Date: 2012–11
  24. By: Bruno Crépon; Esther Duflo; Marc Gurgand; Roland Rathelot; Philippe Zamora
    Abstract: This paper reports the results from a randomized experiment designed to evaluate the direct and indirect (displacement) impacts of job placement assistance on the labor market outcomes of young, educated job seekers in France. We use a two-step design. In the first step, the proportions of job seekers to be assigned to treatment (0%, 25%, 50%, 75% or100%) were randomly drawn for each of the 235 labor markets (e.g. cities) participating in the experiment. Then, in each labor market, eligible job seekers were randomly assigned to the treatment, following this proportion. After eight months, eligible, unemployed youths who were assigned to the program were significantly more likely to have found a stable job than those who were not. But these gains are transitory, and they appear to have come partly at the expense of eligible workers who did not benefit from the program, particularly in labor markets where they compete mainly with other educated workers, and in weak labor markets. Overall, the program seems to have had very little net benefits.
    JEL: C93 J64 J68
    Date: 2012–12
  25. By: Daphna Bassok; Maria Fitzpatrick; Susanna Loeb
    Abstract: The success of any governmental subsidy depends on whether it increases or crowds out existing consumption. Yet to date there has been little empirical evidence, particularly in the education sector, on whether government intervention crowds out private provision. Universal preschool policies introduced in Georgia and Oklahoma offer an opportunity to investigate the impact of government provision and government funding on provision of childcare. Using synthetic control group difference-in-difference and interrupted time series estimation frameworks, we examine the effects of universal preschool on childcare providers. In both states there is an increase in the amount of formal childcare. In Georgia, both the private and public sectors grow, while in Oklahoma, the increase occurs in the public sector only. The differences likely stem from the states’ choices of provision versus funding. We find the largest positive effects on provision in the most rural areas, a finding that may help direct policymaking efforts aimed at expanding childcare.
    JEL: I21
    Date: 2012–12
  26. By: Oliver Holtemöller; Maike: Schultz Irrek
    Abstract: Many economic decisions implicitly or explicitly rely on a projection of the medium- or long-term economic development of a country or region. In this paper, we provide a federal long-run projection model for Germany and the German states. The model fea-tures a top-down approach and, as major contribution, uses error correction models to estimate the regional economic development dependent on the national projection. For the medium- and long-term projection of economic activity, we apply a production function approach. We provide a detailed robustness analysis by systematically varying assumptions of the model. Additionally, we explore the effects of different demographic trends on economic development.
    Keywords: regional long-run projection, convergence, demographic change
    JEL: C53 E17 O10
    Date: 2012–12
  27. By: Kyle F. Herkenhoff
    Abstract: How do job losers use default -- a phenomenon 6x more prevalent than bankruptcy --as a type of “informal" unemployment insurance, and more importantly, what are the social costs and benefits of this behavior? To this end, I establish several new facts: (i) job loss is the main reason for default, not negative equity (ii) people default because they are credit constrained and cannot borrow more, and (iii) the value of debt payments is a significant fraction of a defaulter's earnings. Using these facts, I calibrate a general equilibrium model with a frictional labor market similar to Burdett and Mortensen (1998) and Menzio and Shi (2009, 2011) and individually priced debt along the lines of Eaton and Gersovitz (1981) and Chatterjee et al. (2007). After proving the existence of a Block Recursive Equilibrium, I find that the extra self- insurance job losers obtain by defaulting outweighs the subsequent increase in the cost of credit, and as a result, protectionist policies such as the Mortgage Servicer Settlement of 2012 or the CARD Act of 2009 improve overall welfare by .1%. The side effect of the policies, however, is a .2-.5% higher unemployment rate during recessions that persists throughout the recovery.
    Keywords: Unemployment ; Insurance ; Labor market
    Date: 2012
  28. By: Luca Gandullia (University of Genoa, Italy)
    Abstract: The aim of the paper is to review the economic theory of tax assignment across levels of government and the international experience in the use of direct taxes – personal income taxes and taxes on profits and on business value added – for fiscal decentralization. We highlight that as for other options of local taxation there are merits but also drawbacks in the use of direct taxes as a source of financing for sub-central governments and so the final choice about their use or not is a matter of judgment and depends on the political priority to be attached to different objectives, such as efficiency, equity, accountability, tax competition, administrative feasibility and revenue adequacy.
    Keywords: direct taxes, fiscal decentralization, tax assignment
    JEL: H24 H25 H71 H73
    Date: 2012–09

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