nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2013‒01‒26
33 papers chosen by
Steve Ross
University of Connecticut

  1. Rocketing Rents The magnitude and attenuation of agglomeration economies in the commercial property market By Hans R. A. Koster
  2. Minority and Immigrant Homeownership Experience: Evidence from the 2009 American Housing Survey By Kusum Mundra
  3. Historic Amenities, Income and Sorting of Households By Hans R. A. Koster; Piet Rietveld; Jos Van Ommeren
  4. Economic segregation and urban growth By Li, Jing
  5. To Sleep, Perchance to Dream: Prices for Funeral Homes in US States By Paolo Canofari; Giancarlo Marini; Pasquale Scaramozzino
  6. Leveraging land to enable urban transformation : lessons from global experience By Lozano-Gracia, Nancy; Young, Cheryl; Lall, Somik V.; Vishwanath, Tara
  7. Enrollment and quality levels of Colombia’s public basic education: Has fiscal decentralization improved them? By Ignacio Lozano; María Adelaida Martínez
  8. Housing and Urbanization in Africa: unleashing a formal market process By Paul Collier; Anthony J. Venables
  9. History and Urban Primacy: The Effect of the Spanish Reconquista on Muslim Cities By David Cuberes; Rafael González-Val
  10. The Importance of Time Zone Assignment: Evidence from Residential Electricity Consumption By Felix Weinhardt
  11. Commuting Time and Accessibility in a Joint Residential Location, Workplace, and Job Type Choice Model By Ignacio A. Inoa; Nathalie Picard; André de Palma
  12. Forecasting regional growth in Germany: A panel approach using business survey data By Wenzel, Lars
  13. India’s urban environment: air and water pollution and pollution abatement By Sridhar, Kala S.; Kumar, Surender
  14. Highway to success in India : the impact of the golden quadrilateral project for the location and performance of manufacturing By Ghani, Ejaz; Goswami, Arti Grover; Kerr, William R.
  15. The Market Valuation of Interior Design and Developers strategies: a simple Theory and some Evidence By Leung, Charles Ka Yui; Ma, Wai Yip; Zhang, Jun
  16. Task Specialization in U.S. Cities from 1880-2000 By Guy Michaels; Ferdinand Rauch; Stephen J. Redding
  17. Towards a policy to promote tourism clusters By Benner, Maximilian
  18. Lake Amenities, Environmental Degradation, and Great Lakes Regional Growth By Stephens, Heather; Partridge, Mark
  19. Securitization and the fixed-rate mortgage By Andreas Fuster; James Vickery
  20. Immigrant Homeownership and Immigration Status: Evidence from Spain By Catalina Amuedo-Dorantes; Kusum Mundra
  21. Brokers' contractual arrangements in the Manhattan residential rental market By Bar-Isaac, Heski; Gavazza, Alessandro
  22. Urban Mortality Transitions: The Role of Slums By Günther Fink; Isabel Günther; Kenneth Hill
  23. Spatial autoregressive spillovers vs unobserved common factors models. A panel data analysis of international technology diffusion By Cern Ertur; Antonio Musolesi
  24. Information and participation in social programs By Coady, David; Martinelli, Cesar; Parker, Susan W.
  25. Publicizing the results of standardized external tests : does it have an effect on school outcomes? By Brindusa Anghel; Antonio Cabrales; Jorge Sainz; Ismael Sanz
  26. Technology Spillover of Foreign Direct Investment: An Analysis of Different Clusters in India By Behera, Smruti Ranjan Behera; Dua , Pami Dua; Goldar, Bishwanath Goldar
  27. Business cycle and entrepreneurial behavior using French regional data By Mathilde Aubry; Jean Bonnet; Patricia Renou-Maissant
  28. Regionalization vs. Globalization By HIRATA Hideaki; Ayhan KOSE; Christopher OTROK
  29. Do entrepreneurs matter? By Becker, Sascha O.; Hvide, Hans K.
  30. Examining the Link between Crime and Unemployment: A Time Series Analysis for Canada By Zuzana Janko; Gurleen Popli
  31. Compensation Matters: The Case of Teachers By Alicia H. Munnell; Rebecca Cannon Fraenkel
  32. Tracing the Effects of Guaranteed Admission through the College Process: Evidence from a Policy Discontinuity in the Texas 10% Plan By Jason Fletcher; Adalbert Mayer
  33. Detecting dependence between spatial processes By Herrera Gómez, Marcos; Ruiz Marín, Manuel; Mur Lacambra, Jesús

  1. By: Hans R. A. Koster
    Abstract: Rocketing rents in urban areas are likely explained by agglomeration economies. This paper measures the impact of these external economies on commercial property values using unique micro]data on commercial rents and employment. A measure of agglomeration is employed that is continuous over space, avoiding the modifiable areal unit problem. To distinguish agglomeration economies from unobserved endowments and shocks, I use temporal variation in densities and instrumental variables. The spatial extent of agglomeration economies is determined by estimating a spatial bandwidth within the model. The results show that agglomeration economies have a considerable impact on rents: a standard deviation increase in employment density leads to an increase in rents of about 10 percent. The geographical extent of these benefits is about 15 kilometres. The bias of ignoring time]invariant unobserved endowments and unobserved shocks seems to be limited.
    Keywords: commercial buildings, hedonic pricing, agglomeration economies, spatial decay, kernel densities
    JEL: R30 R33
    Date: 2013–01
  2. By: Kusum Mundra
    Abstract: Using data from the 2009 American Housing Survey and Hazard Model, this paper provides empirical evidence that the homeownership experience during the recent housing boom and housing bust was not homogenous across all groups in the U.S. The recent deterioration of underwriting practices and a boom in mortgage lending did not benefit minorities and immigrant homeownership in the U.S. Blacks experienced significantly lower increase in homeownership than the whites but highest exit from homeownership particularly if they obtained the mortgage during subprime boom period from 2004 - 2006. Hispanics, on the other hand, did not experience significant increase in homeownership and neither did they face a higher exit from homeownership compared to whites. However, Hispanic immigrants were worse off in the recent housing market than Hispanic natives. Immigrants were worse off in the recent housing market than the natives, but naturalized immigrants fared better than the non-naturalized immigrants.
    Keywords: Homeownership, Exit, Subprime, Minorities, Immigrants, Citizenship, Hazard Model
    JEL: J15 J11 R21
    Date: 2013–01
  3. By: Hans R. A. Koster; Piet Rietveld; Jos Van Ommeren
    Abstract: We test the impact of historic amenities on house prices and sorting of households within cities. Conservation area boundaries enable us to employ a semiparametric regression-discontinuity approach to measure the impact of historic amenities. The approach allows for household-specific preferences. Conditional on neighbour attributes, the price difference at the conservation boundary is about 3 percent. Internal historic amenities are also important, as listed houses are about 6 percent more expensive. It is shown that rich households sort themselves in conservation areas and in listed buildings, because they have a higher willingness to pay for historic amenities. The results contribute to an explanation for the substantial spatial income differences within cities.
    Keywords: historic amenities, sorting, conservation areas, semiparametric regression-discontinuity design, hedonic price method
    JEL: R14 R21 R31 R38
    Date: 2013–01
  4. By: Li, Jing
    Abstract: Many studies have investigated the socioeconomic consequences of residential economic segregation in U.S. urban areas. These studies mainly focus on the impact of economic segregation on the poor or minorities and almost universally find that economic segregation hurts these groups in many ways. However, few studies investigate how economic segregation relates to the economic growth of an urban area as a whole. While there are papers that study this issue theoretically, empirical evidence is lacking. The motivation of this paper is to fill this gap. Using U.S. census data, this study documents a significant negative relationship between the initial levels of economic segregation in 1980 and the subsequent economic growth, indexed by metropolitan population growth, in 1980-2000 in U.S. metropolitan statistical areas (MSAs). Holding other things constant, MSAs having higher initial levels of economic segregation experienced substantially slower subsequent population growth.
    Keywords: economic segregation; human capital externalities; social interactions; urban growth
    JEL: D62 O40 R11
    Date: 2012–12–20
  5. By: Paolo Canofari (Department of Economics, Law and Institutions, University of Rome "Tor Vergata"); Giancarlo Marini (Department of Economics, Law and Institutions, University of Rome "Tor Vergata"); Pasquale Scaramozzino (Department of Economics, Law and Institutions, University of Rome "Tor Vergata")
    Abstract: The need for a proper burial is widely felt. This paper makes use of an original data set to explore the relationship between the prices of cemetery plots and the prices of housing. It considers a simple model where the services from both real estate and funeral homes enter individuals’ utility function, and derives testable propositions in order to analyse the relation between housing when alive and after death. The services from funeral homes and from conventional housing are complements in the households’ utility. On the other hand, the services from funeral homes are an inferior good: a lower personal income is associated with higher grave prices.
    Keywords: Funerary Homes, Housing Prices
    JEL: L85 Z13
    Date: 2013–01–11
  6. By: Lozano-Gracia, Nancy; Young, Cheryl; Lall, Somik V.; Vishwanath, Tara
    Abstract: Around the world, in both developed and developing countries, policy makers use a variety of tools to manage and accommodate urban growth and redevelopment. Government officials have three main concerns in terms of land policy: (i) accommodating urban expansion, (ii) providing infrastructure, and (iii) managing density. Together, the planning for infrastructure and urban expansion, land use, and density policies combine to shape the spatial structure of cities. This paper reviews global experience on using land based instruments to accommodate urban development and financing infrastructure. The review suggests that urban transformation is most efficient when land markets are fluid, particularly when they are grounded in strong institutions that (i) assign and protect property rights, (ii) enable independent valuation and public dissemination of land values across uses, and (iii) enable the judicial system to handle disputes that may arise in the process.
    Keywords: Public Sector Management and Reform,Public Sector Economics,Municipal Financial Management,Regional Governance,Urban Governance and Management
    Date: 2013–01–01
  7. By: Ignacio Lozano; María Adelaida Martínez
    Abstract: This paper provides empirical evidence of the impact of fiscal decentralization on Colombia’s public basic education. Based on the social and economic data available for 1,003 municipalities and 13,670 public schools, for the last decade, we confirmed that decentralization has had a positive and non-monotone effect on education enrollment. Likewise, our results suggest that it has had a positive impact on quality, once several variables, commonly used to explain performance differences, were controlled. Assuming that the effects of decentralization might have been uneven between regions and within them, we specified panel data and cross section econometric models for all municipalities as a whole, for size-based municipal categories, and for the towns which receive education funding directly from the central government or not.
    Keywords: Public Goods, Local Taxation, Intergovernmental Relations, Education Expenditures, Government Programs. Classification JEL: H41, H71, H77, I22, I38
    Date: 2013–01
  8. By: Paul Collier; Anthony J. Venables
    Abstract: In many African countries a market for private provision of formal sector mass housing is largely absent. This is not inevitable, but is the consequence of policy failure surrounding five key issues. The affordability of housing, with costs often inflated by inappropriate building regulations and inefficient construction sectors; lack of clarity in land titling and legal enforcement; lack of innovation in supply of housing finance; failure to supply supporting infrastructure and to capture development gains to finance this; and failure to plan cities in a manner conducive to employment creation. Since responsibility for these policies is divided between different parts of government, a coordinated push is needed to secure reform and activate this market.
    Date: 2013
  9. By: David Cuberes (Department of Economics, The University of Sheffield); Rafael González-Val (Department of Economics, The University of Sheffield)
    Abstract: This paper aims to study the effect of a major historical event on the Spanish city size distribution, the Spanish Reconquista. This was a long military campaign that aimed to expel Muslims from the Iberian Peninsula. The process started in the early 1300s and ended around 1500, when the entire peninsula was brought back under Christian rule. The Reconquista had a major effect on the evolution of the Muslim and Christian populations during this period and offers a unique “quasi-natural” experiment. The Reconquista dramatically decreased the population of the three main cities of the Moorish Caliphate - Granada, Cordoba, and Seville. This represents a very particular shock in the sense that these were cities with a vast majority of Muslim population, which was then replaced by Christian residents. Using a methodology closely related to Nitsch (2003) we show that the effect of the Reconquista on both the relative size of these three cities was indeed dramatic and that it cannot be simply explained by similar trends in other important national or international cities. Granada lost 53% of its population during the 1300-1800 period, whereas the figures for Cordoba and Seville were 33% and 7%, respectively. These impressive population drops are still present even after controlling for a large set of country and city-specific socioeconomic indicators. We interpret these results as suggestive that the Spanish Reconquista shock had permanent effects, and therefore, in the context studied here, history does not matter for city growth. Our results suggest that the locational fundamentals that made these three cities the most populated ones in the Peninsula for about 500 years ceased to be crucial growth determinants once Christians took control of them.
    Keywords: urban primacy; locational fundamentals; city growth; lock-in effects
    JEL: R12 N9
    Date: 2013
  10. By: Felix Weinhardt
    Abstract: This paper presents the first nationwide empirical assessment of residential electricity use in response to the timing of daylight. Employing Geographical Information Systems (GIS) solar times of sunrise and sunset are calculated for all geographical locations in mainland USA. This is used to uncover the non-standard variation in sunrise times in standard local time over space, depending on time zone, daylight saving time, and geographical position within time zone. This variation is subsequently used to uncover county-level responses in residential electricity consumption to changes in sunlight. I find no robust overall effect of sunrise times, but early sunrise is associated with lower residential electricity use in the North, but higher consumption in the South. These results would suggest that additionally splitting the USA into time-zones horizontally could reduce the total annual residential electricity bill, but further research is needed to examine the behavioral channels that could give rise to these effects.
    Keywords: time-use, time zones, daylight saving, energy consumption, GIS
    JEL: H4 Q4
    Date: 2013–01
  11. By: Ignacio A. Inoa; Nathalie Picard; André de Palma (THEMA, Universite de Cergy-Pontoise and THEMA; THEMA, Universite de Cergy-Pontoise and THEMA; ENS Cachan)
    Abstract: The effect of an individual-specific measure of accessibility to jobs is analyzed using a three-level nested logit model of residential location, workplace, and job type choice. This measure takes into account the attractiveness of different job types when the workplace choice is anticipated in the residential location decision. The model allows for variation in the preferences for job types across individuals and accounts for individual heterogeneity of preferences at each choice level in the following dimensions: education, age, gender and children. Using data from the Greater Paris Area, estimation results indicate that the individual-specific accessibility measure is an important determinant of the residential location choice and its effect differ along the life cycle. Results also show that the job type attractiveness measure is a more significant predictor of workplace location than the standard measures.
    Keywords: residential location, job location, accessibility, nested logit, Greater Paris.
    JEL: R21 C35 C51
    Date: 2013
  12. By: Wenzel, Lars
    Abstract: This paper is a first attempt to construct quantitative forecasts for regional growth in Germany using business survey data (BSD) from the German chambers of commerce. A panel approach is used to model the growth rates of the Bundesländer from the year 2000 onwards. The proposed model does well in explaining regional growth and the coefficients on the BSD are relatively stable. Results suggest that an indicator that is 10 points higher reflects growth rates that are 0.3-0.4 percentage points higher, while a 10 point increase from the previous year suggests an increase in growth by 0.25 percentage points. Fixed effects are found to play a negligible role. The BSD provides additional information on regional growth and outperforms the benchmark without BSD by up to 14 per cent for the full time period. For the period from 2000 to 2007 this value is as much as 20 per cent. However, for the time period from 2008 onwards, BSD does not provide significant information content over the benchmark. This reflects several shortcomings of the BSD, which nonetheless appears a valuable source of information in forecasting regional growth. --
    Date: 2013
  13. By: Sridhar, Kala S.; Kumar, Surender
    Abstract: This paper focuses on air and water pollution in India’s cities, provides empirical evidence to demonstrate the seriousness of the challenges, discusses the relevant policies of national and local government that are used to address the challenges, discusses relevant political economy issues related to introducing pollution taxes or other policies which are aimed at “green” cities.
    Keywords: Urbanisation; Environment; Air pollution; Water pollution; Fiscal instruments
    JEL: R0 Q53 N95
    Date: 2012–12
  14. By: Ghani, Ejaz; Goswami, Arti Grover; Kerr, William R.
    Abstract: The infrastructure gap is one of the most significant impediments to India realizing its growth and poverty reduction potential. Although India’s transport network is one of the most extensive in the world, accessibility and connectivity are limited. Only 20 percent of the national highway network (which carries 40 percent of traffic) is four-lane and one-fourth of the rural population does not have access to an all-weather road. It is estimated that the transport sector alone will require an investment of nearly US$500 billion over the next 10 years. This paper investigates the impact of the Golden Quadrilateral highway project on the Indian organized manufacturing sector using enterprise data. The Golden Quadrilateral project upgraded the quality and width of 5,846 km of roads in India. The analysis uses a difference-in-difference estimation strategy to compare non-nodal districts based on their distance from the highway system. It finds several positive effects for non-nodal districts located 0-10 km from the Golden Quadrilateral that are not present in districts 10-50 km away, most notably higher entry rates and increases in plant productivity. These results are not present for districts located on another major highway system, the North-South East-West corridor. Improvements for portions of the North-South East-West corridor system were planned to occur at the same time as the Golden Quadrilateral but were subsequently delayed. Additional tests show that the Golden Quadrilateral project’s effect operates in part through a stronger sorting of land-intensive industries from nodal districts to non-nodal districts located on the Golden Quadrilateral network. The Golden Quadrilateral upgrades further helped spread economic activity to moderate-density districts and intermediate size cities.
    Keywords: Transport Economics Policy&Planning,Subnational Economic Development,E-Business,Housing&Human Habitats,Labor Policies
    Date: 2013–01–01
  15. By: Leung, Charles Ka Yui; Ma, Wai Yip; Zhang, Jun
    Abstract: How much do the market values of housing reflect its interior design? Does the interior design interact with other housing attributes? Following the recent research based on “graph theory,” this paper confirms the importance of internal design variables in a hedonic pricing model, which is applied to a large dataset of high-rise apartment buildings in Asia. The evidence is consistent with a simple theory that developers strategically use interior design to “dilute” the effect of location, which leads to a form of endogenous multi-collinearity. Directions for future research are also discussed.
    Keywords: endogenous multi-collinearity; interior design; market valuation; dummy variables; interaction terms
    JEL: R10 R20 R21
    Date: 2013–01
  16. By: Guy Michaels; Ferdinand Rauch; Stephen J. Redding
    Abstract: We develop a new methodology for quantifying the tasks undertaken within occupations using 3,000 verbs from around 12,000 occupational descriptions in the Dictionary of Occupational Titles (DOTs). Using micro-data from the United States from 1880-2000, we find an increase in the employment share of interactive occupations within sectors over time that is larger in metro areas than non-metro areas. We provide evidence that this increase in the interactiveness of employment is related to the dissemination of improvements in transport and communication technologies. Our findings highlight a change in the nature of agglomeration over time towards an increased emphasis on human interaction.
    JEL: N92 O18 R12
    Date: 2013–01
  17. By: Benner, Maximilian
    Abstract: When thinking about clusters, primarily agglomerations of manufacturing and related service industries come into mind. Yet, clustering in tourism is as salient as in few other industries. Tourism clusters are an empirical fact. Considering the high relevance of tourism to many regions and nations, linking cluster and tourism policy seems worth considering. For this, a special theory of tourism cluster policy is needed, as tourism offers some particular characteristics that set it apart from other industries. On the basis of an analysis of these specifics, this article develops a toolbox for cluster policy specifically aimed at agglomerations in the tourism industry. It offers an overview of ways to use tourism agglomerations for the economic development of nations and regions, including rural ones.
    Keywords: clusters; cluster policy; tourism economic growth; regional policy; rural development
    JEL: O18 L83 R11
    Date: 2013
  18. By: Stephens, Heather; Partridge, Mark
    Abstract: Regional migration and growth are increasingly associated with high-quality in situ natural amenities. However, most of the previous U.S. research has focused on the natural amenities of the Mountain West or the South. The Great Lakes, with their abundant fresh water and natural amenities, would also appear well-positioned to provide the foundation for this type of economic growth. Yet, while some parts of the western Great Lakes region are prime examples of amenity-led growth, other areas in the eastern Great Lakes may not have capitalized on their natural amenities, perhaps because of their strong industrial legacy. Using a unique county-level dataset for the Great Lakes region (including Indiana, Illinois, Michigan, Minnesota, New York, Ohio, Pennsylvania, and Wisconsin), we test whether growth in the region is associated with proximity to lake amenities and whether there are offsetting industrial legacy or pollution effects. We also examine whether amenities have additional attraction value for those with high levels of human capital. Consistent with theory that suggests that natural amenities are normal or superior goods, we find that coastal areas in the region are positively associated with increases in shares of college graduates. However, we find little evidence that lake amenities contribute to broader household migration, especially after 2000. Based on these results, there may be opportunities to leverage Great Lake amenities to support economic growth in terms of attracting individuals with high levels of human capital who are most likely to make quality of life migration decisions.
    Keywords: Regional growth; natural amenities
    JEL: O18
    Date: 2012–12–28
  19. By: Andreas Fuster; James Vickery
    Abstract: Fixed-rate mortgages (FRMs) dominate the U.S. mortgage market, with important consequences for household risk management, monetary policy, and systemic risk. In this paper, we show that securitization is a key driver of FRM supply. Our analysis compares the agency and nonagency mortgage-backed-securities (MBS) markets, exploiting the freeze in nonagency MBS liquidity in the third quarter of 2007. Using exogenous variation in access to the agency MBS market, we find that when both market segments are liquid they perform similarly in terms of supporting FRM supply. However, after the nonagency market freezes, the share of FRMs is sharply higher among mortgages eligible to be securitized through the still-liquid agency MBS market. Our interpretation is that securitization is particularly important for FRMs because of the prepayment and interest rate risk embedded in these loans. We highlight policy implications for ongoing reform of the U.S. mortgage finance system.
    Keywords: Mortgages ; Mortgage-backed securities ; Liquidity (Economics) ; Risk management
    Date: 2013
  20. By: Catalina Amuedo-Dorantes (San Diego State University); Kusum Mundra (Rutgers University)
    Abstract: Because of the many advantages of homeownership for immigrants and for the communities where immigrants reside, a variety of countries have implemented policies that facilitate immigrant homeownership. Although these policies hinge on immigration status, the link between immigration status and homeownership is yet to be carefully explored. Using a recent survey of immigrants in Spain, we find that permanent residents from the EU15 enjoy the highest homeownership rates, even after accounting for a wide range of individual and family characteristics known to impact housing ownership. Permanent residents from countries outside the EU15, temporary residents and undocumented immigrants are, respectively, 12 percentagepoints, 29 percentage-points and 33 percentagepoints less likely to own a home than permanent residents from the EU15. Overall, the findings highlight the differences in homeownership by immigrant status, possibly reflecting differences in cultural adaptation and integration across immigrants in host country.
    Keywords: Immigrant Homeownership, Immigration Status, Spain.
    JEL: R21 J61
    Date: 2013–01
  21. By: Bar-Isaac, Heski; Gavazza, Alessandro
    Abstract: We use new data from a rental brokers' multiple listings service to examine the contractual agreements between landlords and brokers. The data display two sources of variation in the way in which agents are compensated: 1) 69 percent of listings involve exclusive relationships between landlords and agents (the other 31 percent are non-exclusive); and 2) in 23 percent of listings, landlords commit to pay the agent's fee (in the other 77 percent, the agent collects the fee from the tenant). We show that contracts vary according to apartment characteristics and market conditions. Specifically, landlords are more likely to sign exclusive agreements with agents for more-atypical apartments and are more likely to pay brokers' fees when apartments are in rent-stabilized buildings and when local vacancy rates are higher.
    Keywords: Real estate; Brokers; Rent-regulation; Exclusive
    JEL: L85 R31
    Date: 2013–01–15
  22. By: Günther Fink (Harvard School of Public Health); Isabel Günther (ETH Zurich); Kenneth Hill (Harvard School of Public Health)
    Abstract: High urban mortality delayed transitions to low mortality in 19th century Europe, but an urban mortality advantage emerged as European transitions progressed into the 20th century. Recent analysis has suggested that high mortality in the rapidly growing urban slums of developing countries might once again delay transitions to low mortality in the 21st century. In this paper we use data from Demographic and Health Surveys across 37 countries to investigate this hypothesis. We document the changes in child mortality over the last twenty years, with a special focus on urban slums and on differences between small and large cities. We show that slum areas fare worse than other urban areas across all child mortality categories and all city categories, but that generally children growing up in urban slums fare at least as well as children in rural areas. Moreover, the improvements in child mortality appear to have affected slum residents at least as much as other urban and rural residents, indicating a neutral role of slum settlements in the mortality transition of developing countries.
    Keywords: child mortality, urban slums, mortality transition
    Date: 2013–01
  23. By: Cern Ertur; Antonio Musolesi
    Abstract: This paper provides an econometric examination of geographic R&D spillovers among countries by focusing on the issue of cross-sectional dependence. By applying several unit root tests, we show that when the number of lags of the autoregressive component of augmented Dickey Fuller test-type speci…cations or the number of common factors is estimated in a model selection framework, the variables (total factor productivity and the R&D capital stocks) appear to be stationary. Then, we estimate the model using two complementary approaches, focusing on generalised spatial autoregression and unobserved common correlated factors. These approaches account for different types of cross-sectional dependence and are related to the notions of weak and strong cross-sectional dependence recently developed in the literature.
    Keywords: Panel data, Cross-section correlation, Spatial models, Factor models, Unit root
    JEL: C23 C5 F0 O3
    Date: 2012–12–19
  24. By: Coady, David; Martinelli, Cesar; Parker, Susan W.
    Abstract: Participation in social programs, such as clubs and other social organizations, results from a process in which an agent learns about the requirements, benefits, and likelihood of acceptance related to a program, applies to be a participant, and, finally, is accepted or rejected. The authors propose a model of this participation process and provide an application of the model using data from a social program in Mexico. Their empirical analysis illustrates that decisions at each stage of the process are responsive to expectations about the decisions and outcomes at the subsequent stages and that knowledge about the program can have a significant impact on participation outcomes.
    Keywords: Knowledge for Development,Housing&Human Habitats,Primary Education,Teaching and Learning,Economic Theory&Research
    Date: 2013–01–01
  25. By: Brindusa Anghel; Antonio Cabrales; Jorge Sainz; Ismael Sanz
    Abstract: We study the effect of standardized external tests on students’ academic outcomes. We exploit the fact that only one of the 17 Spanish regions started doing and publishing the results of standardized tests in 2005 to apply a difference-in-difference methodology, using outcomes of the PISA study from 2000 to 2009. We later confirm our results using synthetic control methods. Using data from a single country allows us to minimize biases arising from differences in legal frameworks, social or cultural environments. Our econometric analysis lends plausibility to the hypothesis that this type of test significantly improves student outcomes. A key novelty is that our exams do not have academic consequences for the students, so that effects have to come directly from the impact on teachers and administrators
    Keywords: External and standardized tests, PISA, Difference-in-difference, Synthetic control methods
    Date: 2012–12
  26. By: Behera, Smruti Ranjan Behera; Dua , Pami Dua; Goldar, Bishwanath Goldar
    Abstract: This paper explores the technology spillover effect of foreign direct investment (FDI) in Indian manufacturing industries across different clusters in India. To measure the spillover effect to domestic firms in a particular cluster, a model is used that combines an innovative production function with a conventional one. The empirical findings reveal significant variations across clusters with regard to spillovers. While some clusters benefit from cluster-specific foreign presence and technology stock, a more commonly observed pattern is that domestic firms in a cluster gain from the presence of foreign firms in other clusters of the region and region-specific technology stock.
    Keywords: Foreign Direct Investment; Technology Spillover; Clusters; Firm location
    JEL: C23 C83 L60
    Date: 2012–10–01
  27. By: Mathilde Aubry (EM Normandie, Métis Research Department, France); Jean Bonnet (University of Caen Basse-Normandie - CREM UMR CNRS 6211, France); Patricia Renou-Maissant (University of Caen Basse-Normandie - CREM UMR CNRS 6211, France)
    Abstract: We study the influences of new firms startups on growth in regional and macroeconomic dimensions in France using a quarterly data basis over the 1993-2011 period. We find that fluctuations in GDP are an early indicator of new firm startups. Nevertheless the most important relationships are found between unemployment rate and new firms startups. Entrepreneurship is mainly driven by necessity motives that have consequences upon potential of growth of new firms startups in most of the French regions.
    Keywords: New firm formation, Business cycle, Schumpeter effect, «refugee» effect, panel data
    JEL: L26 E32 R11
    Date: 2013–01
  28. By: HIRATA Hideaki; Ayhan KOSE; Christopher OTROK
    Abstract: Both global and regional economic linkages have strengthened substantially over the past quarter century. We employ a dynamic factor model to analyze the implications of these linkages for the evolution of global and regional business cycles. Our model allows us to assess the roles played by the global, regional, and country-specific factors in explaining business cycles in a large sample of countries and regions over the period 1960-2010. We find that, since the mid-1980s, the importance of regional factors has increased markedly in explaining business cycles, especially in regions that experienced a sharp growth in intra-regional trade and financial flows. By contrast, the relative importance of the global factor has declined over the same period. In short, the recent era of globalization has witnessed the emergence of regional business cycles.
    Date: 2013–01
  29. By: Becker, Sascha O. (CAGE @ Warwick University ; CEPR ; CESifo ; Ifo and IZA); Hvide, Hans K. (University of Bergen ; CEPR and University of Aberdeen)
    Abstract: In the large literature on firm performance, economists have given little attention to entrepreneurs. We use deaths of more than 500 entrepreneurs as a source of exogenous variation, and ask whether this variation can explain shifts in firm performance. Using longitudinal data, we find large and sustained effects of en- trepreneurs at all levels of the performance distribution. Entrepreneurs strongly affect firm growth patterns of both very young firms and for firms that have begun to mature. We do not find signficant differences between small and larger firms, family and non-family firms, nor between firms located in urban and rural areas, but we do find stronger effects for founders with high human capital. Overall, the results suggest that an often overlooked factor – individual entrepreneurs – plays a large role in affecting firm performance. Key words: entrepreneurship ; firm performance ; human capital. JEL classification: D21 ; D24 ; J23 ; L11 ; L25 ; G39
    Date: 2013
  30. By: Zuzana Janko (Department of Economics, San Francisco State University, California, USA); Gurleen Popli (Department of Economics, The University of Sheffield)
    Abstract: We use national and regional Canadian data to analyze the relationship between the unemployment rate and crime rates. Given potential aggregation bias, we disaggregate the aggregate crime data and look at the relationship between six different types of crimes and unemployment rate. At the national level, neither the aggregate total crime, nor the aggregate property crime are significantly related with the unemployment rate; however a rise in unemployment rate does significantly increase certain kinds of property crime, like breaking and entering, and robbery. At the regional level, the results of our panel data analysis also show that breaking and entering, and fraud rise as contemporaneous unemployment increases. When we extend our panel analysis to control for police-civilian ratio and other controls (this reduces our sample period) we find a significant relationship between unemployment and all crime rates except violent crime. Our results thus indicate that for Canada the unemployment rate is a significant factor in predicting property crimes but not violent crimes.
    Keywords: crime; unemployment; Canada; time series analysis
    JEL: C22 K1
    Date: 2013
  31. By: Alicia H. Munnell; Rebecca Cannon Fraenkel
    Abstract: The 2008 financial crisis sharply reduced the assets and funded levels in state and local pension plans. he drop in funding means that state and local governments have to raise additional revenue to fill the gap. At the same time, the ensuing recession eroded state and local revenues and increased the demand for public services. In response, governments have looked to cut benefits to their workers in order to reduce pension costs. Since, in many cases, state laws prevent any reduction in benefits for current employees, much of the cost-cutting activity has been aimed at new employees. As discussed below, studies have shown that total compensation is roughly equal in the public and private sectors, so a reduction in pension benefits will make total compensation lower in the public sector than in the private sector. Economic theory suggests that lower compensation will reduce the quality of workers attracted to the public sector. To assess the impact that recent cuts to pension benefits may have on the public sector workforce, this brief examines how total compensation differences within the public sector affect the quality of newly hired teachers.
    Date: 2013–01
  32. By: Jason Fletcher; Adalbert Mayer
    Abstract: The Texas 10% law states that students who graduated among the top 10% of their high school class are guaranteed admission to public universities in Texas. We estimate the causal effects of this admissions guarantee on a sequence of connected decisions: students’ application behavior, admission decisions by the university, students’ enrollment choices conditional on admission; as well as the resulting college achievement. We identify these effects by comparing students just above and just below the top 10% rank cutoff. While this design is in the spirit of a regression discontinuity, we note important differences in approach and interpretation. We find that students react to incentives created by the admissions guarantee - for example, by reducing applications to competing private universities. The results also suggest that the effects of the admissions guarantee depend on the university and the type of students it attracts, and that the law is binding and alters the decisions of the admissions committees. We find little evidence that the law increases diversity or leads to meaningful mismatch for the marginal student admitted.
    JEL: I21 I23 I28
    Date: 2013–01
  33. By: Herrera Gómez, Marcos; Ruiz Marín, Manuel; Mur Lacambra, Jesús
    Abstract: Testing the assumption of independence between variables is a crucial aspect of spatial data analysis. However, the literature is limited and somewhat confusing. To our knowledge, we can mention only the bivariate generalization of Moran’s statistic. This test suffers from several restrictions: it is applicable only to pairs of variables, a weighting matrix and the assumption of linearity are needed; the null hypothesis of the test is not totally clear. Given these limitations, we develop a new non-parametric test based on symbolic dynamics with better properties. We show that the test can be extended to a multivariate framework, it is robust to departures from linearity, it does not need a weighting matrix and can be adapted to different specifications of the null. The test is consistent, computationally simple and with good size and power, as shown by a Monte Carlo experiment. An application to the case of the productivity of the manufacturing sector in the Ebro Valley illustrates our approach.
    Keywords: Non-parametric methods; Spatial bootstrapping; Spatial independence; Symbolic dynamics
    JEL: C12 R12 C15 C21
    Date: 2013

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