nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2013‒02‒03
thirty-six papers chosen by
Steve Ross
University of Connecticut

  1. Educational Tracking, Residential Sorting, and Intergenerational Mobility By Yong Suk Lee
  2. Neighborhood Quality and Student Performance By Weinhardt, Felix
  3. Diminishing Margins: Housing Market Declines and Family Financial Responses By Frank P. Stafford; Erik Hurst; Bing Chen
  4. Threat of Grade Retention, Remedial Education and Student Achievement: Evidence from Upper Secondary Schools in Italy By Battistin, Erich; Schizzerotto, Antonio
  5. The Rise of the Low Carbon Consumer City By Matthew J. Holian; Matthew E. Kahn
  6. MACRO SHOCKS AND HOUSE PRICES IN SOUTH AFRICA By Beatrice D. Simo-Kengne; Rangan Gupta; Goodness C. Aye
  7. Task Specialization in U.S. Cities from 1880-2000 By Ferdinand Rauch; Guy Michaels; Stephen J. Redding
  8. Intermodal competition on some routes in transportation networks: The case of inter urban buses and railways By Bataille, Marc; Steinmetz, Alexander
  9. Housing and the Great Depression By Mehmet Balcilar; Rangan Gupta; Stephen M. Miller
  10. Commuting Time and Accessibility in a Joint Residential Location, Workplace, and Job Type Choice Model By Ignacio A. Inoa; Nathalie Picard; André De Palma
  11. Aligning Learning Incentives of Students and Teachers: Results from a Social Experiment in Mexican High Schools By Jere H. Behrman; Susan W. Parker; Petra E. Todd; Kenneth I. Wolpin
  12. Wage Growth through Job Hopping in China By Ariga, Kenn; Ohtake, Fumio; Sasaki, Masaru; Wu, Zheren
  13. Analysis of discrete dependent variable models with spatial correlation By Liesenfeld, Roman; Richard, Jean-François; Vogler, Jan
  14. Comparison of two dynamic transportation models: The case of Stockholm congestion charging By Leonid Engelson; Ida Kristoffersson; Mohammad Saifuzzaman; André De Palma; Kiarash Motamedi
  15. Simulating the Economic Impacts of Living Wage Mandates Using New Public and Administrative Data: Evidence for New York City By Neumark, David; Thompson, Matthew; Brindisi, Francesco; Koyle, Leslie; Reck, Clayton
  16. Does urbanization affect rural poverty ? evidence from Indian districts By Cali, Massimiliano; Menon, Carlo
  17. City Relative Price Dynamics in Australia: Are Structural Breaks Important? By Hiranya K Nath; Jayanta Sarkar
  18. The Impact of Educational Mismatch on Firm Productivity: Evidence from Linked Panel Data By Kampelmann, Stephan; Rycx, Francois
  19. The Role of Consumer Leverage in Generating Financial Crises By Dilyana Dimova
  20. Understanding the Mechanisms through Which an Influential Early Childhood Program Boosted Adult Outcomes By James J Heckman; Rodrigo Pinto; Peter A. Savelyev
  21. Do Entrepreneurs Matter? By Becker, Sascha O.; Hvide, Hans K.
  22. Alcohol Consumption, Deterrence and Crime in New York City By Hope Corman; Naci H. Mocan
  23. How do Principals Assign Students to Teachers? Finding Evidence in Administrative Data and the Implications for Value-added By Dieterle, Steven G.; Guarino, Cassandra; Reckase, Mark D.; Wooldridge, Jeffrey M.
  24. The Long Run Effects of High-School Class Gender Composition By Massimo Anelli; Giovanni Peri
  25. The Impacts of Social Networks on Immigrants’ Employment Prospects: The Spanish Case 1997-2007 By Luciana Méndez Errico
  26. Deep Habits in Consumption: A Spatial Panel Analysis Using Scanner Data By B. VERHELST; D. VAN DEN POEL
  27. The Effects of Living Wage Laws on Low-Wage Workers and Low-Income Families: What Do We Know Now? By Neumark, David; Thompson, Matthew; Koyle, Leslie
  28. The role of non-cognitive and cognitive skills, behavioural and educational outcomes in accounting for the intergenerational transmission of worklessness By Lindsey Macmillan
  29. A Model of Comparative Advantage with Matching in the Urban Tanzanian Labour Market By Andrew Kerr
  30. The effects of rapidly expanding primary school access on effective learning: The case of Southern and Eastern Africa since 2000 By Stephen Taylor; Nicholas Spaull
  31. The China Syndrome: Local Labor Market Effects of Import Competition in the United States By Autor, David; Dorn, David; Hanson, Gordon H.
  32. Cash transfers and child schooling : evidence from a randomized evaluation of the role of conditionality By Akresh, Richard; de Walque, Damien; Kazianga, Harounan
  33. Improving Customer Acquisition Models by Incorporating Spatial Autocorrelation at Different Levels of Granularity By P. BAECKE; D. VAN DEN POEL
  34. Integrating gravity: the role of scale invariance in gravity models of spatial interactions and trade By Arvis, Jean-François
  35. Luxembourg's specialisation as a financial centre within the global value networks of investment funds By DÖRRY Sabine
  36. Impact of external knowledge acquisition strategies on innovation – A comparative study based on Dutch and Swiss panel data By Spyros Arvanitis; Martin Wörter; Pierre Mohnen; Boris Lokshin

  1. By: Yong Suk Lee (Williams College)
    Abstract: I examine how student allocation rules impact achievement of students of different ability and socio- economic background. When the assignment rule shifts from exam to district based, a model illustrates that income relative to ability becomes a stronger predictor of student achievement and higher income households sort towards the better school districts. Using evidence from South Korea, I find that the impact of fatherÕs education, relative to oneÕs middle school grade, on college entrance exam score increases twofold under district assignment. The change in housing land price is 13 percentage points higher in the better school district when the regime shifts.
    Keywords: Intergenerational mobility, Educational tracking, School districts, Residential sorting
    JEL: I20 I28 J62 R21
    Date: 2012–11
  2. By: Weinhardt, Felix (London School of Economics)
    Abstract: Children who grow up in deprived neighborhoods underperform at school and later in life but whether there is a causal link remains contested. This study estimates the effect of very deprived neighborhoods, characterized by a high density of social housing, on the educational attainment of fourteen years old students in England. To identify the causal impact, this study exploits the timing of moving into these neighborhoods. I argue that the timing can be taken as exogenous because of long waiting lists for social housing in high-demand areas. Using this approach, I find no evidence for effects on student performance.
    Keywords: neighborhood effects, housing policy
    JEL: J18 I21 J24
    Date: 2013–01
  3. By: Frank P. Stafford (University of Michigan); Erik Hurst (University of Chicago); Bing Chen (University of Michigan)
    Abstract: We utilize data from the Panel Study of Income Dynamics (PSID) to study borrowing decisions and other factors related to the run-up in housing prices in 1999-2007, their precipitous decline in 2007-2009, and how they contributed to mortgage distress and foreclosures as of 2009-2011. Difficulties were concentrated in selected real estate markets where the Case Shiller home index declined more than 35% from 2007 to 2009. Often expecting further price appreciation or responding to a positive family labor market and income circumstance, homeowners, supported by their lenders, allocated too much of their family income to support house payments and put themselves in a risky position. The year of taking the original mortgage, the rate of decrease in the Case-Shiller home price index, household wealth, and labor market and disability status are substantial predictors of mortgage payment distress and foreclosure.
    Date: 2012–12
  4. By: Battistin, Erich (University of Padova); Schizzerotto, Antonio (IRVAPP)
    Abstract: We use a reform that was recently implemented in Italy to investigate the effects on academic achievement of more stringent requirements for the admission to the next grade at upper secondary school. We study how such effects are mediated by changes in family and school inputs, and in the student commitment to learn all school subjects including those usually considered as marginal components of the curriculum. Geographical discontinuities in the implementation of the reform allow us to set out the comparison of similar students undergoing alternative progression rules, and to shed light on whether, and to what extent, the reform has worked as a tool to improve short-term achievement gains. We document differential effects across curricular tracks, picturing at best – depending on the data employed – a marginal improvement for students in academic schools. We instead find sharp negative effects of the reform in technical and vocational schools, where the students enrolled come from less privileged backgrounds. These findings are accompanied by a substantial increase in the number of activities out of the normal school hours in technical and vocational schools, but not in academic schools. Also, we find that the reform has left unchanged the various family inputs that we consider, and that parents did not provide extra economic support to students facing an increased threat of grade retention. However, in contrast with the documented effects on achievement, we find that schools reacted to the additional administrative burdens and costs imposed by the reform by admitting more students to the next grade. We thus conclude that the reform has had a negative effect on motivation and engagement of the most struggling students, thus exacerbating existing inequalities.
    Keywords: policy evaluation, quasi experimental designs, remedial education
    JEL: C31 I24 I28
    Date: 2012–12
  5. By: Matthew J. Holian; Matthew E. Kahn
    Abstract: Urban density both facilitates consumption opportunities and encourages individuals to drive less and walk and use public transit more. Using several data sets, we document that high quality of life consumer center cities are low carbon cities. We discuss possible causal channels for this association.
    JEL: Q4 Q54 R41
    Date: 2013–01
  6. By: Beatrice D. Simo-Kengne (Department of Economics, University of Pretoria); Rangan Gupta (Department of Economics, University of Pretoria); Goodness C. Aye (Department of Economics, University of Pretoria)
    Abstract: This paper analyses the economic sources underlying the comovement of real house prices in South Africa. We use quarterly provincial-level data from 1974:Q1 to 2011:Q4. First, we disentangle the national component of real house price movements from the local (provincial or region-specific) shocks using a dynamic factor model. The results indicate that recent (2001-2011) fluctuations in house prices were mainly driven by the national component. However, historical movements in real estate prices appear to be a local phenomenon. Second, we assess the effects of monetary policy, portfolio, aggregate supply and aggregate demand shocks on the common (national) component of real house prices using a SVAR model. Our findings show that macro shocks are important sources of house price fluctuations, with portfolio and monetary policy shocks playing greater roles. An historical decomposition confirms the primary role of portfolio and monetary policy shocks in driving house price dynamics over the sample period while aggregate supply shocks are of limited influence. We conclude that comovement in real house prices is due to the combined effects of favourable and unfavourable structural shocks emanating from different sectors of the South African economy.
    Keywords: Housing, Macroeconomy, Structural Vector Autoregression
    JEL: C31 C32 E44 R31
    Date: 2013–01
  7. By: Ferdinand Rauch; Guy Michaels; 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.
    Keywords: Economic development, human interaction, urbanization
    JEL: N92 O18 R12
    Date: 2013–01–11
  8. By: Bataille, Marc; Steinmetz, Alexander
    Abstract: This paper analyzes the effect of inter urban buses competing on a few routes against trains within an established railway network. In line with expectations, we show that this can lead to unprofitable train service on these routes. However, within an established railway network with every track being profitable, competition on just some tracks can result in a collapse of the entire network. External effects of individual routes on the railway network are fundamental for the profitability of the network. Hence, weakening these network effects might be crucial. As a result, efficient intermodal competition on some routes might cause the abandoning of other routes that are not facing any competition. This effect has to be taken into account by political actors when liberalization of inter urban bus travel is considered. --
    Keywords: Transportation,intermodal competition,network effects
    JEL: K2 L1 L5 R4
    Date: 2013
  9. By: Mehmet Balcilar (Department of Economics, Eastern Mediterranean University, Famagusta, North Cyprus,via Mersin 10, Turkey); Rangan Gupta (Department of Economics, University of Pretoria); Stephen M. Miller (College of Business, University of Las Vegas, Nevada)
    Abstract: This paper considers the role of the real housing price in the Great Depression. More specifically, we examine structural stability of the relationship between the real housing price and real GDP per capita. We test for structural change in parameter values, using a sample of annual US data from 1890 to 1952. The paper examines the long-run and short-run dynamic relationships between the real housing price and real GDP per capita to determine if these relationships experienced structural change over the sample period. We find that temporal Granger causality exists between these two variables only for sub-samples that include the Great Depression. For the other sub-sample periods as well as for the entire sample period no relationship exists between these variables.
    Keywords: Great Depression, Real House Price, Real GDP per Capita, Structural change
    JEL: C32 E32 R31
    Date: 2013–01
  10. By: Ignacio A. Inoa (THEMA - Théorie économique, modélisation et applications - CNRS : UMR8184 - Université de Cergy Pontoise); Nathalie Picard (THEMA - Théorie économique, modélisation et applications - CNRS : UMR8184 - Université de Cergy Pontoise); André De Palma (ENS Cachan - Ecole Normale Supérieure de Cachan - École normale supérieure de Cachan - 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
    Date: 2013–01–07
  11. By: Jere H. Behrman (Department of Economics, University of Pennsylvania); Susan W. Parker (Center for Research and Teaching in Economics(CIDE) Mexico); Petra E. Todd (Department of Economics, University of Pennsylvania); Kenneth I. Wolpin (Department of Economics, University of Pennsylvania)
    Abstract: This paper evaluates the impact of three different performance incentives schemes using data from a social experiment that randomized 88 Mexican high schools with over 40,000 students into three treatment groups and a control group. Treatment one provides individual incentives for performance on curriculum-based mathematics tests to students only, treatment two to teachers only and treatment three gives both individual and group incentives to students, teachers and school administrators. Program impact estimates reveal the largest average effects for treatment three, smaller impacts for treatment one and no impact for treatment two.
    Keywords: student, teacher, and group incentives, randomized social experiment, Mexican high schools
    JEL: O1
    Date: 2012–10–01
  12. By: Ariga, Kenn (Kyoto University); Ohtake, Fumio (Osaka University); Sasaki, Masaru (Osaka University); Wu, Zheren (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 relocations are frequent and they are closely correlated. We find that 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 differentials 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 unobservable characteristics associated with risk taking, active and optimistic personality, as well as the implied economic incentives to migrate and keep searching for better jobs.
    Keywords: wage growth, migration, school to work transition
    JEL: J31 J61 J62
    Date: 2012–12
  13. By: Liesenfeld, Roman; Richard, Jean-François; Vogler, Jan
    Abstract: In this paper we consider ML estimation for a broad class of parameter-driven models for discrete dependent variables with spatial correlation. Under this class of models, which includes spatial discrete choice models, spatial Tobit models and spatial count data models, the dependent variable is driven by a latent stochastic state variable which is specified as a linear spatial regression model. The likelihood is a high-dimensional integral whose dimension depends on the sample size. For its evaluation we propose to use efficient importance sampling (EIS). The specific spatial EIS implementation we develop exploits the sparsity of the precision (or covariance) matrix of the errors in the reduced-form state equation typically encountered in spatial settings, which keeps numerically accurate EIS likelihood evaluation computationally feasible even for large sample sizes. The proposed ML approach based upon spatial EIS is illustrated with estimation of a spatial probit for US presidential voting decisions and spatial count data models (Poisson and Negbin) for firm location choices. --
    Keywords: Count data models,Discrete choice models,Firm location choice,Importance sampling,Monte Carlo integration,Spatial econometrics
    JEL: C15 C21 C25 D22 R12
    Date: 2013
  14. By: Leonid Engelson (Trasnport and Location Analysis - The Royal Institute of Technology (KTH)); Ida Kristoffersson (Trasnport and Location Analysis - The Royal Institute of Technology (KTH)); Mohammad Saifuzzaman (ENS Cachan - Ecole Normale Supérieure de Cachan - École normale supérieure de Cachan - ENS Cachan); André De Palma (ENS Cachan - Ecole Normale Supérieure de Cachan - École normale supérieure de Cachan - ENS Cachan); Kiarash Motamedi (THEMA - Théorie économique, modélisation et applications - CNRS : UMR8184 - Université de Cergy Pontoise)
    Abstract: This paper reviews the transportation models used for predicting impacts of congestion charging in European cities and carries out in-depth comparison of two such models, METROPOLIS and SILVESTER. Both are mesoscopic dynamic models involving modal split, route choice and departure time choice calibrated for the Stockholm baseline situation without charges and applied for modeling effects of congestion charging. The results obtained from the two models are mutually compared and validated against actual outcome of the Stockholm congestion charging scheme. Both models provide significant improvement in realism over static models. However results of cost benefit analysis may differ substantially.
    Keywords: Congestion charges; Congestion pricing; Road pricing; Transportation models; Dynamic assignment; Mesoscopic models; Departure time choice
    Date: 2013–01–22
  15. By: Neumark, David (University of California, Irvine); Thompson, Matthew (Charles River Associates); Brindisi, Francesco (New York City Office of Management and Budget); Koyle, Leslie (Charles River Associates); Reck, Clayton (Charles River Associates)
    Abstract: Policy researchers often have to estimate the future effect of imposing a policy in a particular location. There is often evidence on the effects of similar policies in other jurisdictions, but no information on the effects of the policy in the jurisdiction in question. And the policy may have specific features not reflected in the experiences of other areas. It is then necessary to combine the evidence from other locations with detailed information and data specific to the jurisdiction in question, with which to simulate the effects of the policy in the new jurisdiction. We illustrate and use this approach in estimating the impact of a proposed living wage mandate for New York City, emphasizing how our ex ante simulations make use of detailed location-specific information on workers, families, and employers using administrative data and other new public data sources.
    Keywords: living wage, employment, poverty
    JEL: J23 J38 R51
    Date: 2012–12
  16. By: Cali, Massimiliano; Menon, Carlo
    Abstract: Although a high rate of urbanization and a high incidence of rural poverty are two distinct features of many developing countries, there is little knowledge of the effects of the former on the latter. Using a large sample of Indian districts from the 1983-1999 period, the authors find that urbanization has a substantial and systematic poverty-reducing effect in the surrounding rural areas. The results obtained through an instrumental variable estimation suggest that this effect is causal in nature and is largely attributable to the positive spillovers of urbanization on the rural economy rather than to the movement of the rural poor to urban areas. This rural poverty-reducing effect of urbanization is primarily explained by increased demand for local agricultural products and, to a lesser extent, by urban-rural remittances, the rural land/population ratio, and rural nonfarm employment.
    Keywords: Rural Poverty Reduction,Population Policies,Regional Economic Development,Achieving Shared Growth
    Date: 2013–01–01
  17. By: Hiranya K Nath (Sam Houston State University); Jayanta Sarkar (QUT)
    Abstract: This paper examines the dynamic behaviour of relative prices across seven Australian cities by applying panel unit root test procedures with structural breaks to quarterly CPI data for 1972Q1-2011Q4. We find overwhelming evidence of convergence in city relative prices. Three common structural breaks are endogenously determined at 1985, 1995, and 2007. Further, correcting for two potential biases, namely Nickell bias and time aggregation bias, we obtain half-life estimates of 2.3-3.8 quarters that are much shorter than those reported by previous research. Thus, we conclude that both structural breaks and bias corrections are important to obtain shorter half-life estimates.
    Keywords: Relative price convergence; Structural break; Panel unit root test; Half-life; Time
    JEL: C33 E31 R19
    Date: 2013–01–22
  18. By: Kampelmann, Stephan (Free University of Brussels); Rycx, Francois (Free University of Brussels)
    Abstract: We provide first evidence regarding the direct impact of educational mismatch on firm productivity. To do so, we rely on representative linked employer-employee panel data for Belgium covering the period 1999-2006. Controlling for simultaneity issues, time-invariant unobserved workplace characteristics, cohort effects and dynamics in the adjustment process of productivity, we find that: i) a higher level of required education exerts a significantly positive influence on firm productivity, ii) additional years of over-education (both among young and older workers) are beneficial for firm productivity, and iii) additional years of under-education (among young workers) are detrimental for firm productivity.
    Keywords: linked panel data, productivity, educational mismatch, GMM
    JEL: I21 J24
    Date: 2012–12
  19. By: Dilyana Dimova
    Abstract: Consumer leverage can generate financial crises characterized by increased bankruptcy, tightened credit access and reduced demand for goods.  This paper embeds financial frictions in the mortgage contracts of homeowners within a two-sector economy to show that even at moderate initial levels, household indebtedness can create a lasting financial downturn such as the subprime mortgage crisis.  Using two seemingly positive disturbances that triggered the subprime mortgage crisis - an increased housing supply and a relaxation of borrowing conditions - the model demonstrated that the subprime downturn was not a precedent but the natural consequence of financial frictions.  The oversupply of houses lowers asset prices and reduces the value of the real estate collateral used in the mortgage.  This worsens the leverage of indebted consumers and raised their bankruptcy prospects generating a pro-cyclical risk premium.  A relaxation of borrowing conditions turns credit-constrained households into a potential source of disturbances themselves when market optimism allows them to overleverage with little downpayment.  In both cases, the resulting excessive consumer leverage impairs household credit access for a lengthy after-shock period and diverts resources from their consumption.  Their reduced demand for goods may propagate the downturn to the rest of the economy depressing output in other sectors.  Adding credit constraints in the financial sector that provides housing mortgages deepens the negative impact of the shocks and makes recovery even more protracted.
    Keywords: Financial frictions, consumer leverage, credit-constrained consumers, subprime mortgage crisis, pro-cyclical risk-premium
    JEL: E21 E27 E44 G21 G33
    Date: 2012–11–28
  20. By: James J Heckman (University of Chicago); Rodrigo Pinto (University of Chicago); Peter A. Savelyev (Vanderbilt University)
    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.
    Keywords: cognitive traits, personality traits, externalizing behavior, academic motivation, factor analysis, human capital, human development, early childhood interventions, social experiments, Perry Preschool program, experimentally estimated production functions
    JEL: I2 J2
    Date: 2012–12–12
  21. By: Becker, Sascha O. (University of Warwick); Hvide, Hans K. (University of Bergen)
    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 entrepreneurs 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 significant 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.
    Keywords: entrepreneurship, firm performance, human capital
    JEL: D21 D24 J23 L11 L25 G39
    Date: 2013–01
  22. By: Hope Corman; Naci H. Mocan
    Abstract: This paper investigates the relationship between alcohol consumption, deterrence, and crime for New York City. We examine high-frequency time-series data from 1983 to 2001 for one specific location to examine the impacts of variations in both alcohol consumption and deterrence on seven “index” crimes. We tackle the endogeneity of arrests and the police force by exploiting the temporal independence of crime and deterrence in these high-frequency data, and we address the endogeneity of alcohol by using instrumental variables where alcohol sales are instrumented with city and state alcohol taxes and minimum drinking age. We find that alcohol consumption is positively related to assault, rape, and larceny crimes but not murder, robbery, burglary, or motor vehicle theft. We find strong deterrence for all crimes except assault and rape. Generally, deterrence effects are stronger than alcohol effects.
    JEL: I1 K0
    Date: 2013–01
  23. By: Dieterle, Steven G. (University of Edinburgh); Guarino, Cassandra (Indiana University); Reckase, Mark D. (Michigan State University); Wooldridge, Jeffrey M. (Michigan State University)
    Abstract: The federal government's Race to the Top competition has promoted the adoption of test-based performance measures as a component of teacher evaluations throughout many states, but the validity of these measures has been controversial among researchers and widely contested by teachers' unions. A key concern is the extent to which nonrandom sorting of students to teachers may bias the results and lead to a misclassification of teachers as high or low performing. In light of this, it is important to assess the extent to which evidence of sorting can be found in the large administrative data sets used for VAM estimation. Using a large longitudinal data set from an anonymous state, we find evidence that a nontrivial amount of sorting exists – particularly sorting based on prior test scores – and that the extent of sorting varies considerably across schools, a fact obscured by the types of aggregate sorting indices developed in prior research. We also find that VAM estimation is sensitive to the presence of nonrandom sorting. There is less agreement across estimation approaches regarding a particular teacher's rank in the distribution of estimated effectiveness when schools engage in sorting.
    Keywords: value added, teacher quality, teacher labor markets, education
    JEL: I0 I20 I21 I28 J01 J08 J24 J44 J45
    Date: 2012–12
  24. By: Massimo Anelli; Giovanni Peri
    Abstract: The long run earnings and career potential of individuals are strongly affected by their education. Among college educated individuals, the choice of college major is a very important determinant of labor market outcomes. In most countries men and women exhibit significant differences in this choice which is responsible for a large portion of the gender gap in earnings. In this paper we analyze whether the gender composition of peers (classmates) in high school affects the choice of major and hence long run earning potential. We use a newly collected and unique dataset covering 30,000 Italian students graduated from high school between 1985 and 2005. We exploit the fact that students are assigned to classes whose gender composition, within a school over time, varies exogenously. Moreover we are able to control for family, cohort, teacher and school effects in assessing the effect of peer-gender ratio on outcomes. We find that the gender ratio of peers in high school significantly affected the choice of major. A larger share of same-sex peers increases the probability of choosing majors associated to high earning jobs (Economics/Business, Medicine, Engineering). For women we also find that a large percentage of female high school classmates increases their long run performance in college and their earnings.
    JEL: I21 J16
    Date: 2013–01
  25. By: Luciana Méndez Errico (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)
    Abstract: This paper studies the extent to which social networks influence the employment stability and wages of immigrants in Spain. By doing so, I consider an aspect that has not been previously addressed in the empirical literature, namely the connection between immigrants’ social networks and labor market outcomes in Spain. For this purpose, I use micro-data from the National Immigrant Survey carried out in 2007. The analysis is conducted in two stages. First, the impact of social networks on the probability of keeping the first job obtained in Spain is studied through a multinomial logit regression. Second, quantile regressions are used to estimate a wage equation. The empirical results suggest that once the endogeneity problem has been accounted for, immigrants’ social networks influence their labor market outcomes. On arrival, immigrants experience a mismatch in the labor market. In addition, different effects of social networks on wages by gender and wage distribution are found. While contacts on arrival and informal job access mechanisms positively influence women’s wages, a wage penalty is observed for men.
    Keywords: Immigration, Labor market, Social Networks, Quantile regression, Semi-parametric estimations
    JEL: J15 J31 J61 C15
    Date: 2013–01
    Abstract: Using scanner data from a large European retailer, this paper empirically assesses deep habit formation in consumption. Deep habit formation constitutes a possible source of price stickiness and helps to mimic procyclical labour and real wage dynamics that are present in macro data. To gauge the existence and the extent of deep habits in consumption, we estimate a dynamic timespace simultaneous model for consumption expenditure at different levels of product aggregation. This spatial panel model enables us to test for both internal and external deep habit formation at the same time. The former captures inertia or persistence in consumption, and is included in the empirical specification as a time lag. The latter captures preference interdependence across households and is captured by a spatial lag. Our results show mixed evidence with respect to internal habit formation, whereas the external habit effect is almost always positive and significant.
    Keywords: Deep habits, Preference interdependence, Spatial panel
    JEL: C33 C38 D12 L14
    Date: 2012–12
  27. By: Neumark, David (University of California, Irvine); Thompson, Matthew (Charles River Associates); Koyle, Leslie (Charles River Associates)
    Abstract: We provide updated evidence on the effects of living wage laws in U.S. cities, relative to the earlier research covering only the first six or seven years of existence of these laws. There are some challenges to updating the evidence, as the CPS data on which it relies changed geographic coding systems in the mid-2000s. The updated evidence is broadly consistent with the conclusions reached by prior research, including Holzer's (2008) review of that earlier evidence. Living wage laws reduce employment among the least-skilled workers they are intended to help. But they also increase wages for many of them. This implies that living wage laws generate both winners and losers among those affected by them. For broader living wage laws that cover recipients of business or financial assistance from cities, the net effects point to modest reductions in urban poverty.
    Keywords: living wage, wages, employment, poverty
    JEL: J23 J38
    Date: 2012–12
  28. By: Lindsey Macmillan (Department of Quantitative Social Science, Institute of Education, University of London)
    Abstract: Previous work has shown that there is a significant intergenerational correlation of worklessness for the UK which varies across local labour markets (Macmillan, 2011). Using a decomposition from the intergenerational mobility literature (Blanden et. al, 2007), this research is the first to consider the drivers of this transmission. I consider the role of four sets of characteristics of the son in childhood; his non-cognitive skills, cognition, behavioural outcomes and educational attainment, to assess which characteristics are important predictors of later workless spells and whether those characteristics are associated with growing up with a workless father. The wide range of characteristics can only account for 12% of the intergenerational transmission, with the vast majority remaining unaccounted for. While cognition and education dominate the intergenerational transmission of incomes, non-cognitive skills and behavioural outcomes play a more important role in the intergenerational transmission of worklessness. Many of the characteristics considered become increasingly important predictors of future worklessness as the unemployment rate in the local labour market increases. This descriptive analysis suggests that there are benefits to improving the soft skills of the most disadvantaged children, alongside their attainment, to ensure a successful connection with the labour market in adulthood.
    Keywords: : Intergenerational mobility, unemployment, children, skills.
    JEL: J62 J64 J13 J31
    Date: 2013–01–22
  29. By: Andrew Kerr
    Abstract: In this paper I build an equilibrium search model of the urban Tanzanian labour market that explains the choice between wage and self-employment and the variation in earnings across and within these sectors.  Self-employment is very common in urban Tanzania and survey data show both that there are large overlaps in the distribution of earnings in private wage employment and self-employment and that there is little movement between wage and self-employment.  This suggests that self-employment represents a worthwhile alternative to wage employment in small, low-productivity firms for the majority of urban Tanzanians, in contrast to the traditional view of African labour markets in which wage employment in small firms and self-employment are lumped together as the informal sector.
    Date: 2012–12–03
  30. By: Stephen Taylor (Department of Basic Education); Nicholas Spaull (Department of Economics, University of Stellenbosch)
    Abstract: Have recent expansions of access to primary schooling in African countries led to deterioration in the quality of education delivered? This paper helps clarify this question by presenting an appropriate conceptual framework: instead of considering country average test scores and enrolment rates in isolation, we argue that the important outcome of interest is the proportion of children in an age-specific population that reach particular levels of literacy and numeracy. In order to measure this outcome we combine school achievement data with enrolment data for a selection of 14 Southern and Eastern African education systems. Using this preferred measure, we examine the performance of these education systems between 2000 and 2007, many of which considerably increased access to primary schooling in this period. The commonly held perception of an access-quality trade-off in Africa has far less empirical support than was previously believed to be the case.
    Keywords: Enrolment, School quality, Human capital, Southern and East Africa, SACMEQ, Education Statistics
    JEL: I21 I25 I28 O15
    Date: 2013
  31. By: Autor, David (MIT); Dorn, David (CEMFI, Madrid); Hanson, Gordon H. (University of California, San Diego)
    Abstract: We analyze the effect of rising Chinese import competition between 1990 and 2007 on U.S. local labor markets, exploiting cross-market variation in import exposure stemming from initial differences in industry specialization and instrumenting for U.S. imports using changes in Chinese imports by other high-income countries. Rising imports cause higher unemployment, lower labor force participation, and reduced wages in local labor markets that house import-competing manufacturing industries. In our main specification, import competition explains one-quarter of the contemporaneous aggregate decline in U.S. manufacturing employment. Transfer benefits payments for unemployment, disability, retirement, and healthcare also rise sharply in more trade-exposed labor markets.
    Keywords: trade flows, import competition, local labor markets, China
    JEL: F16 H53 J23 J31
    Date: 2013–01
  32. By: Akresh, Richard; de Walque, Damien; Kazianga, Harounan
    Abstract: The authors conduct a randomized experiment in rural Burkina Faso to estimate the impact of alternative cash transfer delivery mechanisms on education. The two-year pilot program randomly distributed cash transfers that were either conditional or unconditional. Families under the conditional schemes were required to have their children ages 7-15 enrolled in school and attending classes regularly. There were no such requirements under the unconditional programs. The results indicate that unconditional and conditional cash transfer programs have a similar impact increasing the enrollment of children who are traditionally favored by parents for school participation, including boys, older children, and higher ability children. However, the conditional transfers are significantly more effective than the unconditional transfers in improving the enrollment of"marginal children"who are initially less likely to go to school, such as girls, younger children, and lower ability children. Thus, conditionality plays a critical role in benefiting children who are less likely to receive investments from their parents.
    Keywords: Youth and Governance,Primary Education,Street Children,Educational Sciences,Education For All
    Date: 2013–01–01
    Abstract: Traditional CRM models often ignore the correlation that could exist among the purchasing behavior of surrounding prospects. Hence, a generalized linear autologistic regression model can be used to capture this interdependence and improve the predictive performance of the model. In particular, customer acquisition models can benefit from this. These models often suffer from a lack of data quality due to the limited amount of information available about potential new customers. Based on a customer acquisition model of a Japanese automobile brand, this study shows that the extra value resulting from incorporating neighborhood effects can vary significantly depending on the granularity level on which the neighborhoods are composed. A model based on a granularity level that is too coarse or too fine will incorporate too much or too little interdependence resulting in a less than optimal predictive improvement. Since neighborhood effects can have several sources (i.e. social influence, homophily and exogeneous shocks), this study suggests that the autocorrelation can be divided into several parts, each optimally measured at a different level of granularity. Therefore, a model is introduced that simultaneously incorporates multiple levels of granularity resulting in even more accurate predictions. Further, the effect of the sample size is examined. This showed that including spatial interdependence using finer levels of granularity is only useful when enough data is available to construct reliable spatial lag effects. As a result, extending a spatial model with multiple granularity levels becomes increasingly valuable when the data sample becomes larger.
    Keywords: Customer Relationship Management (CRM); Predictive Analytics; Customer Intelligence; Marketing; Data Augmentation; Autoregressive Model; Automobile Industry
    Date: 2012–10
  34. By: Arvis, Jean-François
    Abstract: This paper revisits the ubiquitous bi-proportional gravity model and investigates the reasons why different theoretical frameworks may lead to the same empirical formula.The generic gravity equation possesses scale invariance symmetries that constrain possible theoretical explanations based on optimal allocation principles, such as neoclassical or probabilistic frameworks. These constraints imply that a representative consumer's utilities must be separable, and that an entropy model is the only consistent maximum likelihood allocation of a matrix of flows between origin and destination. The paper explores the feasibility of wider classes of non-scale invariant gravity equations, where gravity is no longer bi-proportional by including nonlinear interactions between trade costs and fundamental country factors such as economic size. It shows that such extensions are feasible but that they do not result in a significant improvement in the explanatory power of the empirical analysis.
    Keywords: Economic Theory&Research,Free Trade,Transport Economics Policy&Planning,Geographical Information Systems,Trade Law
    Date: 2013–01–01
  35. By: DÖRRY Sabine
    Abstract: Ruptures like the recent global financial crisis are inherent elements of our global ?securitised? financial system. Re-regulations and the maturing of the financial industry have led to re-organisation processes within the industry with far-reaching implications on international financial centres (IFCs). Surprisingly, little is known about the IFCs? localised organisational nature, social, and structural power relations. Despite the controversy about ?tax heavens?, empirical evidence suggests that IFCs without an economic hinterland have developed strong local competencies and competitive advantages besides regulation aspects. Although dependent on foreign national economies, their specialisation capacitates them to offer finance-related services to a favourable cost-benefit ratio. The IFC Luxembourg seems to exemplify such a case. It has specialised in administrating a particular type of securities: (cross-border) investment funds. The paper does not only employ the GPN approach on finance but also innovatively links it with social network approaches, suggesting a new perspective to analysing locally anchored practices and dynamics in order to better understand ?the global? of today?s financial system.
    Keywords: international financial centre ; global value chains; global production networks; social networks; social capital; investment funds; Luxembourg
    JEL: G15 O16 P16 R11 R51
    Date: 2012–12
  36. By: Spyros Arvanitis (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Martin Wörter (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Pierre Mohnen (Maastricht University); Boris Lokshin (Maastricht University)
    Abstract: There is growing evidence that firms increasingly adopt open innovation practices. In this paper we investigate the impact of two such external knowledge acquisition strategies, ‘buy’ and ‘cooperate’, on firm’s product innovation performance. Taking a direct (productivity) approach, we test for complementarity effects in the simultaneous use of the two strategies, and in the intensity of their use. Our results based on large panels of Dutch and Swiss innovating firms, suggest that while both ‘buy’ and ‘cooperate’ have a positive effect on innovation, there is little statistical evidence that using them simultaneously leads to higher innovation performance. Results from the Dutch sample provide some indication, that there are positive economies of scope in doing external and cooperative R&D simultaneously conditional on doing internal R&D.
    Keywords: Open innovation, R&D collaboration, make, buy strategies
    JEL: O31 O32
    Date: 2013–01

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