nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2013‒02‒08
23 papers chosen by
Steve Ross
University of Connecticut

  1. Explaining regional unemployment differences in Germany: a spatial panel data analysis By Franziska Lottmann
  2. Place Based Policies with Unemployment By Patrick Kline; Enrico Moretti
  3. LEARNING BY WORKING IN BIG CITIES By Jorge De la Roca; Diego Puga
  4. Do Labor Market Networks Have An Important Spatial Dimension? By Judith K. Hellerstein; Mark J. Kutzbach; David Neumark
  5. Evaluating Durable Public Good Provision using Housing Prices By Stephen Coate
  6. Peer Effects in Endogenous Networks By Timo Hiller
  7. The Value of Climate Amenities: Evidence from US Migration Decisions By Paramita Sinha; Maureen L. Cropper
  8. The housing wealth of Italian households: a comparison of administrative and survey data By Andrea Neri; Maria Teresa Monteduro
  9. Teacher evaluations and pupil achievement: Evidence from classroom observations By Marc van der Steeg; Sander Gerritsen
  10. Polycentric structure and the co-agglomeration of economic activities in Bogota: A nonparametric perspective. By Antonio Avendaño; Hernán Enríquez
  11. Testing for Bubbles in Housing Markets: New Results Using a New Method By José Eduardo Gómez; Jair Ojeda Ojeda; Catalina Rey Guerra; Natalia Sicard
  12. Regional Variations in Productivity Premium of Exporters: Evidence from plant-level data By OKUBO Toshihiro; TOMIURA Eiichi
  13. Signalling to whom? Conspicuous spending and the local density of the social group income distribution By Andreas Chai; Wolfhard Kaus
  14. Do Labor Market Policies have Displacement Effects? Evidence from a Clustered Randomized Experiment By Bruno Crépon; Esther Duflo; Marc Gurgand; Roland Rathelot; Philippe Zamora
  15. The Regional Dimension of the Unemployment Crisis By Morgenroth Edgar
  16. Does a hospital’s quality depend on the quality of other hospitals? A spatial econometrics approach to investigating hospital quality competition By Hugh Gravelle; Rita Santos; Luigi Siciliani
  17. The deployment of urban logistics solutions from research, development and pilot results By Jesus Gonzalez-Feliu; Bruno Faivre D'Arcier; Josep-Maria Salanova Grau; Tiphaine Hervé; Fernando Zubillaga; Zeljko Jeftic; Jean-Baptiste Thebaud; Georgia Aifandopoulou
  18. Subways, Strikes, and Slowdowns: The Impacts of Public Transit on Traffic Congestion By Michael L. Anderson
  19. Discomfort in mass transit and its implication for scheduling and pricing By André De Palma; Moez Kilani; Stef Proost
  20. The Role of Expectations: An Application to Internal Migration By Robert Baumann; Justin Svec; Francis Sanzari
  21. Knowledge and rent spillovers through government-sponsored R&D consortia By Nishimura, Junichi; Okamuro, Hiroyuki
  22. Is There Evidence of a Real Estate Collateral Channel Effect on Listed Firm Investment in China? By Jing Wu; Joseph Gyourko; Yongheng Deng
  23. It’s Who You Know: Social Networks, Interpersonal Connections, and Participation in Collective Violence By Omar McDoom

  1. By: Franziska Lottmann
    Abstract: This paper analyzes determinants for regional differences in German unemployment rates. We specify a spatial panel model to avoid biased and inefficient estimates due to spatial dependence. Additionally, we control for temporal dynamics in the data. Our study covers the whole of Germany as well as East andWest Germany separately. We exploit district-level data on 24 possible explanatory variables for the period from 1999 until 2007. Our results suggest that the spatial dynamic panel model is the best model for this analysis. Furthermore, we find that German regional unemployment is of disequilibrium nature, which justifies political interventions.
    Keywords: regional unemployment, spatial dependence, spatial panel models, Germany
    JEL: C23 R12 R23
    Date: 2012–03
  2. By: Patrick Kline; Enrico Moretti
    Abstract: Many countries have policies aimed at creating jobs in depressed areas with high unemployment rates. In standard spatial equilibrium models with perfectly competitive labor and land markets, local job creation efforts are distortionary. We develop a stylized model of frictional local labor markets with the goal of studying the efficiency of unemployment differences across areas and the potential for place based policies to correct local market failures. Our model builds on the heavily studied Diamond - Mortensen - Pissarides framework, adapted to a local labor market setting with a competitive housing market. The result is a simple search analogue of the classic Roback (1982) model that provides a tractable environment for studying the effects of local job creation efforts. In the model, workers are perfectly mobile and the productivity of worker-firm matches may vary across metropolitan areas. In equilibrium, higher local productivity results in higher nominal wages, higher housing costs, and lower unemployment rates. Although workers can move freely to arbitrage away differences in expected utility across metropolitan areas, equilibrium unemployment rates are not equalized across space. We find that if hiring costs are excessive, firms may post too few vacancies. This problem may be offset via local hiring subsidies of the sort found in many place based policies. The optimal hiring subsidy is city specific in the sense that it depends upon the local productivity level.
    JEL: J48 J6 J61 J64
    Date: 2013–02
  3. By: Jorge De la Roca (New York University); Diego Puga (CEMFI, Centro de Estudios Monetarios y Financieros)
    Abstract: Individual earnings are higher in bigger cities. We consider three reasons: spatial sorting of initially more productive workers, static advantages from workers’ current location, and learning by working in bigger cities. Using rich administrative data for Spain, we find that workers in bigger cities do not have higher initial ability as reflected in fixed effects. Instead, they obtain an immediate static premium and accumulate more valuable experience. The additional value of experience in bigger cities persists after leaving and is stronger for those with higher initial ability. This explains both the higher mean and greater dispersion of earnings in bigger cities.
    Keywords: Learning, city size, earnings premium, agglomeration economies.
    JEL: R10 R23 J31
    Date: 2013–01
  4. By: Judith K. Hellerstein; Mark J. Kutzbach; David Neumark
    Abstract: We test for evidence of spatial, residence-based labor market networks. Turnover is lower for workers more connected to their neighbors generally and more connected to neighbors of the same race or ethnic group. Both results are consistent with networks producing better job matches, while the latter could also reflect preferences for working with neighbors of the same race or ethnicity. For earnings, we find a robust positive effect of the overall residence-based network measure, whereas we usually find a negative effect of the same-group measure, suggesting that the overall network measure reflects productivity-enhancing positive network effects, while the same-group measure may capture a non-wage amenity.
    JEL: J15 R23
    Date: 2013–02
  5. By: Stephen Coate
    Abstract: Recent empirical work in public finance uses the housing price response to public investments to assess the efficiency of local durable public good provision. This paper investigates the theoretical foundations for this technique. In the context of a novel theoretical model developed to study the issue, it shows that there is little justification for the technique if citizens have rational expectations concerning future investment in their communities. An example in which investment is chosen by a budget-maximizing bureaucrat is developed to show why the technique can falsely predict under-provision. The technique is valid, however, when citizens have adaptive expectations, believing that whatever provision level that currently prevails will be maintained indefinitely.
    JEL: H41 H43 H75
    Date: 2013–02
  6. By: Timo Hiller
    Abstract: This paper presents a simple model of strategic network formation with local com- plementarities in effort levels and positive local externalities. Equilibrium networks display - other than the complete and the empty network - a core-periphery structure, which is commonly observed in empirical studies. Ex-ante homogenous agents may obtain very different ex-post outcomes. These findings are relevant for a wide range of social and economic phenomena, such as educational attainment, criminal activity, labor market participation and R&D expenditures of rms.
    Keywords: Network formation, peer effects, strategic complements, positive externalities
    JEL: D62 D85
    Date: 2012–11
  7. By: Paramita Sinha; Maureen L. Cropper
    Abstract: We value climate amenities by estimating a discrete location choice model for households that changed metropolitan statistical areas (MSAs) between 1995 and 2000. The utility of each MSA depends on location-specific amenities, earnings opportunities, housing costs, and the cost of moving to the MSA from the household’s 1995 location. We use the estimated trade-off between wages and climate amenities to value changes in mean winter and summer temperatures. At median temperatures for 1970 to 2000, a 1°F increase in winter temperature is worth less than a 1° decrease in summer temperature; however, the reverse is true at winter temperatures below 25°F. These results imply an average welfare loss of 2.7 percent of household income in 2020 to 2050 under the B1 (climate-friendly) scenario from the special report on emissions scenarios (Intergovernmental Panel on Climate Change 2000), although some cities in the Northeast and Midwest benefit. Under the A2 (more extreme) scenario, households in 25 of 26 cities suffer an average welfare loss equal to 5 percent of income.
    JEL: Q5 Q51
    Date: 2013–02
  8. By: Andrea Neri (Bank of Italy); Maria Teresa Monteduro (Italian Ministry of Economy and finance)
    Abstract: We study the distribution of housing wealth in Italy using data from a sample survey (the survey on household income and wealth) and from administrative records regarding real estate owners held by the Italian Department of the Treasury. Our results show that owners with either a low or a high number of properties are under-represented in the survey. After adjusting survey data using the information from the administrative records, average housing wealth increases by some 25 per cent (in relation to the survey results). We find no clear evidence of a bias in the estimate of the level of inequality nor in the association between housing wealth and socio-demographic characteristics.
    Keywords: housing wealth, wealth distribution, measurement errors
    JEL: C83 C14 D31
    Date: 2013–01
  9. By: Marc van der Steeg; Sander Gerritsen
    Abstract: This paper investigates the relationship between teacher evaluations, conducted by trained evaluators, and pupil performance in primary education in a large city in the Netherlands. Teacher evaluations are based on a detailed rubric containing 75 classroom practices considered to be crucial for effective teaching. We obtain a set of estimates that suggests that the score on this rubric significantly predicts pupil performance gains. Estimated test score gains are in the order of 0.4 standard deviations in math and grammar if a pupil is assigned to a teacher from the top quartile instead of the bottom quartile of the distribution of the evaluation rubric. These are relatively large differences in pupil outcomes, suggesting that evaluations based on the rubric measure teacher practices that matter for pupil performance. This suggests that the rubric seems to have potential for teacher evaluations and teacher effort.
    JEL: I2
    Date: 2013–01
  10. By: Antonio Avendaño; Hernán Enríquez
    Abstract: Is widely recognized the polycentric structure of modern cities. However, little is known about the economic links between employment subcenters and the CBD, and the economic structure of subcenters. This study focuses in explore spatial relations between clusters of firms located in the same subcenter in Bogota. The methodological strategy is based on nonparametric estimators. First, the identification of subcenters using sectorial employment data is done. The second task examines the economic linkages between each of the subcenters and the CBD. Finally, bivariate Ripley’s K function is estimated in order to identify the presence of spatial clusters and attraction or repulsion relations between economic activities inside the subcenter. The results show that there are ten important employment subcenters, not including the CBD. Most subcenters have complimentary relations with CBD. Finally, only few subcenters have clusters structure well defined by employment activities that are characterized by attract other complimentary economic activities.
    Date: 2012–10–21
  11. By: José Eduardo Gómez; Jair Ojeda Ojeda; Catalina Rey Guerra; Natalia Sicard
    Abstract: In the context of financial crises influenced by the development and burst of housing price bubbles, the detection of exuberant behaviors in the financial market and the implementation of early warning diagnosis tests are of vital importance. This paper applies the new method developed by Phillips et al (2012) for detecting bubbles in the Colombian residential property market. The empirical results suggest that currently the country could be experiencing a price bubble, when the CPI and the housing rent index are used as deflators. We do not check the robustness of these results to alternative deflators, such as a household income index and a land price index, due to the lack of monthly data on these indicators
    Date: 2013–01–29
  12. By: OKUBO Toshihiro; TOMIURA Eiichi
    Abstract: Exporters are more productive than non-exporters. Although this is a stylized fact, little is known on regional variations within a country. Based on plant-level longitudinal data covering all manufacturing industries in all regions of Japan, this paper finds that the productivity premium of exporters tends to be significantly smaller in regions proximate to the core and in regions with higher market potential. We have also confirmed that our principal findings are consistent with plant-level entry/exit dynamics. The export decision is not completely determined by the firm's own productivity; it is also affected by local market size and export costs.
    Date: 2013–01
  13. By: Andreas Chai; Wolfhard Kaus
    Abstract: We empirically evaluate two competing explanations about how the dispersion of income within social groups affects household spending on visible goods. Using South African household expenditure data, we find evidence that precisely the reverse of the effect predicted by Charles et al. (2009) takes place in that rich households tend to reduce, rather than increase, spending on visible goods as the dispersion of social group income increases. Our results instead support rank-based models of status competition since the number of within-group peers who possess a similar income level is found to be positively correlated with household spending on visible goods. Moreover, we find that the effect of this 'local' density tends to be stronger in the tail regions of the distribution and performs better than other proxies for the overall income distribution used in recent studies. How the range of visible goods used to signal wealth expands as household income grows is also explored.
    Keywords: Conspicuous consumption, Signaling, Status, South Africa, Income distribution
    JEL: D12 D83 J15 O12
    Date: 2013–01–29
  14. By: Bruno Crépon (CREST); Esther Duflo (MIT); Marc Gurgand (PSE & CREST); Roland Rathelot (CREST); Philippe Zamora (CREST)
    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% or 100%) 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.
    Keywords: job placement, counseling, displacement effects, randomized experiment
    JEL: J68 J64 C93
    Date: 2012–11
  15. By: Morgenroth Edgar
    Keywords: unemployment/qec
    Date: 2013–01
  16. By: Hugh Gravelle (Centre for Health Economics, University of York, UK); Rita Santos (Centre for Health Economics, University of York, UK); Luigi Siciliani (Centre for Health Economics and Department of Economics & Related Studies, University of York, UK)
    Abstract: We examine whether a hospital’s quality is affected by the quality provided by other hospitals in the same market. We first set out a theoretical model with regulated prices which specifies conditions on demand and cost functions which determine whether a hospital will have higher quality when its rivals have higher quality. We then apply spatial econometric methods to a sample of English hospitals in 2009-10 and a set of 16 quality measures including mortality rates, readmission, revision and redo rates and three patient reported indicators to examine to examine the relationship between the quality of hospitals. We find that a hospital’s quality is positively associated with the quality of its rivals for seven out of the sixteen quality measures and that in no case is there a negative association. In those cases where there is a positive association, an increase in rivals’ quality by 10% increases a hospital’s quality by 1.7% to 2.9%.
    Keywords: Quality; regulated prices; hospitals; competition; spatial econometrics
    JEL: I1 L3
    Date: 2013–01
  17. By: Jesus Gonzalez-Feliu (LET - Laboratoire d'économie des transports - CNRS : UMR5593 - Université Lumière - Lyon II - Ecole Nationale des Travaux Publics de l'Etat); Bruno Faivre D'Arcier (LET - Laboratoire d'économie des transports - CNRS : UMR5593 - Université Lumière - Lyon II - Ecole Nationale des Travaux Publics de l'Etat); Josep-Maria Salanova Grau (Hellenic Institute or Transport - Center of Research and Technologie Hellas); Tiphaine Hervé (Interface Transport - Interface Transport); Fernando Zubillaga (Mobility and Logistics Cluster Euskadi - Cluster Movilidad y logística Euskadi); Zeljko Jeftic (Ertico - Ertico ITS); Jean-Baptiste Thebaud (Interface Transport - Interface Transport); Georgia Aifandopoulou (Hellenic Institute or Transport - Center of Research and Technologie Hellas)
    Abstract: The deployment of urban logistics solutions is one of the main pending questions in the field of urban goods transport research and practice. Indeed, although several solutions and projects have been tested in the last years, only few of them reach an operational phase and remain viable in time. Through the example of a recently finished demonstration project, this paper presents the main issues related to the deployment of urban logistics solutions form research and development results. More precisely, this paper aims to focus on how the conclusions of pilot actions can be used to forecast the possibilities of deployment for an urban logistics service. First, we present the main stages in deploying a technological or organizational solution, based on the FREILOT project's deployment research and analysis. Then, one of the analysed technologies in the project is presented: the delivery space booking service. After presenting the main business model elements, an example of cost-benefit analysis is proposed, defining the method and the main hypotheses, as well as the main conclusions from the analysis. Then, the main barriers to the deployment of delivery space boking devices are presented. Finally, the paper shows a set of guidelines for public authorities and transport practitioners to deploy urban logistics solutions.
    Keywords: urban logistics services; deployment; cost-benefit analysis; barriers; business model
    Date: 2013–02–03
  18. By: Michael L. Anderson
    Abstract: Public transit accounts for only 1% of U.S. passenger miles traveled but nevertheless attracts strong public support. Using a simple choice model, we predict that transit riders are likely to be individuals who commute along routes with the most severe roadway delays. These individuals’ choices thus have very high marginal impacts on congestion. We test this prediction with data from a sudden strike in 2003 by Los Angeles transit workers. Estimating a regression discontinuity design, we find that average highway delay increases 47% when transit service ceases. This effect is consistent with our model’s predictions and many times larger than earlier estimates, which have generally concluded that public transit provides minimal congestion relief. We find that the net benefits of transit systems appear to be much larger than previously believed.
    JEL: R41 R42 R48
    Date: 2013–02
  19. By: André De Palma (ENS Cachan - Ecole Normale Supérieure de Cachan - École normale supérieure de Cachan - ENS Cachan); Moez Kilani (EQUIPPE - ECONOMIE QUANTITATIVE, INTEGRATION, POLITIQUES PUBLIQUES ET ECONOMETRIE - Université Lille I - Sciences et technologies); Stef Proost (Center for Economic Studies - CES - KU Leuven - CES - KU Leuven)
    Abstract: This paper proposes an analytical formulation of discomfort in mass transit and discusses its micro-economic properties. The formula we introduce reflects real situations faced by the passengers, it has nice mathematical properties and it is easy to compute. The discomfort formulation is used to analyze optimal scheduling and pricing of transit in a dynamic model.
    Keywords: Public transport; congestion discomfort; timetable schedul delay cost
    Date: 2013–02–01
  20. By: Robert Baumann (Department of Economics, College of the Holy Cross); Justin Svec (Department of Economics, College of the Holy Cross); Francis Sanzari
    Abstract: This paper examines the impact of unemployment on migration. In a theoretical model, we show that unemployment, per se, does not affect migration. Rather, migration only occurs when unemployment shocks force residents to update their expectations of the area's unemployment rate. Once these expectations change, migration reallocates labor to bring the economy back to equilibrium. To test this theory, we devise an empirical strategy using state level data in the U.S. from 2000 to 2010, we find strong empirical evidence that unemployment shocks outside of expectations have a far greater impact on migration than unemployment shocks that are within expectations.
    Keywords: Migration, unemployment, expectations
    JEL: R23 J61 D8
    Date: 2012–12
  21. By: Nishimura, Junichi; Okamuro, Hiroyuki
    Abstract: R&D consortia (collaborative R&D projects among private firms, universities, and public research institutes) have been attracting increasing attention as an effective means of promoting innovation. Especially for SMEs, such collaboration provides important opportunities to access and obtain advanced scientific knowledge generated by universities and public research institutes. It is expected that not only the participants in R&D consortia will enhance their performance, through direct knowledge spillovers, but also that the business partners of consortia members may enjoy indirect effects (rent spillovers), through their business transactions. This paper empirically examines the spillover effects through government-sponsored R&D consortia using firm-level data and the propensity score method. Focusing on a major support program for R&D consortia in Japan, the “Consortium R&D Project for Regional Revitalization” by METI, we confirm that there are both direct (knowledge) spillover effects from firms’ participation in this program and indirect (rent) spillover effects on the customer firms of the consortia members. Moreover, by comparing SMEs and large firms, we find that only SMEs obtain knowledge spillovers in R&D consortia, whereas, among their customers, only large firms enjoy rent spillovers.
    Keywords: R&D consortia, business transaction, knowledge spillover, rent spillover, SME, policy evaluation
    JEL: H25 L53 O32 O38
    Date: 2013–01
  22. By: Jing Wu; Joseph Gyourko; Yongheng Deng
    Abstract: Previous research on the United States and Japan finds economically large impacts of changing real estate collateral value on firm investment. Working with unique data on land values in 35 major Chinese markets and a panel of firms outside the real estate industry, we estimate investment equations that yield no evidence of a collateral channel effect. One reason for this stark difference appears to be that some of the most dominant firms in China are state-owned enterprises (SOEs) which are unconstrained in the sense that they do not need to rely on rising underlying property collateral values to obtain all the financing necessary to carry out their desired investment programs. However, we also find no collateral channel effect for non-SOEs when we perform our analysis on disaggregated sets of firms. Norms and regulation in the Chinese capital markets and banking sector can account for why there is no collateral channel effect operating among these firms. We caution that our results do not mean that there will be no negative fallout from a potential real estate bust on the Chinese economy. There are good reasons to believe there would be, just not through a standard collateral channel effect on firm investment.
    JEL: E22 G11 G31 R11 R3 R39
    Date: 2013–02
  23. By: Omar McDoom (London School of Economics)
    Abstract: Although popularly perceived as a positive force, social capital may also produce socially undesirable outcomes. Drawing on Rwanda’s 1994 genocide, this article shows that participation in its violence was partly determined by the features of individuals’ social networks. Perpetrators possessed larger networks in general and more connections to other perpetrators in particular. The quality as well as quantity of connections also mattered. Strong ties generally, and kinship and neighborly ties specifically, were strong predictors of participation. In contrast, possession of countervailing ties to nonparticipants was not significant. In explaining these findings, I suggest participants’ networks fulfilled functions of information diffusion, social influence, and behavioral regulation. The findings point to the importance of social structure and suggest that relational data should complement individual attribute data in predicting participation in collective violence.
    Date: 2013–02

This nep-ure issue is ©2013 by Steve Ross. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.