nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2013‒06‒09
forty-six papers chosen by
Steve Ross
University of Connecticut

  1. Congestion, agglomeration, and the structure of cities By Jeffrey C. Brinkman
  2. Spontaneous Orders and the Emergence of Economically Powerful Cities By Palmberg, Johanna
  3. The Role of Housing in Labor Reallocation By Marcelo Veracierto; Jonas Fisher; Morris Davis
  4. When do textbooks matter for achievement? Evidence from African primary schools By Maria Kuecken; Marie-Anne Valfort
  5. Homeownership and Entrepreneurship: The Role of Commitment and Mortgage Debt By Bracke, Philippe; Hilber, Christian; Silva, Olmo
  6. Does School Choice Improve Student Performance? By Kaja Høiseth Brugård
  7. Time-Varying Effects of Housing and Stock Prices on U.S. Consumption By Beatrice D. Simo-Kengne; Stephen M. Miller; Rangan Gupta; Goodness C. Aye
  8. Embeddedness of regions in European knowledge networks. A comparative analysis of inter-regional R and D collaborations, co-patents and co-publications By Iris Wanzenböck; Thomas Scherngell; Thomas Brenner
  9. Liquidity Shocks and the US Housing Credit Crisis of 2007–2008 By Gianni La Cava
  10. Determinants of Internal Migration among Senegalese Youth By Catalina HERRERA; David Sahn
  11. Distance-Based Methods: An improvement of Ripley’s K function vs. the K density function By José M. Albert; Marta R. Casanova; Jorge Mateu; Vicente Orts
  12. The Effect of Transport Policies on Car Use: A Bundling Model with Applications By Francisco Gallego; Juan-Pablo Montero; Christian Salas
  13. Equity extraction and mortgage default By Steven Laufer
  14. The long-term employment impacts of gentrification in the 1990s By Daniel Hartley; T. William Lester
  15. Fiscal Equalization and Capitalization: Evidence from a Policy Reform By Wouter Vermeulen; Maarten Allers
  16. School Fees, Parental Participation and Accountability: Evidence from Madagascar By Frédéric LESNE
  17. The effects of school entry laws on educational attainment and starting wages in an early tracking system By Martina Zweimüller
  18. School Accountability: Can We Reward Schools and Avoid Pupil Selection? By Ooghe, Erwin; Schokkaert, Erik
  19. Measuring Economic Growth from Outer Space: A Comment By Berliant, Marcus; Weiss, Adam
  20. Proximity, network formation and inventive performance: in search of the proximity paradox By Cassi, Lorenzo; Plunket, Anne
  21. The Regional Dimension of the Unemployment Crisis By Morgenroth, Edgar
  22. Evaluating Multiple Spatial Dimensions of Economic Growth in Brazil Using Spatial Panel Data Models (1970 - 2000) By Guilherme Mendes Resende; Alexandre Xavier Ywata de Carvalho; Patrícia Alessandra Morita Sakowski
  23. Out-migration, Wealth Constraints, and the Quality of Local Amenities By Christian Dustmann; Anna Okatenko
  24. Network social capital and labour market outcomes Evidence from Ireland By Brady, Gerard
  25. “When supply travels far beyond demand: Institutional and regulatory causes of oversupply in Spain’s transport infrastructure” By Daniel Albalate; Germà Bel; Xavier Fageda
  26. The Income Effect of Unconditional Grants: A Reduction in the Collection Effort of Municipalities By Javiera Bravo
  27. Economic Effects of Domestic and Neighbouring Countries’ Cultural Diversity By Erkan Gören
  28. The Geography of Consumer Prices By Adam Reiff; Attila Ratfai
  29. How ethnic diversity affects economic Development? By Erkan Gören
  30. Intergenerational Long Term Effects of Preschool: Structural Estimates from a Discrete Dynamic Programming Model By Heckman, James J.; Raut, Lakshmi K.
  31. Spatial dynamics and convergence: The spatial AK model By Raouf Boucekkine; Carmen Camacho; Giorgio Fabbri
  32. Open borders, transport links and local labor markets By Åslund, Olof; Engdahl, Mattias
  33. Economic shocks and growth: spatio-temporal perspectives on Europe's economies in a time of crisis By Doran, Justin; Fingleton, Bernard
  34. Charging the polluters: A pricing model for road and railway noise. By Andersson, Henrik; Ögren, Mikael
  35. Optimism bias in project appraisal: deception or selection? By Eliasson, Jonas; Fosgerau, Mogens
  36. Motivating Knowledge Agents: Can Incentive Pat Overcome Social Distance? By Erlend Berg; Maitreesh Ghatak; R. Manjula; D. Rajasekhar; Sanchari Roy
  37. The socio-economic gradient in children's reading skills and the role of genetics By John Jerrim; Anna Vignoles; Raghu Lingam; Angela Friend
  38. Productivity Dynamics and R&D Spillovers in the Japanese Manufacturing Industry: An empirical analysis based on micro-level data (Japanese) By IKEUCHI Kenta; YoungGak KIM; KWON Hyeog Ug; FUKAO Kyoji
  39. Public transport reliability and commuter strategy By Guillaume Monchambert; André De Palma
  40. Social Capital and the Family: Evidence that Strong Family Ties Cultivate Civic Virtues By Ljunge, Martin
  42. The Roles of R&D and networking for innovation by Irish and foreign-owned firms: evidence from the Irish CIS 2006-08 By Doran, Justin; O'Leary, Eoin
  43. The role of income inequality in crisis theories and in the subprime crisis By Thomas Goda
  44. Learning Through Referrals By Manolis Galenianos
  45. Do wages reflect labor productivity? The case of Belgian regions By Jozef Konings; Luca Marcolin
  46. Are There Myths on Road Impact and Transport in Sub-Saharan Africa?. By Monica Beuran; Marie Castaing Gachassin; Gaël Raballand

  1. By: Jeffrey C. Brinkman
    Abstract: Congestion pricing has long been held up by economists as a panacea for the problems associated with ever increasing traffic congestion in urban areas. In addition, the concept has gained traction as a viable solution among planners, policymakers, and the general public. While congestion costs in urban areas are significant and clearly represent a negative externality, economists also recognize the advantages of density in the form of positive agglomeration externalities. The long-run equilibrium outcomes in economies with multiple correlated, but offsetting, externalities have yet to be fully explored in the literature. To this end, I develop a spatial equilibrium model of urban structure that includes both congestion costs and agglomeration externalities. I then estimate the structural parameters of the model by using a computational solution algorithm and match the spatial distribution of employment, population, land use, land rents, and commute times in the data. Policy simulations based on the estimates suggest that naive optimal congestion pricing can lead to net negative economic outcomes.
    Keywords: Externalities (Economics) ; Urban economics
    Date: 2013
  2. By: Palmberg, Johanna (Entrepreneurship Forum, CESIS, KTH)
    Abstract: The importance of cities to economic dynamism and growth cannot be emphasized enough. It is crucial for our understanding of what drives economic growth to understand how cities emerge, develop and prosper. This paper investigates the emergence of cities from a spontaneous order and urban economics perspective. The analysis focus on agglomeration effects, externalities and regional clustering as explanations of cities and regional growth. Factors such as local knowledge and dispersion of knowledge are identified as important growth factors. With origin in Hayek’s famous citation “particular circumstances of time and place” these factors are thoroughly discussed in a spontaneous order framework.
    Keywords: Spontaneous orders; cities; urban economics; dynamic externalities; knowledge-flows
    JEL: B25 B53 O18 R10 R12
    Date: 2013–05–24
  3. By: Marcelo Veracierto (Federal Reserve Bank of Chicago); Jonas Fisher (Federal Reserve Bank of Chicago); Morris Davis (University of Wisconsin-Madison, School)
    Abstract: This paper builds a dynamic general equilibrium model of cities and uses it to analyze the role of local housing markets and moving costs in determining the character and extent of labor reallocation in the US economy. Labor reallocation in the model is driven by idiosyncratic city-specific productivity shocks, which we measure using a dataset that we compile using more than 350 U.S. cities for the years 1984 to 2008. Based on this measurement, we find that our model is broadly consistent with the city-level evidence on net and gross population flows, employment, wages and residential investment. We also find that the location-specific nature of housing is more important than moving costs in determining labor reallocation. Absent this quasi-fixity of housing, and under various assumptions governing population flows, population and employment would be much more volatile than observed.
    Date: 2012
  4. By: Maria Kuecken (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne); Marie-Anne Valfort (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)
    Abstract: Using a within-student analysis, we find no average impact of textbook access (ownership or sharing) on primary school achievement. Instead, it is only for students with high socioeconomic status that one form of textbook access - sharing - has a positive impact.
    Keywords: Textbooks; Educational quality; Sub-Saharan Africa; SACMEQ
    Date: 2013–06–01
  5. By: Bracke, Philippe (London School of Economics); Hilber, Christian (London School of Economics); Silva, Olmo (London School of Economics)
    Abstract: We study the link between homeownership and entrepreneurship using a model of occupational choice and housing tenure where homeowners commit a fixed budget to mortgage payments. Our model predicts that: (i) mortgage commitments, by amplifying risk aversion, diminish the likelihood that homeowners start a business; (ii) the negative link between homeownership and entrepreneurship is increasing in mortgage debt; and (iii) the negative relation is more pronounced for entrepreneurs in risky sectors. Exploiting the longitudinal dimension of the British Household Panel Survey to control for unobservables, we test and confirm these predictions. Leveraged home-buyers are 30% less likely to become entrepreneurs.
    Keywords: entrepreneurship, homeownership, commitment
    JEL: L26 D14 G11 R21
    Date: 2013–05
  6. By: Kaja Høiseth Brugård (Department of Economics, Norwegian University of Science and Technology; Center for Economic Research at NTNU)
    Abstract: This paper studies effects of the proportion of girls in compulsory education on further education. I use detailed Norwegian register data to estimate the influence of the proportion of girls in the last grade of compulsory education on high school education and university attainment. A higher proportion of girls is found to increase the probability of graduating from high school. The result is robust to several model specifications. The analysis also indicates a positive effect on enrollment in higher education. Heterogeneity and non-linearity analyses indicate that gender peer effects are most important for students most likely to be on the margin of graduating from high school and enrolling in higher education, and when the share of female students is low.
    Keywords: school choice, high school education, student achievement
    JEL: I2 I21
    Date: 2013–05–31
  7. By: Beatrice D. Simo-Kengne (Department of Economics, University of Pretoria); Stephen M. Miller (College of Business, University of Las Vegas, Nevada); Rangan Gupta (Department of Economics, University of Pretoria); Goodness C. Aye (Department of Economics, University of Pretoria)
    Abstract: This paper applies a time-varying parameter vector autoregressive (TVP-VAR) approach to estimate the relative effects of housing and stock prices on US consumption over time. We use annual data from 1890 to 2012 and find that over different horizons and over time, generally the housing price positively affects consumption while the stock price negatively affects consumption. These opposite responses to changes in housing and stock prices suggest different mechanisms through which wealth affects consumption. Further, the housing price effect proves larger in absolute value than the stock price effect after 1980. Between 1980 and 2007, housing wealth generally exerted a larger effect on consumption. This sub-period includes the 1997/2002 asset price boom/bust where house prices continued to rise moderately as stock prices fell. Finally, the co-occurrence of the decline in both housing and stock prices during the 2007-2009 episode produced bigger effects of the housing price for the first five years of the impulse responses while the higher magnitude of the stock price effect appears in the 6-year horizon. These findings suggest that the magnitude of the relative price effects differs with both time and horizons and also depends on whether prices increase or decrease.
    Keywords: Asset Prices, Consumption, TVP-VAR
    JEL: C32 E21 G10
    Date: 2013–05
  8. By: Iris Wanzenböck (Austrian Institute of Technology (AIT) Vienna); Thomas Scherngell (Austrian Institute of Technology (AIT) Vienna); Thomas Brenner (Philipps-Universität Marburg)
    Abstract: This paper investigates the embeddedness of European regions in different types of inter-regional knowledge networks, namely project based R and D collaborations within the EU Framework Programmes (FPs), co-patent networks and co-publication networks. Embeddedness refers to the network positioning of regions captured in terms of social network analytic (SNA) centrality measures. The objective is to estimate how region-internal and region-external factors influence network embeddedness in the distinct network types, in order to identify differences in their driving factors at the regional level. In our modelling approach, we apply advanced spatial econometric techniques by means of a mixed effects panel version of the Spatial Durbin Model (SDM), and introduce a set of variables accounting for a capacity-specific, a relational as well as a spatial dimension in regional knowledge production activities. The results reveal conspicuous differences between the knowledge networks. Internal capacity- and technology-related aspects but also spatial spillover impacts from surrounding regions prove to be particularly important for centrality in the co-patent network. We also find significant - region-internal and region-external - impacts of general economic conditions on a region’s centrality in the FP network. However, we cannot observe substantial spill-over effects of region-external factors on centrality in the co-publication network. Thus, the distinctive knowledge creation foci in each network seem to find expression in the network structure as well as its regional determinants.
    Keywords: knowledge networks, network embeddedness, network centrality, regional knowledge production, panel Spatial Durbin model.
    JEL: L14 N74 O33 R15
    Date: 2013–05–29
  9. By: Gianni La Cava (Reserve Bank of Australia)
    Abstract: There is extensive anecdotal evidence to suggest that a significant tightening in credit conditions, or a 'credit crunch', occurred in the United States following the collapse of the loan securitisation market in 2007. However, there has been surprisingly little formal testing for the existence of a credit crunch in the context of the US housing market. In this paper I examine whether the fall in mortgage credit over 2007–2008 was caused by a reduction in credit supply which, in turn, can be traced to a fall in the amount of financing available to mortgage lenders. I use the differential exposures of individual mortgage lenders to the collapse of the securitisation market in 2007 as a source of cross-lender variation in lender financing conditions and assess the impact on residential mortgage lending. Using loan-level information to control for unobservable credit demand shocks, I show that mortgage lenders that were particularly reliant on loan securitisation disproportionately reduced the supply of mortgage credit. The negative liquidity shock caused by the shutdown of the securitisation market explains a significant share of the aggregate decline in mortgage credit during this crisis.
    Keywords: bank liquidity; credit supply; mortgage market; housing
    JEL: C36 E21 G11 G12
    Date: 2013–05
  10. By: Catalina HERRERA (Cornell University - Cornell University - Cornell University); David Sahn (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: We analyze the socio-economic determinants of youth decision to internally migrate in Senegal. Young people undertake mostly rural-to-rural and urban-to-urban migrations and over half of them are temporary migrants. Using multinomial logit models, we estimate the role of household and community characteristics during childhood in later youth migration decisions. We find that these determinants are heterogeneous by gender and destination. The higher the fathers' education the more (less) likely are their daughters to move to urban (rural) areas. Young individuals, who spend their childhood in better off households, are more likely to move to urban areas. Also, the presence of younger siblings increases the propensity of moving to rural areas. Access to primary schools during childhood decreases the likelihood of migrating to urban areas for both men and women.
    Keywords: Internal migration;senegal;youth;multinomial logit
    Date: 2013–05–28
  11. By: José M. Albert (Department of Economics, Universitat Jaume I, Castellón, Spain); Marta R. Casanova (Department of Applied Economics, University of Valencia, Spain); Jorge Mateu (Department of Mathematics, Universitat Jaume I, Castellón, Spain); Vicente Orts (IEI & Department of Economics, Universitat Jaume I, Castellón, Spain)
    Abstract: In this paper, we propose a non-cumulative function for evaluating the spatial concentration of economic activity. This function, which we have called the M marginal function, comes from the tradition of spatial statistics but, at the same time, incorporates some key features from the economic geography approach to measure the tendency of economic activity to cluster. Our technique is a straightforward extension of the ‘modified Ripley’s K function’, converted into a non-cumulative function and more similar in spirit to Duranton and Overman’s K density function. Furthermore, it fulfils all the requirements that have already been recognised by the literature on economic geography as the ones that must be met by any measure of localisation. This M marginal function is enough to provide a global view of the spatial structure of economic activity, to test for localisation and to obtain far more detailed information about cluster structures at fairly short distances. Finally, the two distance-based methods are implemented on a comprehensive set of micro-geographic data from Spanish manufacturing sectors to observe how they behave.
    Keywords: distance-based method, non-cumulative function, micro-geographic data, Ripley’s K function, K-density function, spatial location patterns
    JEL: C15 C40 C60 R12
    Date: 2013
  12. By: Francisco Gallego; Juan-Pablo Montero; Christian Salas
    Abstract: In an effort to reduce pollution and congestion, Latin American cities have experimented with different policies to persuade drivers to give up their cars in favor of public transport. Borrowing from the bundling literature, the paper presents a novel model of vertical and horizontal differentiation applied to transport decisions: households differ in their preferences for transportation modes -cars vs public transport- and in the amount of travel. The model captures in a simple way a household's response to a policy shock, i.e., how to allocate existing car capacity, if any, to competing uses (peak vs off-peak hours) and how to adjust such capacity overtime. Using few observables, the model is then used to analyze the effects of two major transport policies: the driving restriction program introduced in Mexico-City in November of 1989 -Hoy-No-Circula (HNC)- and the public transport reform carried out in Santiago in February of 2007 -Transantiago (TS). The model's simulated effects are not only consistent with the econometric estimates in Gallego et al (2013) but also help understand the mechanisms that explain them.
    Keywords: public transport, driving restrictions, pollution, congestion
    JEL: R41 Q53 Q58
    Date: 2013
  13. By: Steven Laufer
    Abstract: Using a property-level data set of houses in Los Angeles County, I estimate that 30% of the recent surge in mortgage defaults is attributable to early home-buyers who would not have defaulted had they not borrowed against the rising value of their homes during the boom. I develop and estimate a structural model capable of explaining the patterns of both equity extraction and default observed among this group of homeowners. In the model, most of these defaults are attributable to the high loan-to-value ratios generated by this additional borrowing combined with the expectation that house prices would continue to decline. Only 30% are the result of income shocks and liquidity constraints. I use this model to analyze a policy that limits the maximum size of cash-out refinances to 80% of the current house value. I find that this restriction would reduce house prices by 14% and defaults by 28%. Despite the reduced borrowing opportunities, the welfare gain from this policy for new homeowners is equivalent to 3.2% of consumption because of their ability to purchase houses at lower prices.
    Date: 2013
  14. By: Daniel Hartley; T. William Lester
    Abstract: In the ongoing debate over the social benefi ts and costs of gentrification, one of the key questions left largely unaddressed by the empirical literature is the degree to which gentrification impacts local labor markets. This paper begins by exploring the nature of employment change in one archetypical gentrifying neighborhood—Chicago’s Wicker Park—to motivate the central hypothesis that gentrification is associated with industrial restructuring. Next, a detailed analysis is presented on the long-term employment changes in neighborhoods that have experienced gentrification during the 1990s across a sample of 20 large central cities. Specifically, this paper uses Freeman’s (2005) definition to define tracts that experienced gentrification and compares employment outcomes in such tracts and those within a ¼ mile buffer to comparable nongentrified tracts. This analysis shows that employment grew slightly faster in gentrifying neighborhoods than other portions of the central city. However, jobs in restaurants and retail services tended to replace those lost in goods-producing industries. This process of industrial restructuring occurred at a faster rate in gentrifying areas. Thus gentrification can be considered a contributory and catalytic factor in accelerating the shift away from manufacturing with urban labor markets.
    Keywords: Housing
    Date: 2013
  15. By: Wouter Vermeulen; Maarten Allers
    Abstract: Fiscal equalization through the allocation of central government grants may have adverse distributional implications if these grants capitalize into house values. We investigate the impact of changes in grants induced by a reform of the Dutch grant system. Since this reform was implemented gradually and in two subsequent stages that targeted different policy domains, we are able to identify on the nonlinearity of its impact over time. As robustness checks, we identify on either stage separately, or on a reform of financing school buildings, which should have limited effects on house prices as additional funds came with an additional task for municipalities. Our results indicate full capitalization of grants. It follows that property owners were important beneficiaries in the municipalities that saw their grants increased because of disadvantageous socio-economic composition.
    JEL: H7 H81 R2 R3 R51
    Date: 2013–05
  16. By: Frédéric LESNE (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: The role of school fees in achieving both allocative and productive efficiency in the delivery of primary education has been a subject of intense debate. Building on a simple model that makes explicit the role of school fees in determining the optimal level of parental participation to school governance, this paper contributes to the debate by evaluating empirically the relationship between fees, participation and the accountability framework in public primary schools in Madagascar. The results show evidence that schools requiring parents to pay more fees experience a higher degree of parental participation. While results are consistent with the theoretical model, the empirical analysis provides evidence that school fees increase participation beyond their effect on the power relationship between the community and the school authorities. The model hypothesis that school fees modify the accountability framework, which leads to more productive participation efforts, is challenged by alternative explanations. One of them is that participation aims not to increase education quality but rather to decrease the amount of fees requested by the school.
    Keywords: education;school governance;accountability;school fees
    Date: 2013–05–23
  17. By: Martina Zweimüller
    Abstract: Empirical evidence suggests that relative age, which is determined by date of birth and the school entry cutoff date, has a causal effect on track choice. Using a sample of male labor market entrants drawn from Austrian register data, I analyze whether the initial assignment to different school tracks has persistent effects on educational attainment and earnings in the first years of the career. I estimate the reduced-form effect of the school entry law on starting wages and find a wage penalty of 1.1–2.0 percent for students born in August (the youngest) compared to students born in September (the oldest). The analysis of educational attainment suggests that significant differences in the type of education exist. Younger students are more likely to pursue an apprenticeship and less likely to have higher education. After five years of labor market experience, the wage penalty amounts to 0.8–1.1 percent, suggesting a persistent (albeit decreasing) negative effect of the school entry rule on labor market outcomes in an early tracking system.
    Keywords: School entry law, early tracking, educational attainment, earnings, labor market entrants
    JEL: I21 J24 J31
    Date: 2013–05
  18. By: Ooghe, Erwin (K.U.Leuven); Schokkaert, Erik (K.U.Leuven)
    Abstract: School accountability schemes require measures of school performance, and these measures are in practice often based on pupil test scores. It is well-known that insufficiently correcting these test scores for pupil characteristics may provide incentives for inefficient pupil selection. We show that the trade-off between reward and pupil selection is not only a matter of sufficient information. A school accountability scheme that rewards school performance will create incentives for pupil selection, even under perfect information, unless the educational production function satisfies an (unrealistic) separability assumption. We propose different compromise solutions and discuss the resulting incentives in theory. The empirical relevance of our analysis – i.e., the rejection of the separability assumption and the magnitude of the incentives in the different compromise solutions – is illustrated with Flemish data.
    Keywords: school accountability, cream-skimming, educational production function
    JEL: H52 I22 I24
    Date: 2013–05
  19. By: Berliant, Marcus; Weiss, Adam
    Abstract: We examine spatial econometric issues arising from the model specification in Henderson, Storeygard and Weil (2012), that uses night light data to proxy for missing or unreliable GDP growth data.
    Keywords: GDP, Night light data, Spatial autocorrelation
    JEL: C21 C23
    Date: 2013–06–01
  20. By: Cassi, Lorenzo; Plunket, Anne
    Abstract: This paper investigates how network relations, proximity and their interplay affect collaboration and their inventive performance. Using patent citations as a proxy for patent quality, we investigate how the network and proximity characteristics of co-inventors enable them to access different sources of knowledge, in different geographical and organizational contexts, and finally affect the quality of inventive collaboration. Our findings enable to address the proximity paradox, which states that proximity facilitates collaboration and knowledge sharing, but it does not necessarily increase innovative performance, too much proximity may even harm innovation (Boschma and Frenken, 2009; Broekel and Boschma, 2011).
    Keywords: Social networks, geographical proximity, technological proximity, co-patenting, network formation.
    JEL: D85 L65 O31 O33 R11
    Date: 2013–01–15
  21. By: Morgenroth, Edgar
    Keywords: unemployment/qec
    Date: 2013–01
  22. By: Guilherme Mendes Resende; Alexandre Xavier Ywata de Carvalho; Patrícia Alessandra Morita Sakowski
    Abstract: O objetivo deste estudo consiste em avaliar os resultados de estimações de crescimento econômico regional em múltiplas escalas espaciais, utilizando modelos de painel espacial. As escalas espaciais examinadas são áreas mínimas comparáveis, microrregiões, mesorregiões e estados no período entre 1970 e 2000. Modelos alternativos de painel espacial com efeitos fixos foram estimados sistematicamente nestas escalas espaciais para demonstrar que os coeficientes estimados variam de acordo com a escala utilizada. Os resultados mostram que as conclusões obtidas a partir de regressões de crescimento dependem da escolha da escala espacial. Primeiramente, a hipótese de convergência de clube não pode ser rejeitada, sugerindo haver diferenças nos processos de convergência entre o norte e o sul do Brasil. Além disso, quanto mais agregada for a escala espacial utilizada, maior será o coeficiente positivo da média de anos de escolaridade. O efeito de custos de transporte é positivo e estatisticamente significante para o crescimento econômico apenas no nível do estado. Os coeficientes da densidade populacional mostram que áreas mais densamente povoadas são prejudiciais para o crescimento econômico, sugerindo efeitos de congestionamento no nível de áreas mínimas comparáveis (AMCs), microrregiões e mesorregiões, mas a magnitude destes coeficientes varia de acordo com a escala geográfica. Finalmente, os coeficientes de transbordamento espacial também variam conforme a escala espacial sob análise. Em geral, estes coeficientes são estatisticamente significantes nos níveis de AMC, microrregião e mesorregião; mas, no nível estadual, deixam de ser estatisticamente significantes, sugerindo que transbordamentos espaciais são limitados no espaço. The goal of this paper is to evaluate the results of regional economic growth estimates at multiple spatial scales using spatial panel data models. The spatial scales examined are minimum comparable areas, micro-regions, meso-regions and states over the period between 1970 and 2000. Alternative spatial panel data models with fixed effects were systematically estimated across those spatial scales to demonstrate that the estimated coefficients change with the scale level. The results show that the conclusions obtained from growth regressions are dependent on the choice of spatial scale. First, club convergence hypothesis cannot be rejected suggesting there are differences in the convergence processes between the north and south in Brazil. Moreover, the positive average-years-of-schooling coefficient gets larger as more aggregate spatial scales are used. Transportation costs effect is positive and statistically significant to economic growth only at the state level. Population density coefficients show that higher populated areas are harmful to economic growth demonstrating somehow that congestion effects are operating at the MCA, micro-regional and meso-regional spatial scales, but their magnitudes vary across the geographic scales. Finally, the values of spatial spillovers coefficients also vary according to the spatial scale under analysis. In general, such coefficients are statistically significant at the MCA, micro-regional and meso-regional levels; but, at state level those coefficients are no longer statistically significant suggesting that spatial spillovers are bounded in space.
    Date: 2013–04
  23. By: Christian Dustmann (Department of Economics, and Centre for Research and Analysis of Migration (CReAM), University College London.); Anna Okatenko (CReAM, University College London.)
    Abstract: Using a simple theoretical model, we show that the level of migration costs relative to wealth determines the form of the relation between income and migration intentions, which can be monotonically decreasing, increasing, or inverse U-shaped. Using unique individual level data, covering three geographic regions—sub-Saharan Africa, Asia, and Latin America—we show that migration intentions do indeed respond to individual wealth, and that the patterns differ across the country groups studied in a manner compatible with the predictions of our model. Further, contentment with various dimensions of local amenities plays an important role for migration decisions.
    Keywords: Migration and Wealth Constraints, Migration Intentions, Local Amenities
    JEL: O15 R23 J61
    Date: 2013–05
  24. By: Brady, Gerard
    Abstract: Using data from the International Social Survey Programme 2008 this paper tests empirically the effects of network social capital on Irish employment outcomes, while controlling for possible endogeneity. We allow the effects of social networks to vary for different groups and across different localities. We also test the hypothesis that network social capital works as a complement to human capital in the labour market, rather than as a substitute. We find that social participation and employment are not endogenous and that ‘weak ties’ matter for employment outcomes, whereas ‘strong ties’ are less important. The effects, however, vary across age and location. We also find that social and human capital may be substitutes rather than complements when it comes to the labour market. These findings are discussed with relevance and examples for policy.
    Keywords: Social Capital, Networks, Ireland, Employment, Labour market
    JEL: J64 J68
    Date: 2013–05–30
  25. By: Daniel Albalate (Faculty of Economics, University of Barcelona); Germà Bel (Faculty of Economics, University of Barcelona); Xavier Fageda (Faculty of Economics, University of Barcelona)
    Abstract: Spain’s transport infrastructure policy has become a paradigmatic case of oversupply and of mismatch with demand. The massive expansion of the country’s transport infrastructure over the last decade has not been a response to demand bottlenecks or previously identified needs. For this reason, the intensity of use today on all interurban modes of transport in Spain falls well below that of other EU countries. This paper analyzes the institutional and regulatory factors that have permitted this policy, allowing us to draw lessons from the Spanish case that should help other countries avoid the pitfalls and shortcomings of Spanish policy. Based on our analysis, we also discuss policy remedies and suggest reforms in different regulatory areas, which could help improve the performance of Spain’s infrastructure policy.
    Keywords: Infrastructure, Overcapacity, Regulation, Spain. JEL classification: H54; L91; L98; R41; R42; R48
    Date: 2013–06
  26. By: Javiera Bravo
    Abstract: This paper presents research on the effect of unconditional grants on local government revenue in Chile: the receipt of transfers may engender an income effect that reduces the collection effort of municipalities. Grants are endogenous and we exploit a kink in a component of the Chilean formula for resource distribution for a panel of 340 Chilean municipalities from 1990 to 2007. We find empirical evidence that for Chilean municipalities, unconditional grants have a negative effect on local revenue. Specifically, an increase in per capita grant amount of one standard deviation is associated with a decrease of between 0.25 and 0.32 standard deviations in local per capita revenue.
    Keywords: fiscal decentralization, intergovernmental grants, local revenue collection, regression kink design
    JEL: H2 H3 H7 R5
    Date: 2013
  27. By: Erkan Gören (University of Oldenburg, Department of Economics)
    Abstract: This paper investigates the economic growth impact of cultural diversity, both domestically and in neighbouring countries, in a balanced panel of 94 countries covering the period 1970 to 2004. The measures of cultural diversity used in this article were derived from a recently developed computer algorithm intended primarily to measure linguistic distances in an automated fashion. The empirical analysis suggests that the degree of cultural diversity in contiguous neighbouring countries has substantial positive effects on domestic per capita income growth, even controlling for a broad set of regional, institutional, religious and other proximate factors of economic growth. The conclusion is that culturally homogeneous countries gain a strategic advantage over their culturally diverse neighbours.
    Keywords: cultural diversity; ethnic diversity; economic growth
    JEL: O11 O5
    Date: 2013–03
  28. By: Adam Reiff (National Bank of Hungary); Attila Ratfai (Central European University)
    Abstract: We argue that the underlying width of the border in international price determination is a trivial fraction of the corresponding Engel and Rogers (1996) reduced form estimate. We develop a two-country, multi-region, dynamic, stochastic equilibrium model of monopolistic competition with costly price adjustment and cross-location shopping. The optimal price is proportional to a weighted average of market prices, with weights negatively related to shopping costs. We calibrate structural distance and border parameters to a unique panel of store-level prices, and conclude that price adjustment costs directly account for about a quarter of the reduced form border width.
    Date: 2012
  29. By: Erkan Gören (University of Oldenburg, Department of Economics)
    Abstract: This paper investigates the empirical relationship between the two concepts of ethnicity and economic growth. Ethnicity is assumed to affect economic growth through a number of possible transmission channels that are generally included in cross-country growth regressions by proposing an extended econometric system of equations to describe growth incorporates new channel variables for the potential indirect effects of ethnicity that are important in the process of economic development. The results, based on a sample of 95 countries for the period 1960-1999, suggest that the concept of ethnic fractionalization is a strong predictive measure for the direct effect of ethnicity on growth, whereas the concept of ethnic polarization has non-negligible indirect economic effects through the specified channel variables.
    Keywords: ethnic diversity; fractionalization; polarization; transmission channels; economic growth
    JEL: O11 O5
    Date: 2012–10
  30. By: Heckman, James J. (University of Chicago); Raut, Lakshmi K. (U.S. Social Security Administration)
    Abstract: This paper formulates a structural dynamic programming model of preschool investment choices of altruistic parents and then empirically estimates the structural parameters of the model using the NLSY79 data. The paper finds that preschool investment significantly boosts cognitive and non-cognitive skills, which enhance earnings and school outcomes. It also finds that a standard Mincer earnings function, by omitting measures of non-cognitive skills on the right hand side, overestimates the rate of return to schooling. From the estimated equilibrium Markov process, the paper studies the nature of within generation earnings distribution and intergenerational earnings and schooling mobility. The paper finds that a tax financed free preschool program for the children of poor socioeconomic status generates positive net gains to the society in terms of average earnings and higher intergenerational earnings and schooling mobility.
    Keywords: preschool investment, early childhood development, intergenerational social mobility, structural dynamic programming
    JEL: J24 J62 O15 I21
    Date: 2013–05
  31. By: Raouf Boucekkine (GREQAM - Aix-Marseille School of Economics (AMSE)); Carmen Camacho (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne); Giorgio Fabbri (EPEE - Université d'Evry-Val d'Essonne)
    Abstract: We study the optimal dynamics of an AK economy where population is uniformly distributed along the unit circle. Locations only differ in initial capital endowments. Spatio-temporal capital dynamics are described by a parabolic partial differential equation. The application of the maximum principle leads to necessary but non-sufficient first-order conditions. Thanks to the linearity of the production technology and the special spatial setting considered, the value-fonction of the problem is found explicitly, and the (unique) optimal control is identified in feedback form. Despite constant returns to capital, we prove that the spatio-temporal dynamics, induced by the willingness of the planner to give the same (detrended) consumption over space and time, lead to convergence in the level of capital across locations in the long-run.
    Keywords: Economic growth, spatial dynamics; optimal control; partial-differential equations
    Date: 2013–05
  32. By: Åslund, Olof (IFAU, Uppsala University, Uppsala Center for Labor Studies); Engdahl, Mattias (Department of Economics)
    Abstract: We study the labor market impact of opening borders to low-wage countries. The analysis exploits time and regional variation provided by the 2004 EU enlargement in combination with transport links to Sweden from the new member states. The results suggest an adverse impact on earnings of present workers in the order of 1 percent in areas close to pre-existing ferry lines. The effects are present in most segments of the labor market but tend to be greater in groups with weaker positions. The impact is also clearer in industries which have received more workers from the new member states, and for which across-the-border work is likely to be more common. There is no robust evidence on an impact on employment or wages. At least part of the effects is likely due to channels other than the ones typically considered in the literature.
    Keywords: migration policy; immigration; labor market outcomes
    JEL: J16 J31 J61
    Date: 2013–04–24
  33. By: Doran, Justin; Fingleton, Bernard
    Abstract: The response by regional and national economies to exogenous impulses has a well-established literature in both spatial econometrics and in mainstream econometrics and is of considerable importance given the current economic crisis. This paper focuses on dynamic counterfactual predictions and impulse-response functions to provide insight regarding the question of whether responses to economic shocks are transitory or permanent. Analysis shows that output shocks have permanent effects on productivity with economies adjusting to new levels following a shock. This suggests that the current recession will be embodied permanently within the memory of some of Europe's leading economies as a hysteretic effect.
    Keywords: vector error correction, European Union, economic shocks, crisis, Verdoorn law, productivity
    JEL: C32 C53 E27 R11
    Date: 2012–08
  34. By: Andersson, Henrik; Ögren, Mikael
    Date: 2013
  35. By: Eliasson, Jonas (KTH Royal Institute of Technology); Fosgerau, Mogens (DTU Transport)
    Abstract: A number of highly cited papers by Flyvbjerg and associates have shown that ex-ante infrastructure appraisals tend to be overly optimistic. Ex post evaluations indicate a bias where investment cost is higher and demand lower on average than predicted ex ante. These authors argue that the bias must be attributed to intentional misrepresentation by project developers. This paper shows that the bias may arise simply as a selection bias, without there being any bias at all in predictions ex ante, and that such a bias is bound to arise whenever ex ante predictions are related to the decisions whether to implement projects. Using a database of projects we present examples indicating that the selection bias may be substantial. The examples also indicate that benefit-cost ratios remains a useful selection criterion even when cost and benefits are highly uncertain, gainsaying the argument that such uncertainties render cost-benefit analyses useless.
    Keywords: Cost overruns; Forecast accuracy; Cost-benefit analysis; Appraisal; Selection bias; Winner’s curse
    JEL: R40 R42
    Date: 2013–06–03
  36. By: Erlend Berg; Maitreesh Ghatak; R. Manjula; D. Rajasekhar; Sanchari Roy
    Abstract: This paper studies the interaction of incentive pay and social distance in the dissemination of information.  We analyse theoretically as well as empirically the effect of incentive pay when agents have pro-social objectives, but also preferences over dealing with one social group relative to another.  In a randomised field experiment undertaken across 151 villages in South India, local agents were hired to spread information about a public health insurance programme.  Relative to flat pay, incentive pay improves knowledge transmission to households that are socially distant from the agent, but not to households similar to the agent.
    Keywords: Public services, information constraints, incentive pay, social proximity, knowledge transmission
    Date: 2013–03–29
  37. By: John Jerrim (Institute of Education, University of London); Anna Vignoles (Faculty of Education, University of Cambridge); Raghu Lingam (London School of Hygiene and Tropical Medicine, University of London); Angela Friend (University of Colorado Boulder)
    Abstract: By the time children leave primary school there is a large socio-economic gap in their reading proficiency. There are a number of potential explanations for this socio-economic gap and in this paper we investigate the role of three particular genes and gene-environment interactions in determining children’s reading skills, using the Avon Longitudinal Study of Parents and Children (ALSPAC) dataset. We find that whilst these genes are indeed correlated with reading outcomes, effect sizes are small and sensitive to the choice of test used and the sample selected. Our results suggest that the leading candidate genes can jointly explain just 2% of the socio-economic gap in children’s reading test scores. We conclude that the influence of these three genes on children’s reading ability is limited, and their role in producing socio-economic gaps in reading ability is even more limited still.
    Keywords: Reading, Genes, Gene-environment interaction, ALSPAC
    JEL: I20 I24
    Date: 2013–06–05
  38. By: IKEUCHI Kenta; YoungGak KIM; KWON Hyeog Ug; FUKAO Kyoji
    Abstract: Recent studies on productivity dynamics analysis using plant-level data found that major sources of the decline in aggregate productivity growth is due to the negative exit effect, in which the productivity level of exiting plants is higher than the industry average, and the total factor productivity (TFP) of small plants has stagnated. Using matched data of the Census of Manufactures and the Report on the Survey of Research and Development for 1987 and 2007, we examine two issues by focusing on regional economics. First, we decompose the aggregate productivity growth in Japan's manufacturing sector and prefectural level to investigate in which prefecture did negative effects occur. We found that a large negative exit effect occurred in manufacturing plants agglomerations such as Tokyo, Osaka, and Kanagawa after 1995. Second, we analyze the effect of research and development (R&D), private R&D spillovers, and public R&D spillovers on productivity growth in the Japanese manufacturing sector. Our findings are as follows. (1) The effect of R&D spillovers from other firms is attenuated by distance. (2) The effect of R&D spillovers across firms has remarkably declined since the late 1990s by exits of plants which belong to R&D intensive firms in the agglomerations. This means that the exits by such plants bring simultaneously the negative exit effect and stagnation of TFP growth in small plants. (3) The effect of public R&D spillovers is more likely to decline. This is caused by the reduction of R&D in public research organizations since the late 1990s.
    Date: 2013–05
  39. By: Guillaume Monchambert (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)
    Abstract: This paper addresses the two-way implication between punctuality level of public transport and commuter behavior. We consider a modal competition between public transport and an alternative mode. Commuters may choose different strategies to minimize their journey cost. In particular, when the bus becomes less punctual, more potential bus users arrive late at the bus stop. We show that punctuality increases with the alternative mode fare through a price effect. This specificity can be viewed as an extension of the Mohring effect. In the general case, the punctuality of a bus is lower at equilibrium than at optimum. According to the alternative mode operating cost, the bus attracts too many (small cost) or too few (large cost) customers.
    Keywords: public transport; reliability; duopoly; welfare; Mohring e ect; schedule delay
    Date: 2013–05–29
  40. By: Ljunge, Martin (Research Institute of Industrial Economics (IFN))
    Abstract: I establish a positive relationship between family ties and civic virtues, as captured by disapproval of tax and benefit cheating, corruption, and a range of other dimensions of exploiting others for personal gain. I find that family ties are a complement to social capital, using within country evidence from 83 nations and data on second generation immigrants in 29 countries with ancestry in 85 nations. Strong families cultivate universalist values and produce more civic and altruistic individuals. The results provide a constructive role for families in promoting family values, which challenge an ‘amoral familism.’ Moreover, strong families are complementary with more developed and democratic institutions. The results provide a constructive role for families in promoting family values that support successful societies with a high state and fiscal capacity.
    Keywords: Family ties; Civic; Family values; Cultural transmission; Altruism; Social capital
    JEL: A13 H26 P16 Z13
    Date: 2013–06–04
  41. By: Mart Kaska; Tiiu Paas
    Abstract: The aim of this paper is to outline differences in the socio-demographic and employment characteristics of Estonian people who have worked in a neighbouring country – Finland, Sweden, Latvia or Russia. The empirical part of this paper relies on data from CV Keskus – an online employment portal bringing together jobseekers and vacant job posts. The results of our analysis show that different destination regions – the wealthier countries of Finland and Sweden (referred to as East-West mobility) and Latvia and Russia (referred to as East-East mobility) have attracted workers with different personal and job-related characteristics. Ethnicity and higher education are important determinants in explaining differences between East-West and East-East labour flows. Non-Estonians and people with a higher education have been less likely to work in Finland or Sweden.
    Keywords: geographic labour mobility, neighbouring countries, cross-country labour flows, Estonia
    JEL: J61 O57 R23 P52
    Date: 2013
  42. By: Doran, Justin; O'Leary, Eoin
    Abstract: This paper provides an empirical test of Cohen and Levinthal’s (1990) hypothesis that undertaking R&D and collaborating with external networks together enhance the probability that firms engage in product and process innovation. Following Doran, Jordan and O’Leary (2013) we test this hypothesis separately for Irish and foreign-owned firms based in Ireland using data from the Irish Community Innovation Survey 2006-08. In order to control for potential endogeneity of the external networking variables a two-step procedure is used with predicted probabilities used as instruments in the estimated production functions. The results suggest that Irish-owned firms which engage in external networks with public knowledge sources while simultaneously undertaking R&D are more likely to innovate than firms which perform these two activities individually. However, Irish-owned firms which engage in backward networking for product and forward networking for process innovation while also undertaking R&D are less likely to be innovative, perhaps suggesting a substitution effect. These results for Irish-owned firms provide some support for Cohen and Levinthal’s (1990) hypothesis. However, foreign-owned firms seems to be largely self-contained, relying exclusively on intramural R&D for innovation as the external networking variables, both individually and when interacted with R&D, have no effect on innovation likelihood.
    Keywords: Innovation, R&D, External Networking
    JEL: O3 O31 O32
    Date: 2013–04–30
  43. By: Thomas Goda (Universidad EAFIT)
    Abstract: An increasing number of economists argue that income inequality was a root cause behind the subprime crisis of 2007. The aim of this paper is to outline and contrast the theoretical underpinnings of Marxian, Post Keynesian and mainstream crisis theories and to compare their viewpoints regarding the role that inequality plays. The main finding of this paper is that despite important theoretical differences, economists from all three strands provide a similar explanation for the link between inequality and the subprime crisis (even though conventional mainstream crisis theories do not regard inequality as destabilizing factor). This suggests that the rise in income inequality indeed played an important role in the build-up of the crisis. To ensure that a wider audience accepts inequality as a prominent causal factor for the crisis it is however necessary that the negative effects of wealth concentration are also taken into account.
    Keywords: income inequality, crisis theories, subprime crisis
    JEL: B0 D3 E25 G01
    Date: 2013–05
  44. By: Manolis Galenianos (Pennsylvania State University)
    Abstract: This paper theoretically examines the firm's choice to use different search channels in order to hire new workers. An equilibrium model is developed where the quality of a match is uncertain and firms search for workers through the market and through referrals. The intensity of use of each search channel is endogenized through the choice of channel-specific search effort. When referrals generate more accurate signals regarding match quality, the model predicts that referred workers have higher starting wages, higher productivity and lower separation rates than non-referred candidates and that these differentials decrease over time due to selection, which is consistent with the data. The model is extended by introducing productivity heterogeneity in firms and allowing the endogenous determination of signal quality. It is shown that high productivity firms choose greater accuracy of signals which diminishes the referral-market differential and leads to lower referral intensity, consistent with the data. This type of selection on the firm side explains why regressions that do not include firm fixed effects find a negative effect of referrals on wages in contrast to firm-level and other evidence.
    Date: 2012
  45. By: Jozef Konings; Luca Marcolin
    Abstract: Unemployment rates are significantly different across regions in Belgium. In the search for an explanation for this fact, we simultaneously estimate a wage and labor productivity equations where we include regional dummies as explanatory variables. We find that the wage-productivity gap reached 11% for Brussels and 4.2% for Wallonia in the years 2005-2012. This was driven by the negative performance in labor productivity of the firms in these regions relative to Flanders, which more than compensated for the advantage in unit labor costs they could profit from. On the other hand, the gap for Brussels is found to be currently decreasing in time thanks to a positive growth rate in labor productivity. The sign and magnitude of the wage-productivity gap is robust to the estimation of the relationship using hours worked instead of employees, and including benefits to salaries into the cost of labor. These results are coherent with the existence at the regional level of institutional barriers to the firm-level adjustment of wages to labor productivity. Among the possible explanations for this, our estimations suggest that a reduction in the gap between labor costs and productivity may be achieved through greater wage flexibility at the regional level.
    Date: 2013
  46. By: Monica Beuran; Marie Castaing Gachassin (Centre d'Economie de la Sorbonne); Gaël Raballand (The World Bank)
    Abstract: As planned large investments in road infrastructure continue to be high on the agenda of many African countries, only few of these countries have actually ammended their investments strategy. In many cases, there seems to be a preference for a status quo that can easily be explained by political economy factors driving the policies in the sector. This paper first presents data on the state of roads in Sub-Saharan Africa (length, density, condition) as well as on investments in the sector over the last decades. It then demonstrates how most countries' strategies are based on some misperceptions and recommends some changes to improve the developmental impact of roads investments. Better prioritization of investments, better procurement and contract management, better projects implementation and better monitoring are still needed, in spite of the efforts observed in the last 10 years.
    Keywords: Transport, roads, Sub-Saharan Africa, strategy, infrastructure, procurement.
    JEL: H41 O18 O55 R42
    Date: 2013–05

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