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

  1. Spatial sorting By Jan Eeckhout; Roberto Pinheiro; Kurt Schmidheiny
  2. Impacts of the Great East Japan Earthquake on Regional Potentials and Labor Distribution in Miyagi Prefecture (Japanese) By IHARA Ryusuke; NAKAMURA Ryohei; MORITA Manabu
  3. A New Zealand Urban Population Database By Grimes, Arthur; Tarrant, Nicholas
  4. House prices, home equity and entrepreneurships By Corradin, Stefano; Popov, Alexander
  5. Good Firms, Worker Flows and Productivity By Serafinelli, Michel
  6. Spatial Aspects of Firm-level Carbon Dioxide Emissions in Japan (Japanese) By OKUBO Toshihiro; Robert J.R. ELLIOTT; Matthew A. COLE; Ying ZHOU
  7. Showing off to the new neighbors? Income, socioeconomic status and consumption patterns of internal migrants By Alexander M. Danzer; Barbara Dietz; Kseniia Gatskova; Achim Schmillen
  8. Early Childhood Education for Children with Autism: How Teacher and Classroom Characteristics Influence Student Learning By O'Donnell, Rebecca May Neal
  9. Neighbourhood Effects in Consumption: Evidence from Disaggregated Consumption Data By Teodora Boneva
  10. Institutions and the Location Decisions of Highly Skilled Migrants to Europe By Nowotny, Klaus
  11. A Solar-Home Rental Business Model: Capturing Synergies from Solar Energy and Single Family Rental Properties By Lutey, Robert
  12. What is Economic Corridor Development and What Can It Achieve in Asia’s Subregions? By Brunner, Hans-Peter
  13. Determinants of banking system fragility: a regional perspective By Degryse, Hans; Elahi, Muhammad Ather; Penas, María Fabiana
  14. Microfinance and Moneylenders: Long-run Effects of MFIs on Informal Credit Market in Bangladesh By Berg, Claudia; Emran, M. Shahe; Shilpi, Forhad
  15. Drivers of firm-level productivity in Russia's manufacturing sector By Bogetic, Zeljko; Olusi, Olasupo
  16. Does State Antitrust Enforcement Drive Establishment Exit? By Robert M. Feinberg; Thomas A. Husted; Florian Szucs
  17. Cellulosic Biofuel Supply with Heterogeneous Biomass Suppliers: An Application to Switchgrass-based Ethanol By Rosburg, Alicia; Miranowski, John; Jacobs, Keri
  18. Wealth effects and the consumption of Italian households in the Great Recession By Renata Bottazzi; Serena Trucchi; Matthew Wakefield
  19. Improving Immigrant Selection: Further Changes Are Required Before Increasing Inflows By Christopher Worswick
  20. Real estate prices in Japan and Lewis turning point By Tabata, Katsushi; Kawaguchi, Yuichiro
  21. Migration and Dynamics: How a Leakage of Human Capital Lubricates the Engine of Economic Growth By Sorger, Gerhard; Stark, Oded; Wang, Yong

  1. By: Jan Eeckhout (Institute for Fiscal Studies); Roberto Pinheiro; Kurt Schmidheiny
    Abstract: We investigate the role of complementarities in production and skill mobility across cities. We propose a general equilibrium model of location choice by heterogeneously skilled workers, and consider different degrees of complementarities between the skills of workers. The nature of the complementarities determines the equilibrium skill distribution across cities. We prove that with extreme-skill complementarity, the skill distribution has fatter tails in large cities; with top-skill complementarity, there is first-order stochastic dominance. Using the model to back out skills from wage and housing price data, we find robust evidence of fat tails in large cities. Big cities have big inequality. This pattern of spatial sorting is consistent with extreme-skill complementarity: the productivity of high skilled workers and of the providers of low skilled services is mutually enhanced.
    Keywords: complementarity, cities, sorting, price-theoretic measure of skills, population mobility, city size, matching theory, general equilibrium, skill distribution
    Date: 2013–08
  2. By: IHARA Ryusuke; NAKAMURA Ryohei; MORITA Manabu
    Abstract: Using a multi-regional new economic geography (NEG) model developed by Ihara, Nakamura and Morita (2012), we investigate the impacts of the Great East Japan Earthquake on regional potentials and labor distribution in Miyagi prefecture. There are 35 cities, and industries are classified into two sectors: agricultural and manufacturing and services. This paper takes a simulation approach, and we first calibrate the main parameters (i.e. the elasticity of substitution and transportation cost levels) and derive the regional potentials. Then we predict the transition of regional potentials and labor distribution caused by the earthquake. Consequently, we show that (i) the Great East Japan Earthquake decreased regional potentials by 10% on average and 20% in the coastal areas; (ii) while the labor population in most of the disaster-stricken cities decreased, that in the city of Sendai increased because of the centricity; (iii) as the recovery progresses, labor moves from inland cities to coastal cities.
    Date: 2013–07
  3. By: Grimes, Arthur (Motu Economic and Public Policy Research); Tarrant, Nicholas (GT Research and Consulting)
    Abstract: This paper documents a comprehensive database for the populations of 60 New Zealand towns and cities (henceforth “towns”). Populations are provided for every tenth year from 1926 through to 2006. New Zealand towns have experienced very different growth rates over this period. Economic geography theories posit that people migrate to (and from) places according to a few key factors. In order to analyse the determinants of urban growth empirically, we need a comprehensive database of urban populations over time, as provided here.
    Keywords: New Zealand population, urban growth
    JEL: R23
    Date: 2013–08
  4. By: Corradin, Stefano; Popov, Alexander
    Abstract: How does home ownership affect new business creation? We develop a model of career choice in the presence of liquidity constraints in which shocks to the value of real estate affect the propensity of potential entrepreneurs to borrow against the value of their property. Using a large US individual-level survey dataset over the 1996-2006 period, we show that a 10% increase in home equity raises the probability of transition into entrepreneurship by up to 14%. Our results persist when we use the topological elasticity of housing supply to generate variation in home equity that is orthogonal to entrepreneurial choice. JEL Classification: G21, L26
    Keywords: collateral channel, entrepreneurship, Home ownership
    Date: 2013–05
  5. By: Serafinelli, Michel
    Abstract: I present direct evidence on the role of firm-to-firm labor mobility in enhancing the productivity of firms located near highly productive firms. Using matched employer-employee and balance sheet data for the Veneto region of Italy, I identify a set of high-wage firms (HWF) and show they are more productive than other firms. I then show that hiring a worker with HWF experience increases the productivity of other (non-HWF) firms. A simulation indicates that worker flows explain 10-15 percent of the productivity gains experienced by other firms when HWFs in the same industry are added to a local labor market.
    Keywords: productivity, agglomeration advantages, linked employer-employee data, labor mobility.
    JEL: J24 J31 J61 R2 R23
    Date: 2013–06–09
  6. By: OKUBO Toshihiro; Robert J.R. ELLIOTT; Matthew A. COLE; Ying ZHOU
    Abstract: In this paper, we examine the spatial distribution of Japanese pollution-intensive firms. Employing spatial econometric techniques, our results show that firm-level carbon dioxide emissions are spatially correlated and spatial correlations with our dependent variable are perhaps due to demonstration or imitation effects. We also find evidence of feedback effects where the emissions of firms affect those of other firms located nearby.
    Date: 2013–08
  7. By: Alexander M. Danzer (Ludwig-Maximilians-Universität München); Barbara Dietz; Kseniia Gatskova; Achim Schmillen
    Abstract: This paper analyses incomes and socioeconomic status of internal migrants over time and in comparison to their new neighbors and investigates whether status consumption is a way for newly arrived city dwellers to signal their social standing. Using a novel dataset from the emerging economy of Kazakhstan we find that internal migrants earn an income and status premium for their move. In a comparison to indigenous city dwellers their earnings and household incomes are not significantly different; however, mobile households report a significantly higher subjective socio-economic status. Exploiting expenditure data, we find that recent migrant households gain status from using visible consumption to impress their new neighbors. This signaling might be used as adaptation to the new economic and social environment or to gain access to social capital.
    Keywords: Absolute and relative welfare, income, status consumption, conspicuous consumption, signaling model, adaptation, internal migration, rural-urban migration, emerging economy, Kazakhstan, socioeconomic status
    JEL: P36 I31 R2
    Date: 2013–07
  8. By: O'Donnell, Rebecca May Neal
    Abstract: This paper estimates the relationship between changes in academic performance for pre-school age children with Autism Spectrum Disorder and teacher education and classroom staffing using data from the Pre-Elementary Education Longitudinal Study (PEELS). Strong positive relationships between changes in children’s standard scores on selected standardized math and reading tests are found when their teachers have bachelor’s or master’s degrees in special education, or bachelor’s degrees in general education. There is also evidence of relationships between classroom structure and change in student standard scores on standardized reading and math tests for children with ASD.
    Keywords: Public Economics,
    Date: 2013–07
  9. By: Teodora Boneva
    Abstract: This paper identifies neighbourhood effects in consumption using the randomized nature of the Progresa programme. Recent studies establish that the programme affects the consumption of both eligible and neighbouring ineligible households but the underlying mechanism of the spillovers is not fully understood. I use disaggregated consumption data to distinguish between changes in consumption which result from changes in neighbourhood consumption and changes in consumption which are a result of income transfers between households. Using a flexible demand model that accounts for total expenditure, prices and household characteristics, I find that neighbourhood consumption has a substantial effect on household consumption choices
    Keywords: Social interactions, consumption, field experiments, Progresa
    JEL: D12 H23 I38 O12
    Date: 2013–08–15
  10. By: Nowotny, Klaus (University of Salzburg)
    Abstract: The economic literature provides ample evidence that immigration of highly skilled workers is beneficial for the host economy. Yet, when compared to countries such as the USA or Canada, Europe receives a lower share of migrants with tertiary education, raising concerns that the EU does not attract enough highly skilled migrants. There is, however, considerable heterogeneity in the share of highly-skilled migrants across EU-15 countries which is even more pronounced at the regional level. This paper uses this heterogeneity to investigate the economic, labor market and institutional factors that make regions and countries attractive for highly skilled migrants vis-a-vis low-skill migrants. Controlling for a variety of regional characteristics, the regressions show both similarities and differences in the determinants of location choice between high- and low-skilled migrants and possible directions for migration policy.
    Keywords: highly-skilled migration; regional location decisions; institutions; migration policy
    JEL: C35 F22 R23
    Date: 2013–08–09
  11. By: Lutey, Robert
    Abstract: Abstract. The credit market collapse and housing-led economic recession beginning in 2007-2008 have resulted in several million distressed homes in the U.S. that are in various stages of delinquency, default, and foreclosure. Over the past three to four years, a number of private equity investment pools have been buying large blocks of distressed residential properties at auction, in short sales, and otherwise, with the intention of renovating and renting them at attractive yields, and ultimately, profiting from their sale as prices rebound from recessionary levels. In the process, they are institutionalizing single family rental property management on an unprecedented state and regional scale. Market demographics and persistently tight credit conditions portend several years of sustained growth in both the demand for rentals and rental rates. Simultaneously, the installed cost of solar photovoltaic (PV) systems has declined over 50% in just the last three years. Among the major catalysts of the decline have been a glut of manufacturing capacity that was built in response to pre-recession demand; federal and state financial incentives including tax credits, rebates, and performance-based payments; and gradual gains from competition and efficiencies in balance-of-system costs. Together, these two trends offer the prospect of an integrated “solar-rental” investment strategy that will produce compelling returns while significantly boosting residential solar energy use. This paper encompasses three objectives: (1) to establish a framework for a solar-home rental business model in which rental incomes are enhanced via the sale of rooftop-generated solar electricity to the tenants of single-family properties; (2) to address several of the major operational elements of such a business, including installation and maintenance of the solar energy system, tenant billing, and management of the solar operation; and (3) to model the economics of the individual solar and rental operations, and the combined enterprise, in a number of markets, in order to identify those where the solar-rental strategy would produce attractive returns relative to the rental-only approach. Thirteen cases in twelve state markets were evaluated for their solar-home rental economics. All the markets have experienced high rates of distressed single family properties since the recession and they account for the majority of institutional “REO-to-rental” purchases. Of the case studies, five produced after-tax returns exceeding 7.50%, matching or exceeding standalone rental yields by up to 0.19%, and over 0.40% under an expected scenario of further cost declines. As a group, these markets are characterized by high marginal electricity rates, moderate to high solar insolation, and modest to significant upfront or performance-based incentives. It is estimated that the top institutional buyers have accumulated 40,000-50,000 distressed properties since 2009 and that they are expected to purchase upwards of 100,000 additional homes over the next two years. In comparison, the national single family rental market is estimated at 16 million homes, 2 million of which were added since 2006, while the number of U.S. residences with solar panels stood at approximately 300,000 as of the end of 2012. If half of the expected portfolio of institutional single family rentals was to be solarized, it would result in a 25% increase in the stock of residential solar installations, via the “leveraging” of actions by perhaps a dozen property buyers. As solar panel prices and, especially, balance-of-system installation costs continue to decline in the face of rising electricity rates, solar energy-rentals should prove an attractive proposition to residential rental property investors and a big assist to the country’s renewable energy usage.
    Keywords: Distressed; foreclosure; single family; single family rental; residential; real estate; rental; REO-to-rental; REIT; private equity; solar; solar energy; PV; photovoltaic; solar REIT; solar electricity; renewable energy; tax equity; Renewable Portfolio Standards; SREC; Solar Renewable Energy Credit; solar home rental
    JEL: G2 G20 G23 G29 Q4 Q42 R3 R30 R39
    Date: 2013–08–08
  12. By: Brunner, Hans-Peter (Asian Development Bank)
    Abstract: Economic corridors connect economic agents along a defined geography. They provide important connections between economic nodes or hubs that are usually centered in urban landscapes. They do not stand alone, as their role in regional economic development can be comprehended only in terms of the network effects that they induce. As the case studies in this paper show, there is no standard picture of what economic corridor development is and what it can achieve. What economic corridors can achieve for regional economic integration depends first on what characteristics the specific existing economic networks in which the economic corridors are embedded personify, and second on which characteristics corridor development are intended to introduce or strengthen. Corridor characteristics interact dynamically to create patterns of regional economic development. Models that make this interaction explicit have combined elements of the New Economic Geography (nonlinear and General Equilibrium elements). The Asian Development Bank (ADB) has a significant stake in the successful application of corridor development approaches with an annual investment of $2 billion or more in regional cooperation and integration.
    Keywords: Economic corridors; development; regional economic integration; agents; nonlinear dynamics
    JEL: F15 O18 R12 R58
    Date: 2013–07–01
  13. By: Degryse, Hans; Elahi, Muhammad Ather; Penas, María Fabiana
    Abstract: We study the role of regional banking system characteristics for regional banking system fragility in Asia, Europe, Latin America and the US. We find that regional banking system fragility reduces when banks in the region jointly hold more liquid assets, are better capitalized, and when regional banking systems are more competitive. For Asia and Latin-America, a greater presence of foreign banks and more wholesale funded banks also reduces regional banking fragility. In contrast, regional banking fragility increases in foreign bank presence and wholesale funding in the US. We further investigate the possibility of contagion across regions. We find that the contagion effects of Europe and the US on Asia and Latin America are significantly higher compared to the effect of Asia and Latin America among themselves. Finally, the impact of cross-regional contagion is attenuated when the host region has a more liquid and more capitalized banking sector. JEL Classification: G15, G20, G29
    Keywords: Banking system stability, cross-regional contagion, financial integration
    Date: 2013–07
  14. By: Berg, Claudia; Emran, M. Shahe; Shilpi, Forhad
    Abstract: Using two surveys from Bangladesh, this paper provides evidence on the effects of microfinance competition on village moneylender interest rates and households’ dependence on informal credit. The views among practitioners diverge sharply: proponents claim that MFI competition reduces both the moneylender interest rate and households’ reliance on informal credit, while the critics argue the opposite. Taking advantage of recent econometric approaches that address selection on unobservables without imposing the standard exclusion restrictions, we find that the MFI competition does not reduce moneylender interest rates, thus partially repudiating the proponents. The effects are heterogeneous; there is no perceptible effect at low levels of MFI coverage, but when MFI coverage is high enough, the moneylender interest rate increases significantly. In contrast, households’ dependence on informal credit tends to go down after becoming MFI member, which contradicts part of the critic’s argument. The evidence is consistent with a model where MFIs draw away better borrowers from the moneylender, and fixed costs are important in informal lending.
    Keywords: Microfinance, Moneylenders, Microcredit, Interest Rates, Informal Borrowing, Long-run Effects, Bangladesh, Identification through Heteroskedasticity
    JEL: C31 O12 O17
    Date: 2013–08–01
  15. By: Bogetic, Zeljko; Olusi, Olasupo
    Abstract: This note presents the results of an empirical analysis of firm-level productivity growth in Russia's manufacturing sector during the period 2003-08 using a rich Amadeus database as well as the recent EBRD/World Bank Business Enterprise and Performance surveys (BEEPs). The results show that productivity grew steadily between 2003 and 2008, with an annual growth rate averaging 4 percent over the period, showing no signs of a slowdown from the previous period after the 1998 crisis. Firm characteristics such as size, location, age, and the structure of firm ownership are important determinants of productivity, as evidenced by positive effects of scale economies (large firm effect), agglomeration (Moscow-city effect), private ownership, and a firm's industry dominance. Supplemental analysis of the quality of infrastructure -- water, electricity, transport, and the internet -- using BEEPS data show that infrastructure quality gaps reduce firm productivity with water supply gaps having the largest impact.
    Keywords: Transport Economics Policy&Planning,E-Business,Economic Theory&Research,Microfinance,Municipal Financial Management
    Date: 2013–08–01
  16. By: Robert M. Feinberg; Thomas A. Husted; Florian Szucs
    Abstract: Previous work has shown that state-level antitrust enforcement activity may have impacts on entry and relocation behavior by U.S. firms. Significant state-level antitrust activity may be an indicator of a perceived adverse business environment and it is found to deter establishment entry, particularly for larger firms in the retail and wholesale sectors. An obvious question is whether establishment exit is affected in a symmetric way, or whether sunk costs of market entry may lead to a smaller impact in terms of the exit decisions. We first combine US Census establishment exit panel data with data for 1998-2006 on US state-level antitrust activity and other measures of state-level business activities that may affect establishment exit. We also consider establishment exit across different broad industry types -- manufacturing, retail and wholesale -- and several firm size categories. Local business cycle factors seem to be the primary driver of exit, though there is some evidence of political and antitrust determinants as well. In another approach, we examine firm-level exit decisions and the extent to which these respond to state antitrust enforcement, with some indication of antitrust enforcement effects here as well, especially in the wholesale and retail sectors. JEL classification:
    Date: 2013
  17. By: Rosburg, Alicia; Miranowski, John; Jacobs, Keri
    Abstract: The potential of biomass for alternative energy production has attracted considerable attention because of associated implications for energy security, food supply, and climate change. This paper considers the economic impacts of spatial variation and landowner behavior on potential biomass supply for U.S. cellulosic biofuel. We develop and apply a long-run biomass production through bioenergy conversion cost model that incorporates heterogeneity of biomass suppliers within and between local markets. An application to U.S. switchgrass-based cellulosic ethanol production suggests cost-minimizing biofuel production decisions, which include biorefinery size, biomass transportation distance, and price of biomass, vary significantly across locations. An aggregate switchgrass ethanol supply curve developed from local biofuel supply estimates is used to evaluate the potential for and cost of achieving cellulosic biofuel production targets such as the revised Renewable Fuels Standard. Empirical results suggest spatial variation in biomass production conditions plays an important role in the potential supply and distribution of U.S. cellulosic biofuel production. 
    Keywords: biofuel; biomass; cellulosic ethanol; RFS2; switchgrass
    JEL: Q11 Q16 Q41 Q42 Q48
    Date: 2013–08–13
  18. By: Renata Bottazzi (Institute for Fiscal Studies and University of Bologna); Serena Trucchi; Matthew Wakefield (Institute for Fiscal Studies and University of Bologna)
    Abstract: We estimate marginal propensities to consume from wealth shocks for Italian households. Large asset price shocks in 2008 underpin an IV estimator. A euro fall in financial or risky financial wealth resulted in cuts in annual total (non-durable) consumption of 5-9 (3.5-6) cents. There is evidence of effects for food spending. Responses of total and non-durable spending to changes in housing wealth are 0.2 to 0.4 cents/euro. Counterfactuals indicate financial wealth effects were important (relative to other factors) for consumption falls in 2008/09. Thus wealth effects on consumption can be important for households' welfare and aggregate outcomes.
    Keywords: wealth effects, household consumption, 2008 crisis
    JEL: D12 D91 G01
    Date: 2013–08
  19. By: Christopher Worswick (Carleton University)
    Abstract: Before increasing new immigrant intake targets, Canada should focus on improving immigrants’ labour market outcomes through reforms to the selection process, according to a report released today by the C.D. Howe Institute. In “Improving Immigrant Selection: Further Changes Are Required Before Increasing Inflows,” author Christopher Worswick cites recent evidence of poor outcomes for recent immigrants that raise a caution flag for higher annual targets.
    Keywords: Social Policy
    JEL: J15 J61 J68
  20. By: Tabata, Katsushi; Kawaguchi, Yuichiro
    Abstract: This paper has done a model analysis from a long-term perspective about Real estate prices in Japan. In particular, we consider a Lewis turning point with the rise of land prices over time. It is analyzed by state space methods. Using the model, we examined how the real estate transactions were affected by the population growth and the technological progress. Furthermore, we have compared two types of models which consider banking sector and no banking transactions. In particular, population decline in Japan would have a significant impact to the long term recession since 1990. We are skeptical about the population declining effect using our model. A Summary of our model estimation is as follows. (1) The Lewis turning point with both technological progress and population growth is confirmed. Japan has passed the Lewis turning point in the second half of '70. (2) Since then, banks played an important role in the formation of real estate prices. (3) A trend that has lowered the price of real estate with declining population cannot be confirmed clearly. (4) In the bubble period, real estate price exceeds the reality of the macro economy due to the bank loan behavior. The Japanese experience of the rise in land prices is very interesting in considering the future of the Asian countries. Asian countries have made remarkable economic development. However, these benefits of growth would be absorbed by the increase in asset prices and real estate investment. This is very similar to the past experience of Japan.
    Keywords: Real Estate, Financial Accelerator, Population, Lewis Turning Point
    JEL: E37 J11 O10
    Date: 2013–08–10
  21. By: Sorger, Gerhard; Stark, Oded; Wang, Yong
    Abstract: This paper studies the growth dynamics of a developing country under migration. Assuming that human capital formation is subject to a strong enough, positive intertemporal externality, the prospect of migration will increase growth in the home country in the long run. If the external effect is less strong, there exists at least a level effect on the stock of human capital in the home country. In either case, the home country experiences a welfare gain, provided that migration is sufficiently restrictive. These results, obtained in a dynamic general equilibrium setting, extend and strengthen the results of Stark and Wang (2002) obtained in the context of a static model.
    Keywords: Overlapping-generations growth model, Intertemporal human capital externalities, Long-run growth effect of the prospect of migration, Social welfare gains, Community/Rural/Urban Development, Institutional and Behavioral Economics, Labor and Human Capital, F22, I30, J24, J61, O15, O40,
    Date: 2013–07

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