nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2013‒09‒24
34 papers chosen by
Steve Ross
University of Connecticut

  1. Competitors, Complementors, Parents and Places: Explaining Regional Agglomeration in the U.S. Auto Industry By Cabral, Luís M B; Wang, Zhu; Xu, Yi (Daniel)
  2. Agglomeration Economies in Classical Music By Borowiecki, Karol J.
  3. Housing and Tax Policy By Sami Alpanda; Sarah Zubairy
  4. The Spatial Development of India By Desmet, Klaus; Ghani, Ejaz; O'Connell, Stephen D; Rossi-Hansberg, Esteban
  5. Will Sooner Be Better? The Impact of Early Preschool Enrollment on Cognitive and Noncognitive Achievement of Children By Filatriau, Olivier; Fougère, Denis; Tô, Maxime
  6. Do Students Perform Better in Schools with Orderly Classrooms? By OECD
  7. National Institutions and Subnational Development in Africa By Michalopoulos, Stelios; Papaioannou, Elias
  8. Development Class-size Reduction Policies and the Quality of Entering Teachers. By Steven Dieterle (University of Edinburgh)
  9. Global House Price Fluctuations: Synchronization and Determinants By Hideaki Hirata; M. Ayhan Kose; Christopher Otrok; Marco Terrones
  10. Economic geography, endogenous fertility, and agglomeration By Tadashi Morita; Kazuhiro Yamamoto
  11. New Firm Formation and the properties of local knowledge bases: Evidence from Italian NUTS 3 regions By Alessandra Colombelli; Francesco Quatraro
  12. The Economic Gains to Colorado of Amendment 66 By Strauss, Jack
  13. School Management in Developing Countries By Sebastian Galiani; Ricardo Perez-Truglia
  14. School Accountability, Postsecondary Attainment and Earnings By David J. Deming; Sarah Cohodes; Jennifer Jennings; Christopher Jencks
  15. An Anatomy of the Geographical Concentration of Canadian Manufacturing Industries By Kristian Behrens; Théophile Bougna
  16. Modelling long term trend and local spatial correlation: a mixed penalized spline and spatial econometrics approach By Román Mínguez; María Durbán; José María Montero; Dae-Jin Lee
  17. Adjustment Costs and Long Run Spatial Agglomerations By William Brock; Anastasios Xepapadeas; Athanasios Yannacopoulos
  18. The organizational and regional determinants of inter-regional collaborations – Academic inventors as bridging agents By Friedrich Dornbusch; Sidonia von Proff; Thomas Brenner
  19. How much do children learn in school? International evidence from school entry rules By Sander Gerritsen; Dinand Webbink
  20. A link based network route choice model with unrestricted choice set By Fosgerau, Mogens; Frejinger, Emma; Karlström, Anders
  21. Estimating flexible route choice models using sparse data By Fadaei Oshyani, Masoud; Sundberg, Marcus; Karlström, Anders
  22. The Competitiveness of Global Port-Cities: Synthesis Report By Olaf Merk
  23. The Driving Force behind the Boom and Bust in Construction in Europe By Yan Sun; Pritha Mitra; Alejandro Simone
  24. U.S. High-Skilled Immigration, Innovation, and Entrepreneurship: Empirical Approaches and Evidence By William R. Kerr
  25. Parental Leave and Children’s Schooling Outcomes: Quasi-Experimental Evidence from a Large Parental Leave Reform By Natalia Danzer; Victor Lavy
  26. Educational Inequality and the Returns to Skills By Lundberg, Shelly
  27. Housing in Retirement Across Countries By Makoto Nakajima; Irina A. Telyukova
  28. How to share the cost of a public good? By CHAMPSAUR, Paul
  29. Asset Price Bubbles: A Selective Survey By Anna Scherbina
  30. Do 'Broken Windows' Matter? Identifying Dynamic Spillovers in Criminal Behavior By Gregorio Caetano; Vikram Maheshri
  31. Logistic Regression for Extremely Rare Events: The Case of School Shootings By Christian Westphal
  32. Physician Beliefs and Patient Preferences: A New Look at Regional Variation in Health Care Spending By David Cutler; Jonathan Skinner; Ariel Dora Stern; David Wennberg
  33. Migration and Tax Competition Within a Union By Razin, Assaf; Sadka, Efraim
  34. Heterogeneous Tastes and Incomplete Stratification in Sorting Models: What do Surveys Tell Us? By Jacob Fishman; V. Kerry Smith

  1. By: Cabral, Luís M B; Wang, Zhu; Xu, Yi (Daniel)
    Abstract: Taking the early U.S. automobile industry as an example, we evaluate four competing hypotheses on regional industry agglomeration: intra-industry local externalities, inter-industry local externalities, employee spinouts, and location fixed-effects. Our findings suggest that inter-industry spillovers, particularly the development of the carriage and wagon industry, play an important role. Spinouts play a secondary role and only contribute to agglomeration at later stages of industry evolution. The presence of other firms in the same industry has a negligible (or maybe even negative) effect on agglomeration. Finally, location fixed-effects account for some agglomeration, though to a lesser extent than inter-industry spillovers and spinouts.
    Keywords: Employee spinouts; Industry agglomeration; Local externalities
    JEL: J6 L0 R1
    Date: 2013–04
  2. By: Borowiecki, Karol J. (Department of Business and Economics)
    Abstract: This study investigates agglomeration effects for classical music production in a wide range of cities for a global sample of composers born between 1750 and 1899. Theory suggests a trade-off between agglomeration economies (peer effects) and diseconomies (peer crowding). I test this hypothesis using historical data on composers and employ a unique instrumental variable – a measure of birth centrality, calculated as the average distance between a composer’s birthplace and the birthplace of his peers. I find a strong causal impact of peer group size on the number of important compositions written in a given year. Consistent with theory, the productivity gain eventually decreases and is characterized by an inverted U-shaped relationship. These results are robust to a large series of tests, including checks for quality of peers, city characteristics, various measures of composers’ productivity, and across different estimations in which also time-varying birth centrality measures are used as instrumental variables.
    Keywords: Agglomeration economies; density effects; peer effects; productivity; urban history; cities; composer
    JEL: D24 J24 N90 R12 Z11
    Date: 2013–09–16
  3. By: Sami Alpanda; Sarah Zubairy
    Abstract: In this paper, we investigate the effects of housing-related tax policy measures on macroeconomic aggregates using a dynamic general-equilibrium model. The model features borrowing and lending across heterogeneous households, financial frictions in the form of collateral constraints tied to house prices, and a rental housing market alongside owner-occupied housing. Using our model, we analyze the effects of changes in housing-related tax policy measures on the level of output, tax revenue and household debt, along with other macroeconomic aggregates. The tax policies we consider are (i) increasing property tax rates, (ii) eliminating the mortgage interest deduction, (iii) eliminating the depreciation allowance for rental income, (iv) instituting taxation of imputed rental income from owner-occupied housing and (v) eliminating the property tax deduction. We find that among these fiscal tools, eliminating the mortgage interest deduction would be the most effective in raising tax revenue, and in reducing household debt, per unit of output lost. On the other hand, eliminating the depreciation allowance for rental income would be the least effective. Our experiments also highlight the differential welfare impact of each tax policy on savers, borrowers and renters.
    Keywords: Economic models; Fiscal Policy
    JEL: E62 H24 R38
    Date: 2013
  4. By: Desmet, Klaus; Ghani, Ejaz; O'Connell, Stephen D; Rossi-Hansberg, Esteban
    Abstract: This paper studies the recent spatial development of India. Services, and to a lesser extent manufacturing, are increasingly concentrating in high-density clusters. This stands in contrast with the United States, where in the last decades services have tended to grow fastest in medium-density locations, such as Silicon Valley. India's experience is not common to all fast-growing developing economies. The spatial growth pattern of China looks more similar to that in the U.S. than to that of India. Our findings suggest that certain frictions are keeping medium-density places in India from growing faster.
    Keywords: economic geography; India; services; spatial development; spatial distribution of economic activity
    JEL: O1 O18 O53 R11 R12
    Date: 2013–04
  5. By: Filatriau, Olivier; Fougère, Denis; Tô, Maxime
    Abstract: In this paper we measure the effect of entering preelementary school at age 2 rather than 3 in France. Our identification strategy relies on ratios between the number of young children and the capacity of preelementary schools observed at the very local level. This information allows us to solve the endogeneity issue due to the potential correlation between unobserved determinants of early enrollment decision and children achievement. We measure this effect on schooling achievement in primary and lower secondary schools. We show that early enrollment in preelementary school improves cognitive and noncognitive skills at age six, and both literacy and numeracy from the third to the ninth grades.
    Keywords: cognitive and noncognitive skills; human capital; preschool; schooling decision
    JEL: I21 J13
    Date: 2013–05
  6. By: OECD
    Abstract: Most students enjoy orderly classrooms for their language-of-instruction lessons. Socio-economically disadvantaged students are less likely to enjoy orderly classrooms than advantaged students. Orderly classrooms – regardless of the school’s overall socio-economic profile – are related to better performance.
    Date: 2013–09
  7. By: Michalopoulos, Stelios (Brown University and NBER); Papaioannou, Elias (London Business School, NBER and CEPR)
    Abstract: We investigate the role of national institutions on subnational African development in a novel framework that accounts both for local geography and cultural-genetic traits. We exploit the fact that the political boundaries in the eve of African independence partitioned more than two hundred ethnic groups across adjacent countries subjecting similar cultures, residing in homogeneous geographic areas, to different formal institutions. Using both a matching-type and a spatial regression discontinuity approach we show that differences in countrywide institutional structures across the national border do not explain within-ethnicity differences in economic performance, as captured by satellite images of light density. The average non-effect of national institutions on ethnic development masks considerable heterogeneity partially driven by the diminishing role of national institutions in areas further from the capital cities.
    Keywords: Africa, Borders, Ethnicities, Development, National Institutions, Regression Discontinuity
    Date: 2013
  8. By: Steven Dieterle (University of Edinburgh)
    Abstract: State-wide class-size reduction (CSR) policies have typically failed to produce large achievement gains. One explanation is that the introduction of such policies forces schools to hire relatively low-quality teachers. This paper uses data from an anonymous state to explore whether teacher quality suffered from the introduction of CSR. We find that it did, but not nearly enough to explain the small achievement effects of CSR. The combined fall in achievement due to hiring lower quality teachers and more inexperienced teachers is small relative to the unrealized gains. Furthermore, between-school differences in the quality of incoming teachers cannot explain the poor estimated CSR performance from previous quasi-experimental treatment-control comparisons.
    Date: 2013–09–17
  9. By: Hideaki Hirata; M. Ayhan Kose; Christopher Otrok; Marco Terrones
    Abstract: We examine the properties of house price fluctuations across 18 advanced economies over the past 40 years. We ask two specific questions: First, how synchronized are housing cycles across these countries? Second, what are the main shocks driving movements in global house prices? To address these questions, we first estimate the global components in house prices and various macroeconomic and financial variables. We then evaluate the roles played by a variety of global shocks, including shocks to interest rates, monetary policy, productivity, credit, and uncertainty, in explaining house price fluctuations using a wide range of FAVAR models. We find that house prices are synchronized across countries, and the degree of synchronization has increased over time. Global interest rate shocks tend to have a significant negative effect on global house prices whereas global monetary policy shocks per se do not appear to have a sizeable impact. Interestingly, uncertainty shocks seem to be important in explaining fluctuations in global house prices.
    Keywords: Housing prices;Asset prices;Business cycles;Developed countries;Time series;monetary policy; interest rates; business cycles; financial cycles
    Date: 2013–02–06
  10. By: Tadashi Morita (Faculty of Economics, Osaka Gakuin University); Kazuhiro Yamamoto (Graduate School of Economics, Osaka University)
    Abstract: In this paper, we construct an interregional trade model that has en- dogenous fertility rates in the manner of Helpman and Krugman (1985). The presented model shows that fertility rates in a large region become lower than those in a small region because of the agglomeration of man- ufacturing firms in the former. The agglomeration of firms in a region lowers the relative price of manufactured goods to child rearing costs, which raises the fertility rates. We also find that a decline in transportation costs results in the ag- glomeration of manufacturing firms, which lowers fertility rates in both large and small regions. Finally, we extend our two-region model to a multi-region model and find that the number of manufacturing firms in larger regions is always greater than that in smaller regions, meaning that fertility rates in the former are always lower than those in the latter.
    Keywords: agglomeration, fertility rates, transportation costs, consumerism
    JEL: J13 R10
    Date: 2013–09
  11. By: Alessandra Colombelli (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - Université Nice Sophia Antipolis [UNS] - CNRS : UMR6227); Francesco Quatraro (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis [UNS])
    Abstract: This paper investigates the relationship between the creation of new firms and the properties of the local knowledge bases, like coherence, cognitive distance and variety. By combining the literature on the knowledge spillovers of entrepreneurship and that on the recombinant knowledge approach, we posit that locally available knowledge matters to the entrepreneurial process, but the type of knowledge underlying theses dynamics deserve to be analyzed. The analysis is carried out on 104 Italian NUTS 3 regions observed over the time span 1995-2011. The results show that the complementarity degree of local knowledge is important, while increasing similarity yields negative effects. This suggests that the creation of new firms in Italy is associated to the exploitation of well established technological trajectories grounded on competences accumulated over time, although cognitive proximity is likely to engender lock-in effects and hinder such process.
    Keywords: New Firm Formation; Knowledge-Spillovers Theory of Entrepreneurship; Recombinant Knowledge; Knowledge Coherence; Variety; Cognitive Distance; Italy
    Date: 2013–07–20
  12. By: Strauss, Jack
    Abstract: Colorado is considering raising personal income taxes to fund a $950 million initiative. Are the increased benefits from educational attainment worth the revenue costs? This study surveys in-depth the economic literature on the impact of increased educational expenditure on future income, entrepreneurship, health care, housing, crime and business location. It discusses the economic links between educational spending and educational outcomes, and estimates the pecuniary and non-pecuniary impact of the initiative on the state.
    Keywords: Education Economics
    JEL: H52 I20
    Date: 2013–09–18
  13. By: Sebastian Galiani (Washington University in St. Louis); Ricardo Perez-Truglia (Harvard University and Universidad de San Andres)
    Abstract: We review the empirical evaluation of three school-management interventions: school decentralization, tracking and contract teachers. We provide stylized models to organize the discussion of the results. We look at the average and distributional effects of the policies and stress the possible importance of complementary interventions aimed at reducing inequality when the programs are cost-effective but engender greater benefits to the best students. We compare the results across non-experimental, quasi-experimental and experimental studies, and argue, not surprisingly, that a solid identification strategy is critical to getting the policy recommendations right. Finally, we identify some problems that future research should address.
    JEL: H00
    Date: 2013–07
  14. By: David J. Deming; Sarah Cohodes; Jennifer Jennings; Christopher Jencks
    Abstract: We study the impact of accountability pressure in Texas public high schools in the 1990s on postsecondary attainment and earnings, using administrative data from the Texas Schools Project (TSP). We find that high schools respond to the risk of being rated Low-Performing by increasing student achievement on high-stakes exams. Years later, these students are more likely to have attended college and completed a four-year degree, and they have higher earnings at age 25. However, we find no overall impact - and large declines in attainment and earnings for low-scoring students - of pressure to achieve a higher accountability rating.
    JEL: I20 I24
    Date: 2013–09
  15. By: Kristian Behrens; Théophile Bougna
    Abstract: We document the location patterns of Canadian manufacturing industries – as well as changes in those patterns over the first decade of 2000 – using detailed micro-geographic data. Depending on industry definitions and years, 40 to 60 percent of industries are clustered. According to our measures, manufacturing industries become less geographically concentrated in Canada, i.e., localization is decreasing. Yet, some of the most localized industries are becoming even more localized. We also document the locational trends specific to small firms, young firms, and exporters. We find that their location patterns do not differ significantly from that of the other firms in their industries.
    Keywords: Location patterns, manufacturing industries, micro-geographic data, Canada
    JEL: R12 L60
    Date: 2013
  16. By: Román Mínguez; María Durbán; José María Montero; Dae-Jin Lee
    Abstract: In this work we propose the combination of P-splines with traditional spatial econometric models in such a way that it allows for their representation as a mixed model. The advantages of combining these models include: (i) dealing with complex non-linear and non-separable trends, (ii) estimating short-range spatial correlation together with the large-scale spatial trend, (iii) decomposing the systematic spatial variation into those two components and (iv) estimating the smoothing parameters included in the penalized splines together with the other parameters of the model. The performance of the proposed spatial non-parametric models is checked by both simulation and a empirical study. More specifically, we simulate 3,600 datasets generated by those models (with both linear and non-linear-non-separable global spatial trends). As for the empirical case, we use the well-known Lucas county data on housing prices. Our results indicate that the proposed models have a better performance than the traditional spatial strategies, specially in the presence of nonlinear trend
    Keywords: Global spatial trend, Mixed models, P-splines, PS-SAR, PS-SEM
    JEL: C14 C15 C21
    Date: 2013–09
  17. By: William Brock (University of Wisconsin, Department of Economics, University of Missouri, Columbia); Anastasios Xepapadeas (Athens University of Economics and Business Department of International and European Economic Studies); Athanasios Yannacopoulos (Athens University of Economics and Business, Department of Statistics)
    Abstract: We introduce knowledge spillovers as an externality in the production function of competitive firms operating in a finite spatial domain under adjustment costs. Spillovers are spatial as productive knowledge flows more easily among firms located nearby. When knowledge spillovers are not internalized by firms spatial agglomerations may emerge endogenously in a competitive equilibrium, however, they do not emerge at the steady state of the social optimum.
    Keywords: Investment Theory, Adjustment Costs, Spatial Agglomerations
    JEL: D21 R3 C61
    Date: 2013–07
  18. By: Friedrich Dornbusch (Fraunhofer Institute for Systems and Innovation Research ISI, Competence Center Policy and Regions); Sidonia von Proff (Economic geography and Location Research, Philipps-Universität Marburg); Thomas Brenner (Economic geography and Location Research, Philipps-Universität Marburg)
    Abstract: Collaboration over distance is difficult to maintain in innovation projects which require a great deal of regional collaboration. However, patent documents reveal that a number of inventor teams are able to overcome long distances. Earlier literature started to investigate factors, which increase the probability of long-distance innovation co-operation. The paper at hand is restricted to patents with academic participation, but takes a close look at two types of factors in the environment of the inventors: (1) the characteristics of the university that employs the academic inventor(s), and (2) the influence of the regional environment. Research on the impact of these factors is still underdeveloped in the literature. By considering only patents with at least one academic inventor we have a relatively homogeneous subset of patents and can concentrate on the external impacts. We find that a similar research area structure, a high absorptive capacity as well as a high start-up rate foster intra-regional collaboration. More TTO staff and a larger university lead to more long-distance collaboration while the industry orientation of the university does not exert an influence on the distance between inventors.
    Keywords: patents, research collaboration, academic patents, collaboration over distance, Germany
    JEL: O31 R12 L14
    Date: 2013–09–18
  19. By: Sander Gerritsen; Dinand Webbink
    Abstract: This study provides the first estimates of the causal effect of time in school on cognitive skills for many countries around the world, for multiple age groups and for multiple subjects. These estimates enable a comparison of the performance of education systems based on gain scores instead of level scores. We use data from international cognitive tests and exploit variation induced by school entry rules within a regression discontinuity framework. The effect of time in school on cognitive skills strongly differs between countries. Remarkably, we find no association between the level of test scores and the estimated gains in cognitive skills. As such, a country’s ranking in international cognitive tests might misguide its educational policy. Across countries we find that a year of school time increases performance in cognitive tests with 0.2 to 0.3 standard deviations for 9-year-olds and with 0.1 to 0.2 standard deviations for 13-year-olds. Estimation of gains in co gnitive skills also yields new opportunities for investigating the determinants of international differences in educational achievements.
    JEL: I2 J24
    Date: 2013–09
  20. By: Fosgerau, Mogens (DTU TRANSPORT); Frejinger, Emma (KTH); Karlström, Anders (KTH)
    Abstract: This paper considers the path choice problem, formulating and discussing an econometric random utility model for the choice of path in a network with no restriction on the choice set. Starting from a dynamic specification of link choices we show that it is equivalent to a static model of the multinomial logit form but with infinitely many alternatives. The model can be consistently estimated and used for prediction in a computationally efficient way. Similarly to the path size logit model, we propose an attribute called link size that corrects utilities of overlapping paths but that is link additive. The model is applied to data recording path choices in a network with more than 3,000 nodes and 7,000 links.
    Keywords: Discrete choice; Recursive logit; Networks; Route choice; Infinite choice set
    JEL: R40
    Date: 2013–09–16
  21. By: Fadaei Oshyani, Masoud (KTH); Sundberg, Marcus (KTH); Karlström, Anders (KTH)
    Abstract: GPS and nomad devices are increasingly used to provide data from individuals in urban traffic networks. In many different applications, it is important to predict the continuation of an observed path, and also, given sparse data, predict where the individual (or vehicle) has been. Estimating the perceived cost functions is a difficult statistical estimation problem, for different reasons. First, the choice set is typically very large. Second, it may be important to take into account the correlation between the (generalized) costs of different routes, and thus allow for realistic substitution patterns. Third, due to technical or privacy considerations, the data may be temporally and spatially sparse, with only partially observed paths. Finally, the position of vehicles may have measurement errors. We address all these problems using a indirect inference approach. We demonstrate the feasibility of the proposed estimator in a model with random link costs, allowing for a natural correlation structure across paths, where the full choice set is considered.
    Keywords: GPS; Route choice model; Indirect inference; Sparse data; Statistical estimation problem.
    JEL: R40
    Date: 2013–09–16
  22. By: Olaf Merk
    Abstract: This report provides a synthesis of main findings from the OECD Port-Cities Programme, created in 2010 in order to assess the impact of ports on their cities and provide policy recommendations to increase the positive impacts of ports on their cities.
    Date: 2013–09–06
  23. By: Yan Sun; Pritha Mitra; Alejandro Simone
    Abstract: This paper studies the factors behind pro-cyclical but widely varying construction shares (as a percent of GDP) across countries, with a strong focus on European countries. Using a dataset covering 48 countries (including advanced and emerging economies within and outside Europe) for 1990-2011, we find that country’s geography, demographics, and economic conditions are the key determinants of a norm around which actual construction shares revolve in a simple AR(1) and error-correction process. The empirical results show that in many European countries, construction shares overshoot relative to their norms before the recent global crisis, but they have fallen significantly since the crisis. Nevertheless, there is still room for further adjustment in construction shares in some countries which may weigh on economic recovery.
    Keywords: Infrastructure;Europe;Euro Area;Housing;Tourism;Economic conditions;Demand;Business cycles;Developed countries;Developing countries;Cross country analysis;Construction, Business Cycle, Error-correction, European Growth
    Date: 2013–08–21
  24. By: William R. Kerr
    Abstract: High-skilled immigrants are a very important component of U.S. innovation and entrepreneurship. Immigrants account for roughly a quarter of U.S. workers in these fields, and they have a similar contribution in terms of output measures like patents or firm starts. This contribution has been rapidly growing over the last three decades. In terms of quality, the average skilled immigrant appears to be better trained to work in these fields, but conditional on educational attainment of comparable quality to natives. The exception to this is that immigrants have a disproportionate impact among the very highest achievers (e.g., Nobel Prize winners). Studies regarding the impact of immigrants on natives tend to find limited consequences in the short-run, while the results in the long-run are more varied and much less certain. Immigrants in the United States aid business and technology exchanges with their home countries, but the overall effect that the migration has on the home country remains unclear. We know very little about return migration of workers engaged in innovation and entrepreneurship, except that it is rapidly growing in importance.
    JEL: F15 F22 J15 J31 J44 L14 L26 O31 O32 O33
    Date: 2013–08
  25. By: Natalia Danzer; Victor Lavy
    Abstract: This paper investigates the question whether long-term human capital outcomes are affected by the duration of maternity leave, i.e. by the time mothers spend at home with their newborn before returning to work. Employing RD and difference-in-difference approaches, this paper exploits an unanticipated reform in Austria which extended the maximum duration of paid and job protected parental leave from 12 to 24 months for children born on July 1, 1990 or later. We use test scores from the Austrian PISA test of birth cohorts 1990 and 1987 as measure of human capital. The evidence suggest no significant overall impact of the extended parental leave mandate on standardized test scores at age 15, but that the subgroup of boys of highly educated mothers have benefited from this reform while boys of low educated mothers were harmed by it.
    JEL: J13 J22 J24
    Date: 2013–09
  26. By: Lundberg, Shelly (University of California, Santa Barbara)
    Abstract: Research and policy discussion about the diverging fortunes of children from advantaged and disadvantaged households have focused on the skill disparities between these children – how they might arise and how they might be remediated. Analysis of data from the National Longitudinal Study of Adolescent Health reveals another important mechanism in the determinants of educational attainment – differential returns to skills for children in different circumstances. Though the returns to cognitive ability are generally consistent across family background groups, personality traits have very different effects on educational attainment for young men and women with access to different levels of parental resources. These results are consistent with a model in which the provision of focused effort in school is complementary with parental inputs while openness, associated with imagination and exploration, is a substitute for information provision by educated parents and thus contributes to resilience in low-resource environments. In designing interventions to improve outcomes for disadvantaged children, we need to be cognizant of interactions between a child's skills and their circumstances.
    Keywords: education, inequality, noncognitive skills
    JEL: I24 J24
    Date: 2013–08
  27. By: Makoto Nakajima; Irina A. Telyukova
    Abstract: The “retirement saving puzzle” is a phenomenon in which many households U.S. households have significant wealth late in life, contrary to the predictions of a simple life-cycle model. In this project, we examine cross-country differences in the saving behavior of retirees in order to weigh in on the discussion of the puzzle. First, we find that countries in our sample vary noticeably in terms of the extent of the puzzle: one group of countries, in South and Central Europe, look like the United States, while in Northern Europe, retirees spend down their wealth much more rapidly. Second, it appears that the rate of dissaving in retirement is correlated with the extent of public coverage of healthcare and long-term care, and these differences in saving happen predominantly through dissaving of financial assets, while housing assets are less affected. In a quantitative experiment using a life-cycle model of saving in retirement, we measure the role of out-of-pocket medical spending risk in accounting for differences in observed saving patterns among retirees in the United States and Sweden, considering housing and financial assets separately. The model predicts that this risk accounts, on average across age, for one-half of the difference in median net worth between United States and Sweden, and for about 70 percent of the difference in median financial assets. The role of risk diminishes with age, and is seen primarily in financial asset saving, while housing assets do not appear to respond to spending risk, suggesting that housing is not a precautionary asset.
    Date: 2013–08
  28. By: CHAMPSAUR, Paul
  29. By: Anna Scherbina
    Abstract: Why do asset price bubbles continue to appear in various markets? This paper provides an overview of recent literature on bubbles, with significant attention given to behavioral models and rational models with frictions. Unlike the standard rational models, the new literature is able to model the common characteristics of historical bubble episodes and offer insights for how bubbles are initiated and sustained, the reasons they burst, and why arbitrage forces do not routinely step in to squash them. The latest U.S. real estate bubble is described in the context of this literature.
    Keywords: Asset prices;Business cycles;Investment;Economic models;Bubbles, Limits to Arbitrage, Financial Crisis.
    Date: 2013–02–21
  30. By: Gregorio Caetano (University of Rochester); Vikram Maheshri (University of Houston)
    Abstract: The “Broken Windows†theory of crime prescribes “zero-tolerance†law enforcement policies that disproportionately target light crimes with the understanding that this will lead to future reductions of more severe crimes. We provide evidence against the effectiveness of such policies using a novel database from Dallas. Our identification strategy explores detailed geographic and temporal variation to isolate the causal behavioral effect of prior crimes on future crimes and is robust to a variety of sources of potential endogeneity. We also estimate the effectiveness of alternative targeting policies to discuss the efficiency of “Broken Windows†inspired policies.
    Keywords: Crime, Social Interactions, Broken Windows
    JEL: K R
    Date: 2013–05–09
  31. By: Christian Westphal (University of Marburg)
    Abstract: School shootings are often used in public policy debate as a justification for increased regulation, based on qualitative arguments. However, to date, no effort has been made to find valid quantitative evidence for the claims bolstering the regulation recommendations. In defense of this absence of evidence, it is usually argued that the rarity of such events does not allow the employment of quantitative methods. This paper, using a simulation study, shows that, based on the number of shool shootings in the United States and Germany combined, the well-known method of logistic regression can be applied to a case-control study, making it possible to at least test for an association between hypothesized influential variables and the occurrences. Moderate relative risks, explained by an observed variable, would lead to a high power of the appropriate test. A moderate numbers of cases generated by such a variable would suffice to show a significant association.
    Keywords: Rare Events; Logistic Regression; Case-Control Studies; School Shootings
    JEL: C25 C35 I18 K14
    Date: 2013
  32. By: David Cutler; Jonathan Skinner; Ariel Dora Stern; David Wennberg
    Abstract: There is considerable controversy about the causes of regional variations in healthcare expenditures. We use vignettes from patient and physician surveys, linked to Medicare expenditures at the level of the Hospital Referral Region, to test whether patient demand-side factors, or physician supply-side factors, explains regional variations in Medicare spending. We find patient demand is relatively unimportant in explaining variations. Physician organizational factors (such as peer effects) matter, but the single most important factor is physician beliefs about treatment: 36 percent of end-of-life spending, and 17 percent of U.S. health care spending, are associated with physician beliefs unsupported by clinical evidence.
    JEL: H51 I1 I11 I18
    Date: 2013–08
  33. By: Razin, Assaf; Sadka, Efraim
    Abstract: We develop a stylized EU-type model of a union consisting of rich, capital-abundant and productive, countries, and poor,capital-scarce and low productivity, countries, in order to explain key features of tax policies and inter- and intra-migration flows. Our purpose is to explain the differences in the tax rates and the generosity of the welfare state, on the one hand, and migration flows, on the other hand, between rich and poor countries, within the union, and migration flows from the rest of the world. We identify a fiscal externality which makes the tax competition and the tax coordination regime to be different one from the other.
    Keywords: capital mobility; fiscal leakage; labor mobility
    JEL: F2 H2
    Date: 2013–08
  34. By: Jacob Fishman; V. Kerry Smith
    Abstract: This paper uses the 2011 Phoenix Area Social Survey to evaluate the plausibility of the assumptions made by locational equilibrium sorting models to rationalize incomplete stratification of households across local communities by income. The analysis with a well-recognized index of environmental attitudes, the New Environmental Paradigm (NEP), confirms the correlations in equilibrium outcomes implied by these models. As a result, it supports the role of differences in the tastes for public goods as an explanation for the sorting outcomes.
    JEL: D58 H4 Q51
    Date: 2013–08

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