nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2014‒02‒02
fifty papers chosen by
Steve Ross
University of Connecticut

  1. Urban renewal after the Berlin Wall By Richter, Felix; Ahlfeldt, Gabriel; Maennig, Wolfgang
  2. Endogenous spatial structure and delineation of submarkets: A new framework with application to housing markets By Arnab Bhattacharjee; Eduardo Castro; Taps Maiti; João Marques
  3. History, Path Dependence and Development: Evidence from Colonial Railroads, Settlers and Cities in Kenya By Remi Jedwab; Edward Kerby; Alexander Moradi
  4. Spatial Sorting By Schmidheiny, Kurt; Eeckhout, Jan; Pinheiro, Roberto
  5. City Age and City Size By Südekum, Jens; Giesen, Kristian
  6. Functional regression over irregular domains By Arnab Bhattacharjee; Liqian Cai; Taps Maiti
  7. "Technological Progress and Economic Geography" By Takatoshi Tabuchi; Jacques-Fran�ois Thisse; Xiwei Zhu
  8. The Effects of Teacher Strike Activity on Student Learning in South African Primary Schools By Gabrielle Wills
  9. Do eco-innovations need specific regional characteristics? By Horbach, Jens
  10. The Short- and Long-Term Effects of School Choice on Student Outcomes: Evidence from a School Choice Reform in Sweden By Wondratschek, Verena; Edmark, Karin; Frölich, Markus
  11. Macroeconomic Implications of Agglomeration By Toni Whited; Jonas Fisher; Morris Davis
  12. Testing for rational speculative bubbles in the Brazilian residential real-estate market By Marcelo M. de Oliveira; Alexandre C. L. Almeida
  13. The Treatment Effect of Attending a High-Quality School and the Influence of Unobservables By Storck, Johanna; Freier, Ronny
  14. Location, location, location: Extracting location value from house prices By Kolbe, Jens; Schulz, Rainer; Wersing, Martin; Werwatz, Axel
  15. The (Surprising) Efficacy of Academic and Behavioral Intervention with Disadvantaged Youth: Results from a Randomized Experiment in Chicago By Philip J. Cook; Kenneth Dodge; George Farkas; Roland G. Fryer, Jr; Jonathan Guryan; Jens Ludwig; Susan Mayer; Harold Pollack; Laurence Steinberg
  16. The Economics of Density: Evidence from the Berlin Wall By Sturm, Daniel; Ahlfeldt, Gabriel; Redding, Stephen; Wolf, Nikolaus
  17. Green cities? Urbanization, trade and the environment By Borck, Rainald; Pflüger, Michael
  18. Testing for Information Asymmetries in Real Estate Markets By Pablo Kurlat; Johannes Stroebel
  19. Educational Infrastructure, School Construction, & Decentralization in Developing Countries: Key Issues for an Understudied Area By Alec Ian Gershberg
  20. Real estate companies' size and the production of energy-efficient housing services: Evidence from Germany's apartment housing market By Michelsen, Claus; Rosenschon, Sebastian; Schulz, Christian
  21. Industry Localization, Distance Decay, and Knowledge Spillovers: Following the Patent Paper Trail By Octávio Figueiredo; Paulo Guimarães; Douglas Woodward
  22. Minimum wages and employment: A spatial identification strategy for Germany By Frings, Hanna; vom Berge, Philipp; Paloyo, Alfredo R.
  23. Race to the debt trap? Spatial econometric evidence on debt in German municipalities By Fossen, Frank M.; Freier, Ronny; Martin, Thorsten
  24. Labour Market Matters - January 2014 By Tran, Vivian
  25. Regional fertility data analysis: A small area Bayesian approach By Eduardo A. Castro; Zhen Zhang; Arnab Bhattacharjee; José M. Martins; Taps Maiti
  26. Parental background, early scholastic ability, the allocation into secondary school tracks and language skills at the age of 15 years in a highly differentiated system: a test of the contradictions between a two- or three-level approach By Dronkers J.
  27. Monitoring housing markets for episodes of exuberance: an application of the Phillips et al. (2012, 2013) GSADF test on the Dallas Fed International House Price Database By Pavlidis, Efthymios; Yusupova, Alisa; Paya, Ivan; Peel, David; Martinez-Garcia, Enrique; Mack, Adrienne
  28. Municipal assessments versus actual sales price information in hedonic price studies: A South African case study By M du Preez and MC Sale
  29. Beyond Rising Unemployment: Unemployment Risk, Crisis and Regional Adjustments in Greece By Vassilis Monastiriotis; Angelo Martelli
  30. Spatial structures of health outcomes and health behaviours in Scotland: Evidence from the Scottish Health Survey By Arnab Bhattacharjee; Taps Maiti; Dennis Petrie
  31. Convenient links for the estimation of hedonic price indexes:the case of unique, infrequently traded assets By Esmeralda Ramalho; Joquim Ramalho
  32. Residential Parking in Vibrant City Districts By Molenda, Inga; Sieg, Gernot
  33. Regional resilience and fat tails: A stochastic analysis of firm growth rate distributions of German regions By Matthias Duschl
  34. Regional Implications of Financial Market Development: Credit Rationing, Trade, and Location By Seidel, Tobias; von Ehrlich, Maximilian
  35. Do university policies matter? Effects of Course Policies on Performance By Ostermaier, Andreas; Beltz, Philipp; Link, Susanne
  36. Local Transmission of Trade Shocks By Ferdinando Monte
  37. The Magnitude and Causes of Job Polarization: A Local Labor Market Approach By Dauth, Wolfgang
  38. Does Education Affect Cognitive Abilities? By Kamhöfer, Daniel; Schmitz, Hendrik
  39. Regional convergence analysis for skill-specific employment groups By Werner, Daniel
  40. Public Input Competition under Stackelberg Equilibrium: A Note By Yongzheng Liu; Jorge Martinez-Vazquez
  41. Social background's effect on educational attainment: does method matter? By Wolbers M.H.J.; Velden R.K.W. van der; Büchner C.I.R.
  42. Culture and the Spatial Dissemination of Ideas Evidence from Froebel s Kindergarten Movement By Falck, Oliver; Bauernschuster, Stefan
  43. Is Happiness Contagious? Separating Spillover Externalities from the Group-Level Social Context By Tumen, Semih; Zeydanli, Tugba
  44. City Competition for the Creative Class By Buettner, T; Janeba, Eckhard
  45. Demand Modeling, Forecasting, and Counterfactuals, Part I By Parag A. Pathak; Peng Shi
  46. De-composing diversity: In-group size and out-group entropy and their relationship to neighbourhood cohesion By Koopmans, Ruud; Schaeffer, Merlin
  47. Housing finance across countries : new data and analysis By Badev, Anton; Beck, Thorsten; Vado, Ligia; Walley, Simon
  48. The Impact of Internal Migration on Local Labour Markets in Thailand By Eliane El Badaoui; Eric Strobl; Frank Walsh
  49. Wage Incidence of Local Corporate Taxation - Micro Evidence from Germany By Peichl, Andreas; Fuest, Clemens; Siegloch, Sebastian
  50. The Stockholm congestion pricing syndrome: how congestion charges went from unthinkable to uncontroversial By Eliasson , Jonas

  1. By: Richter, Felix; Ahlfeldt, Gabriel; Maennig, Wolfgang
    Abstract: Urban renewal areas are popular instruments in spatial planning to prevent urban decline and to induce urban renewal. 22 renewal areas were implemented in Berlin, Germany alone between 1993 and 1995, mainly to increase housing and living quality in the aftermath of the city s long division during the Cold War period. We use a quasi-experimental research design to study the long-run effects of these designations on property prices within and surrounding the renewal areas. While there is evidence for significant improvements in the quality of the housing stock and increases in property prices in the targeted areas, evidence is weak at best for positive housing externalities. Our results further indicate that fundamental location advantages increase the impact of the policy. --
    JEL: R12 R31 R58
    Date: 2013
  2. By: Arnab Bhattacharjee (Heriot-Watt University); Eduardo Castro (University of Aveiro); Taps Maiti (Michigan State University); João Marques (University of Aveiro)
    Abstract: Definition of housing submarkets is important at both conceptual and empirical levels. In the housing studies literature, submarkets have been defined according to three different criteria: i) similarity in hedonic housing characters, ii) similarity in hedonic prices; iii) substitutability of housing units. We argue that the simultaneous fulfilment of criteria i) and ii) is a sufficient condition for criteria iii) to be fulfilled. Criterion i) is directly observable, while criterion ii) can be checked by a model able to detect and analyse spatial heterogeneity in the shadow prices. Here, we propose a new framework, based on a synthesis of spatial econometrics, functional data analysis (FDA) and geographically weighted regression (GWR). The framework is applied to a hedonic regression model where the dependent variable is logarithm of house prices per square meter and housing features are regressors. Thus, we delineate submarkets by clustering (jointly) on the surfaces of the estimated functional partial effects and housing features. The above model addresses two main limitations of previous approaches. First, endogeneity in spatial structure can be incorporated in the model. Second, the framework does not require delineation of housing submarkets a priori. Application to the housing market of the Aveiro-Ãlhavo urban conglomeration in Portugal implies submarkets that emphasize the historical and endogenous evolution of the urban spatial structure.
    Keywords: Spatial heterogeneity, Submarkets, Spatial lag model, Geographically weighted regression, Functional data analysis
    JEL: C21 R31 C51
    Date: 2014
  3. By: Remi Jedwab; Edward Kerby; Alexander Moradi
    Abstract: Little is known about the extent and forces of urban path dependence in developing countries. Railroad construction in colonial Kenya provides a natural experiment to study the emergence and persistence of this spatial equilibrium. Using new data at a fine spatial level over one century shows that colonial railroads causally determined the location of European settlers, which in turn decided the location of the main cities of the country at independence. Railroads declined and settlers left after independence, yet cities persisted. Their early emergence served as a mechanism to coordinate investments in the post-independence period, yielding evidence for how path dependence influences development.
    Keywords: Path Dependence; Urbanisation; Transportation; Colonialism
    JEL: R11 R12 R40 O18 O33 N97
    Date: 2014
  4. By: Schmidheiny, Kurt; Eeckhout, Jan; Pinheiro, Roberto
    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. --
    JEL: R10 J61 J60
    Date: 2013
  5. By: Südekum, Jens; Giesen, Kristian
    Abstract: There has been vast interest in the distribution of city sizes in an economy, but this research has largely neglected that cities also diff er along another fundamental dimension: age. Using novel data on the foundation dates of almost 8,000 American cities, we fi nd that older cities in the US tend to be larger than younger ones. To take this nexus between city age and city size into account, we introduce endogenous city creation into a dynamic economic model of an urban system. The city size distribution that emerges in our economy delivers an excellent and robust fit to diff erent types of US city size data, in fact much better than other parameterizations derived from diff erent urban growth models. This evidence can resolve several recent debates, and build a bridge between different views in the literature on city size distributions. --
    JEL: R11 R12 R10
    Date: 2013
  6. By: Arnab Bhattacharjee (Heriot-Watt University); Liqian Cai (Michigan State University); Taps Maiti (Michigan State University)
    Abstract: We develop a method for estimating the functional surface of a regression coefficient that varies over a complex spatial domain with irregular boundaries, peninsulas and interior holes. The method is motivated by, and applied to, data on housing markets, where the central object of inference is estimation of spatially varying effects of living space on house prices. For this purpose, we extend a method of spline smoothing over an irregular domain to the functional regression model. Spatially varying coefficients for a specific regressor are estimated by a combination of three smoothing problems, allowing for additional regressors with spatially fixed coefficients. The estimates adapt well to the irregular and complex spatial domain. Implicit prices for living space vary spatially, being high in the city centre and other desirable locations, and declining towards the periphery along gradients determined by major roads.
    Keywords: Delaunay triangulation, Finite element, Housing markets, Spatial functional regression, Spline smoothing
    Date: 2013
  7. By: Takatoshi Tabuchi (Faculty of Economics, The University of Tokyo); Jacques-Fran�ois Thisse (CORE, Universit� catholique de Louvain, NRU-Higher School of Economics and CEPR); Xiwei Zhu (Center for Research of Private Economy and School of Economics, Zhejiang University)
    Abstract:    New economic geography focuses on the impact of falling transport costs on the spatial distribution of activities. However, it disregards the role of technological innovations, which are central to modern economic growth, as well as the role of migration costs, which are a strong impediment to moving. We show that this neglect is unwarranted. Regardless of the level of transport costs, rising labor productivity fosters the agglomeration of activities, whereas falling transport costs do not affect the location of activities. When labor is heterogeneous, the number of workers residing in the more productive region increases by decreasing order of productive e¢ ciency when labor productivity rises.
    Date: 2014–01
  8. By: Gabrielle Wills
    Abstract: This paper investigates whether teacher strikes affect student achievement at the primary school level in South Africa. A cross-subject analysis with student fixed effects is used to eliminate sources of endogeneity bias at the school and student level. Results indicate that teacher strike participation negatively affects learning for students in the poorest three quarters of schools in South Africa. A negative effect size as large as ten per cent of a standard deviation is observed. There is also evidence that more marginalised students, both in terms of socio-economic status and academic performance, are affected most negatively by strike action. However, application of a technique by Altonji, Taber and Elder (2005) indicates that it is not possible to rule out that measured strike effects may be driven by omitted variable bias. The student fixed effects strategy fails to adequately control for unobserved teacher characteristics that may influence both a teacher’s decision to strike and student achievement.
    Keywords: Teachers, Strikes, Trade unions, Student Achievement, South Africa
    JEL: I21 J51 J52 J24
    Date: 2014
  9. By: Horbach, Jens
    Abstract: The theoretical and empirical innovation literature stresses the importance of regional fac-tors and locational conditions for location choice of firms and their innovation success. Innovation activities are not equally distributed in space because agglomeration effects and specific regional infrastructures may promote innovation success. Concerning environmentally oriented innovations, the so-called eco-innovations, there is a widespread empirical literature analyzing their determinants but - because of the lack of adequate data - the inclusion of regional and locational factors has been neglected. This paper tries to close this gap by using the establishment panel of the German Institute for Employment Research in Nuremberg combined with data at the regional level. To explore specific regional determinants of eco-innovations compared to other innovations including variables at the firm and the regional level, a two-level mixed effects logistic regression has been applied. Our econometric results show that external knowledge sources such as the regional proximity to research centers and universities are more important for eco-innovations compared to other innovations. Eco-innovations seem to be a chance for under-developed, disadvantaged regions because especially regions characterized by a high unemployment rate are more likely to adopt eco-innovations. Furthermore, eco-innovations need more effort concerning R&D inputs, further education measures within a firm and the qualifi-cation of the personnel. --
    JEL: Q55 R11 C25
    Date: 2013
  10. By: Wondratschek, Verena (ZEW Mannheim); Edmark, Karin (IFN - Research Institute of Industrial Economics); Frölich, Markus (University of Mannheim)
    Abstract: This paper evaluates the effects of a major Swedish school choice reform. The reform in 1992 increased school choice and competition among public schools as well as through a large-scale introduction of private schools. We estimate the effects of school choice and competition, using precise geographical information on the locations of school buildings and children's homes for the entire Swedish population for several cohorts affected at different stages in their educational career. We can measure the long-term effects up to age 25. We find that increased school choice had very small, but positive, effects on marks at the end of compulsory schooling, but virtually zero effects on longer term outcomes such as university education, employment, criminal activity and health.
    Keywords: school choice, school competition, treatment evaluation, cognitive and non-cognitive skills
    JEL: I20 C21
    Date: 2014–01
  11. By: Toni Whited (University of Rochester); Jonas Fisher (Federal Reserve Bank of Chicago); Morris Davis (University of Wisconsin-Madison, School)
    Abstract: Cities exist because of the productivity gains arising from clustering production and workers, a process called agglomeration. How important is agglomeration for aggregate growth? This paper constructs a dynamic stochastic general equilibrium model of cities and uses it to estimate the effect of local agglomeration on aggregate growth. We combine aggregate time series and city-level panel data to estimate our model’s parameters by the Generalized Method of Moments. The estimates imply that local agglomeration has an economically and statistically significant impact on the growth rate of per capita consumption, raising it by about 10 percent.
    Date: 2013
  12. By: Marcelo M. de Oliveira; Alexandre C. L. Almeida
    Abstract: Speculative bubbles have been occurring periodically in local or global real estate markets and are considered a potential cause of economic crises. In this context, the detection of explosive behaviors in the financial market and the implementation of early warning diagnosis tests are of critical importance. The recent increase in Brazilian housing prices has risen concerns that the Brazilian economy may have a speculative housing bubble. In the present paper, we employ a recently proposed recursive unit root test in order to identify possible speculative bubbles in data from the Brazilian residential real-estate market. The empirical results show evidence for speculative price bubbles both in Rio de Janeiro and Sao Paulo, the two main Brazilian cities.
    Date: 2014–01
  13. By: Storck, Johanna; Freier, Ronny
    Abstract: This paper studies the effect of attending a high-quality secondary school on subsequent educational outcomes. The analysis is based on data from the German Socio-Economic Panel Study in which we observe children when they make their secondary school choice (between ages 10-12) and later when they self-report on their intentions with regard to their further educational path (between ages 16-17). To identify the treatment effect, we use a regression-control framework as well as an instrumental variable approach (based on local supply of schools). In a second step, we carefully examine the influence of unobservable characteristics, using the new technique proposed by Altonji, Elder, and Taber (2005b). Our findings suggest that unobservable characteristics are indeed crucial to the validity of the research design. While we find large positive and significant effects of attending a high-quality school, we cannot rule out that the estimates are not in fact driven by selection on unobservables. --
    JEL: I21 C31 I20
    Date: 2013
  14. By: Kolbe, Jens; Schulz, Rainer; Wersing, Martin; Werwatz, Axel
    Abstract: We propose a novel semiparametric method to extract location values from house prices. After splitting house prices into building and land components, location values are estimated with adaptive weight smoothing. The adaptive estimator requires neither strong smoothness assumptions nor local symmetry. We apply the method to house transactions from Berlin, Germany. The estimated surface of location values is highly correlated with expert-based land values and location ratings. The method can therefore be used for applications where no other location value information exists or where this information is not reliable. --
    JEL: C14 R31 C50
    Date: 2013
  15. By: Philip J. Cook; Kenneth Dodge; George Farkas; Roland G. Fryer, Jr; Jonathan Guryan; Jens Ludwig; Susan Mayer; Harold Pollack; Laurence Steinberg
    Abstract: There is growing concern that improving the academic skills of disadvantaged youth is too difficult and costly, so policymakers should instead focus either on vocationally oriented instruction for teens or else on early childhood education. Yet this conclusion may be premature given that so few previous interventions have targeted a potential fundamental barrier to school success: “mismatch” between what schools deliver and the needs of disadvantaged youth who have fallen behind in their academic or non-academic development. This paper reports on a randomized controlled trial of a two-pronged intervention that provides disadvantaged youth with non-academic supports that try to teach youth social-cognitive skills based on the principles of cognitive behavioral therapy (CBT), and intensive individualized academic remediation. The study sample consists of 106 male 9th and 10th graders in a public high school on the south side of Chicago, of whom 95% are black and 99% are free or reduced price lunch eligible. Participation increased math test scores by 0.65 of a control group standard deviation (SD) and 0.48 SD in the national distribution, increased math grades by 0.67 SD, and seems to have increased expected graduation rates by 14 percentage points (46%). While some questions remain about the intervention, given these effects and a cost per participant of around $4,400 (with a range of $3,000 to $6,000), this intervention seems to yield larger gains in adolescent outcomes per dollar spent than many other intervention strategies.
    JEL: I0 I20 I24 I3 J24 Z18
    Date: 2014–01
  16. By: Sturm, Daniel; Ahlfeldt, Gabriel; Redding, Stephen; Wolf, Nikolaus
    Abstract: This paper develops a quantitative model of city structure to separate agglomeration forces, dispersion forces and fundamentals as determinants of location choices. The model remains tractable and amenable to empirical analysis because of stochastic shocks to worker productivity, which yield a gravity equation for commuting ows. To empirically disentangle alternative determinants of location choices, we use Berlin s division and reuni cation as a source of exogenous variation in the surrounding concentration of economic activity. Using disaggregated data on land prices, workplace employment and residence employment for thousands of city blocks for 1936, 1986 and 2006, we nd that the model can account both qualitatively and quantitatively for the observed changes in city structure. --
    JEL: N34 O18 R12
    Date: 2013
  17. By: Borck, Rainald; Pflüger, Michael
    Abstract: We study environmental pollution in an economic geography framework with two cities, where pollution arises from commuting within cities, goods transport between cities, production of manufacturing and agricultural goods, and residential energy use. We find that city size has an ambiguous effect on pollution levels. We also analyse how pollution changes with varying trade freeness, skilled wage income, and commuting costs. --
    JEL: Q54 R12 F12
    Date: 2013
  18. By: Pablo Kurlat; Johannes Stroebel
    Abstract: We study equilibrium outcomes in markets with asymmetric information about asset values among both buyers and sellers. In residential real estate markets hard-to-observe neighborhood characteristics are a key source of information heterogeneity: sellers are usually better informed about neighborhood values than buyers, but there are some sellers and some buyers that are better informed than their peers. We propose a new theoretical framework for analyzing such markets with many heterogeneous assets and differentially informed agents. Consistent with the predictions from this framework, we find that changes in the seller composition towards (i) more informed sellers and (ii) sellers with a larger supply elasticity predict subsequent house-price declines and demographic changes in that neighborhood. This effect is larger for houses whose value depends more on neighborhood characteristics, and smaller for houses bought by more informed buyers. Our findings suggest that home owners have superior information about important neighborhood characteristics, and exploit this information to time local market movements.
    JEL: D53 D82 G14 R21 R31
    Date: 2014–01
  19. By: Alec Ian Gershberg (The New School)
    Abstract: Poor and insufficient school infrastructure negatively impacts student learning and schooling outcomes. Myriad factors have contributed to an infrastructure gap in the education sector in many countries – rapid increases in enrolments, poor maintenance and aging capital stocks, rural to urban migration, and inefficient government planning and school construction to name a few. Various forms of decentralization are likely to be involved both to improve governance and accountability and to foster innovation and cost saving in the school construction industry and investment and project cycle. This paper first discusses why the topic is interesting and worth considering; next we lay out the issues and considerations specific to educational infrastructure decentralization; we then connect the discussion to the broader infrastructure discussions in the other papers as well as to the education decentralization literature. We examine an illustrative case study in Egypt exemplifying both the typical centralization of a national school construction authority, and the reasons for countries to consider certain kinds of decentralization. The case also highlights that school construction reforms involving potential decentralization are a long slog dominated and driven by politics. We provide a framework for un-packaging and considering key components of the processes involved in service provision and some promising strategies relating to decentralization. We conclude with some insights for practitioners and others interested in advancing knowledge of the topic.
    Date: 2014–01–14
  20. By: Michelsen, Claus; Rosenschon, Sebastian; Schulz, Christian
    Abstract: This paper investigates the effect of a housing company's size on the outcome of energetic refurbishment. We argue that economies of scale, economies of scope and effects of learning have an impact on the production of energy-efficient housing services. To test our hypothesis, we use unique data on 102,307 apartment houses in Germany. Besides owner characteristics and refurbishment effort, we introduce several control variables, to capture vintage, size and spatial effects. We find strong evidence for the presence of firm-specific, in particular size, effects on the energetic outcome of refurbishment. For example, large housing companies reduce real energy requirements of a building by 39.96% in the case of full refurbishment. In contrast, single-unit owners increase energy efficiency by only 15.93%. Moreover, the absolute differences between company types increase with refurbishment effort. --
    JEL: R31 R32 Q48
    Date: 2013
  21. By: Octávio Figueiredo (Universidade do Porto); Paulo Guimarães (American University of Sharjah); Douglas Woodward (University of South Carolina)
    Abstract: This paper investigates the hypothesis that knowledge spillovers increase where industries are localized. At the same time, we take a fresh look at the role of distance in knowledge diffusion. Our unique database combines U.S. county-level patent citation data with county-level establishment and employment data. Relying on a cited-citing gravity equation with high-dimensional fixed effects that control for multiple sources of observed and non-observed heterogeneity, we implement a Poisson pseudo-maximum-likelihood estimator. Our results confirm the negative role of distance uncovered in Jaffe, Trajtenberg & Henderson's (1993) pioneering work. We also find that knowledge spillovers correlate positively with industry localization and that the agglomeration of an industry can offset the effect of distance. Our approach to estimate the Poisson regression with two high-dimensional fixed effects may prove equally useful in applications to a variety of other problems in economics.
    Keywords: Knowledge Spillovers, Agglomeration, Gravity Equation, High-Dimensional Fixed Effects, Poisson Regression.
    JEL: R12 R39 C13 C21
    Date: 2014–01
  22. By: Frings, Hanna; vom Berge, Philipp; Paloyo, Alfredo R.
    Abstract: We estimate the effects on wage and employment growth rates of the introduction and subsequent increases of the minimum wage in the main construction industry of Germany. Using a regional dataset constructed from individual employment histories, we exploit the spatial dimension and border discontinuities of the regional data to account for spillovers between districts and unobserved heterogeneity at the local level. The results indicate that the minimum wage increased the wage growth rate for East Germany but did not have a significant impact on the West German equivalent. The estimated effect on the employment growth rate revealed a contraction in the East of about 2.6 to 3.1 percentage points for a one-standard-deviation increase in the minimum-wage bite, amounting to roughly half of the overall decline in the growth rate, but no significant change was observed for the West. --
    JEL: J31 J38 J08
    Date: 2013
  23. By: Fossen, Frank M.; Freier, Ronny; Martin, Thorsten
    Abstract: Through an intertemporal budget constraint, jurisdictions may gain advantages in tax and spending competition by 'competing' on debt. While the existing spatial econometric literature focuses on tax and spending competition, very little is known about spatial interaction via public debt. This paper estimates the spatial interdependence of public debt among German municipalities using a panel on municipalities in the two largest German states from 1999 to 2006. We find significant and robust interaction effects between debt of neighboring municipalities, which we compare to spatial tax and spending interactions. The results indicate that a municipality increases its per capita debt by 16-33 Euro as a reaction to an increase of 100 Euro in neighboring municipalities. --
    Keywords: public debt,tax and spending competition,municipality data,spatial interactions,spatial panel estimation
    JEL: C23 H63 H74 R12
    Date: 2014
  24. By: Tran, Vivian
    Abstract: In North America, students with immigrant parents typically achieve higher levels of education than their counterparts with domestic-born parents. In Europe however, the opposite is typically true. In Canada, immigrants students (1st or 2nd generation) are 1.6 times as likely to attend university by age 23 as students with Canadian born parents. In Switzerland, 1st generation students are only 0.45 times as likely to attend as students with Swiss born parents, and 2nd generation students 0.8 times as likely. A paper by CLSRN affiliates Garnett Picot (Queen’s University and Statistics Canada) and Feng Hou (Statistics Canada) entitled “Why Immigrant Background Matters for University Participation: A Comparison of Switzerland and Canada†(CLSRN Working Paper no. 128) finds that differences in immigration systems as well as educational structures may be the reasons for these differences between Switzerland and Canada. “Open enrolment†– a policy which allows students to attend public schools outside their neighborhood catchment area – is intended to improve student outcomes through two primary channels: by allowing families to enroll their children in schools that are higher quality or better matches; and by creating incentives for school managers to increase effort in order to attract or retain students when faced with increasing competition. A paper entitled “Open Enrolment and Student Achievement†(CLSRN Working Paper no. 126) by CLSRN affiliates Jane Friesen (Simon Fraser University), Benjamin Cerf Harris (U.S. Census Bureau) and Simon Woodcock (Simon Fraser University) finds clear evidence that open enrolment improves student achievement.
    Keywords: immigration, second generation, higher education, university participation, open enrolment, school choice, school competition
    JEL: J15 I24 I21 I28
    Date: 2014–01–28
  25. By: Eduardo A. Castro (Department of Social, Political and Territorial Sciences, University of Aveiro); Zhen Zhang (Department of Statistics and Probability, Michigan State University); Arnab Bhattacharjee (Department of Economics and Spatial Economics and Econometrics Centre (SEEC), Heriot-Watt University); José M. Martins (Department of Social, Political and Territorial Sciences, University of Aveiro); Taps Maiti
    Abstract: Accurate estimation of demographic variables such as mortality, fertility and migrations, by age groups and regions, is important for analyses and policy. However, traditional estimates based on within cohort counts are often inaccurate, particularly when the sub-populations considered are small. We use small area Bayesian statistics to develop a model for age-specific fertility rates. In turn, such small area estimation requires accurate descriptions of spatial and cross-section dependence. The proposed methodology uses spatial clustering methods to estimate an adjacency matrix that captures such dependence more adequately. The model is then used to estimate agespecific fertility rates and total fertility rates at the regional NUTS III area level for Portugal. The paper makes important contributions to small area Bayesian statistics in a spatial domain focusing on estimation of fertility rates. The estimates obtained are more accurate and adequately represent uncertainty in the estimates, and are therefore very useful for demographic policy in Portugal.
    Date: 2013
  26. By: Dronkers J. (ROA)
    Abstract: Recently Dunne 2010 and Dronkers, van der Velden Dunne 2011 introduced a three-level model countries, schools, and students. They showed that school characteristics like socioeconomic composition and ethnic diversity have substantial effects on achievement levels and also affect the relation between parental background and achievement. Moreover, these school characteristics seem to mediate some of the effects of educational system characteristics found earlier see Figure 1. However their results contradict very much the consensus about the effects of educational systems on outcomes and inequality, which are exclusively based on a two-level model countries and students. The most important authors are Hanushek and Wmann 2006, Schtz, Ursprung and Wmann 2008, Wmann, Ldemann, Schtz and West 2009 and Hanushek and Wmann 2012. Esser forth coming discussed rightfully extensively the possible explanations of the different outcomes of the Hanushek Wssmann approach and the Dronkers, van der Velden Dunne puzzle.
    Date: 2014
  27. By: Pavlidis, Efthymios (Federal Reserve Bank of Dallas); Yusupova, Alisa (Federal Reserve Bank of Dallas); Paya, Ivan (Federal Reserve Bank of Dallas); Peel, David (Federal Reserve Bank of Dallas); Martinez-Garcia, Enrique (Federal Reserve Bank of Dallas); Mack, Adrienne (Federal Reserve Bank of Dallas)
    Abstract: The detection of explosive behavior in house prices and the implementation of early warning diagnosis tests are of great importance for policy-making. This paper applies the GSADF test developed by Phillips et al. (2012) and Phillips et al. (2013), a novel procedure for testing, detection and date-stamping of explosive behavior, to the data from the Dallas Fed International House Price Database documented in Mack and Martínez-García (2011). We discuss the use of the GSADF test to monitor international housing markets. We assess the international boom and bust cycle experienced during the past 15 years through this lens— with special attention to the United States, the United Kingdom, and Spain. Our empirical results suggest that these three countries experienced a period of exuberance in housing prices during the late 90s and the first half of the 2000s that cannot be attributed solely to the behavior of fundamentals. Looking at all 22 countries covered in the International House Price Database, we detect a pattern of synchronized explosive behavior during the last international house boom-bust episode not seen before.
    JEL: C22 G12 R31
    Date: 2014–01–16
  28. By: M du Preez and MC Sale
    Abstract: In most hedonic price model studies, the actual sales price of a property is employed as the dependent variable in the parametric regression analysis. Although the use of this price is pervasive, alternatives to it do exist. One such alternative is the assessed property value, which is more readily available compared to the actual property price. The aim of this study is to compare implicit price estimates of property characteristics (both structural and locational) based on actual sales price data and assessed property values. To this end, a seemingly unrelated regression with two hedonic price equations is used, one which employs actual market prices as the dependent variable and the other which employs assessed values. The results show that the hypothesis that the influence of structural and locational housing characteristics on residential property prices is the same for assessed values and actual market prices cannot be accepted. This finding should act as a caution for hedonic practitioners not to solely base their conclusions and recommendations on the use of assessed values in hedonic price models.
    Keywords: Municipal Assessments, Sales Price, hedonic price, South Africa
    JEL: C50 R14 R15
    Date: 2014
  29. By: Vassilis Monastiriotis; Angelo Martelli
    Abstract: The remarkable rise in unemployment in Greece has in a way overshadowed the substantial differentiation, across regions, in terms of regional unemployment and labour market adjustment. This paper examines the geography of these dynamics using probit regressions of unemployment risk and decomposing the observed regional unemployment differentials into three components corresponding to differences in labour quality, matching efficiency and effective demand. We find that, underlying the general increase in unemployment is a wealth of unemployment dynamics and adjustment trajectories. The fall in effective demand has been largest in the main metropolitan regions and the north and north-western periphery. Adjustment has been strong in some areas (e.g., Athens) but, overall, adjustment processes (such as bumping-down and changes in the mix of workforce characteristics) have been weak. The crisis has nullified the improvements in labour market performance registered since the country’s entry into the Eurozone, hitting especially those regions that benefitted most from the latter. The spatial differentiation of adjustment intensities and demand pressures suggests a heightened role for regional policy in the post-crisis period, especially in relation to addressing problems of over-education and matching efficiency in the demand-depressed areas and of inter-regional adjustment mechanisms nationally.
    Date: 2013–12
  30. By: Arnab Bhattacharjee (Heriot-Watt University); Taps Maiti (Michigan State University); Dennis Petrie (University of Melbourne)
    Abstract: Socioeconomic characteristics, health behaviours, and the utilisation and quality of healthcare are prime examples of socioeconomic, cultural and demographic phenomena that are inherently spatial in nature. Understanding the spatial structure of these factors is particularly relevant in order to efficiently allocate resources. This paper explores the general equilibrium spatial structure of health outcomes and health behaviours across Scottish health boards using a variant of the spatial Durbin model which allows for an a priori unknown spatial weights matrix. The results suggest that there is substantial spatial dynamics in behaviours across Health Boards and that these spillovers are, as expected, asymmetric. We then demonstrate how the model can be used to estimate the behavioural and health impact of a targeted education policy within each health board taking into account both the direct effect on the particular health board itself and the indirect effect in terms of spillovers. The results illustrate how the dynamic effects play a large role in designing place based policies that maximise the overall effectiveness of health interventions. Taking into account the spatial dynamics allows policy makers to better target resources and interventions on particular clusters where the direct and indirect spillover benefits are likely to be the greatest in terms of improving health.
    Keywords: spatial econometrics, spatial weights matrix, spatial Durbin model, health outcomes, health behaviours, health care utilisation
    JEL: I12 I18 C33
    Date: 2014
  31. By: Esmeralda Ramalho (Department of Economics and CEFAGE-UE, Universidade de Évora); Joquim Ramalho (Department of Economics and CEFAGE-UE, Universidade de Évora)
    Abstract: Hedonic methods are a prominent approach in the construction of quality-adjusted price indexes. This paper shows that the process of computing such indexes is substantially simplified if arithmetic (geometric) price indexes are computed based on exponential (log-linear) hedonic functions estimated by the Poisson pseudo maximum likelihood (ordinary least squares) method. A Monte Carlo simulation study based on housing data illustrates the convenience of the links identified and the very attractive properties of the Poisson estimator in the hedonic framework.
    Keywords: Hedonic price indexes; Quality adjustment; Retransformation; House prices; Exponential regression; Poisson pseudo maximum likelihood.
    JEL: C43 C51 E31 R31
    Date: 2014
  32. By: Molenda, Inga; Sieg, Gernot
    Abstract: Living downtown has advantages because it allows for a convenient access to a variety of shopping and leisure activities as well as disadvantages due to the difficulties in finding a parking spot when parking capacity is scarce. We formally model the trade-off in a vibrant city district between parking privileges for residents and economic vitality in terms of the product variety offered. We identify situations in which assigning on-street parking spaces to residential parking is a welfare-maximizing policy. Furthermore, we analyze the optimal share of residential parking spaces from the residents perspective only and find that it exceeds the welfare-maximizing share. --
    JEL: R41 R48 D61
    Date: 2013
  33. By: Matthias Duschl (Section Economic Geography and Location Research, Philipps-University, Marburg)
    Abstract: This paper breaks down the distributional analysis of firm growth rates to the domain of regions. Extreme growth events, i.e. fat tails, are conceptualized as an indicator of competitive regional environments which enable processes like structural adaptation or technological re-orientation. An understanding of the heterogeneous dynamics at the level of firms, the “turbulence underneath the big calm†(Dosi et al. 2012), provides a micro-funded empirical perspective on the evolutionary dimension of regional resilience. Therefore, the flexible Asymmetric Exponential Power (AEP) density is fitted to firm data for each German region during the years of economic downturn (2008-2010). Peculiarities of employment growth are explicitly taken into account by applying a new maximum likelihood estimation procedure with order statistics (Bottazzi 2012). The estimated parameters, which measure the tails’ fatness, are then related to various region-specific factors that are discussed in the literature on regional resilience. Results show that firm growth rate distributions remain asymmetric and fat tailed at the spatially disaggregated level, but their shape markedly differ across regions. Extreme growth events, i.e. firm-level turbulences, are primarily a phenomenon of economically better performing regions at the aggregate level and further intensified by the presence of a higher qualified workforce. Besides, the fatness of the tails depends on the regions’ industrial structure.
    Keywords: regional resilience, firm growth, growth rates distributions, fat tails, asymmetric exponential power, evolutionary perspective
    JEL: R11 L16 C46
    Date: 2014–01–29
  34. By: Seidel, Tobias; von Ehrlich, Maximilian
    Abstract: We develop a heterogeneous-fi rms model with trade in goods, labor mobility and credit constraints due to moral hazard. Mitigating fi nancial frictions reduces the incentive of high-skilled workers to migrate to one region such that an unequal distribution of industrial activity becomes less likely. Hence, financial market development has opposite regional implications as trade liberalization. While the former leads to more dispersion of economic activity across space, the latter tends to drive clustering. We provide empirical evidence for this hypothesis by combining industry-region variation in the spatial concentration of economic activity with information on the access to credit and the dependence on external finance. Our estimates for 20 European countries and eleven industries con firm that fi nancial market development mitigates the clustering of economic activity. --
    JEL: F12 F36 R11
    Date: 2013
  35. By: Ostermaier, Andreas; Beltz, Philipp; Link, Susanne
    Abstract: We benefit from the Bologna reform to show how course and program policies affect academic achievement. We examine two similar programs at the business school of a major European university, which were both reformed. Time lags in the reforms allow us to estimate the difference in the differences of student performance in a compulsory second-year course. Performance fell as the impact of the course on the graduation certificate decreased and the time until students received the certificate increased. More students failed as they were allowed to resit the exam more often. Both effects depend on ability. We conclude that program policies matter and universities should be aware of their effects. --
    JEL: I21 I23 I28
    Date: 2013
  36. By: Ferdinando Monte (Johns Hopkins University, Carey Business School)
    Abstract: This paper studies theoretically and empirically the geographic transmission of trade shocks over the territory of a country. Increases in labor demand in a location raise local wages and draw workers away from employment in neighboring locations: those locations experience a reduction in labor supply and an increase in prevailing wages even if not initially affected, or not engaged in the production of tradeable goods; adjustment in their wages affect in turn other close-by locations. In addition, increases in prevailing wages in a location affect all the industries producing there: other locations active in the same industries gain then market shares and experience an increase in labor demand even when they are far apart. I develop a model capable of incorporating realistic geographic features and isolate theoretically the different components of this diffusion. The model is general enough to also allow the study of transmission of localized immigration and productivity shocks. I estimate its main components with data on US commuting patterns and sectoral employment. I illustrate the impact of reductions in trade frictions in a sector on locations active and inactive in it, and the consequences of productivity growth on nominal wages of workers vs. real wages of residents. The model delivers insights on the consequences of ignoring commuting ?flows in analyses of local labor markets.
    Keywords: trade, commuting, local labor markets, geography
    JEL: F16 J61
    Date: 2014–01
  37. By: Dauth, Wolfgang
    Abstract: This paper examines job polarization at the level of local labor markets in Germany over a 30-year period. The major explanation of job polarization is skill biased technological change (SBTC): new technologies are complementary to high paying jobs but substitute workers in routine manual jobs in the middle of the wage distribution, who relocate to low paying service jobs. Several recent papers use regional data to analyze if there is a relation between routine labor and the growth of service jobs, but provide no evidence if the region's labor markets are actually polarized. I close this gap by first introducing an intuitive and simple index to measure the magnitude of job polarization. Then I use comprehensive data on all German employees subject to social security to calculate this index for 204 local labor markets (LLM) in Western Germany between 1980 and 2010. I find that there are substantial disparities if and how strongly LLM are polarized. About one half of all German LLM exhibit significant job polarization, while some others are even inversely polarized. In an econometric analysis, I use this measure to examine the relation between the regional economic structure in the beginning of the period and job polarization. The main finding is that the explanation of SBTC does not apply to all regions to the same extend. Urban regions with many export oriented manufacturing industries in 1980 are most likely to polarize, while SBTC does not seem to have led to polarization in rural regions specialized in traditional manufacturing. --
    JEL: J31 J24 R23
    Date: 2013
  38. By: Kamhöfer, Daniel; Schmitz, Hendrik
    Abstract: We analyze the causal effect of education on old-age cognitive abilities using German Socio-Economic Panel (SOEP) data and regional variation in mandatory years of schooling and the supply of schools. Our outcome variable is the score an individual reaches in an ultra-short intelligence test. We explain this score, using instrumented education. Instrumental variable estimation is necessary since on the one hand, schooling is highly affected by cognitive skills (reverse causality), and, on the other hand, both are influenced by third factors like income and health (possibly omitted variable bias). Using variations in education policy in the German federal states we are able to instrument education for three groups of students which cover all levels of educational achievement. Unlike previous studies this allows us to estimate three different local average treatment effects. The estimated effects range from 14% to 53% of a standard deviation. We find the strongest effect for students with intermediate education. --
    JEL: I21 J24 C26
    Date: 2013
  39. By: Werner, Daniel
    Abstract: In most of the developed countries the number of low-skilled workers decreased and the number of high-skilled workers increased. However, it is far from clear whether and how this change in the skill composition of the employees affects the evolution of regional employment disparities. Therefore, this paper investigates the hypothesis of convergence for the total employment rate and skill-specific employment rates of West German regional planning units for the time period 1989 to 2008. This paper considers different concepts of convergence. Following the cross-sectional approach to convergence provides no evidence for a catching-up process between regions. The findings from the time series approach to convergence are mixed. The results indicate for stochastic convergence in the case of total and high-skilled employment rates whereas the hypothesis of stochastic convergence is rejected for regional low-skilled and medium-skilled employment rates. --
    JEL: C23 J21 R23
    Date: 2013
  40. By: Yongzheng Liu (School of Finance, China Financial Policy Research Center Renmin University of China); Jorge Martinez-Vazquez (International Center for Public Policy. Andrew Young School of Policy Studies, Georgia State University)
    Abstract: This paper examines the Stackelberg equilibrium for public input competition and compares it with the non-cooperative Nash equilibrium. Given two asymmetric regions, we show that under the Nash equilibrium, the more productive region tends to spend more on public input, which results in this region attracting more capital than the less productive region. The comparison of the two equilibria reveals that the leader region obtains a rst-mover advantage under the Stackelberg setting. This suggests that if regions interact with each other sequentially as in the Stackelberg equilibrium, then the regional disparity that is due to the heterogeneity of productivity is likely to be mitigated or enlarged, depending on which region performs the leadership role in the competition process.
    Date: 2014–01–06
  41. By: Wolbers M.H.J.; Velden R.K.W. van der; Büchner C.I.R. (GSBE)
    Abstract: Social background directly impacts educational choice and attainment, but also influences choice and attainment indirectly by affecting school performance. Boudon (1974) described this relationship as primary (indirect) and secondary (direct) effects of social stratification. Based on this approach and Mare¿s sequential transition model, we decompose this impact to analyze these effects¿ relative importance at various stages over the school career. Using Dutch panel data of three school cohorts, we can assess whether primary and secondary effects¿ relative importance has been stable over time. We use different statistical methods to assess the results¿ robustness. Our findings show secondary effects have a decreasing impact at the first transition over time but a rather stable and in some cases increasing impact at the educational career¿s later stages. As a result, the cumulative share of secondary effects on educational attainment is stable over time, at least if one examines the last two cohorts. When using ordinary least squares (OLS) or counterfactual models, secondary effects amount to some 55% of social background¿s total effect. However, using structural equation modeling that allows for taking into account measurement error in performance tests and social background, secondary effects¿ relative importance amounts to some 45%. This result suggests method does matter for numerical closeness. Nevertheless, the findings of all models used in this study point in the same direction and suggest that preferences and expectations of aspiring higher educational levels remain strongly associated with social background.
    Keywords: Hypothesis Testing: General; Analysis of Education; Education and Inequality;
    JEL: C12 I21 I24
    Date: 2013
  42. By: Falck, Oliver; Bauernschuster, Stefan
    Abstract: Friedrich Froebel, a German pedagogue, established the first kindergarten worldwide in Thuringia in 1839. We study the spatial dissemination of the kindergarten movement in Germany in the 19th and beginning of the 20th century. Spatial dissemination can be explained by the cultural proximity, measured by dialect similarity at the end of the 19th century, to Froebel s place of activity. We further show that the spatial pattern of child care use is highly persistent over time. End of 19th century cultural proximity to Froebel s place of activity can explain the spatial pattern of child care use in the 1990s and 2000s. --
    JEL: N33 J13 Z13
    Date: 2013
  43. By: Tumen, Semih; Zeydanli, Tugba
    Abstract: We investigate whether individuals feel happier when others around them are happier in broadly defined worker groups. This will be a formal test of spillovers in happiness. Answering this question requires a careful handling of the reflection problem, as it may not be possible to separate the endogenous spillover effects from contextual effects unless an appropriately designed identification strategy is employed. Implementing such a strategy and using the 2008 release of the British Housing Panel Survey (BHPS), we show that the group-level happiness does not have a statistically significant endogenous effect on individual-level happiness in the Great Britain. We report, however, statistically significant contextual effects in various dimensions including age, education, employer status, and health. These results suggest that higher group-level happiness does not spill over to the individual level in neither negative nor positive sense, while the individual-level happiness is instead determined by social context (i.e., the group-level counterparts of certain observed covariates). We also test the relevance of the "Easterlin paradox" and find that our result regarding the effect of income on happiness -- controlling for social interactions effects -- is the group-level analogue of Easterlin's original results.
    Keywords: Happiness; spillover externalities; contextual effects; social ecologies; reflection problem; BHPS.
    JEL: C31 C36 D03 D62 I31
    Date: 2014–01–25
  44. By: Buettner, T; Janeba, Eckhard
    Abstract: Considering data for individual earnings we show that the local subsidization of cultural activities in Germany exerts effects on the wage distribution in the sense that these subsidies tend to reduce the wage gap between those with higher and less education. These findings motivate a theoretical analysis which explains the effects of subsidies in terms of a cross-sectional capitalization into the earnings of the immobile factor. In the theoretical model, the local government is focusing on improving the economic conditions faced by immobile residents. In this context, subsidization of cultural activities is discussed as a form of local public goods provision which makes a city more attractive to highly educated individuals who capture the rents from the production process. The theoretical analysis shows that inter-jurisdictional competition for the highly educated introduces a distortion of public goods provision, in the sense that uncoordinated policies lead to an inefficiently large supply of the public good. Our results suggest that since German local governments are prevented from adjusting their tax structure in a way that meets the efficiency requirements under fiscal competition, they resort to extending the supply of cultural activities through public subsidization. --
    JEL: H20 H41 R13
    Date: 2013
  45. By: Parag A. Pathak; Peng Shi
    Abstract: There are relatively few systematic comparisons of the ex ante counterfactual predictions from structural models to what occurs ex post. This paper uses a large-scale policy change in Boston in 2014 to investigate the performance of discrete choice models of demand compared to simpler alternatives. In 2013, Boston Public Schools (BPS) proposed alternative zone configurations in their school choice plan, each of which alters the set of schools participants are allowed to rank. Pathak and Shi (2013) estimated discrete choice models of demand using families' historical choices and these demand models were used to forecast the outcomes under alternative plans. BPS, the school committee, and the public used these forecasts to compare alternatives and eventually adopt a new plan for Spring 2014. This paper updates the forecasts using the most recently available historical data on participants' submitted preferences and also makes forecasts based on an alternative statistical model not based a random utility foundation. We describe our analysis plan, the methodology, and the target forecast outcomes. Our ex ante forecasts eliminate any scope for post-analysis bias because they are made before new preferences are submitted. Part II will use newly submitted preference data to evaluate these forecasts and assess the strengths and limitations of discrete choice models of demand in our context.
    JEL: H52 I21
    Date: 2014–01
  46. By: Koopmans, Ruud; Schaeffer, Merlin
    Abstract: Ethnic diversity is typically measured by the well-known Hirschman-Herfindahl Index. This paper discusses the merits of an alternative approach, which is in our view better suited to tease out why and how ethnic diversity matters. The approach consists of two elements. First, all existing diversity indices are non-relational. From the viewpoint of theoretical accounts that attribute negative diversity effects to ingroup favouritism and out-group threat, it should however matter whether, given a certain level of overall diversity, an individual belongs to a minority group or to the dominant majority. We therefore decompose diversity by distinguishing the in-group share from the diversity of ethnic out-groups. Second, we show how generalized entropy measures can be used to test which of diversity's two basic dimensions matters most: the variety of groups, or the unequal distribution (balance) of the population over groups. These measures allow us to test different theoretical explanations against each other, because they imply different expectations regarding the effects of in-group size, out-group variety, and balance. We apply these ideas in an analysis of various social cohesion measures across 55 German localities and show that in-group size matters more for natives, and out-group diversity more for immigrants. In both groups, the variety component of diversity seems to be decisive. These findings provide little support for group threat as an important mechanism behind negative diversity effects, and are most in line with the predictions of theories that emphasize coordination problems, asymmetric preferences, and network closure, which are maximized where there are many small groups. --
    Keywords: ethnic diversity,social cohesion,entropy,in-group favouritism,group threat
    Date: 2013
  47. By: Badev, Anton; Beck, Thorsten; Vado, Ligia; Walley, Simon
    Abstract: This paper presents new data on the depth and penetration of mortgage markets across countries. There is a large variation across both dimensions of mortgage market development, across countries, but also -- in terms of depth -- within countries. Mortgage markets seem to develop only at relatively high levels of gross domestic product per capita. Policies associated with financial system development are also associated with mortgage market development, including price stability and the efficiency of contractual and information frameworks. The development of the insurance sector and the stock market, sources of long-term funding, is strongly associated with mortgage market development, while government subsidies and support are not. A benchmarking exercise compares the actual values of mortgage market development to values predicted by structural country factors and shows a large variation across countries and over time in the gap between predicted and actual values, related to specific policies but also mortgage boom and bust cycles.
    Keywords: Debt Markets,Access to Finance,Emerging Markets,Housing Finance,Banks&Banking Reform
    Date: 2014–01–01
  48. By: Eliane El Badaoui; Eric Strobl; Frank Walsh
    Abstract: We estimate the impact of internal migration on local labour markets in Thailand. Using an instrumental variable approach based on weather and distance we estimate an exogenous measure of the net migration inflow into each region. Our results show that instrumenting for the possible endogeneity of net inward migration is crucial to the analysis. The results suggest that wages of low skill male workers are highly flexible with substantial adjustments in hours worked and weekly wages in response to short term changes in labour supply. We find no effect on high skilled workers.
    Keywords: Internal migration, Labour markets, Thailand
    JEL: O15 J10
    Date: 2014–01–06
  49. By: Peichl, Andreas; Fuest, Clemens; Siegloch, Sebastian
    Abstract: In this paper we provide empirical evidence on the wage incidence of the German business tax, which is set at the municipal level. For our analysis, we use very rich administrative linked employer-employee panel data, covering 11 years, and link it to data on the business tax rates of about 11,100 German municipalities. On average 8\% of the municipalities adjust their business tax rate per year. We are thus able to exploit multiple quasi-natural experiments to identify the tax incidence on wages. While the unique German setting allows us to gauge general equilibrium wage effects, the detailed administrative data enables us to estimate heterogeneous incidence effects and to explore different channels of how the business tax burden is passed on. Consistent with our theoretical model, we find a negative direct effect of corporate taxation on wage, arising in a collective wage bargaining context. A one euro increase in the annual tax liabilities yields a 50 cent decrease of the annual wage bill. This burden is borne high- and medium-skilled labor. Furthermore, we show that the general equilibrium effect on wages is negligible in the context of our study due to the high regional labor mobility. --
    JEL: H22 H25 J30
    Date: 2013
  50. By: Eliasson , Jonas (KTH)
    Abstract: Congestion pricing was introduced in Stockholm 2006, first as a trial followed by a referendum, and permanently from 2007. Public attitudes to the charges became more negative during the period from the decision to the start of the system. Once the system started, public attitudes became dramatically more positive over the following years, going from 2/3 against the charges to more than 2/3 in favour of the charges. While the traditional explanatory variables self-interest and belief in the charges’ effectiveness strongly affect attitudes at any given point in time, we show that they cannot explain the change in opinion. Moreover, self-reported changes in behaviour and attitudes considerably underestimate actual changes. About 3/4 of the decrease in car trips and more than half of the change in attitudes seem to have gone unnoticed by respondents, ex post. We discuss how the debate and the shift in attitudes can be understood as a public and political reframing of the congestion pricing over time.
    Keywords: Congestion pricing; Acceptability; Attitudes
    JEL: H23 H54 R41 R48
    Date: 2014–01–20

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