nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2014‒03‒22
33 papers chosen by
Steve Ross
University of Connecticut

  1. The Impact of Better School Accessibility on Student outcomes By Kenzo Asahi
  2. Kauffman School Evaluation Long-Term Outcomes Report: Year 2. By Matthew Johnson; Eric Lundquist; Cleo Jacobs Johnson; Claudia Gentile
  3. Criminality spread: a "Boomerang effect" of public transport improvements?. By Carlos Augusto Olarte Bacares
  4. Evaluating Spatial Policies By Steve Gibbons; Max Nathan; Henry G. Overman
  5. Culturally Clustered or in the Cloud? Location of Internet Start-ups in Berlin By Kristoffer Moeller
  6. Who Are the School Truants? By OECD
  7. Inside the Black Box of Class Size: Mechanisms, Behavioral Responses, and Social Background By Fredriksson, Peter; Öckert, Björn; Oosterbeek, Hessel
  8. Smart city: fact and fiction By De Santis, Roberta; Fasano, Alessandra; Mignolli, Nadia; Villa, Anna
  10. Are there different convergence local behaviors hidden under the regional level? By Alberto Días Dapena; Fernando Rubiera Morollón; Dusan Paredes Araya
  11. Decomposition of Differences in PISA Results in Middle Income Countries By Nieto, Sandra; Ramos, Raul
  12. Towards an evolutionary perspective on regional resilience By Ron Boschma
  13. The role of market access and human capital in regional wage disparities: Empirical evidence for Ecuador By Rafael Alvarado; Miguel Atienza
  14. The evolving dialogue between Innovation and Economic Geography. From physical distance to non-spatial proximities and 'integrated' frameworks By Riccardo Crescenzi
  15. Are public transport improvements endogenous with respect to employment and income location in a city?. By Carlos Augusto Olarte Bacares
  16. Did consumers want less debt? Consumer credit demand versus supply in the wake of the 2008-2009 financial crisis By Gropp, Reint; Krainer, John; Laderman, Elizabeth
  17. The Determinants of Exit in Argentina: Core and Peripheral Regions By Calá, Carla Daniela; Manjón Antolín, Miguel C.; Arauzo Carod, Josep Maria
  18. Education Promoted Secularization By Becker, Sascha O.; Nagler, Markus; Woessmann, Ludger
  19. Agent-based modeling of knowledge transfer within social networks By Widad Guechtouli
  20. Commuting for meetings By Fosgerau, Mogens; Engelson, Leonid; Franklin, Joel
  21. Shrinking Regions in a Shrinking Country: The Geography of Population Decline in Lithuania 2001-2011 By Ubarevičienė, Rūta; van Ham, Maarten; Burneika, Donatas
  22. Debt Dilution in 1920s America: Lighting the Fuse of a Mortgage Crisis By Natacha Postel-Vinay
  23. Separating Gender Composition Effect from Peer Effects in Education By B. Jahanshahi
  24. “When supply travels far beyond demand: Causes of oversupply in Spain’s transport infrastructure” By Daniel Albalate; Germà Bel; Xavier Fageda
  25. How Old Are the Teachers? By OECD
  26. Natural disasters and macroeconomic performance: The role of residential investment By Holger Strulik; Timo Trimborn
  27. Ethno-regional favouritism in Sub-Saharan Africa By Ahlerup, Pelle; Isaksson, Ann-Sofie
  28. Loss Aversion, Team Relocations, and Major League Expansion By Humphreys, Brad; Zhou, Li
  29. Key Players in Co-Offending Networks By Lindquist, Matthew J.; Zenou, Yves
  30. Spatiotemporal Search By Navid Mojir; Ahmed Khwaja; K. Sudhir
  31. Pathways from jobs to social cohesion By Wietzke, Frank-Borge
  32. Do Parents' Occupations Have an Impact on Student Performance? By OECD
  33. Crime and Mental Wellbeing By Cornaglia, Francesca; Feldman, Naomi E.; Leigh, Andrew

  1. By: Kenzo Asahi
    Abstract: This paper identifies and quantifies the effects of better transport accessibility on student performance measured by mathematics test scores. A 27 km new subway line and the extension of an existing line in Santiago (Chile) in the mid-2000s reduced the distance between some schools and their nearest subway station. Estimates are derived using fixed effects models that account for endogeneity in the relation between student performance and school-subway network distance. Increased proximity to the subway network is associated with substantially lower test scores.
    Keywords: School accessibility, subway, test scores, student achievement, transport innovations
    JEL: R42 H41 I29
    Date: 2014–03
  2. By: Matthew Johnson; Eric Lundquist; Cleo Jacobs Johnson; Claudia Gentile
    Abstract: The Kauffman School is a charter school in Kansas City, Missouri that opened in 2011 to serve middle and high school students from the city’s most economically disadvantaged neighborhoods . This report evaluates the effectiveness of the School at improving student achievement, attendance, and discipline outcomes during its first two years of operation.
    Keywords: Kauffman School, Long-Term Outcomes, Education
    JEL: I
    Date: 2014–03–06
  3. By: Carlos Augusto Olarte Bacares (Centre d'Economie de la Sorbonne)
    Abstract: The relationship between accessibility or the degree of improvement of urban transport and criminality has been underestimated and close to forgotten. This paper aims to reveal the importance of public transport policies in the evolution of crime configuration in a city. The hypothesis that the probability of transport improvements in a zone depends on some of its socio-economic characteristics is adopted. The use of the propensity score matching technique reveals that the presence of improvements of public transport in a zone of the city has a direct and significant impact on the increase of some types of crime. Likewise, spatial econometrics results expose that crime tends to be contagious in neighbouring zones. The presence of the Transmilenio system in Bogota may share out criminality to other zones of the city. Negative externalities like the better mobility of offenders and, then, their possible choice to expand their criminal activities to new zones, can spoil the positive effects of enhancement of public transport. Far from suggesting no developing public transport or isolating some “dangerous” neighbourhoods or inhabitants, this article shows that improvement of public transport may not only generate positive externalities; policy makers should take into consideration the mutation and shift of criminal behaviours in order to identify possible solutions such as the construction of more establishments providing health, welfare and sporting activities, as is evoked in the results. In this way, the “boomerang effect” of the improvement to transport will be reduced.
    Keywords: Urban public transports improvements, propensity score matching, crime contagion, spatial dependence.
    JEL: C31 K42 R12 R15
    Date: 2014–03
  4. By: Steve Gibbons; Max Nathan; Henry G. Overman
    Abstract: In most countries economic prosperity is very unevenly distributed across space: regions, cities and neighbourhoods seem to be very unequal, whether we look at average earnings, employment, education or almost any other socio-economic outcome. Regional, urban and neighbourhood policies are often based on concerns about these kinds of disparities, and reducing such disparities is a key policy objective in many countries. This paper considers the role of empirical analysis in informing the development of these policies. It is particularly concerned with issues arising in the quantitative evaluation of the impact of policy, the major barriers to more effective evaluation and how these might be addressed in future.
    Keywords: Spatial economics, evaluation, impact evaluation, econometrics, research design, public policy, economic development
    JEL: A11 C81 C93 R00
    Date: 2014–03
  5. By: Kristoffer Moeller
    Abstract: Knowledge based firms like IT companies do neither have a capital- nor a land intensive production. They predominantly rely on qualified labour and increasingly depend on the location of its (potential) employees. This implies that it is more likely that firms follow workers rather than the other way around. Contributing to the literature of firm location and consumer cities I empirically test the amenity oriented firm location hypothesis. In particular I investigate whether Berlin internet start-up firms, representing a footloose knowledge-based service industry, locate in urban amenity-rich places. Identification builds on the sudden fall of the Berlin Wall. The intra-city analysis yields a significant impact of urban amenities on the location of internet start-up. A comparison with other service industries suggests that amenities are significant to the location choice of creative sectors whereas no effect can be observed for non-creative firms.
    Keywords: Firm location, urban amenities, consumer city, internet start-ups, entrepreneurs, Berlin
    JEL: R30 D22 L26
    Date: 2014–03
  6. By: OECD
    Abstract: Across OECD countries, 18% of students skipped classes at least once in the two weeks prior to the PISA test, and 15% of students skipped a day of school or more over the same period. Few students in high-performing school systems skip classes or days of school. For students in OECD countries, skipping classes is associated with a 32-point lower score in mathematics, while skipping days of school is associated with a 52-point lower score. Truancy is observed among all students, whether advantaged or disadvantaged.
    Date: 2014–01
  7. By: Fredriksson, Peter (Stockholm University); Öckert, Björn (IFAU); Oosterbeek, Hessel (University of Amsterdam)
    Abstract: Studies on the effect of class size on student achievement typically find that disadvantaged students benefit more from reduced class size than others. To better understand this differential impact, we analyze changes in the learning environment due to class size, and behavioral responses to class size among parents, schools, teachers and students. The variation in class size is induced by a maximum class size rule applying to upper primary schools in Sweden. We find that in response to an increase in class size: i) teachers seem to assign more responsibility to students; ii) low-income students find their teachers hard to follow when taught in full-class iii) high-income parents help their children more with homework; iv) parents are more likely to change schools; and v) other school inputs and student effort adjust very little. These findings help explain why we find that the negative effect of class size on achievement in our data is concentrated among low-income students.
    Keywords: class size, social background, heterogenous effects, regression discontinuity
    JEL: I21 I28 J24 C31
    Date: 2014–03
  8. By: De Santis, Roberta; Fasano, Alessandra; Mignolli, Nadia; Villa, Anna
    Abstract: Transforming a city into a Smart City is a complex and multidimensional process which changes over time since all the involved stakeholders work to achieve more and better results. “To be smart” affects many aspects of a city including economics, government, people, living, mobility, environment, energy and services. This paper aims at critically analysing the main features related to smart cities such as terminological issues, the heterogeneous theoretical background and the methodological limits of the few existing measurement experiences.
    Keywords: Smart city, urban development, human capital, transport infrastructure, ICTs
    JEL: O1 O18 O2 R12
    Date: 2014–03
  9. By: Arline T. Geronimus; John Bound; Annie Ro
    Abstract: Determining whether population dynamics provide competing explanations to place effects for observed geographic patterns of population health is critical for understanding health inequality. We focus on the working-age population where health disparities are greatest and analyze detailed data on residential mobility collected for the first time in the 2000 US census. Residential mobility over a 5-year period is frequent and selective, with some variation by race and gender. Even so, we find little evidence that mobility biases cross-sectional snapshots of local population health. Areas undergoing large or rapid population growth or decline may be exceptions. Overall, place of residence is an important health indicator; yet, the frequency of residential mobility raises questions of interpretation from etiological or policy perspectives, complicating simple understandings that residential exposures alone explain the association between place and health. Psychosocial stressors related to contingencies of social identity associated with being black, urban, or poor in the U.S. may also have adverse health impacts that track with structural location even with movement across residential areas.
    Keywords: place and health, residential mobility, race and health, SES, urban, rural
    Date: 2014–02
  10. By: Alberto Días Dapena; Fernando Rubiera Morollón (REGIOlab, Laboratorio de Análisis Económico Regional - Universidad de Oviedo); Dusan Paredes Araya (IDEAR - Department of Economics, Universidad Católica del Norte - Chile)
    Abstract: The large literature about economic convergence explores widely different ways of measure convergence as well as sophisticates and improves the econometrical techniques. Contradictory the number of contributions that analyze how relevant is the data spatial desegregation is reduced. Our hypothesis is that the spatial unit of analysis definition could affect significantly the convergence conclusions. The assumptions of the Neoclassical models of economic growth might not to be affected by the spatial desegregation but New Economic Geography framework pointed out the core-periphery behaviors and if the spatial unit is too much aggregated it could make diffuse this processes. To study it in this paper a multilevel perspective is proposed. That allows differentiating possible different local behaviors inside regions. It is applied to the U.S. economy: States and counties. The results show high intra class correlation indexes that indicate that there exists a significant variance inside of the States. A general behavior of convergence is observed coherent with previous studies but we can indentify some States that present internal behaviors of divergence or significant changes in the speed of convergence.
    Keywords: Convergence studies, regional and local growth, multilevel analysis and US.
    JEL: R11 R15 O47
    Date: 2014–03
  11. By: Nieto, Sandra (University of Barcelona); Ramos, Raul (University of Barcelona)
    Abstract: Our objective is to analyse the role of teacher and school quality to explain differences in students' educational outcomes. With this aim, we use PISA microdata for 10 middle income and 2 high income countries and we apply decomposition methods in order to identify the role of these factors for different groups of students. Our results show that school and teacher quality and better practices matter even in different institutional settings. From a policy perspective, this evidence supports actions addressed at improving both factors in order to reduce cross‐country differences but also between students at the top and bottom distribution in terms of socio‐economic characteristics.
    Keywords: educational outcomes, teacher and school quality, PISA, decomposition methods, middle‐income countries
    JEL: J24 I21 I25
    Date: 2014–03
  12. By: Ron Boschma
    Abstract: This paper proposes an evolutionary perspective on regional resilience. We conceptualize resilience not just as the ability of a region to accommodate shocks, but we extend it to the long-term ability of regions to develop new growth paths. We propose a comprehensive view on regional resilience, in which history is key to understand how regions develop new growth paths, and in which industrial, network and institutional dimensions of resilience come together. Resilient regions are capable of overcoming a trade-off between adaptation and adaptability, as embodied in their industrial (related and unrelated variety), network (open, loosely coupled) and institutional (loosely coherent) structures.
    Date: 2014–03
  13. By: Rafael Alvarado (Department of Economics, Universidad Tecnica Particular de Loja); Miguel Atienza (IDEAR - ORDHUM - Department of Economics, Universidad Católica del Norte - Chile)
    Abstract: This article examines the effect of market access and human capital on regional wage disparities in Ecuador using the wage equation of the core-periphery model of the New Economic Geography and a multi-level model. Our results, based on cross-sectional data, suggest that market access has a positive and statistically significant effect on wages, although this effect is relatively small. Only a small degree of regional wage variation can be attributed to the effect of market size, while the composition of the labor force explains a significant part of the reduction of regional wage disparities. Consequently, efforts to reduce the unequal spatial distribution of human capital can contribute to the reduction of regional income disparity.
    Keywords: Market access, Human capital, Wages, NEG. Multilevel regression, Ecuador.
    JEL: J31 R12 J24
    Date: 2014–03
  14. By: Riccardo Crescenzi
    Abstract: This paper looks at the recent economic geography literature and sets out to explore the evolution of its intersections with innovation theories. The replacement of the linear model with more sophisticated conceptualisations of the process of innovation has made it possible to account for persistent disparities in innovative performance across space and has motivated researchers to incorporate the role of space and places in the analysis of innovation processes. From the physical-metrical approach of geography as distance, to the emphasis on specialisation and diversification patterns (geography as economic place), institutional-relational factors, non-spatial proximities and 'integrated' frameworks, economic geography theory has substantially evolved in terms of its contribution to the understanding of technological dynamics with significant implications for the rationale, design and implementation of innovation policies.
    Date: 2014–03
  15. By: Carlos Augusto Olarte Bacares (Centre d'Economie de la Sorbonne)
    Abstract: Previous research has proved the existence of a causal relationship between the concentration of jobs in a city and the income of inhabitants. Other researchers have studied the close and nearly causal relationship between those variables and the infrastructure such as highways in different zones of a city. Nevertheless, no one study has taken into account the degree to which each area of a city benefits from the latest improvements to public transport. The aim of this research is to analyse the relationship between the size of the labour market, the income and the employment concentration with respect to improvements to public transport (Transmilenio) in Bogota. The degree of enhancement of public transport in a zone is suspected to be endogenous. Through the use of OLS estimations and then 2SLS, the validation of endogeneity provides sufficient tools to infer causality of improvement of public transport. The size of companies, defined by the number of jobs they offer, plays the role of instrumental variable. In essence, the number of jobs, the size of the labour market and income are largely defined by the level of improvement to urban public transport in each zone of the city but the causality relationship changes depending on the size of companies established in each zone. In the case of Bogota, public transport improvements seams to have a causality relationship with the income of inhabitants in each zone and the number of jobs, and this changes with respect to the size of enterprises. In contrast, the size of the labour market, defined as the number of jobs reachable in a specific time, is not determined by the degree of the presence of public transport enhancement.
    Keywords: Causality, improvements of public transports, endogeneity, effective size of labor market, size of enterprises.
    JEL: J68 R12 R23
    Date: 2014–02
  16. By: Gropp, Reint; Krainer, John; Laderman, Elizabeth
    Abstract: We explore the sources of household balance sheet adjustment following the collapse of the housing market in 2006. First, we use microdata from the Federal Reserve Board's Senior Loan Officer Opinion Survey to document that banks cumulatively tightened consumer lending standards more in counties that experienced a house price boom in the mid-2000s than in non-boom counties. We then use the idea that renters, unlike homeowners, did not experience an adverse wealth shock when the housing market collapsed to examine the relative importance of two explanations for the observed deleveraging and the sluggish pickup in consumption after 2008. First, households may have optimally adjusted to lower wealth by reducing their demand for debt and implicitly, their demand for consumption. Alternatively, banks may have been more reluctant to lend in areas with pronounced real estate declines. Our evidence is consistent with the second explanation. Renters with low risk scores, compared to homeowners in the same markets, reduced their levels of nonmortgage debt and credit card debt more in counties where house prices fell more. The contrast suggests that the observed reductions in aggregate borrowing were more driven by cutbacks in the provision of credit than by a demand-based response to lower housing wealth. --
    Keywords: credit supply,deleveraging,households,financial crisis
    JEL: E21 G21
    Date: 2014
  17. By: Calá, Carla Daniela; Manjón Antolín, Miguel C.; Arauzo Carod, Josep Maria
    Abstract: This paper analyses the regional determinants of exit in Argentina. We find evidence of a dynamic revolving door by which past entrants increase current exits, particularly in the peripheral regions. In the central regions, current and past incumbents cause an analogous displacement effect. Also, exit shows a U-shaped relationship with respect to the informal economy, although the positive effect is weaker in the central regions. These findings point to the existence of a core-periphery structure in the spatial distribution of exits. Key words: firm exit, count data models, Argentina JEL: R12; R30; C33
    Keywords: Economia regional, Localització industrial, Argentina, Anàlisi de dades de panel, Anàlisi de sèries temporals, 332 - Economia regional i territorial. Economia del sòl i de la vivenda,
    Date: 2014
  18. By: Becker, Sascha O. (University of Warwick); Nagler, Markus (University of Munich); Woessmann, Ludger (University of Munich)
    Abstract: Why did substantial parts of Europe abandon the institutionalized churches around 1900? Empirical studies using modern data mostly contradict the traditional view that education was a leading source of the seismic social phenomenon of secularization. We construct a unique panel dataset of advanced-school enrollment and Protestant church attendance in German cities between 1890 and 1930. Our cross-sectional estimates replicate a positive association. By contrast, in panel models where fixed effects account for time-invariant unobserved heterogeneity, education – but not income or urbanization – is negatively related to church attendance. In panel models with lagged explanatory variables, educational expansion precedes reduced church attendance.
    Keywords: Secularization, education, history, Germany
    Date: 2014
  19. By: Widad Guechtouli
    Abstract: In this paper, we study both processes of direct and indirect knowledge transfer, from a modelling perspective, using agent-based models. In fact, there are several ways to model knowledge. We choose to study three different representations, and try to determine which one allows to better capture the dynamics of knowledge diffusion within a social network. Results show that when knowledge is modelled as a binary vector, and not cumulated, this enables us to observe some heterogeneity in agents' learning and interactions, in both types of knowledge transfer.
    Keywords: knowledge model, knowledge transfer, social networks, communication.
    Date: 2014–02–25
  20. By: Fosgerau, Mogens; Engelson, Leonid; Franklin, Joel
    Abstract: Urban congestion causes travel times to exhibit considerable variability, which leads to coordination problems when people have to meet. We analyze a game for the timing of a meeting between two players who must each complete a trip of random duration to reach the meeting, which does not begin until both are present. Players prefer to depart later and also to arrive sooner, provided they do not have to wait for the other player. We find a unique Nash equilibrium, and a continuum of Pareto optima that are strictly better than the Nash equilibrium for both players. Pareto optima may be implemented as Nash equilibria by penalty or compensation schemes.
    Keywords: congestion; random travel time variability; coordination game
    JEL: C7 D1 R4
    Date: 2014
  21. By: Ubarevičienė, Rūta (Lithuanian Social Research Centre); van Ham, Maarten (Delft University of Technology); Burneika, Donatas (Lithuanian Social Research Centre)
    Abstract: Shrinking populations have been gaining increasing attention, especially in post-socialist East and Central European countries. While most studies focus on the population decline of capital cities and their regions, much less is known about the spatial dimension of population decline on the national level. Lithuania is one of the countries which have experienced very high levels of population decline in the last decades. This study uses Lithuanian Census data from the years 2001 and 2011 to get insight into the geography of population change for the whole country. The results show a sharp population decline in Lithuania of 17.2% between 1989 and 2011, with the decrease being more intense during the second decade of the period. The population dropped in most areas, including the main cities, but increased in the regions surrounding these cities. The predictive models show a clear geographical dimension of population decline, but also reveal that population composition and investments play a role in the process of decline.
    Keywords: post-socialist transition, shrinking regions, population decline, suburbanization, Lithuania
    JEL: J11 J61 P20 R23
    Date: 2014–03
  22. By: Natacha Postel-Vinay (London School of Economics)
    Abstract: An explanation of the Great Depression based on mortgage debt via the banking channel has been downplayed due to the conservatism of mortgage contracts at the time. Indeed, maturities were particularly short compared to today's average terms (around three years), and loan-to-value ratios often did not exceed 50 per cent. Using newly-discovered archival documents and a newly-compiled dataset from 1934, this paper uncovers the darker side of 1920s U.S. mortgage lending: the so-called “second mortgage system.” As borrowers often could not make a 50 per cent down payment, a majority of them took on second mortgages at usurious rates. As theory predicts, debt dilution, even in the presence of seniority rules, can be highly detrimental to both junior and senior lenders. The probability of default on first mortgages was likely to increase, and commercial banks were more likely to foreclose. Through foreclosure they would still be able to retrieve 50 per cent of the property value, but often after a protracted foreclosure process - a great impediment to bank survival in case of a liquidity crisis. This paper is thus a timely reminder that second mortgages, or “piggyback loans” as they are called today, can be hazardous to lenders and borrowers alike. It provides further empirical evidence that debt dilution can be detrimental to credit.
    Keywords: Great Depression, Commercial Banks, Portfolio Choice, Mortgage
    JEL: G11 G21 N22
    Date: 2014–03
  23. By: B. Jahanshahi
    Abstract: This paper aims to highlight the importance of considering endogenous peer effects, as defined by Manski (1993), in order to identify gender composition effect on education outcome appropriately. Using Manski (1993) linear-in-means model, this paper illustrates that the gender composition effect that is currently estimated in education function is the function of three parameters: social multiplier, gender differences in outcome and gender composition effect (known as a gender peer effect). The appropriate gender peer effect is identified after using Graham's variance restriction method to identify and rule out a social multiplier effect. The findings suggest that a social multiplier plays a crucial role in learning process for Italian secondary and US primary students, although a gender peer effect is not as important as highlighted in previous literatures (Hoxby, 2000; Whitmore, 2005; Lavy and Schlosser, 2011).
    JEL: I21 J16
    Date: 2014–03
  24. By: Daniel Albalate (Faculty of Economics, University of Barcelona); Germà Bel (Faculty of Economics, University of Barcelona); Xavier Fageda (Faculty of Economics, University of Barcelona)
    Abstract: Spain’s transport infrastructure policy has become a paradigmatic case of oversupply and of mismatch with demand. The massive expansion of the country’s transport infrastructure over the last decade has not been a response to demand bottlenecks or previously identified needs. For this reason, the intensity of use today on all interurban modes of transport in Spain falls well below that of other EU countries. This paper analyzes the institutional and regulatory factors that have permitted this policy, allowing us to draw lessons from the Spanish case that should help other countries avoid the pitfalls and shortcomings of Spanish policy. Based on our analysis, we also discuss policy remedies and suggest reforms in different regulatory areas, which could help improve the performance of Spain’s infrastructure policy.
    Keywords: Infrastructure, Transportation, Overcapacity, Regulation, Spain. JEL classification: H54; L91; L98; R41; R42; R48
    Date: 2014–03
  25. By: OECD
    Abstract: More than one-third of male primary school teachers in OECD countries are now over 50 years old. Across OECD countries, the average age of secondary school teachers has increased by one month every year in the last decade. Only a few countries have managed to develop policies which lower the average age of teachers significantly. Increasing the numbers of female teachers no longer lowers the average age, as the female teaching workforce is ageing faster than its male counterpart.
    Date: 2014–03
  26. By: Holger Strulik; Timo Trimborn
    Abstract: Recent empirical research has shown that income per capita in the aftermath of natural disasters is not necessarily lower than before the event. Income remains in many cases not significantly affected or, perhaps even more surprisingly, it responds positively to natural disasters. Here, we propose a simple theory, based on the neoclassical growth model, that explains these observations. Specifically we show that GDP is driven above its pre-shock level when natural disasters destroy predominantly residential housing (or other durable goods). Disasters destroying mainly productive capital, in contrast, are predicted to reduce GDP. Insignificant responses of GDP can be expected when disasters destroy about twice as much residential structures as productive capital. We show that disasters, irrespective of whether their impact on GDP is positive, negative, or insignificant, entail considerable losses of aggregate welfare. --
    Keywords: natural disasters,economic recovery,residential housing,economic growth
    JEL: E20 O40 Q54 R31
    Date: 2014
  27. By: Ahlerup, Pelle (Department of Economics, School of Business, Economics and Law, Göteborg University); Isaksson, Ann-Sofie (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Abstract: Studies of political favouritism in Africa often treat ethnic and regional favouritism as interchangeable concepts. The present paper distinguishes between the two and investigates their relative influence in Sub-Saharan Africa. Focusing on whether individuals perceive their ethnic group to be unfairly treated by government, we assess the importance of being a co-ethnic of the country president, of living in the president’s region of origin and of the regional share of president co-ethnics. Empirical findings drawing on detailed individual level survey data covering more than 19 000 respondents across 15 African countries suggest that ethnic and regional favouritism are not the same, but rather have independent effects.
    Keywords: ethnic favouritism; regional favouritism; Africa
    JEL: D63 D72 O12 O55
    Date: 2014–03–13
  28. By: Humphreys, Brad (University of Alberta, Department of Economics); Zhou, Li (University of Alberta, Department of Economics)
    Abstract: Professional sports teams receive large public subsidies for new facility construction. Empirical research suggests that these subsidies cannot be justified by tangible or intangible economic benefits. We develop a model of bargaining between local governments and teams over subsidies that includes league expansion decisions. The model features loss aversion by fans that captures lost utility when a team leaves a city. The model predicts that teams exploit this loss aversion to extract larger than expected subsidies from local governments, providing an explanation for these large subsidies and highlighting the importance of anti-trust exemptions in enhancing teams' bargaining positions.
    Keywords: Endowment Effect; Loss aversion; major league sports; bargaining
    JEL: D42 H25 L12 L83
    Date: 2014–03–02
  29. By: Lindquist, Matthew J. (SOFI, Stockholm University); Zenou, Yves (Stockholm University)
    Abstract: We study peer effects in crime by analyzing co-offending networks. We first provide a credible estimate of peer effects in these networks equal to 0.17. This estimate implies a social multiplier of 1.2 for those individuals linked to only one co-offender and a social multiplier of 2 for those linked to three co-offenders. We then provide one of the first empirical tests of the key player policy in a real world setting. This policy defines a micro-founded strategy for removing the criminal from each network that reduces total crime by the largest amount. Using longitudinal data, we are able to compare the theoretical predictions of the key player policy with real world outcomes. By focusing on networks for which the key player has disappeared over time, we show that the theoretical predicted crime reduction is close to what is observed in the real world. We also show that the key player policy outperforms other reasonable police policies such as targeting the most active criminals or targeting criminals who have the highest betweenness or eigenvector centrality in the network. This indicates that behavioral-based policies can be more efficient in reducing crime than those based on algorithms that have no micro-foundation.
    Keywords: crime, social networks, peer effects, social multiplier, key player, crime policies
    JEL: A14 K42 Z13
    Date: 2014–02
  30. By: Navid Mojir (Yale School of Management); Ahmed Khwaja (Yale School of Management and Cowles Foundation); K. Sudhir (Yale School of Management and Cowles Foundation)
    Abstract: Despite evidence that consumers search across both stores (spatial) and time (temporal), the search literature models search in only one dimension. We develop a model of spatiotemporal search that nests a finite horizon model of spatial search within an infinite horizon model of inter-temporal search. The model is estimated using an iterative procedure that formulates it as a mathematical program with equilibrium constraints (MPEC) embedded within an E-M algorithm to allow for latent class heterogeneity. The empirical analysis is based on data on household store visits and purchases in the milk category. In contrast to extant research, we find that omitting the temporal dimension underestimates price elasticity. We attribute this difference to the importance of stockouts relative to stockpiling in the milk category. Further, contrary to the conventional wisdom that promotions reduce loyalty, we find that in the presence of search frictions, price promotions can be a store loyalty-enhancing tool.
    Keywords: Structural models, Sales promotions, Dynamic Programming, Retailing
    JEL: L81 M31 D12
    Date: 2014–03
  31. By: Wietzke, Frank-Borge
    Abstract: There is growing recognition that access to good jobs is an important driver of social cohesion. While economic dimensions of labor market outcomes are relatively well documented, evidence on the link between social cohesion and jobs is still surprisingly scarce. This paper, based on an earlier background report for the WDR 2013, presents empirical evidence for pathways between labor market outcomes and social cohesion. The findings indicate that formal employment is associated with a range of social outcomes and behaviors that are typically associated with higher levels of social cohesion. However, there are also indications that this relationship varies across dimensions of social wellbeing. In particular social interactions and political activism among those in regular employment can either improve the quality of aggregate institutions or deepen existing social divides.
    Keywords: Labor Policies,Labor Markets,Population Policies,Markets and Market Access,Housing&Human Habitats
    Date: 2014–03–01
  32. By: OECD
    Abstract: Students whose parents work in professional occupations generally outperform other students in mathematics, while students whose parents work in elementary occupations tend to underachieve compared to their peers. The strength of the relationship between parents’ occupations and student performance varies considerably across countries: for example, when it comes to mathematics performance, the children of cleaners in Shanghai-China outperform the children of professionals in the United States, and the children of professionals in Germany outperform the children of professionals in Finland, on average. Finland and Japan achieve high levels of performance by ensuring that the children of parents who work in elementary occupations are given the same education opportunities and the same encouragement as the children of professionals.
    Date: 2014–02
  33. By: Cornaglia, Francesca (Queen Mary, University of London); Feldman, Naomi E. (Federal Reserve Board); Leigh, Andrew (Australian National University)
    Abstract: We provide empirical evidence of crime's impact on the mental wellbeing of both victims and non-victims. We differentiate between the direct impact to victims and the indirect impact to society due to the fear of crime. The results show a decrease in mental wellbeing after violent crime victimization and that the violent crime rate has a negative impact on mental wellbeing of non-victims. Property crime victimization and property crime rates show no such comparable impact. Finally, we estimate that society-wide compensation due to increasing the crime rate by one victim is about 80 times more than the direct impact on the victim.
    Keywords: crime, mental wellbeing, neighbourhood effects, non-victims
    JEL: I31 R28
    Date: 2014–03

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