nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2014‒05‒04
thirty-two papers chosen by
Steve Ross
University of Connecticut

  1. Can Pakistan have creative cities? An agent based modeling approach with preliminary application to Karachi: By Malik, Ammar A.; Crooks, Andrew T.; Root, Hilton L.
  2. Unaffordable Housing and Local Employment Growth: Evidence from California Municipalities By Chakrabarti, Ritashree; Zhang, Junfu
  3. Immigration, Housing Discrimination and Employment By Tito Boeri; Marta De Philippis; Eleonora Patacchini; Michele Pellizzari
  4. Applying the Hedonic Pricing Model to the Prices of Single-Family Homes in the Oldest U.S. City, St. Augustine, Florida, Testing Whether Property Taxes Are Capitalized into Housing Prices By Angjellari-Dajci, Fiorentina; Cebula, Richard
  5. The Importance of Community Attributes in Household Residential Location Decisions By Mónica Ospina; Santiago Bohórquez; Andrea Serna; Laura Castañeda
  6. Locational signaling and agglomeration By Berliant, Marcus; Chia-Ming, Yu
  7. Credit Risk Modeling Of Residential Mortgage Lending In Russia By Agatha M. Poroshina
  8. On the Distributive Costs of Drug-Related Homicides By Nicolas Ajzenman; Sebastian Galiani; Enrique Seira
  9. Rental Market Regulation in the European Union By Carlos Cuerpo; Peter Pontuch; Sona Kalantaryan
  10. The Impact of Education on Personality: Evidence from a German High School Reform By Dahmann, Sarah; Anger, Silke
  11. A Human Rights based approach to Housing Policy: A critical and normative analysis By Lind, Hans
  12. Customer Discrimination and Employment Outcomes: Theory and Evidence from the French Labor Market By Combes, Pierre-Philippe; Decreuse, Bruno; Laouénan, Morgane; Trannoy, Alain
  13. University Knowledge Spillovers & Regional Start-up Rates: Supply and Demand Side Factors By Hellerstedt, Karin; Wennberg, Karl; Frederiksen, Lars
  14. Globalization and Local Profiles of Economic Growth and Industrial Change By Dauth, Wolfgang; Suedekum, Jens
  15. Financial development and patterns of industrial specialization: Regional evidence from China By He , Qing; Xue, Chang; Zhu, Chenqi
  16. Gender Comparison, Schooling and Sociability Ratings in Nigeria Evidence from Youth Survey in Ife Town By Ojeaga, Paul; Odejimi, Deborah
  17. Agglomeration effects of inter-firm backward and forward linkages: evidence from Japanese manufacturing investment in China By Nobuaki Yamashita; Toshiyuki Matsuura; Kentaro Nakajima
  18. Assessing Regional Variations in the Effect of the Removal of User Fees on Institutional Deliveries in Rural Zambia By Chitalu M. Chama-Chiliba; Steven F. Koch
  19. Two-sided matching with one-sided preferences By Guillaume Haeringer; Vincent Iehlé
  20. Does High School Homework Increase Academic Achievement? By Kalenkoski, Charlene M.; Pabilonia, Sabrina Wulff
  21. Statistical Risk Analysis for Real Estate Collateral Valuation using Bayesian Distributional and Quantile Regression By Alexander Razen; Wolfgang Brunauer; Nadja Klein; Thomas Kneib; Stefan Lang; Nikolaus Umlauf
  22. Have U.S. Budget Deficits Raised the Real Interest Rate Yield on Tax-Free Municipal Bonds? By Cebula, Richard
  23. Peers Effects on a Fertility Decision: an Application for Medellín Colombia By Leonardo Morales
  24. Urban food retail in Africa: The case of Addis Ababa, Ethiopia By Woldu, Thomas; Abebe, Girum; Lamoot, Indra; Minten, Bart
  25. Foreclosures in an Exurb: Multiple Empirical Analyses through a Prism By Kashian, Russell; Cebula, Richard; Cramer, Eric
  26. Forecasting the U.S. Real House Price Index By Vasilios Plakandaras; Rangan Gupta; Periklis Gogas; Theophilos Papadimitriou
  27. Does Eligibility for Tertiary Education Affect Crime Rates? Quasi-Experimental Evidence By Nordin , Martin
  28. Gross In-Migration and Public Policy in the U.S. during the Great Recession: An Exploratory Empirical Analysis, 2008-2009 By Cebula, Richard; Nair-Reichert, Usha; Coombs, Christopher
  29. Declining Migration within the US: The Role of the Labor Market By Molloy, Raven; Smith, Christopher L.; Wozniak, Abigail
  30. Local Minimum Wage Laws: Impacts on Workers, Families and Businesses By Reich, MIchael; Jacobs, Ken; Bernhardt, Annette
  31. Labor Market Institutions and Long-Term Effects of Youth Unemployment By Kawaguchi, Daiji; Murao, Tetsushi
  32. Determinants of public education expenditure: Evidence from Indian states By Monojit Chatterji; Sushil Mohan; Sayantan Ghosh Dastidar

  1. By: Malik, Ammar A.; Crooks, Andrew T.; Root, Hilton L.
    Abstract: The form and function of many cities are increasingly marred by congestion, sprawl and socioeconomic segregation, preventing them from experiencing expected productivity gains associated with urbanization. We operationalize these insights by creating a stylized agent-based model of a theoretical city, inspired by social complexity theory and the new urban literature.
    Keywords: urban areas, urban population,
    Date: 2013
  2. By: Chakrabarti, Ritashree (IHS Global Insight); Zhang, Junfu (Clark University)
    Abstract: It is widely believed that unaffordable housing could drive businesses away and thus impede job growth. However, there is little evidence to support this view. This paper presents a simple model to clarify how housing affordability is linked to employment growth and why unaffordable housing could negatively affect employment growth. The paper then investigates this effect empirically using data on California municipalities. For various reasons, a simple correlation between unaffordable housing and employment growth cannot be interpreted as causal. Several empirical strategies are employed to identify the causal effect of unaffordable housing on employment growth. The estimation results provide consistent evidence that unaffordable housing indeed slows local employment growth. Policy implications of these findings are briefly discussed.
    Keywords: housing affordability, employment growth, amenity, California
    JEL: R11 R12 R13
    Date: 2014–04
  3. By: Tito Boeri (Bocconi University); Marta De Philippis (LSE and fRDB); Eleonora Patacchini; Michele Pellizzari (University of Geneva)
    Abstract: We use a new dataset on eight Italian cities and a novel identification strategy to analyze the relationship between the employment status of migrants and the percentage of migrants living nearby. Our data contain information at the very local level (i.e. the residential block) and are representative of the population of both legal and illegal migrants. Identification is based on an instrumental variable strategy that exploits the physical characteristics of the local buildings as a source of exogenous variation in the incidence of migrants in each location. We find evidence that migrants who reside in areas with a high concentration of non-Italians are less likely to be employed compared to similar migrants who reside in more mixed areas. This penalty is higher if the migrants leaving nearby are illegal and it is not mitigated by living close to migrants who are from own's ethnic group nor who are more proficient in the Italian language. The employment prospects of natives do not appear to be affected by the vicinity of migrants.
    Keywords: Immigrant residential density, housing discrimination, ethnic networks
    JEL: J15 J61 R23
    Date: 2014–04
  4. By: Angjellari-Dajci, Fiorentina; Cebula, Richard
    Abstract: This empirical investigation applies a hedonic pricing model to determine whether property taxes have been capitalized into housing prices of single-family homes in city of St. Augustine, Florida housing market for single family homes. There were sufficient data in this context to study a total of 4,017 single-family houses for the six-year period from 2008 to 2013 period. The sales price and property tax levels are expressed real terms, i.e., in 2005 dollars. The semi-log estimation reveals, among other things, that the natural log of the real sales price of a single-family house in the St. Augustine area was in fact negatively affected by the city and county property tax level.
    Keywords: housing prices; property tax capitalization; market mechanism
    JEL: H24 H71 R21 R32 R38
    Date: 2014–01–26
  5. By: Mónica Ospina; Santiago Bohórquez; Andrea Serna; Laura Castañeda
    Abstract: This study identifies how community attributes affect household residential location decisions in Medellin, Colombia. The empirical model applies the revealed preference principle: each household is assumed to have made an optimal location decision given a set of alternatives. Using household data, we estimate a conditional logit choice model for residential communities by controlling for both individual and neighborhood characteristics, including environmental attributes. The set of alternatives for each household are defined using the applicable neighborhood’s socioeconomic and geographic characteristics. The results provide an estimate of household preferences for the many characteristics of the potential choices in the choice set. In the case of Medellin, we found positive and significant preferences for public provided goods such as public schools and security but relatively low preferences for recreational and cultural spaces; households prefer that the latter be provided by the private sector.
    Keywords: Housing Demand; Neighborhood Characteristics; Environmental Economics
    JEL: R21 R23 Q50
    Date: 2013–08–27
  6. By: Berliant, Marcus; Chia-Ming, Yu
    Abstract: Agglomeration can be caused by asymmetric information and a locational signaling effect: The location choice of workers signals their productivity to potential employers. The cost of a signal is the cost of housing at that location. When workers' marginal willingness to pay for housing is negatively correlated with their productivity, only the core-periphery (partially stratified) equilibria are stable. When workers' marginal willingness to pay for housing and their productivity are positively correlated, there is no core-periphery equilibrium. The urban wage premium is explained when there is core-periphery equilibrium. Furthermore, location can at best be an approximate rather than a precise sieve for high-skill workers.
    Keywords: Agglomeration; Adverse Selection; Asymmetric Information; Locational Signaling
    JEL: D51 D82 R13
    Date: 2014–04–19
  7. By: Agatha M. Poroshina (National Research University Higher School of Economics)
    Abstract: This paper analyzes the problems of credit risk modeling of residential mortgage lending in Russia. Using unique mortgage loan and macro data from a regional branch of the Agency of Home Mortgage Lending (2008-2012), we find that borrower and mortgage loan characteristics affect the loan performance and play an important role in predicting default as well as a macroeconomic situation. On the residential mortgage market, borrowers with undeclared income have the lowest probability of default, mainly explained by the difference in declared and real income. Obtained results are robust under parametric and semiparametric specifications with correction for selectivity bias.
    Keywords: credit risk, default, mortgage lending, sample selection, Russia
    JEL: C14 D12 R20
    Date: 2014
  8. By: Nicolas Ajzenman (Harvard Kennedy School); Sebastian Galiani (University of Maryland); Enrique Seira (Instituto Tecnológico Autónomo de México)
    Abstract: Reliable estimates of the effects of violence on economic outcomes are scarce. We exploit the manyfold increase in homicides in 2008-2011 in Mexico resulting from its war on organized drug traffickers to estimate the effect of drug-related homicides on house prices. We use an unusually rich dataset that provides national coverage on house prices and homicides and exploit within-municipality variations. We find that the impact of violence on housing prices is borne entirely by the poor sectors of the population. An increase in homicides equivalent to one standard deviation leads to a 3% decrease in the price of low-income housing. In spite of this large burden on the poor, the willingness to pay in order to reverse the increase in drug-related crime is not high. We estimate it to be approximately 0.1% of Mexico’s GDP.
    Date: 2014–04
  9. By: Carlos Cuerpo; Peter Pontuch; Sona Kalantaryan
    Abstract: The state of development of rental markets as a genuine alternative to home-ownership stands out as a particularly relevant institutional factor shaping the outcome of the housing market and playing a balancing role and alleviating house price pressures. This is especially the case when it proves to be an affordable platform for young and low-income households, providing them with a viable alternative to a hasty first step into the property ladder. In order to help policymakers develop a sizeable private rental market acting as an attenuating factor of housing prices volatility, it is important to depict the relevant dimensions of the rental market regulation and assess their likely impact on the aggregate housing market. Against this background, this paper first develops a two-dimensional indicator on rental market regulation, covering for rent controls and the tenant-landlord relationship. The resulting indices are put to the test by assessing their impact on housing prices. According to this analysis, an efficient, fair and swift judicial system appears as a necessary step towards unlocking rental markets full potential. Moreover, rent controls appear to have a significant destabilizing impact on the aggregate housing market, increasing the volatility of house prices when confronted with different shocks. Finally, qualitative aspects of the tenancy contract negotiation do not have a first-hand impact on housing market dynamics.
    JEL: C23 C38 R15 R28 R52
    Date: 2014–04
  10. By: Dahmann, Sarah (DIW Berlin); Anger, Silke (Institute for Employment Research (IAB), Nuremberg)
    Abstract: This paper investigates the short-term effects of a reduction in the length of high school on students' personality traits using a school reform carried out at the state level in Germany as a quasi-natural experiment. Starting in 2001, academic-track high school (Gymnasium) was reduced from nine to eight years in most of Germany's federal states, leaving the overall curriculum unchanged. This enabled students to obtain a university entrance qualification (Abitur) after a total of only 12 rather than 13 years of schooling. We exploit the variation in the length of academic-track high school over time and across states to identify the effect of schooling on students' Big Five personality traits and on their locus of control. Using rich data on adolescents and young adults from the German Socio-Economic Panel (SOEP) study, our estimates show that shortening high school caused students on average to be more extroverted and less emotionally stable. Our estimates point to important heterogeneous effects. In addition to differences between East and West Germany, we find that male students and students from disrupted families showed stronger personality changes following the reform: they became more agreeable and more extroverted, respectively. We conclude that the educational system plays an important role in shaping adolescents' personality traits.
    Keywords: non-cognitive skills, Big Five, locus of control, skill formation, high school reform
    JEL: I21 I28 J24
    Date: 2014–04
  11. By: Lind, Hans (Department of Real Estate and Construction Management, Royal Institute of Technology)
    Abstract: “Realising the right to the city – a a human right based framework for regeneration of areas of urban disadvantage.” In the second part of the articles three current Swedish cases are analyzed from a normative perspective to illustrate how a rights based approach can be implemented in a better way. Design/methodology/approach: The article uses an analytical/philosophical approach. Findings: Hearne includes both “means” and “ends” among the rights, and it is argued that the rights should only be formulated in terms of ends. In the Swedish cases the common feature is that tenants are living in rentregulated apartments with low rent and then something happens that withdraws this opportunity. It is argued that society is always changing and no one has an unconditional right to continue to live in the same way as before. The main rights should be formulated in terms of access to “reasonable” alternatives and as right to a time to adjust to the new situation. Practical/social implications: How one looks at the rights in the situations described will be the foundation for the type of legal rules that should be implemented. Originality/value: The article shows a human rights based approach could be implemented in a more convincing way a number of specific housing situations. Keywords:
    Keywords: human rights; housing policy; tenants´ rights; renovation; rent regulation
    JEL: R31 R38
    Date: 2014–04–23
  12. By: Combes, Pierre-Philippe (GREQAM, University of Aix-Marseille); Decreuse, Bruno (GREQAM, University of Aix-Marseille); Laouénan, Morgane (IRES, Université catholique de Louvain); Trannoy, Alain (EHESS, Paris)
    Abstract: The paper investigates the link between the over-exposure of African immigrants to unemployment in France and their under-representation in jobs in contact with customers. We build a two-sector matching model with ethnic sector-specific preferences, economy-wide employer discrimination, and customer discrimination in jobs in contact with customers. The outcomes of the model allow us to build a test of ethnic discrimination in general and customer discrimination in particular. We run the test on French individual data in a cross-section of local labor markets (Employment Areas). Our results show that there is both ethnic and customer discrimination in the French labor market.
    Keywords: discrimination, matching frictions, jobs in contact, ethnic unemployment, local labor markets
    JEL: J15 J61 R23
    Date: 2014–04
  13. By: Hellerstedt, Karin (Jönköping International Business School); Wennberg, Karl (The Ratio Institute and Stockholm School of Economics.); Frederiksen, Lars (Innovation Management Group, Department of Business Administration, Aarhus University,)
    Abstract: This paper investigates regional start-up rates in the knowledge intensive services and high-tech industries. Integrating insights from economic geography and population ecology into the literature on entrepreneurship, we develop a theoretical framework which captures how both supply- and demand-side factors mold the regional bedrock for start-ups in knowledge intensive industries. Using multi-level data of all knowledge intensive start-ups across 286 Swedish municipalities between 1994 and 2002 we demonstrate how characteristics of the economic and political milieu within each region influence the ratio of firm births. We find that economically affluent regions dominate entrepreneurial activity in terms of firm births, yet a number of much smaller rural regions also revealed high levels of start-ups. Knowledge spillovers from universities and firm R&D strongly affect the start-up rates for both knowledge intensive manufacturing and knowledge intensive services firms. However, the start-up rate of knowledge-intensive service firms is tied more strongly to the supply of highly educated individuals and the political regulatory regime within the municipality. This suggests that knowledge intensive service-start-ups are more susceptible to both demand-side and supply-side context than manufacturing start-ups. Our study contributes to the growing stream of research that explains entrepreneurial activity as shaped by contextual factors, most notably educational institutions that contribute to technology startups.
    Keywords: Start-ups; Spillovers; Universities; R&D; Political regime
    JEL: L26 M13 P25 R12
    Date: 2014–04–24
  14. By: Dauth, Wolfgang (Institute for Employment Research (IAB), Nuremberg); Suedekum, Jens (Heinrich Heine University Düsseldorf)
    Abstract: We analyze how globalization has affected the sectoral anatomy of regional growth in Germany over the period 1978-2008. The aggregate German economy is characterized by a secular decline of manufacturing and a rise of modern service industries. This trend– also known as Petty's law – is not uniform across space, however. Some regions exhibit it at an even accelerated pace, while other regions have reinforced their manufacturing specializations. We first categorize all German regions into one of three groups, with "protrend", "anti-trend" or "featureless" growth. Afterwards we propose an explanation why a particular region ended up in one of those groups: We argue that the regional profiles of growth and change are systematically related to the initial sizes, and the import and export exposures of the local manufacturing sectors.
    Keywords: structural change, local industry compositions, trade exposure, local employment growth
    JEL: R11 O14 F16
    Date: 2014–04
  15. By: He , Qing (BOFIT); Xue, Chang (BOFIT); Zhu, Chenqi (BOFIT)
    Abstract: The paper investigates the influences of financial development on patterns of industrial specialization across China’s regions. We find that industrial sectors reliant on access to external finance are found to concentrate in regions with developed financial markets. Both foreign direct investment (FDI) and informal financing channels are shown to play significant roles in shaping patterns of industrial specialization in China. In contrast, proxies for formal financial markets, e.g. the banking system and capital markets have few effects on regional industrial agglomeration. The role of financial development remains robust to instrumental variable estimation and controlling for other traditional determinants of regional specialization.
    Keywords: financial development; informal finance; FDI; industrial specialization
    JEL: G10 G20 L60
    Date: 2014–04–11
  16. By: Ojeaga, Paul; Odejimi, Deborah
    Abstract: This study investigates factors that affect sociability ratings among youths between 10 to 30 years of age in Nigeria, using a survey carried out in Ife town. The results show that in- school females were likely to socialize more than out of school females. Schooling was found to be affecting youth sociability rating in general. There was also a noticeable level of reduced socialization among out of school youths as it was found that they were less likely to interact as much as in-school youths owing to their family backgrounds. The implication of the findings is that schooling does affect the level of social interaction among youths in general since youths out of school had some level of inferiority complex that prevented them from socializing with in-school youths.
    Keywords: Extraversion, Gender Comparison, Schooling, Sociability
    JEL: J11 J16
    Date: 2013–07–13
  17. By: Nobuaki Yamashita; Toshiyuki Matsuura; Kentaro Nakajima
    Abstract: This paper examines the agglomeration effects of multinational firms on the location decisions of first-time Japanese manufacturing investors in China for the period 1995–2007. This is accomplished by exploiting newly constructed measures of inter-firm backward and forward linkages formed in a home country. The conditional and mixed logit estimates reveal that agglomeration by first-tier suppliers and customers draws subsequent investment into a location. However, such agglomeration effects are not pervasive and do not extend to the second and third tiers. Instead, we find that agglomeration by third-tier suppliers generates a countervailing force, making a location relatively unattractive.
    Keywords: Agglomeration, Backward and forward linkages, Location choice of multinational enterprises
    JEL: F23 L22 R3
    Date: 2014
  18. By: Chitalu M. Chama-Chiliba (Department of Economics, University of Pretoria); Steven F. Koch (Department of Economics, University of Pretoria)
    Abstract: This paper examines regional differences in the effect of user fee removal in rural areas of Zambia on the use of health institutions for delivery. The analysis uses quarterly longitudinal data covering 2003q1-2008q4. When unobserved heterogeneity, spatial dependence and quantitative supply-side factors are incorporated in the Interrupted Time Series (ITS) design, user fee removal is found to immediately increase aggregate institutional deliveries, although the national trend was unaffected. Drug availability and the presence of traditional birth attendants also influence institutional deliveries at the national level, such that, in the short-term, strengthening and improving community-based interventions could increase institutional deliveries. However, there is significant variation and spatial dependence masked in the aggregate analysis. The results highlight the importance of service quality in promoting institutional deliveries, and also suggest that social and cultural factors, especially in rural areas, influence the use of health facilities for delivery. These factors are not easily addressed, through an adjustment to the cost of delivery in health facilities.
    Keywords: Maternal care, Institutional deliveries, User fees, Spatial dependence
    JEL: I10 I18 I19 R10 R15 R58
    Date: 2014–04
  19. By: Guillaume Haeringer (Zicklin School of Business - Baruch College); Vincent Iehlé (LEDa - Laboratoire d'Economie de Dauphine - Université Paris IX - Paris Dauphine, CEREMADE - CEntre de REcherches en MAthématiques de la DEcision - CNRS : UMR7534 - Université Paris IX - Paris Dauphine)
    Abstract: In a school choice context we show that considering only schools' priorities and the set of acceptable schools for each student - but not how these schools are ranked in their preferences - we can restrict the set of possible stable matchings that can arise for any preference profile of the students that leaves the set of acceptable schools unchanged. We characterize impossible matches, i.e., of pairs student school that cannot be matched at any stable matching, for any preference profile. Our approach consists of linking Hall's marriage condition to stable matchings. Our results offer a new methodology to assess to what extent the preferences on one side of a matching market can preset the stable matchings that can emerge. First, we use this technique to discuss the impact of priority zoning in school choice problems. Second, a new mechanism for school choice problems is proposed. It is shown that it (weakly) Pareto dominates the Student Optimal Stable Mechanism and retain some of its incentives.
    Keywords: school Choice; Hall's marriage theorem; stable matching; zoning policy; Pareto improvement
    Date: 2014–04–18
  20. By: Kalenkoski, Charlene M. (Texas Tech University); Pabilonia, Sabrina Wulff (U.S. Bureau of Labor Statistics)
    Abstract: Although previous research has shown that homework improves students' academic achievement, the majority of these studies use data on students' homework time from retrospective questionnaires, which are less accurate than time-diary data. However, most time-diary data sets do not contain outcome measures, and thus are limited in the questions they can answer. One data set that does have both time-diary and outcome information is the combined Child Development Supplement (CDS) and the Transition to Adulthood Survey (TA) of the Panel Study of Income Dynamics. Students complete time diaries as part of the CDS and then a few years later provide information on outcomes in the TA. The CDS provides us with time diaries for both weekdays and weekend days, providing a good picture of homework over the course of a week rather than on just a single day. For high school graduates, we explore the effects of time spent on homework on two measures of academic achievement: high school GPA and college attendance by age 20. We find that homework time increases the probability of college attendance for boys. In addition, when we look at homework performed as a sole activity, we find that homework increases high school GPA for boys.
    Keywords: academic achievement, homework, GPA, human capital, education
    JEL: I2 J22 J24
    Date: 2014–04
  21. By: Alexander Razen; Wolfgang Brunauer; Nadja Klein; Thomas Kneib; Stefan Lang; Nikolaus Umlauf
    Abstract: The Basel II framework strictly defines the conditions under which financial institutions are authorized to accept real estate as collateral in order to decrease their credit risk. A widely used concept for its valuation is the hedonic approach. It assumes, that a property can be characterized by a bundle of covariates that involves both individual attributes of the building itself and locational attributes of the region where the building is located in. Each of these attributes can be assigned an implicit price, summing up to the value of the entire property. With respect to value-at-risk concepts financial institutions are often not only interested in the expected value but also in different quantiles of the distribution of real estate prices. To meet these requirements, we develop and compare multilevel structured additive regression models based on GAMLSS type approaches and quantile regression, respectively. Our models involve linear, nonlinear and spatial effects. Nonlinear effects are modeled with P-splines, spatial effects are represented by Gaussian Markov random fields. Due to the high complexity of the models statistical inference is fully Bayesian and based on highly efficient Markov chain Monte Carlo simulation techniques.
    Keywords: Bayesian hierarchical models, hedonic pricing models, GAMLSS, distributional regression quantile regression, multilevel models, MCMC, P-splines, value-at-risk
    Date: 2014–04
  22. By: Cebula, Richard
    Abstract: Using a half century of data, this empirical study adopts a simple loanable funds to investigate the impact of the budget deficits on the ex post real interest rate yield on high grade municipal bonds in the U.S. Autoregressive 2SLS estimates for the 1960-2012 study period find that the ex post real interest rate yield on high grade municipal bonds is an increasing function of the ex post real interest rate yield on Moody’s Baa-rated corporate bonds, the ex post real interest rate yield on three-year U.S. Treasury notes, the real value of the S&P 500 stock index, and the federal budget deficit (relative to the GDP level). Based on these results, it is observed that factors elevating the federal budget deficit appear to raise the real cost of borrowing to the cities (of all sizes), counties, and states across the U.S. Over the long run, failure to address the federal budget issue could have profound negative impacts on the finances of U.S. cities, counties, and states and their economic activities.
    Keywords: budget deficits; real interest rate; tax-free municipal bonds
    JEL: E43 H62 H74
    Date: 2014–04–26
  23. By: Leonardo Morales
    Abstract: This paper addresses the estimation of peer group effects on a fertility decision. The peer group is composed of neighbors with similar socio-demographic characteristics. In order to deal with the endogeneity problem associated to the estimation of neighborhood effects, an instrumental variables procedure is performed. To control for the reflection problem, usual in linear effects models, this paper uses an identification strategy that relies on the definition of peer groups at the individual level. This paper provides evidence that peer effects explain the age at which poor women in Medellín (Colombia) decide to have their firstborn. These social forces are hazardous factors that may increase the incidence of adolescent pregnancy.
    Keywords: Fertility, Family Planning, Demographic Economics, Social Interaction Models
    JEL: J13 J13 C31
    Date: 2013–08–22
  24. By: Woldu, Thomas; Abebe, Girum; Lamoot, Indra; Minten, Bart
    Abstract: We study food retail in Addis Ababa, one of the biggest cities in Africa. Based on a primary survey of food retail outlets selling cereals, fruits and vegetables, and processed foods, we note high variation in quality and prices in the city and an increasing differentiation in food retail markets in recent years. On the high-end, we see the emergence of domestic (as foreign direct investment in retail is not allowed) private modern retail outlets that deliver high quality products at high prices and that focus mostly on wealthier areas and consumers. At the other side, we see cooperative retail that delivers food at controlled and subsidized prices. The latter shops are characterized by typical price control policy problems, reflected in regular lack of supplies and queuing. It seems that food retail markets would be improved by stimulating the emergence of a competitive private retail sector, the abolishment of price controls, and targeted subsidies or safety nets for the poor.
    Keywords: cooperative retail, Food retail, modern private retail, urban markets,
    Date: 2013
  25. By: Kashian, Russell; Cebula, Richard; Cramer, Eric
    Abstract: As the nation navigates through the stages of its foreclosure crisis, its journey brings with it negative outcomes that impact to the general real estate market. This paper combines two individual pieces and peruses a comprehensive illustration of the timeline of foreclosures and sheriff sales, and the effect they have on the single-family real estate market in Muskego, Wisconsin. This paper employs two econometric models to achieve its goal. First, we utilize a duration model that considers the time from a foreclosure’s filing until a sheriff sale or redemption. Our second model turns to a probit model, which attempts to predict whether a home is sheriff-sold or redeemed. Our results find that despite growing experience in dealing with foreclosures, lenders do not appear to have reduced the time from filing to sheriff sale. Finally, more expensive homes are less likely to be sheriff-sold following a foreclosure in relationship to other foreclosures.
    Keywords: foreclosures; timeline to sheriff sale
    JEL: G01 R2 R21 R39
    Date: 2014
  26. By: Vasilios Plakandaras (Department of Economics, Democritus University of Thrace, Greece); Rangan Gupta (Department of Economics, University of Pretoria); Periklis Gogas (Department of Economics, Democritus University of Thrace, Greece); Theophilos Papadimitriou (Department of Economics, Democritus University of Thrace, Greece)
    Abstract: The 2006 sudden and immense downturn in U.S. House Prices sparked the 2007 global financial crisis and revived the interest about forecasting such imminent threats for economic stability. In this paper we propose a novel hybrid forecasting methodology that combines the Ensemble Empirical Mode Decomposition (EEMD) from the field of signal processing with the Support Vector Regression (SVR) methodology that originates from machine learning. We test the forecasting ability of the proposed model against a Random Walk (RW) model, a Bayesian Autoregressive and a Bayesian Vector Autoregressive model. The proposed methodology outperforms all the competing models with half the error of the RW model with and without drift in out-of-sample forecasting. Finally, we argue that this new methodology can be used as an early warning system for forecasting sudden house prices drops with direct policy implications.
    Keywords: House prices, Forecasting, Machine learning, Support vector regression
    JEL: C32 C53 R31
    Date: 2014–05
  27. By: Nordin , Martin (Department of Economics, Lund University)
    Abstract: This paper estimates a tertiary eligibility effect on crime for Sweden. The idea is that investment in higher education is a way of escaping youth inactivity and idleness, and, since youth inactivity is known to trigger crime, the self-incapacitation effect of higher education decreases crime rates. However, to invest in higher education, the individual has to meet the tertiary eligibility requirements in upper-secondary school. Tertiary eligibility may therefore affect crime rates. Evidence of an exogenous grade inflation in the eligibility rate is used to identify the tertiary eligibility effect. With the introduction of a goal-related grading system, the share with tertiary eligibility increased by more than 6 percentage points. Accordingly, during the period with grade inflation in the eligibility rate, crime rates fell, but, when the period of grade inflation was ended, the effect of tertiary eligibility on crime disappeared as well. Hence, when youth have the opportunity to invest in higher education, and thus escape unemployment or inactivity, their propensity to commit crime decreases.
    Keywords: crime; education; tertiary eligibility
    JEL: J20 K14 K42
    Date: 2014–04–29
  28. By: Cebula, Richard; Nair-Reichert, Usha; Coombs, Christopher
    Abstract: For the period 2008-2009 of the “Great Recession,” the gross state-level in-migration rate was an increasing function of expected per capita personal income, state parks per capita, and warmer January temperatures. For the same study period, the gross in-migration rate was a decreasing function of the cost of living, the poverty rate, the average state income tax rate, per capita property taxation, and hazardous waste sites. All of the estimates yield results suggesting consistently, as in previous studies of earlier time periods, that migrants (consumer-voters) at the very minimum prefer lower state income tax burdens and lower property tax burdens. Consumer-voters’ evaluation of government services in determining their choice of location during the “Great Recession” appears to depend upon the type of government service. While consumer-voters on average appear to prefer states with greater public provision of state parks, our results do not indicate a strong preference for states with higher per pupil outlays on primary and secondary public education.
    Keywords: migration; public policy; state income tax rates; property tax levels
    JEL: D72 H71 H75 R23 R53
    Date: 2013–12–13
  29. By: Molloy, Raven (Federal Reserve Board of Governors); Smith, Christopher L. (Federal Reserve Board of Governors); Wozniak, Abigail (University of Notre Dame)
    Abstract: Interstate migration has decreased steadily since the 1980s. We show that this trend is not primarily related to demographic and socioeconomic factors, but instead appears to be connected to a concurrent secular decline in labor market transitions. We explore a number of reasons for the declines in geographic and labor market transitions, and find the strongest support for explanations related to a decrease in the net benefit to changing employers. Our preferred interpretation is that the distribution of relevant outside offers has shifted in a way that has made labor market transitions, and thus geographic transitions, less desirable to workers.
    Keywords: migration, migration decline, labor market transitions, job transitions, returns to tenure
    JEL: J6 J1
    Date: 2014–04
  30. By: Reich, MIchael; Jacobs, Ken; Bernhardt, Annette
    Keywords: Social and Behavioral Sciences
    Date: 2014–03–01
  31. By: Kawaguchi, Daiji (Hitotsubashi University); Murao, Tetsushi (Kyushu University)
    Abstract: Graduating from a school during a time of adverse economic conditions has a persistent, harmful effect on workers' subsequent employment opportunities. An analysis of panel data from OECD countries during the 1960-2010 periods reveals that a worker who experiences a one-percentage-point higher unemployment rate while the worker is 16-24 years old has a 0.14 percentage-point higher unemployment rate at ages 25-29 and 0.03 percentage points higher at ages 30-34. The persistence of this negative effect is stronger in countries with stricter employment protection legislation. A composite index for labor market rigidity is constructed and the index is shown to have positive correlation with the persistence. Moderating macroeconomic fluctuations is more important in countries that have more persistent labor-market entry effects on subsequent outcomes.
    Keywords: persistence, unemployment, port of entry, cohort analysis, hysteresis
    JEL: E24 J64 J65 K31
    Date: 2014–04
  32. By: Monojit Chatterji; Sushil Mohan; Sayantan Ghosh Dastidar
    Abstract: Public education expenditure varies significantly across Indian states. Using data on sixteen Indian states from 2001-2010, the paper tries to identify the determinants of per capita education expenditure of state governments in India. The econometric findings indicate that richer states spend more on education compared to the poorer states. A lower share of child population (0-14 years) is found to significantly enhance education expenditure at the state level. We do not find any evidence that political factors such as political ideology of the ruling party and level of corruption affect education expenditure of state governments.
    Keywords: public education expenditure, public policy, Indian states, panel data
    JEL: H52 H72 J11 J18
    Date: 2014–04

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