nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2014‒12‒03
thirty-two papers chosen by
Steve Ross
University of Connecticut

  1. Speculative Price Bubbles in Urban Housing Markets in Germany By Konstantin A. Kholodilin; Claus Michelsen; Dirk Ulbricht
  2. Top Team Diversity and Business Performance: Latent Class Analysis for Firms and Cities By Nathan, Max
  4. Validating Teacher Effect Estimates Using Changes in Teacher Assignments in Los Angeles By Andrew Bacher-Hicks; Thomas J. Kane; Douglas O. Staiger
  5. Moving to Opportunity or Isolation? Network Effects of a Slum Relocation Program in India By Barnhardt, Sharon; Field, Erica; Pande, Rohini
  6. Shops and the city By Stan Veuger; Daniel Shoag
  7. Returning to the Nest: Debt and Parental Co-residence Among Young Adults By Dettling, Lisa J.; Hsu, Joanne W.
  8. Sibling spillover effects in school achievement By Nicoletti, Cheti; Rabe, Birgitta
  9. Boomtowns and the Nimbleness of the Housing Market: The Impact of Shale Oil and Gas Drilling on Local Housing Markets By Farren, Michael D.
  10. Why Are Wal-Mart and Target Next-Door Neighbors? By Schuetz, Jenny
  11. Okun's Law in the French Regions: A Cross-Regional Comparison By Marie-Estelle Binet; François Facchini
  12. The effect of credit conditions on the Dutch housing market By Marc Francke; Alex van de Minne; Johan Verbruggen
  13. Immigrants' 'Ability' and Welfare as a Function of Cultural Diversity: Effect of Cultural Capital at Individual and Local Level By Tubadji, Annie; Gheasi, Masood; Nijkamp, Peter
  14. Causal Inference in Urban and Regional Economics By Nathaniel Baum-Snow; Fernando Ferreira
  15. Housing Bubbles By Edward L. Glaeser; Charles G. Nathanson
  17. The Effect of Downzoning on Spatial Development Patterns By Newburn, David; Ferris, Jeffrey
  18. Quasi maximum likelihood estimation for simultaneous spatial autoregressive models By Wang, Luya; Li, Kunpeng; Wang, Zhengwei
  19. Immigration, Cultural Distance and Natives' Attitudes Towards Immigrants: Evidence from Swiss Voting Results By Brunner, Beatrice; Kuhn, Andreas
  20. Dutch Disease or Agglomeration? The Local Economic Effects of Natural Resource Booms in Modern America By Hunt Allcott; Daniel Keniston
  21. Role of Social Networks in Diversification o Income Sources in Rural India By Johny, Judit; Wichmann, Bruno; Swallow, Brent
  22. Indonesian Higher Education: Gaps in Access and School Choice By Mohamad Fahmi
  23. Rural and Urban Differences in Household Wealth Accumulation: What Role Do Demographics, Wages and Property Values Play? By Marre, Alexander W.
  24. Evidence and Persistence of Education Inequality in an Early-Tracking System - The German Case By Annabelle Krause; Simone Schüller
  25. Stealing to Survive? Crime and Income Shocks in 19th Century France By Bignon, Vincent; Caroli, Eve; Galbiati, Roberto
  26. Spatial dynamics and convergence: The spatial AK model By Raouf Boucekkine; Carmen Camacho; Giorgio Fabbri
  27. County Fiscal Policy and Entrepreneurship: The Impact of Occupational License Taxes on Business Startups By Burney, Shaheer; Allen, James E. IV; Davis, Alison F.
  28. Political Budget Cycles: Evidence from Italian Cities By Alberto Alesina; Matteo Paradisi
  29. Does Management Matter in Schools By Nicholas Bloom; Renata Lemos; Raffaella Sadun; John Van Reenen
  30. Estimating the impact of water quality on surrounding property values in Upper Big Walnut Creek Watershed in Ohio for dynamic optimal control By Liu, Hongxing; Gopalakrishnan, Sathya; Browning, Drew; Herak, Patrick; Sivandran, Gajan
  31. Are Disadvantaged Students more Likely to Repeat Grades? By OECD
  32. Sorting Between and Within Industries: A Testable Model of Assortative Matching By Abowd, John M.; Kramarz, Francis; Pérez-Duarte, Sébastien; Schmutte, Ian M.

  1. By: Konstantin A. Kholodilin; Claus Michelsen; Dirk Ulbricht
    Abstract: The surge in the German house prices starting in 2010 raised fears about the emergence of a speculative bubble. Given a local nature of housing markets, it is not clear to what extent the bubble, if any, is spread across different cities. In this paper, we test for speculative house price bubbles in 127 large German cities over the last 20 years. Along with testing bubbles for each city separately, we apply two new testing approaches: a panel data and principal components version of explosive root tests. We define bubble as an explosive growth of prices that is not supported by the rent increase. Therefore, to check for the existence of bubbles, we examine prices, rents, and price-to-rent ratios. We find evidence for explosive price increases in many cities, especially for the case of newly built housing. However, only in few urban housing markets prices decouple from their fundamental values. On the national level, we do not see evidence for speculative price movements. Overall, we find that the danger of a build-up of a speculative price bubble in the German housing market is rather moderate.
    Keywords: Speculative bubble, explosive root, German cities
    JEL: C21 C23 C53
    Date: 2014
  2. By: Nathan, Max (London School of Economics)
    Abstract: A growing number of studies find linkages between workforce diversity and business performance, but key aspects of this relationship remain unclear. First, within the firm, the role of 'top team' demography on firm outcomes is surprisingly little understood. Second, urban location may amplify firm-level processes, but almost no studies test these firm-area interactions. I deploy English cross-sectional data to explore these issues, using latent class analysis to tackle firm-level heterogeneity. I find evidence of positive links in some firm classes, both linear and non-linear, and suggestive evidence that ethnic top team diversity is amplified in the London city-region.
    Keywords: firm-level analysis, business performance, diversity, ethnicity, gender, cities
    JEL: J15 L21 R23
    Date: 2014–09
  3. By: R. Jason Faberman; Matthew Freedman
    Abstract: We use longitudinal microdata to estimate the urban density premium for U.S. establishments, controlling for observed establishment characteristics and dynamic establishment behavior. Consistent with previous studies, we estimate a density premium between 6 and 10 percent, even after controlling for establishment composition, local skill mix, and the endogeneity of location choice. More importantly, we find that the estimated density premium is realized almost entirely at birth and is constant over the life of establishments. We find little evidence that the endogenous entry or exit of establishments can account for any of the estimated density premium. We interpret our results as implying that the returns to agglomeration diffuse within a city through a reallocation channel rather than through an increase in the productivity of existing firms.
    Keywords: urban density premium, dynamic agglomeration economies, establishment entry and exit
    JEL: R12 R30 D22
    Date: 2014–10
  4. By: Andrew Bacher-Hicks; Thomas J. Kane; Douglas O. Staiger
    Abstract: In a widely cited study, Chetty, Friedman, and Rockoff (2014a; hereafter CFR) evaluate the degree of bias in teacher value-added estimates using a novel "teacher switching" research design with data from New York City. They conclude that there is little to no bias in their estimates. Using the same model with data from North Carolina, Rothstein (2014) argued that the CFR research design is invalid, given a relationship between student baseline test scores and teachers' value-added. In this paper, we replicated the CFR analysis using data from the Los Angeles Unified School District and similarly found that teacher value-added estimates were valid predictors of student achievement. We also demonstrate that Rothstein's test does not invalidate the CFR design and instead reflects a mechanical relationship, given that teacher value-added scores from prior years and baseline test scores can be based on the same data. In addition, we explore the (1) predictive validity of value-added estimates drawn from the same, similar, and different schools, (2) an alternative way of estimating differences in access to effective teaching by taking teacher experience into account, and (3) the implications of alternative ways of imputing value-added when it cannot be estimated directly.
    JEL: I21 J45
    Date: 2014–11
  5. By: Barnhardt, Sharon; Field, Erica; Pande, Rohini
    Abstract: A" housing" lottery" in" a" large" Indian" city" provided" 110" out" of" 497" participants the" opportunity" to" move" out" of" a" slum" and" into" improved" housing" on" the" city's" periphery." Fourteen"years"after"housing"assignment,"relative" to"lottery"losers,"winners"report"better" housing"conditions"farther"from"the"city"center,"but"no"change"in"family"income"or"human" capital."Winners"also"state"increased"isolation" from" family"and"caste"networks"and"lower" access" to" informal" insurance." In" particular," they" are" significantly" less" likely" to" know" someone"they"can"rely"on"for"borrowing"needs"and"report"fewer"informal"transfers"in"the" event" of" shocks." We" also" observe significant" program" exit:" 34%" of" winners" never" even" moved" into" the" assigned" housing" and" 32%" eventually" exited" the" colony" to" be" closer" to" family" and" the" city" center." Our" results" suggest" that" the" benefits" of" improved" suburban" housing"were"offset"by"its"drawbacks"in"the"form"of"destruction"of"social"capital,"pointing"to" the"importance"of"considering"social"networks"when"designing"housing"programs" for" the" poor.
  6. By: Stan Veuger (American Enterprise Institute); Daniel Shoag (American Enterprise Institute)
    Abstract: In this paper, we estimate the size of the externalities produced by big-box retail stores for other establishments and explore the effect of the externalities on local government policy.
    Keywords: subsidies, retail, big box
    JEL: A
    Date: 2014–04
  7. By: Dettling, Lisa J. (Board of Governors of the Federal Reserve System (U.S.)); Hsu, Joanne W. (Board of Governors of the Federal Reserve System (U.S.))
    Abstract: This paper examines the relationship between a young adults' debt burden and the decision to co-reside with a parent. Using a quarterly panel of young adults' credit histories, and controlling for age, county, and quarter fixed effects, and local demographic characteristics, unemployment rates, and house prices, we estimate the relationship between current period debt and subsequent decisions to co-reside with a parent. Our results indicate that indebtedness--as measured by average loan balances, declining credit scores and delinquency on accounts--increases flows into parental co-residence. Moreover, after moving in, delinquency and low credit scores increase time spent in co-residence. We find that the changing debt portfolios of young adults over this period--characterized by rising student loan debt and small declines in credit card, auto and mortgage debt--can predict 30 percent of the observed increase in flows into co-residence, and 26 percent of the observed increase in time spent in co-residence.
    Keywords: Consumer debt; household formation; delinquency; boomerang generation
    JEL: D13 D91 J11
    Date: 2014–09–02
  8. By: Nicoletti, Cheti; Rabe, Birgitta
    Abstract: We provide the first empirical evidence on direct sibling spillover effects in school achievement using English administrative data. Our identification strategy exploits the variation in school test scores across three subjects observed at age 11 and 16 and the variation in the composition of school mates between siblings. These two sources of variation have been separately used to identify school peer effects, but never in combination. By combining them we are able to identify a sibling spillover effect that is net of unobserved child, family and school characteristics shared by siblings. We find a modest spillover effect from the older sibling to the younger but not vice versa. This effect is considerably higher for siblings from deprived backgrounds, where sibling sharing of school knowledge might compensate for the lack of parental information.
    Date: 2014–11–11
  9. By: Farren, Michael D.
    Abstract: Recent drilling innovations allowing access to unconventional resources like tight oil and shale gas have spurred a number of drilling booms around the United States. One side effect is rising housing prices caused by migrating oil and gas industry workers who create a positive housing demand shock. Initial research has examined the effect of these shale drilling booms on rental prices and home valuations, but thus far the effect of the price signal on housing supply has not been investigated. Using two-way fixed effects estimators I analyze the effect of shale drilling operations on population, home and hotel construction in the Marcellus, Bakken and Fayetteville Shale regions, finding that a housing boom accompanies the drilling boom. The size of the impact tends to increase as the considered region becomes more rural and remote.
    Keywords: Natural Resources, Hydraulic Fracturing, Shale Gas, Housing Supply, Boomtown, Community/Rural/Urban Development, Resource /Energy Economics and Policy, Q3, Q4, R1, O1,
    Date: 2014–05
  10. By: Schuetz, Jenny (Board of Governors of the Federal Reserve System (U.S.))
    Abstract: One of the most notable changes in the U.S. retail market over the past twenty years has been the rise of Big Box stores, retail chains characterized by physically large stores selling a wide range of consumer goods at discount prices. A growing literature has examined the impacts of Big Box stores on other retailers and consumers, but relatively little is known about how Big Box stores choose locations. Because Big Box stores offer highly standardized products and compete primarily on price, it is likely that they will seek to establish spatial monopolies, far from competitor stores. In this paper, I examine where new Big Box stores locate with respect to three types of existing establishments: own-firm stores, other retailers in the same product space (competitors), and retailers in other product spaces (complements). Results indicate that new Big Box stores tend to avoid existing own-firm stores and locate near complementary Big Box stores. However, there is little evidence that new Big Boxes avoid competitors. Firms in the same product space may not be perfect substitutes, or firms may prefer to share consumers in a desirable location rather than cede the entire market to competitor firms.
    Keywords: Retail location; spatial competition; agglomeration; Big Box stores
    JEL: L81 R12 R32
    Date: 2014–10–06
  11. By: Marie-Estelle Binet (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie); François Facchini (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)
    Abstract: This article tackles one central issue in the regional science literature: the persistence of regional disparities in unemployment within national economies. Our approach is original as Okun's coefficients are estimated for each of the 22 administrative French regions over the period 1990-2008, taking into account cross-regional disparities in a panel data specification. Estimates show that the coefficients exhibit regional differences. Indeed, Okun's law is confirmed in fourteen regions, although it does not hold in the other eight regions. Finally, region-specific factors that explain the results that are not significant are identified, and policies to reduce unemployment in French regions are examined.
    Keywords: Okun's law, panel data, French regions, spatial heterogeneity
    Date: 2013–02–21
  12. By: Marc Francke; Alex van de Minne; Johan Verbruggen
    Abstract: It is widely perceived that the supply of mortgages, especially since the extensive liberalization of the mortgage market of the 1980s, has had implications for the housing market in the Netherlands. In this paper we introduce a new method to estimate a credit condition index (CCI). The CCI represents changes in the supply of credit over time, apart from changes in interest rates and income. It has been estimated by an unobserved component in an error-correction model in which the average amount of new provided mortgages per period is explained by the borrowing capacity and additional control variables. The model has been estimated on data representing first time buyers (FTB). For FTB we can assume that the housing and non-housing wealth is essentially zero. The CCI has subsequently been used as an explanatory variable in an error-correction model for house prices representing not only FTB, but all households. The models have been estimated on quarterly data from 1995 to 2012. The estimated CCI has a high correlation with the Bank Lending Survey, a quarterly survey in which banks are asked whether there is a tightening or relaxation of (mortgage) lending standards compared to the preceding period. The CCI has explanatory power in the error-correction model for house prices. In real terms house prices declined about 25% from 2009 to 2012. The estimation results show that nearly half of this decline can be attributed to a decline in the CCI.
    Keywords: lending standards; financial liberation; housing prices
    JEL: C32 E44 E51 G21
  13. By: Tubadji, Annie (University of Regensburg); Gheasi, Masood (VU University Amsterdam); Nijkamp, Peter (VU University Amsterdam)
    Abstract: This paper presents an operationalization of a mixed Bourdieu–Mincer-type model that seeks to find evidence for individual and local cultural capital effects on human capital 'ability'. We aim to compare these effects for native workers and immigrants (as well as between immigrants themselves) in a locality. The main objective of the paper is twofold: 1) to examine how ethnic background affects immigrants' schooling results; and 2) to explore the link between the wage differential of immigrant young workers entering the labour market in the context of a locally varying cultural milieu. Our study utilises the 2007–2009 data set for higher professional education (termed HBO in Dutch) graduates from Maastricht University. We use a two-stage least squares (2SLS) estimation method to analyse empirically a system of two equations. In the first Bourdieu-type equation, individual cultural capital, together with school type/quality, explains the individual's schooling achievement. Next, this 'schooling achievement' is employed as an explanatory variable in the second Mincer-type equation, which examines wage differential effects. Our Mincer-type equation is next augmented with a control for the local cultural milieu. We find evidence of ethnic segregation with regard to the quality of educational institution to which immigrants have access, which naturally explains part of the wage differential effect. Moreover, we find that local cultural capital determines the size of the wage gap.
    Keywords: immigration, wage differential, cultural capital, local cultural milieu, Mincer equation
    JEL: Z10 O31 O43 R11
    Date: 2014–09
  14. By: Nathaniel Baum-Snow; Fernando Ferreira
    Abstract: Recovery of causal relationships in data is an essential part of scholarly inquiry in the social sciences. This chapter discusses strategies that have been successfully used in urban and regional economics for recovering such causal relationships. Essential to any successful empirical inquiry is careful consideration of the sources of variation in the data that identify parameters of interest. Interpretation of such parameters should take into account the potential for their heterogeneity as a function of both observables and unobservables.
    JEL: R0
    Date: 2014–10
  15. By: Edward L. Glaeser; Charles G. Nathanson
    Abstract: Housing markets experience substantial price volatility, short term price change momentum and mean reversion of prices over the long run. Together these features, particularly at their most extreme, produce the classic shape of an asset bubble. In this paper, we review the stylized facts of housing bubbles and discuss theories that can potentially explain events like the boom-bust cycles of the 2000s. One set of theories assumes rationality and uses idiosyncratic features of the housing market, such as intensive search and short selling constraints, to explain the stylized facts. Cheap credit provides a particularly common rationalization for price booms, but temporary periods of low interest rates will not explain massive price swings in simple rational models. An incorrectly under-priced default option is needed to explain the formation of rational bubbles. Many non-rational explanations for real estate bubbles exist, but the most promising theories emphasize some form of trend-chasing, which in turn reflects boundedly rational learning.
    JEL: R0 R31
    Date: 2014–08
  16. By: Somekh, Babak (Department of Economics, University of Haifa)
    Abstract: We consider the consequences of introducing a Superstore into a city segregated by income. In this monocentric city, consumers and firms live on a continuous line interval. Our model consists of two types of firms; many high-cost perfectly competitive ”Corner Stores” located throughout the city, and one low-cost ”Superstore” located in the outer part of the city and choosing its price strategically. We look to determine the impact of the low price offered by the Superstore on the welfare of both low and high-income consumers. In addition we consider the impact of city income structure on the pricing decision of firms and monopoly profits. Regarding consumer welfare, we find that low-income consumers that are segregated away from the Superstore may still benefit from its entry into the market. More specifically, the impact of the Superstore on the isolated consumer depends on the sensitivity of the local real estate market to the entry of the Superstore and its choice of price. We also find that a greater disparity in disposable income between the two types of consumers makes it more likely that the Superstore will charge a higher price.
    Keywords: Spatial competition; Segregation; Income disparity
  17. By: Newburn, David; Ferris, Jeffrey
    Keywords: Land Use, Land Use Policy, Community/Rural/Urban Development, Environmental Economics and Policy, Land Economics/Use,
  18. By: Wang, Luya; Li, Kunpeng; Wang, Zhengwei
    Abstract: This paper considers the problem of estimating a simultaneous spatial autoregressive model (SSAR). We propose using the quasi maximum likelihood method to estimate the model. The asymptotic properties of the maximum likelihood estimator including consistency and limiting distribution are investigated. We also run Monte Carlo simulations to examine the finite sample performance of the maximum likelihood estimator.
    Keywords: Simultaneous equations model, Spatial autoregressive model, Maximum likelihood estimation, Asymptotic theory.
    JEL: C31
    Date: 2014–11
  19. By: Brunner, Beatrice (Zurich University of Applied Sciences (ZHAW)); Kuhn, Andreas (Swiss Federal Institute for Vocational Education and Training)
    Abstract: We combine community-level outcomes of 27 votes about immigration issues in Switzerland with census data to estimate the effect of immigration on natives' attitudes towards immigration. We apply an instrumental variable approach to take potentially endogenous locational choices into account, and we categorize immigrants into two groups according to the cultural values and beliefs of their source country to understand how the cultural distance between natives and immigrants affects this relationship. We find that the share of culturally different immigrants is a significant and sizable determinant of anti-immigration votes, while the presence of culturally similar immigrants does not affect natives' voting behavior at all in most specifications. The cultural distance between immigrant and native residents thus appears crucial in explaining the causal effect of immigration on natives' attitudes towards immigration, and we argue that the differential impact is mainly driven by natives' concerns about compositional amenities. We finally show that the elasticity of the share of right-wing votes in favor of the Swiss People's Party is much more elastic with respect to the share of culturally different immigrants than natives' attitudes themselves, suggesting that the party has disproportionally gained from changes in attitudes caused by immigrant inflows.
    Keywords: instrumental variable, endogenous residential choice, cultural distance, cultural values and beliefs, voting behavior, attitudes towards immigration, immigration, rightwing votes
    JEL: D72 F22 J15 J61 R23
    Date: 2014–08
  20. By: Hunt Allcott; Daniel Keniston
    Abstract: Does natural resource production benefit producer economies, or does it instead create a "Natural Resource Curse," perhaps as Dutch Disease crowds out the manufacturing sector? We combine a new panel dataset of oil and gas production and reserves with county-level aggregate outcomes and restricted-access Census of Manufactures microdata to estimate how oil and gas booms have affected local economic growth in the U.S. since the 1960s. We find that a boom that doubles national oil and gas employment increases total employment by 2.9 percent in a county with one standard deviation larger oil and gas endowment. Despite substantial migration, wages also rise. Notwithstanding, manufacturing employment and output are actually pro-cyclical with oil and gas booms, because many manufacturers in resource-abundant counties supply inputs to the oil and gas sector, while many others sell locally-traded goods and benefit from increases in local demand. Manufacturers' revenue productivity also grows during booms, especially in linked and local industries, but there is no evidence that output prices rise. The results demonstrate how a meaningful share of manufacturers produce locally traded goods, and they highlight how linkages to natural resources can be a driver of manufacturing growth.
    JEL: J2 L6 O4 Q43 R1
    Date: 2014–09
  21. By: Johny, Judit; Wichmann, Bruno; Swallow, Brent
    Abstract: Rural households in developing countries adopt diversification of income sources as a common strategy to stabilize their income throughout the year. We view social networks as an important factor that influences diversification activities. Social interactions may help households to gain ideas, skills, services and information which could influence their decision to diversify their income sources.This paper examines whether household’s social networks influence income diversification in Wayanad District of South India. We develop a network econometric model based on a Spatial Autoregressive econometric approach by replacing the spatial matrix with a network matrix. Our results indicate that the diversification of a household’s social network has a statistically significant positive effect on its income diversification.
    Keywords: Income Diversification, Social Networks, Rural Housheholds, International Development,
    Date: 2014
  22. By: Mohamad Fahmi (Department of Economics, Padjadjaran University)
    Abstract: I estimate the higher education access gap among individuals who study in different type of upper secondary school. I use a non linear Binder-Oaxaca decomposition as de-pendent variable is a binary choice. The sample data is a household data that pull out from three waves of Indonesia Family Life Survey (IFLS). The results show that student from public school has higher chances to attend post secondary education as compared to private Islam and private secular group, whereas, private Christian is superior than pub-lic school. The evidence also indicates there are considerable differences between public school, private non-religious and Islamic school graduates in academic achievement and socio-economic characteristics. Parents’ education and academic achievement provides important contribution to a low probability of entering higher education for private non religious school graduates. While father’s education and family income contribute sub-stantially to a low probability of accessing higher education for the private non religious group.
    Keywords: Higher Education, Access; Non-Linier Decomposition
    JEL: I21 I24
    Date: 2014–10
  23. By: Marre, Alexander W.
    Abstract: Building on recent literature on rural wealth creation, this paper explores the dynamics of household net worth accumulation for residents in metro, nonmetro, and nonmetro-nonadjacent areas and seeks the drivers of differences in rural and urban household wealth and wealth accumulation. Using data from the Panel Study of Income Dynamics (PSID), regressions of net worth -- including financial capital, home equity, net value of farm and business assets and other property -- are estimated for a sample of households between 1999 and 2009. The results show that nonmetro and nonadjacent effects on household net worth are explained partly by differences in demographic composition, wages and property values.
    Keywords: household wealth, rural wealth creation, net worth, Community/Rural/Urban Development,
    Date: 2014
  24. By: Annabelle Krause (IZA); Simone Schüller (FBK-IRVAPP and IZA)
    Abstract: This article reviews empirical evidence on the early tracking system in Germany and the educational inequalities associated with it. Overall, the literature confirms the existence of considerable social, ethnic, gender- and age-related inequalities in secondary school track placement. Studies on tracking timing and track allocation mechanisms reveal that postponement of the selection decision and binding teacher recommendations may reduce certain (mainly social) inequalities. Furthermore, recent evidence concerning long-term consequences of tracking on labor market outcomes suggests that sizeable built-in flexibilities in the German system succeed in compensating for initial (age-related) education inequalities. The paper concludes with an outline and discussion of the most promising pathways for future research in order to help design inequality-reducing policy recommendations.
    Keywords: Tracking, Educational inequality, School system, Germany
    JEL: I24 I28 J24
    Date: 2014–11
  25. By: Bignon, Vincent (Bank of France); Caroli, Eve (Université Paris-Dauphine); Galbiati, Roberto (CNRS)
    Abstract: Using local administrative data from 1826 to 1936, we document the evolution of crime rates in 19th century France and we estimate the impact of a negative income shock on crime. Our identification strategy exploits the phylloxera crisis. Between 1863 and 1890, phylloxera destroyed about 40% of French vineyards. We use the geographical variation in the timing of this shock to identify its impact on property and violent crime rates, as well as minor offences. Our estimates suggest that the phylloxera crisis caused a substantial increase in property crime rates and a significant decrease in violent crimes.
    Keywords: crime, income shock, phylloxera, 19th century France
    JEL: K42 N33 R11
    Date: 2014–10
  26. By: Raouf Boucekkine (GREQAM - Aix-Marseille School of Economics (AMSE)); Carmen Camacho (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne); Giorgio Fabbri (EPEE - Université d'Evry-Val d'Essonne)
    Abstract: We study the optimal dynamics of an AK economy where population is uniformly distributed along the unit circle. Locations only differ in initial capital endowments. Spatio-temporal capital dynamics are described by a parabolic partial differential equation. The application of the maximum principle leads to necessary but non-sufficient first-order conditions. Thanks to the linearity of the production technology and the special spatial setting considered, the value-fonction of the problem is found explicitly, and the (unique) optimal control is identified in feedback form. Despite constant returns to capital, we prove that the spatio-temporal dynamics, induced by the willingness of the planner to give the same (detrended) consumption over space and time, lead to convergence in the level of capital across locations in the long-run.
    Keywords: Economic growth, spatial dynamics; optimal control; partial-differential equations
    Date: 2013–05
  27. By: Burney, Shaheer; Allen, James E. IV; Davis, Alison F.
    Abstract: In this paper, we create a model of business startup decisions by utility maximizing individuals to determine the impact of county occupational license taxes on business startups. We utilize a unique dataset generated by the Kentucky Entrepreneurship Survey which allows us to observe personal traits of entrepreneurs, each year a startup was established, and the entrepreneurs’ perception of the entrepreneurial culture of each county. Controlling for relevant factors, we find that county-level occupational license taxes do not significantly impact the decision of entrepreneurs to start a business. We do, however, find strong evidence that other factors such as community culture influence startup decisions.
    Keywords: occupational license tax, entrepreneurship, startup, business, fiscal policy, county, local government, Kentucky, Community/Rural/Urban Development, Public Economics,
    Date: 2014
  28. By: Alberto Alesina; Matteo Paradisi
    Abstract: The introduction of a new real estate tax in Italy in 2011 created a well designed natural experiment to test the strategic choice of fiscal variables (a tax rate) in relation to elections. We find substantial evidence of "political budget cycles", with municipalities choosing lower tax rates when close to elections. The evidence on political budget cycles is stronger in localities in the South of Italy. The well documented lower level of "social capital" in this region may account for less attention and lower control of politicians. Cities with large preexisting deficits did not set lower rates before elections, presumably because the deficit was a salient political problem and incumbents did not want to look as aggravating it.
    JEL: H0
    Date: 2014–10
  29. By: Nicholas Bloom; Renata Lemos; Raffaella Sadun; John Van Reenen
    Abstract: We collect data on operations, targets and human resources management practices in over 1,800 schools educating 15-year-olds in eight countries. Overall, we show that higher management quality is strongly associated with better educational outcomes. The UK, Sweden, Canada and the US obtain the highest management scores closely followed by Germany, with a gap to Italy, Brazil and then finally India. We also show that autonomous government schools (i.e. government funded but with substantial independence like UK academies and US charters) have significantly higher management scores than regular government schools and private schools. Almost half of the difference between the management scores of autonomous government schools and regular government schools is accounted for by differences in leadership of the principal and better governance.
    JEL: L2
    Date: 2014–11
  30. By: Liu, Hongxing; Gopalakrishnan, Sathya; Browning, Drew; Herak, Patrick; Sivandran, Gajan
    Abstract: Non-point source pollution and its impact on water quality are of great importance to policy makers, residence and farmers. This paper uses a hedonic property value model to investigate the marginal implicit values of water quality change in Hoover Reservoir in the Upper Big Walnut Creek (UBWC) watershed, Ohio. The estimates are fed into a simple dynamic optimization model which maximizes social welfare while taking into account the damage from production as well as the production profits. This paper uses the Soil and Water Assessment Tool (SWAT) to simulate the quality and quantity of the surface and ground water and uses ArcGIS to link housing transactions in Franklin County and Delaware County with disaggregated flow of nutrient runoff in the watershed. The econometric results indicate that the marginal damage for a one mg/L increase in nitrogen (N) and phosphorus (P) loadings are $7,713.41 and $27,624.05 respectively, and the increase of property value of a one meter increase of secchi depth water clarity is $95,132.07. This paper investigates the effects of multiple water quality parameters on both waterfront and non-waterfront properties, using the yearly maximum loading, sediment, and dissolved oxygen, as well as yearly average secchi disk depth as measurement. A simple dynamic optimization model is included to show the tradeoff between production profits and water quality.
    Keywords: Hedonic property model, water quality, dynamic optimization model., Environmental Economics and Policy,
    Date: 2014
  31. By: OECD
    Abstract: <ul> <li> One in eight students across OECD countries has repeated a grade at least once before the age of 15. </li> <li> Many countries reduced the rate of grade repetition between 2003 and 2012. </li> <li> One in five disadvantaged 15-year-olds has repeated a grade. Even among students with similar academic performance, the likelihood of repeating a grade is one-and-a-half times greater for disadvantaged students than for advantaged students. </li></ul>
    Date: 2014–09
  32. By: Abowd, John M. (Cornell University); Kramarz, Francis (CREST (ENSAE)); Pérez-Duarte, Sébastien (European Central Bank); Schmutte, Ian M. (University of Georgia)
    Abstract: We test for sorting of workers between and within industrial sectors in a directed search model with coordination frictions. We fit the model to sector-specific vacancy and output data along with publicly-available statistics that characterize the distribution of worker and employer wage heterogeneity across sectors. Our empirical method is general and can be applied to a broad class of assignment models. The results indicate that industries are the loci of sorting-more productive workers are employed in more productive industries. The evidence confirms assortative matching can be present even when worker and employer components of wage heterogeneity are weakly correlated.
    Keywords: sorting, industries
    JEL: J30
    Date: 2014–08

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