nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2014‒12‒24
sixty-one papers chosen by
Steve Ross
University of Connecticut

  1. The Spatial Dimension of US House Price Developments By Katharina Pijnenburg
  2. Spatial and hedonic analysis of house price dynamics in Warsaw By Widłak, Marta; Waszczuk, Joanna; Olszewski, Krzysztof
  3. Welfare Benefits of Agglomeration and Worker Heterogeneity By De Groot, Henri L.F.; Ossokina, Ioulia V.; Teulings, Coen N
  4. Regional variation in the elasticity of supply of housing, and its determinants: The case of a small sparsely populated country By Elias Oikarinen; Eero Valtonen
  5. The Fortress European City: The socio-spatial Exclusion of Asylum Seekers in Copenhagen, Madrid, and Berlin By René Kreichauf
  6. Infrastructure?s Long-Lived Impact on Urban Development: Theory and Empirics By Arthur Grimes; Eyal Apatov; Larissa Lutchmann; Anna Robinson
  7. Modelling default transitions in the UK mortgage market By McCann, Fergal
  8. The Economics of Density: Evidence from the Berlin Wall By Ahlfeldt, Gabriel; Redding, Stephen J.; Sturm, Daniel M; Wolf, Nikolaus
  9. Inequality of level of living in the Russian Federation: some regional and municipal aspects By Anna Bufetova
  10. Best Education Money Can Buy? Capitalization of School Quality in Finland By Mika Kortelainen; Tuukka Saarimaa; Oskari Harjunen
  11. The Time Value of Housing: Historical Evidence from London Residential Leases By Philippe Bracke; Ted Pinchbeck; James Wyatt
  12. Spatiotemporal patterns of Shrinking Cities in Europe 1990 - 2010 By Manuel Wolff; Thorsten Wiechmann
  13. The role of proximity relations in regional and territorial development processes By André Torre; Fred Wallet
  14. The City as a Small Open Economy By John Hartwick
  15. Does the EU have homogeneous urban structure area? The role of agglomeration and the impact of shocks on urban structure By Marco Modica
  16. Impacts of International Trade and Logistics Industry on Urban Land Use in Mersin By fikret zorlu
  17. Socio-economic explanation of urban sprawl: Evidence from Switzerland, 1970-2010 By Barbara Weilenmann; Tobias Schulz
  18. New firm formation and its effect on employment growth in declining regions By Heike Delfmann; Sierdjan Koster
  19. No Price Like Home: Global House Prices, 1870-2012 By Knoll, Katharina; Schularick, Moritz; Steger, Thomas
  20. Business confidence and forecasting of housing prices and rents in large German cities By Konstantin Kholodilin
  21. Urbanization and Decentralization: The changing urban-rural linkages and opportunities of decentralization of services By Joachim von Braun
  22. continuity and change in workplaces of beyoglu in the period 1950-2011 By gülin giriþken
  23. Urban Infrastructure on a regional level ? Economical effects on local business identified with surveys and observations By Maik Hoemke
  25. The innovation and its territorial factors: An analysis in the micro-regions of São Paulo. By Suelene Mascarini
  26. Industrial Agglomeration and Dispersion in China: Spatial reformation of the "workshop of the world" By ITO Asei
  27. Innovation in creative cities: Evidence from British small firms By Lee, Neil; Rodriguez-Pose, Andres
  28. Debt, jobs, or housing: what's keeping millennials at home? By Bleemer, Zachary; Brown, Meta; Lee, Donghoon; Van der Klaauw, Wilbert
  29. Scholarly Publication and Collaboration in Brazil: The Role of Geography By Otavio Sidone; Eduardo Haddad; Jesus Mena-Chalco
  30. Sustainable Transportation and Urban Development By Daniel Shefer
  31. Ageing in a Long-term Regeneration Neighbourhood: A Disruptive Experience or Successful Ageing in Place? By Kleinhans, Reinout; Veldboer, Lex; Jansen, Sylvia; van Ham, Maarten
  32. Spatial impacts of economic crisis. Scenarios for the Portuguese Regions By Tomaz Dentinho; João Borba
  33. Regional labour markets in Brazil: the role of skills and agglomeration economies By Ana Maria Bonomi Barufi
  34. A solution to urban sprawl: Management of urban regeneration by smart growth By Neslihan Sag; Aykut Karaman
  35. Your very private job agency: Job referrals based on residential location networks By Franziska Hawranek; Norbert Schanne
  36. “Phantom of the Opera” or “Sex and the City”? Historical Amenities as Sources of Exogenous Variation By Bauer, Thomas; Breidenbach, Philipp; Schmidt, Christoph M
  37. Optimal monetary policy rules and house prices: the role of financial frictions By Alessandro Notarpietro; Stefano Siviero
  38. Strong versus Weak Ties in Migration By Giulietti, Corrado; Wahba, Jackline; Zenou, Yves
  39. Financial frictions, the housing market, and unemployment By Branch, William A.; Petrosky-Nadeau, Nicolas; Rocheteau, Guillaume
  40. Urban Resilience: Store Location Dynamics and Cultural Heritage By Mark van Duijn; Jan Rouwendal; Ruben van Loon
  41. Local quality of government and migration. Evidence for European regions By Ketterer, Tobias; Rodriguez-Pose, Andres
  42. Mortgage-related Financial Difficulties: Evidence from Australian Micro-level Data By Matthew Read; Chris Stewart; Gianni La Cava
  43. What Calls to ARMs? International Evidence on Interest Rates and the Choice of Adjustable Rate Mortgages By Badarinza, Cristian; Campbell, John Y; Ramadorai, Tarun
  44. The Gothenburg congestion charge: effects, design and politics By Börjesson , Maria; Kristoffersson , Ida
  45. Holes in the Dike: the global savings glut, U.S. house prices and the long shadow of banking deregulation By Mathias Hoffmann; Iryna Stewen
  46. Ranking Teachers when Teacher Value-Added is Heterogeneous Across Students By Stacy, Brian
  47. Regional Policy Evaluation: Interactive Fixed Effects and Synthetic Controls By Gobillon, Laurent; Magnac, Thierry
  48. Teacher Pay and Student Performance: Evidence from the Gambian Hardship Allowance By Pugatch, Todd; Schroeder, Elizabeth
  49. Testing and explaining economic resilience with an application to Italian regions By Di Caro, Paolo
  50. Does Management Matter in Schools? By Bloom, Nicholas; Lemos, Renata; Sadun, Raffaella; Van Reenen, John
  51. The Cost of Misguided Urbanization: The Case of Informal Settlements in Butuan City, Philippines By Navarro, Ma. Kresna; Almaden, Catherine Roween
  52. The Impact of Regional and Sectoral Productivity Changes on the U.S. Economy By Caliendo, Lorenzo; Parro, Fernando; Rossi-Hansberg, Esteban; Sarte, Pierre-Daniel
  53. Market potential, start-up size and the survival of new firms By Klaesson, Johan; Klaesson, Charlie
  54. Climate Change Adaptation: Lessons from Urban Economics By Matthew E. Kahn
  55. Natural disasters and macroeconomic performance: The role of residential investment By Strulik, Holger; Trimborn, Timo
  56. Bubbles and crises: The role of house prices and credit By André K. Anundsen; Frank Hansen; Karsten Gerdrup; Kasper Kragh-Sørensen
  57. More Schooling, Less Youth Crime? Learning from an Earthquake in Japan By Aoki, Yu
  58. Road pricing: An overview By M. Rouhani, Omid
  59. A New Hedonic Regression for Real Estate Prices Applied to the Singapore Residential Market By Liang Jiang; Peter C.B. Phillips; Jun Yu
  60. The Transmission of Real Estate Shocks Through Multinational Banks By Bertay, A.C.
  61. Research intensive clusters and regional innovation systems: a case study of mechatronics in Apulia By Massimo Florio; Julie Pellegrin; Emanuela Sirtori

  1. By: Katharina Pijnenburg
    Abstract: Spatial heterogeneity and spatial dependence are two well established aspects of house price developments. However, the analysis of differences in spatial dependence across time and space has not gained much attention yet. In this paper we jointly analyze these three aspects of spatial data. We apply a panel smooth transition regression model that allows for heterogeneity across time and space in spatial house price spillovers and for heterogeneity in the effect of the fundamentals on house price dynamics. We find evidence for heterogeneity in spatial spillovers of house price developments across space and time: house price developments in neighboring regions spill over stronger in times of increasing neighboring house prices compared to declining neighboring house prices. This is interpreted as evidence for the disposition effect. Moreover, heterogeneity in the effect of the fundamentals on house price dynamics could not be detected for all variables; real per capita disposable income and the unemployment rate have a homogeneous effect across time and space.
    JEL: C23 R12 R31
    Date: 2014–11
  2. By: Widłak, Marta; Waszczuk, Joanna; Olszewski, Krzysztof
    Abstract: The aim of our article is to analyze the dynamics of housing prices in the secondary housing market in Warsaw from Q1 2006 to Q3 2013, taking into account the spatial relationship between prices. In the first part of this research we compare the geographically weighted regression with a linear regression estimated using OLS with spatial variables. In the second part, we combine the geographically weighted regression with the penalized spline regression to extract the effect of time on prices. With this method we obtain a nonlinear and more precise measure of time effects and improved goodness-of-fit statistics. We obtain a hedonic index, that is more robust against short-term changes in house prices than the usual, linear hedonic index. This is a novel approach, which has not been applied before in the case of the Polish housing market. The index allows us to show how interest rates or the housing policy influenced house prices.
    Keywords: hedonic price indices; housing prices; spatial influence on prices; geographically weighted regression; penalized splines
    JEL: D12 R21 R31
    Date: 2014–08
  3. By: De Groot, Henri L.F.; Ossokina, Ioulia V.; Teulings, Coen N
    Abstract: The direct impact of local public goods on welfare is relatively easy to measure from land rents. However, the indirect effects on home and job location, on land use, and on agglomeration benefits are hard to pin down. We develop a spatial general equilibrium model for the valuation of these effects. The model is estimated using data on transport infrastructure, commuting behavior, wages, land use and land rents for 3000 ZIP-codes in the Netherlands and for three levels of education. Welfare benefits are shown to differ sharply by workers' educational attainment.
    Keywords: agglomeration; land rates; local public goods; residential sorting; spatial equilibrium
    JEL: H4 H54 R13 R23 R4
    Date: 2014–10
  4. By: Elias Oikarinen; Eero Valtonen
    Abstract: The long-term price elasticity of supply of housing is a key factor determining the growth rates of housing prices and housing supply as the city grows. Therefore, the housing supply elasticity has considerable influence on the competitiveness of the region and on the growth potentials of the area. Previous empirical investigations provide evidence of substantial regional variation in the supply elasticity of housing within the U.S. The literature further shows that the supply elasticity and its variation across cities are significantly influenced not only by regulatory supply constraints, but also by the city level population, population density, and geographic constraints. This paper studies empirically if these findings apply to a country that is notably different from the U.S. with respect to its size, population density, typical city size, geographic and cultural coherence, and regulatory constraints, i.e., Finland. Apparently, this is the first study to estimate the supply elasticities directly based on the level of housing stock and the Johansen Maximum Likelihood methodology. Our findings are largely in line with those reported for the U.S. Based on quarterly data for the period 1987-2011, the analysis shows substantial regional variation in the long-term supply elasticity across Finnish cities. To examine the factors behind the observed regional differences, we construct an index that aims to measure the city level regulatory and geographic constraints for housing supply. The city size, zoning policies, and geographic constraints are found to be the most significant factors causing regional elasticity diversity. Together, these factors account for 80% of the regional elasticity variations. While more flexible regulation can increase the supply elasticity ? and a general policy recommendation is therefore that regional administrations should strive to decrease the regulatory constraints on housing supply to increase the growth potentials of the area ? the results imply that the opportunities of regulatory policies to affect the elasticity are limited even in a sparsely populated country with small cities and abundant reserve of vacant developable land.
    Keywords: housing; supply; elasticity; regions
    JEL: R31 R52
    Date: 2014–11
  5. By: René Kreichauf
    Abstract: The article aims to illustrate the spatial dimensions of exclusionary mechanisms applied to immigrants asking for asylum in European cities. It focuses on the housing of asylum seekers, its policies, effects, causes, conflicts and resistance, with the assumption that housing asylum seekers is relevant for the integration process of this group. The comparative study uses the cases of of Copenhagen, Berlin, and Madrid exploring following main questions: 1) To what extent does the housing of asylum seekers affect the inclusion process into the urban society, and 2) how do asylum seekers act against exclusionary mechanisms and how do they negotiate their political interests? In this context, the presentation focuses on four fields of interests: the policy and responsibilities regarding housing asylum seekers on the EU, national and local level, the illustration of the location and characteristics of housing, the conflicts that arise from housing asylum seekers in communities, and forms of resistance by asylum seekers and political activists against the housing policy. The paper illustrates that the political and societal dealings with asylum seekers and, more specifically, the location for housing of asylum seekers in either deprived neighborhoods on the outskirts (Madrid, Berlin) or outside of European cities (especially Copenhagen, but also Berlin and Madrid), and the material conditions of the housing affect the inclusion process and the image of asylum seekers and their housing. Therefore, neighborhood conflicts arise between migrants and neighborhood residents, and migrants resist (often by means of protests in the urban space) against their living conditions. However, while ruffled feelings and protests have been smoothed in Copenhagen (mostly due to political repression and small improvements regarding the asylum legislation), there is an increase of political protest and resistance by political groups and asylum seekers considering the housing situation in Berlin and Madrid, which emerged due to neighborhood conflicts, the occupation of public spaces, and solidarity movements. The European City is often described as a place of openness, integration, and emancipation (Simmel 1950; Siebel 2004). However, this research work shows how asylum seekers are systematically prevented to benefit from these features. It clarifies the disadvantageous housing situation, discrimination practices and the issue of a possible failed integration, and it finally illustrates that the European City has built a new, invisible wall that excludes "non-citizens" from the actual urban life. In regards to locally "unwanted" migration groups, the European City developed to some kind of a new Fortress City.
    Keywords: exclusion; asylum; housing; urban underclass; protest; segregation; poverty
    Date: 2014–11
  6. By: Arthur Grimes; Eyal Apatov; Larissa Lutchmann; Anna Robinson
    Abstract: We analyse the impacts that infrastructure provision has on long run urban development. The topic is of major importance to policy-makers when deciding whether or not to invest in major infrastructure projects. The analysis helps policy-makers to understand the intended, and potentially unintended, long run consequences of their infrastructure investment decisions. Reflecting a spatial equilibrium approach, we maintain that population flows reflect people's overall rankings of urban areas; thus, through revealed preference, growing cities are shown to have had preferred attributes (wages and amenities combined) relative to other cities. Social infrastructure (such as higher educational institutions and hospitals) and transport infrastructure may have both productive and amenity value. Thus increased provision of such infrastructure within a city may enhance a city's attractiveness provided their benefits exceed costs of provision. Poor infrastructure provision linking an urban area to major cities and other amenities may, conversely, reduce the attractiveness of that urban area, curtailing its long run population growth. We first outline a new theoretical model that includes distance-related effects on individual utility, and hence on urban population development. The new derivation, while similar to that of a recent model by Duranton and Turner (Review of Economic Studies, 2012), avoids a convenient but questionable assumption in their approach in relation to the effect of distance on individual utility. Our theoretical approach includes the impact of amenities, and the effect of distance in reducing their attractiveness, while also accounting for potential distance-related effects on wages and living costs. We test our model using long-term (80 year) historical data (measured every 10 years from 1926 to 2006) that enables us to relate the populations of 60 New Zealand urban areas to early infrastructure provision and initial conditions (e.g. existence of a harbour, topography, climate, etc). The use of additional data from the start of the twentieth century as instruments enables us to test whether early (and subsequent) infrastructure provision affected the shape of city development over the 80 year period. As well as dealing with endogeneity issues through our choice of instruments, we use spatial-econometrics techniques to test for spatial spillovers between cities.
    Keywords: Infrastructure; city development; population growth; migration; spatial equilibrium
    JEL: H54 R12
    Date: 2014–11
  7. By: McCann, Fergal (Central Bank of Ireland)
    Abstract: Using a large panel data set on the population of UK mortgage loans by Irish-headquartered banks, this paper presents a transitions-based model of mortgage default. The estimation departs from cross-sectional methods typically used in mortgage default models, in that the transition both into and out of mortgage default is predicted. Housing equity, regional unemployment and loan interest rates are found to impact the probability of transition into default, while housing equity, interest rates and the time spent in default all significantly aect the probability that a loan transitions out of default ("cures"). The latter finding is indicative of a hysteresis effect in mortgage markets, whereby the longer a mortgage spends in default, the less likely it is that the obligor will begin repayment. This finding provides important impetus for mortgage modication programmes which aim to tackle mortgage arrears at as early a stage as possible. In an extension, the default transitions of owner-occupiers are shown to be far less sensitive to changes in housing equity than those of Buy-to-Let investors. This finding suggests that instances of "strategic default" are uncommon among UK homeowners, but investors may well exercise the "put option" implicit in their contract when house price falls leave them "out of the money".
    Keywords: Mortgages, default, credit risk, Markov multi-state model.
    JEL: D14 G21
    Date: 2014–11
  8. By: Ahlfeldt, Gabriel; Redding, Stephen J.; Sturm, Daniel M; Wolf, Nikolaus
    Abstract: This paper develops a quantitative model of internal city structure that features agglomeration and dispersion forces and an arbitrary number of heterogeneous city blocks. The model remains tractable and amenable to empirical analysis because of stochastic shocks to commuting decisions, which yield a gravity equation for commuting flows. To structurally estimate agglomeration and dispersion forces, we use data on thousands of city blocks in Berlin for 1936, 1986 and 2006 and exogenous variation from the city's division and reunification. We estimate substantial and highly localized production and residential externalities. We show that the model with the estimated agglomeration parameters can account both qualitatively and quantitatively for the observed changes in city structure.
    Keywords: agglomeration; cities; commuting; density; gravity
    JEL: N34 O18 R12
    Date: 2014–08
  9. By: Anna Bufetova
    Abstract: Social disparities in Russia were increasing since transition started in the 1990s on the background of decline of all social indicators. In the first decade of 2000-th growth of economy contributed to improvement of wellbeing of population. Policy of budgetary alignment and state social policy carried out in the first 10 years of 2000-th at the expense of redistribution of a resource rent was aimed at mitigation of social disparities. This empirical paper attempts to add evidence on the issue of disparities and convergence in levels of living within regions and cities of the Russian Federation (the RF) in the period 2000-2011. Combination of regional and urban aspects of analysis allows making assessment and examination of inequalities in level of living more adequate. The study covers 79 regions and 193 cities of the RF with population over 100,000. The paper considers various components of level of living: income, poverty rate, employment, quality and affordability of housing, health care and education and analyzes their differences between regions and between cities and their evolution in time. Quantitative analysis was complemented by analysis of qualitative characteristics of health services, education, housing in regions and cities. Further quantitative assessment of level of living in regions and cities is made on the base of synthetic indicator of level of living. Introduced indicator comprises information of different indicators and allows classification of RF regions and cities and evaluation of disparities and convergence tendencies of levels of living. The analysis of dynamics of the synthetic indicators of level of living provides evidence for regional convergence of levels of living and a slight mitigation of inter-city inequality of levels of living. But within the considered set of cities we can observe groups of cities that characterized by different dynamics of levels of living. Analyzing these groups we made an attempt to identify the main factors that determine the spatial trends in inequality in levels of living.
    Keywords: Regional Disparities; Level of living; inequality; cities; regional capitals; convergence; divergence; Russian Federation;
    JEL: R13
    Date: 2014–11
  10. By: Mika Kortelainen; Tuukka Saarimaa; Oskari Harjunen
    Abstract: By international comparison, Finnish pupil achievement is high and school achievement differences small. The Finnish education system is unusual also because there are no national testing programs and information on school quality measures is not publicly disclosed. Is school quality capitalized into house prices in this environment? Using a boundary discontinuity research design and data from Helsinki, we find that it is: a one standard deviation increase in average test scores increases prices by roughly 2.5 percent, which is comparable to findings from the U.K and the U.S. This price premium is related to pupils? socioeconomic background rather than school effectiveness.
    Keywords: Boundary discontinuity, house prices, school quality, spatial differencing
    JEL: R21 H75 I20 C21
    Date: 2014–12–05
  11. By: Philippe Bracke; Ted Pinchbeck; James Wyatt
    Abstract: Most housing transactions in London involve trading long leases of varying lengths. We exploit this feature to estimate the time value of housing --- the relationship between the value of a property and the length of time it will be owned for --- over the range 1-99 years. To do so, we compile a unique historical dataset from 1987 to 1992 to abstract from current institutional features of the UK system, for instance rights to extend leases that could confound our results. By applying hedonic techniques to these data we provide new evidence on how the market values leasehold properties. We find that the time value of housing over the range 1-99 is similar to an exponential shape, a finding that suggests sophisticated pricing behaviour in the London residential market. Digging deeper, however, we show that leasehold prices depart from this predictable pattern in a way that is consistent with a declining discount rate schedule.
    Keywords: House prices, discount rates, historical data
    JEL: G12 R30
    Date: 2014–12
  12. By: Manuel Wolff; Thorsten Wiechmann
    Abstract: At the beginning of the 21st century, the shrinking cities phenomenon is widespread across Europe. The majority of Europe's cities already lose population and the rate is more than likely to increase in future. Most European countries see an increasingly ageing population and internal migration from underdeveloped to more competitive locations. Generally, the long-term development of Europe's cities will largely be conditioned by the birth rate which dramatically declined to levels far below the natural reproduction rate (second demographic transition, Lesthaeghe and van de Kaa 1986) whereas the short-term development is especially influenced by job-driven migration. Selected studies give an idea of the persistence and spatial extent of this phenomenon in Europe (e.g. Cheshire and Hay 1989; Cheshire 1995; Turok and Mykhnenko 2007). However, the state of knowledge on causes, effects, and spatial patterns of urban shrinkage is still poor. We know little about the extension and spreading of urban shrinkage; in particular we lack a cross-national comparative perspective. Every attempt to compare the evolution of cities in Europe is confronted with the heterogeneity of definitions, criteria and statistical data. In spite of the difficulties of a standardized statistical comparison on the local level and in order to narrow the existing gap this paper aims at mapping urban shrinkage in Europe by breaking down demographic processes in Europe to the local scale. Based on a definition of urban areas in Europe and a causal model which was developed and tested in the frame of the COST Action ?Cities Regrowing Smaller' the spatial distribution of growth, stagnation and decline in urban Europe in the period from 1990 to 2010 will be presented. This includes a typology of different types of shrinking cities in Europe which in addition shows the dominance of either migration or natural demographic processes. This analysis proves that shrinking cities can be found in most countries in Europe but with major regional differences with regard to size and speed of urban shrinkage. References Cheshire P. and Hay D., 1989, Urban Problems in Western Europe, London: Unwil Hyman. Cheshire P., 1995, A New Phase of Urban Development in Western Europe ? The Evidence for the 1980s, Urban Studies, Vol. 32, N°7, pp. 1045-1063. Lesthaeghe, R. and Kaa, D. van de, 1986. Twee Demografische Transities?. In: R. Lesthaeghe and D. van de Kaa eds. Bevolking: Groei en Krimp. pp. 9-24. Deventer: Van Loghum Slaterus. Turok I. and Mykhnenko V., 2007, The Trajectories of European Cities, 1960-2005, Cities, Vol. 24, N°3, pp. 165-182.
    Keywords: shrinking cities; demographic change; cross-national comparative perspective
    JEL: J11 R23
    Date: 2014–11
  13. By: André Torre; Fred Wallet
    Abstract: Proximity analyses have nowadays turned out to be a part of the toolbox of regional scientists and this notion recently became very popular in the position of politics, and private or public stakeholders. In parallel, the notion of proximity spread in the academic literature and is now commonly used by scholars in regional science, geography or spatial economics. Interest is affecting now the works dedicated to innovation process, links between science and industry, relations between users and producers or sub-contractors, national systems of innovation, innovative milieus, about also local labour markets or urban policies. But despite the substantial literature on proximity processes and relations, only a few academic works have been devoted to studying the link between regional development and proximity relations. We consider that the integration of the notion of proximity into the framework of regional development analysis provides interesting input due to its plasticity and ability to draw connections between spatial, economic and social dimensions; but also suggests ways of possible changes for regional and territorial policies. The main outline is to try to assess the importance of proximity relations (or obstacles led by proximity relations) in regional development processes, and discuss approaches of different disciplines. We aim to re-situate the analysis of proximity within the various theoretical approaches to the territory and, in particular, to highlight its place and the role it could play in the study of regional and territorial development processes, and possibly its contribution to public policies or collective action. It seems interesting to investigate the relation between proximity analyses and regional or local and territorial development; taking into account long distance relations and clusterisation processes has led to a renewal of development approaches. This investigation consists of three main axes of inquiry related to the ability to go beyond the sterile opposition between the local only and the decisive influence of distance relations. Are the themes addressed in these approaches wide and diverse enough to account for the mechanisms that reflect the diversity and complexity of the processes of local development (or are they, on the contrary, too specific to certain areas)? Are the (conceptual and analytical) tools, models and applied (qualitative and quantitative) studies based on an analysis of the phenomena of regional development through proximity sufficiently robust and objectifiable (and can they be used to generate valuable measures)? Can the results of proximity based analyses be translated into recommendations for decision-making and coordination between stakeholders, including in the field of public action or policies?
    Keywords: Regional development; proximity; innovation; governance
    JEL: R1 R5
    Date: 2014–11
  14. By: John Hartwick
    Abstract: We set out a small, open economy model of a city, one with local housing, government production and a non-traded good. We observe that a positive shift in labor productivity in the export sector generally results in a larger, higher-wage and more densely settled city. Production of the local public good increases for the special case of the public good 'counting' small in the utility function of the representative resident. Similar results obtain for the case of a city experiencing an exogenous improvement in a local climate amenity.
    Keywords: small open city; urban public sector; law of urban growth.
    JEL: R23 H40 F43
    Date: 2014–11
  15. By: Marco Modica
    Abstract: The urban structures between the Member States of the European Union is very different for historical, geographical, economic reasons. However, the population is spread across geographic areas in a way that, although continuously changing, is not possible to define as random. Indeed, countries have faced a strong tendency toward agglomeration, namely population gathers within proper areas like cities, and currently the agglomeration within cities "is an extremely complex amalgam of incentives and actions taken by millions of individuals, businesses, and organizations" Eeckhout (2004, p. 1429). Then, the creation of the European Union, the distortions caused by the introduction of a single currency in countries structurally so different and the expansion of mobility of people, capital and services due to the constitution of the so-called Schengen Area from the beginning of '90s might have had some impacts on the dynamics of city populations. This paper provides a study of the hierarchical structure of the cities within the EU Member States with particular attention on agglomeration forces by means of two very well-known empirical regularities: Zipf's law, as a proxy for agglomeration forces, and Gibrat's law as a test for stationarity. Indeed, the Zipf coefficient can be seen as a measure of urbanization: the larger the value of the coefficient, the more even the population of cities in the urban system. There are several potential explanations for variations in its value, one of these can be found in a model of economic geography a la Krugman (1991) and Fujita et al. (1999). These models can be viewed as models of unevenness in the distribution of economic activity and moreover, they state that for certain parameter values, economic activity is agglomerated, while for other parameter values, economic activity is dispersed (i.e. a city system will be more agglomerated the greater are scale economies, the lower are transport costs and the lower the share of international trade in the economy) By means of parametric and non-parametric analysis the main conclusions of this paper are the following: the hierarchical structures of Member States is more even than expected. Moreover, the European Union seems to be split in three distinct areas: an area characterized by the validity of Gibrat's law (temporary idiosyncratic shocks might have permanent impacts on the city structure); an area characterized by the presence of mean reversion (any exogenous shock is used up in certain amount of time); a small area where the effects of the shocks is magnified in the big cities. Finally, we find that only the constitution of the Schengen Area and the share of international trade seem to have a weak impact on the hierarchical structures of Member States.
    Keywords: City size distributions; European city growth; Zipf?s Law; Gibrat?s Law
    JEL: C46 D30 R11 R12
    Date: 2014–11
  16. By: fikret zorlu
    Abstract: The progress in logistics industry is highly dependent upon international and domestic trade performance of a city. In the literature various studies deal with economic development and its influence on urban growth and land use. Agglomeration theory and cluster theory try to identify the factors of physical concentration and networking characteristics of an specific industry at regional and local scale. This study deals with logistics industry, its relation with international trade and impacts on urban development. Logistics industry is dependent to certain transport infrastructures (port, highway, railway), investment areas (warehouses, truck terminals, delivery center, transport terminals), social capital (skilled labor), operational capacity (fleet size, sub-contracting companies) and land uses (availability of land, land prices, accessibility). This study deals with the role of international trade and logistics industry on urban land use formation in Mersin, Turkey. In Turkey, international trade figures show a gradual growth and hence logistics industry is one of the leading activities of regional economy. Logistics industry in Mersin showed remarkable developments both in terms of variety and scale of activities; therefore, it may refer to a distinct category of economic development of the city. In the last decades both domestic and international trade showed notable growth and geographic concentrations of logistics firms and specialized labor are interrelated to dynamics of trade activities. This study investigates spatial distribution and hierarchal classification of logistic centers, terminals and activities in the city. Urban development and land use of the city at eastern edge are mostly dominated by logistics industry. Location strategies and concentration patterns of 64 logistics companies and their relative influence on urban land use are investigated. Location criteria for the companies are: availability of physical infrastructure, logistics service capacity and possibilities of development. Logistics terminals, truck arks and warehouses are concentrated on the eastern part of the city. Compared to other factors, land availability, accessibility to highway are regarded as most significant factors of location. Finally, companies are classified into three groups according to capacity utilization performances, improvement strategies and location preferences. Land use and location of logistics activities are related to firm strategies. Research findings show three strategies: increasing rates of capacity utilization, technology and capacity improvement and new investment.
    Keywords: logistics; trade; urban development; cluster
    JEL: R12 R14
    Date: 2014–11
  17. By: Barbara Weilenmann; Tobias Schulz
    Abstract: The term urban sprawl is often used to describe apparent inefficiencies of spatial development, including disproportionate growth of urban areas and excessive leapfrog development. In Switzerland, where open space is a scare resource, sprawl takes place all over the country. It goes at the expense of high quality soil which is perceived as the most prominent negative effect. Proceeding from the monocentric city-model, urban economists confirm that urban sprawl is driven by fundamental economic forces such as rising incomes, population growth and low commuting costs. In Switzerland, all these factors have been quite pronounced over the last decades indeed and they should have a high explanatory value. Still, there is the question whether these forces are sufficient to explain suburbanisation also in recent decades. We build on traditional models regressing sprawl on mobility behaviour, rising income and population growth as explanatory variables, and extend the model with other explanatory factors such as change in life-styles (e.g. preference for single-family housing), demographic structures, employment distribution/structure, and commuting. We expect e.g. that a growing number of single households accelerates urban sprawl. Most of the urban economic studies on the drivers of urban sprawl focus on the periphery of great metropolitan areas and do not cover more than one period. Furthermore, they usually use simple measures to capture the development of the settlement structure such as total or per capita soil consumption. Yet, spatial patterns of soil consumption such as the density and spatial distribution of settlements and its development are not taken into account. We will fill this gap by using the recently developed metrics of urban sprawl (Jaeger et al. 2010) that incorporate density and spread of settlement structures and thus allows us to measure sprawl more comprehensively. Our analysis is based on an exceptional, temporally and spatially consistent dataset (including the newly developed comprehensive metrics for urban sprawl), encompassing all Swiss municipalities and covering a time-span of 1970 to 2010 with one observation per decade. This allows us to examine, whether and how the determinants of growth change across time and whether the conventional monocentric city model has more or less explanatory power in earlier or later decades. Such insights will provide a valuable contribution to our understanding of the phenomenon of sprawl. We propose to present first results of our analysis at the ERSA conference in St. Petersburg.
    Keywords: Land Use; urban sprawl; urbanization drivers; Switzerland
    JEL: R14 R52 R58 C12 C30 O18
    Date: 2014–11
  18. By: Heike Delfmann; Sierdjan Koster
    Abstract: New firm formation is often highly prioritized by local governments, particularly for regions that are declining. Entrepreneurship can play an important role in keeping declining regions vital through job creation. Yet, the way in which new firm formation exerts its influence on employment growth is not yet evident. Are start-ups in those areas equally productive in influencing employment change as they are in growing regions? Although there is a large and growing body of research on new firm formation and employment, there is still a knowledge gap concerning the impact of the context on the effect of new firm formation. Previously the focus has been on growth. New firm formation can contribute direct and indirectly to regional employment. The indirect effects are thought to have a larger impact on the long term, and indirect effects are not per sé positively related to employment growth. Focusing on the regional context, we investigate whether the relationship differs depending decline or growth, and by the degree of urbanization, to determine both long and short term employment effects. In order to establish the impact of new firm formation on employment rates, the paper examines panel data of firm dynamics and employment growth retrieved from the LISA database covering the whole of the Netherlands on a municipality level (418 regions) between 1996-2010. This data is complemented with data on population density, size, growth and decline from the Statistic Netherlands.
    Keywords: Employment growth; population decline; new firm formation; urban and rural regions; direct and indirect effects;
    JEL: M13 R11 O18
    Date: 2014–11
  19. By: Knoll, Katharina; Schularick, Moritz; Steger, Thomas
    Abstract: How have house prices evolved in the long-run? This paper presents annual house price indices for 14 advanced economies since 1870. Based on extensive data collection, we are able to show for the first time that house prices in most industrial economies stayed constant in real terms from the 19th to the mid-20th century, but rose sharply in recent decades. Land prices, not construction costs, hold the key to understanding the trajectory of house prices in the long-run. Residential land prices have surged in the second half of the 20th century, but did not increase meaningfully before. We argue that before World War II dramatic reductions in transport costs expanded the supply of land and suppressed land prices. Since the mid-20th century, comparably large land-augmenting reductions in transport costs no longer occurred. Increased regulations on land use further inhibited the utilization of additional land, while rising expenditure shares for housing services increased demand.
    Keywords: house prices; land prices; neoclassical theory; transportation costs
    JEL: N10 O10 R30 R40
    Date: 2014–09
  20. By: Konstantin Kholodilin
    Abstract: The role of the housing market in the everyday life of society is difficult to overestimate. The housing rents and prices directly affect standard of living of virtually every person. Housing loans constitute the largest liability of households and account for a large proportion of bank lending. In Germany, the housing accounts for more than a half of wealth of private households. It is well known that speculative price bubbles on real-estate markets are likely to trigger financial crises, which can, in turn spill, over to the real economy by producing deep recessions accompanied by huge employment reductions. Since the end of 2010, after more than a decade of falling real housing prices, strong rent and especially price increases have been observed in Germany. This raised doubts and fears in German society. On the one hand, it is feared that Germany can follow the path of Spain, Ireland, and other bubble countries that ended in a severe economic crisis. On the other hand, the tenants that constitute a majority of German population are afraid of substantial rent increases that will erode their welfare. The tenants' discontent takes a form of massive protests and manifestations endangering political stability in the country. For this reason of the major issues debated in during recent elections and ongoing coalition negotiations among two leading German parties CDU/CSU and SPD is the housing policy. Therefore, it is very important to be able to predict the dynamics of home rents and prices in the nearest future. In this paper, we evaluate the forecasting ability of 115 indicators to predict the prices and rents for existing and new housing in 71 German cities with population exceeding 100,000 persons. Above all, we are interested in whether the local business confidence indicators can allow substantially improving the forecasts, given the local nature of real-estate markets. The forecast accuracy of different predictors is tested in a framework of a quasi out-of-sample forecasting. Its results are quite heterogeneous. No single indicator appears to dominate all others for all cities and market segments. However, there are several predictors that are especially useful, namely business confidence at the national level, consumer confidence, and price-to-rent ratios. Even better forecast precision can be achieved by combining individual forecasts. On average, the forecast improvements attain about 20%, measured by reduction in RMSFE, compared to autoregressive model. In separate cases, however, the magnitude of improvement is about 50%.
    JEL: C21 C23 C53
    Date: 2014–11
  21. By: Joachim von Braun
    Abstract: "Urbanization and Decentralization: The changing urban-rural linkages and opportunities of decentralization of services" Joachim von Braun, Center for Development Research (ZEF) University of Bonn, Germany This paper explores the relations between urbanization and decentralization. Ever stronger linkages between urban and rural areas represent a challenge for sustainable development. Until now, the widespread view in the economic policy and research, categorizing "rural" as more "remote farming areas" and urban as "crowded cities", has led to their separate treatment, missing important sustainability footprints and poverty-reducing inter-linkages between them. The reality is different. In fact, the farming areas (the very rural) and the megacities (the very urban) co-evolve along a continuum with multiple types of flows and interactions. These dynamics are bringing the two spaces ever closer in space and livelihood patterns, leading to the loss of traditional distinctions between them. This gives an important potential role to decentralization of government, and decentralization of services in particular. Decentralization is an instrument for efficient and participatory governance. It has emerged as one of the most important governance reforms in recent history: Approximately 80 percent of all developing and transition countries have implemented this reform in past three decades. Based on a systematic review of country experiences this paper highlights the need for new attention to the spatial dimensions of development and to urban-rural linkages for sustainable development and reviews the evidence of synergies and pitfalls between urbanization and decentralization with concepts of economic geography, and institutional economics. There is evidence that the poorer segments of societies often do not benefit as much from decentralization as the better-off, and in some cases, decentralization even makes matters worse for them. An important reason for this mixed experience is the fact that the impact of decentralization on poverty depends on design- and context-specific factors. Institutional arrangements that work in one situation may not be appropriate for another, which has led to the appeal to move "from best practice to good fit." Against this context, this paper addresses the specific question: how to guide urban-rural linkages toward sustainable development. Strong linkages enhance people's welfare and growth because they facilitate the flow of resources to where they have the largest net economic and social benefits. However, such linkages cannot be taken for granted in development; they must be optimally invested in to help reduce transaction costs related to the linkages of diverse types and stimulate positive externalities and spillover effects. Urban-rural linkages need more policy attention, which requires that adequate institutional and organizational structures be put in place, necessitating appropriate coordination mechanisms between central and local governments.
    Keywords: H75 State and Local Government: Health; Education; Welfare; Public Pensions; O18 Economic Development: Urban; Rural; Regional; and Transportation Analysis; Housing; Infrastructure R11 Regional Economic Activity: Growth; Development; Environmental Issues; and Changes
    Date: 2014–11
  22. By: gülin giriþken
    Abstract: 20th century witnessed Istanbul's unexpected and tumultuous economic, politic, social and spatial transformation. In the first quarter of the 20th century, Istanbul lost half of its population and went through a stagnated duration; however the city regained its importance and former population at the end of 1950's. The city's macroform and transportation infrastructure that could have easily handled the needs of the city at the beginning of the 20th century. However migration accalerated by industrilization began with 1950's and increased need for more transport infrastructure in the urban area and other cities. Due to these rooted changes, the city's macroform turned inside out in terms of spatial context. During this tumultuous and multi-layered transformation period, Istanbul's central business district was restructured and Istanbul pursued being the centre of commerce and economy in the country. In the last decade of the 20th century, with the influential effect of producer services, this transformation and change was reflected to the sectoral and spatial environment. 1950 and following years are the times of radical transformation of the economic, social and cultural structure for Istanbul. The structure and function, cultural and ethnic diversity, the appearance and silhouette the city had sustained for thousands of years has started to change first gradually in the 1950s, then dramatically in the 1970s and finally 1990s and 2000s Istanbul has become an unorganized, unplanned giant metropolis. In this framework, Istanbul's fastest transforming district, Beyoglu underwent through some big changes in economic, cultural and daily-life aspects. In this context, Beyoglu district which is a perfect example to observe the transformations that Turkish city went through between the years 1950 and 2010 and the influence of producer services during this transformation period. This research is aimed at analyzing the workplace geography of Beyoglu district in the period 1950-2011. Research focusing on; - recognition of sectoral assemblages that produces and reproduces economic and spatial change and transformation; - discovering the economic and spatial differentiation and segmentation which characterized by spatial shifts in years; - characterizing and monitoring the economic and spatial transformation processes by using policies, actions, and tools. The research analyzes the economic landscape of Beyoglu in the 20th century period with adopting a relational perspective. The research looks in detail to the characteristics and activity assemblages of economic structure of Beyoglu, spatial formations of change and transformation, and the effect of these all economic processes to the formation of the district and the city.
    Keywords: central business district; economic geography; urban change and transformation; Z13 Economic Sociology Economic Anthropology Social and Economic Stratification
    Date: 2014–11
  23. By: Maik Hoemke
    Abstract: Increasing expansion of transport infrastructure is taking place in more and more countries. This trend, strongly encouraged by the globalization process, is reflected in ever-shorter journey times in both national and international travel. During such developments, extensive urban-planning alterations in areas that are being provided with new transport infrastructure tend to be viewed purely in terms of macro-economic datasets. The present study is therefore intended to add a new level to research on the efficacy of new transport facilities ? namely, economical effects measured by surveys and observations. The new Lötschberg Base Tunnel in Switzerland is to be taken as an example case for the purpose. When the 34.6-km Lötschberg Base Tunnel opened for scheduled operations in December 2007, the rural communes in the Upper Valais region acquired a strong new link with the catchment area of Berne. For example, the train journey between Visp (small municipality in Upper Valais with 7.000 inhabitants) and Berne was shortened from 2 hours to less than 1 hour. In addition to the link with Berne, internal public transport connections in Upper Valais were also tremendously improved and extended. Interchange links were improved, connections were better organized, high-frequency timetables were introduced and services were substantially increased ? transport facilities that are every bit as good as an urban railway network. In the past 5 years after opening of the tunnel extensive empirical methods were established to observe economic changes in the municipality of Visp. At first there were yearly observations of the shop opening times in the municipality connected with observations of new shop openings or closures. Also a questionnaire was conducted and was sent to all shop owners in Visp. Finally the housing market was observed by photography. Every 2 years pictures were shot which shown the changes in the area of Visp, especially in the residential home sector. Additionally expert interviews were added to classify the findings of all empirical methods. The aim of the study is to demonstrate that research focusing merely on economic macro data effects in a given area, and ignoring the social aspects of new infrastructure, inevitably suffers a loss of quality. The special characteristic of the present study lies in the way in which it assesses infrastructure developments, in regions that were previously peripheral, on the basis of urban development phenomena and social phenomena.
    Keywords: Mobility; mobile methods; social space; transport infrastructure
    Date: 2014–11
  24. By: Fernando Barreiro-Pereira
    Abstract: ABSTRACT. A new urban revolution begun in the second half of the XX century and it is going to challenge the relation between the size and economic role of cities: on one side, the last decades have witnessed the emergence and the never seen growth of a number of Mega-cities, with more than 9 million inhabitants, most of them being located in less developed countries. On the other side, the globalization of the post-industrial economy generates a new urban spatial organization where a few number of cities concentrate a disproportionate part of economic power, creation, decision and control. Most of the largest cities are in the less developed countries, while the most powerful world cities are mainly located in the developed countries. It results that size seems to be neither a necessary nor a sufficient condition for obtaining the status of world city. A condition to be a world city is the access to the economic power. A conventional city has a region behind, and there is no region without city, neither city without region. But a Mega city has, at least, a country behind. When in a country there are several Mega cities, competition for the specialization emerges among them. However, within a country, regions are more closely related. But due to the globalization, the rise of high technology applied to the telecom networks, the expansion of the financial markets, generally located around the big cities, together the great multinational companies, and the strong development in multimodal transportation networks, cause a great growth in some places of the World, attracting immigration and amenities. Nevertheless, although it seems to have convergence among the big cities considered in this work, not all these cities are similar. The main aim of this paper is to analyze the comparison between the real convergence-divergence among 50 Mega-cities of the World, and the convergence-divergence among its corresponding countries, using several growth models, studying the possible existence of Clubs convergence among these cities and countries.
    Keywords: Urban economics; Globalization; Clubs convergence; Economic growth; Mega-cities; Urbanization; Amenities.
    JEL: R11 O18 O47 J11
    Date: 2014–11
  25. By: Suelene Mascarini
    Abstract: This paper aims to examine empirically, through the application of the Knowledge Production Function, how the innovation in micro-region of São Paulo can be affected for some territorial factors. In the literature, and assumed here, the innovative results, measured by patents, are linked to the quantity and quality of innovative inputs and characteristics of the regions that are configured as an input. In this sense, stands the importance of positive externalities that are generated by the spatial concentration of producers and support institutions that are able to contribute to the efforts of innovative firms. In addition, this paper emphasizes the role of local production structures in the regions of São Paulo, since both the regional diversification and regional specialization are mentioned as important factors in the innovation process. The main results suggested that although the level of R&D investments were important for generating local innovation, ie, the generation of local patents, this relationship does not occur clearly in the regions of São Paulo. In addition, local productive structure or density linkages of firms that interacts are certainly important factors and compensatory for innovation process.
    Keywords: Geography and Innovation; Patents; Knowledge Production Function.
    JEL: O31 R12 R15
    Date: 2014–11
  26. By: ITO Asei
    Abstract: With rising labor costs in China, some scholars assert that its labor-intensive industries will succumb to latecomer economies, and China's era as the "workshop of the world" will end. There is, however, little agreement regarding whether labor-intensive industries, now concentrated along the coast, are relocating to other regions. How does agglomeration affect this relocation? How does this relocation process affect the Asian Production Network (APN)? To approach these issues, this paper examines the determinants of industrial relocation in China by using province- and city-level data from 2004 to 2010, which some scholars call the "post-Lewisian turning point." We particularly focus on the significant gap in economic development in China, especially in regard to industrial agglomeration and dispersion. The results show that the capital-labor ratio is positively related to industrial growth in the coastal areas but negatively related in the central regions. Although agglomeration economies have been weak, the absolute scale of local industry includes a positive effect. In sum, both dispersion and agglomeration forces are observed, suggesting the existence of multi-force dynamics of spatial relocation in China.
    Date: 2014–11
  27. By: Lee, Neil; Rodriguez-Pose, Andres
    Abstract: Creative cities are seen as important sites for the generation of new ideas, products and processes. Yet, beyond case studies of a few high-profile cities, there is little empirical evidence on the link between local creative industries concentration and innovation. This paper addresses this gap with an analysis of around 1,300 UK SMEs. The results suggest that firms in local economies with high shares of creative industries employment are significantly more likely to introduce entirely new products and processes than firms elsewhere, but not innovations which are simply new to the firm. This effect is not exclusive to creative industries firms and seems to be largely due to firms in medium sized, rather than large, cities. The results imply that creative cities may have functional specialisations in new content creation and so firms are more innovative in them.
    Keywords: cities; creative cities; creative industries; creativity; innovation
    JEL: O31 O38 R11 R58
    Date: 2014–11
  28. By: Bleemer, Zachary; Brown, Meta (Federal Reserve Bank of New York); Lee, Donghoon (Federal Reserve Bank of New York); Van der Klaauw, Wilbert (Federal Reserve Bank of New York)
    Abstract: Young Americans’ residence choices have changed markedly over the past fifteen years, with recent cohorts entering the housing market at lower rates, and lingering much longer in parents’ households. This paper begins with descriptive evidence on the residence choices of 1 percent of young Americans with credit reports, observed quarterly for fifteen years in the Federal Reserve Bank of New York’s Equifax-sourced Consumer Credit Panel (CCP). Steep increases in the rate of living with parents or other substantially older household members have emerged as youth increasingly forsake living alone or with groups of roommates. Coupledom, however, appears stable. Homeownership at age thirty shows a precipitous drop following the recession, particularly for student borrowers. In an effort to decompose the contributions of housing market, labor market, and student debt changes to the observed changes in young Americans’ living arrangements, we model flows into and out of co-residence with parents. Estimates suggest countervailing influences of local economic growth on co-residence: strengthening youth labor markets support moves away from home, but rising local house prices send independent youth back to parents. Finally, we find that student loans deter independence: state-cohort groups who were more heavily reliant on student debt while in school are significantly and substantially more likely to move home to parents when living independently, and are significantly and substantially less likely to move away from parents when living at home.
    Keywords: student loans; household information
    JEL: D14 E24 R21
    Date: 2014–11–01
  29. By: Otavio Sidone; Eduardo Haddad; Jesus Mena-Chalco
    Abstract: Brazilian scholarly outputs have had rapid growth that was accompanied by an expansion of domestic research collaboration. In this paper, we identify spatial patterns of research collaboration in Brazil, as well as measure the role of geographical proximity in determining the interaction among Brazilian researchers. Using a database comprised of over one million researchers and seven million publications registered in the Brazilian Lattes Platform, we collect and consolidate information on inter-regional research collaboration in terms of scientific co-authorship networks among 4,616 municipalities over the period between 1992 and 2009, which enabled a range of data analysis unprecedented in literature. The effects of geographical distance on collaboration are measured for different knowledge areas under the estimation of spatial interaction models. The main results suggest strong evidence of geographical deconcentration of collaboration in recent years with an increased participation of authors in scientifically less traditional regions, such as South and Northeast Brazil. Additionally, the distance still is significant in determining the intensity of knowledge flows in scientific collaboration networks in Brazil since the increase of 100 kilometers between two researchers implies the average reduction on 16% of the probability of collaboration and there is no evidence that its effect has diminished over time, although the magnitude of such effects varies among networks of different knowledge areas.
    Keywords: spatial scientometrics; scientific collaboration; co-authorship networks; spatial interaction models;
    JEL: R12
    Date: 2014–11
  30. By: Daniel Shefer
    Abstract: The challenges facing transportation planners have grown continuously over the years owing to mounting problems of congestion, concerns with environmental degradation and global warming, enhanced awareness of safety, and the increasing complexity of travel behaviour patterns associated with modern life. Modern life has brought about more travel, more leisure time, and more engagement in out-of-home, non-work activities. Modern life, especially in more recent years, has also witnessed rapid population and economic growth in many urban areas and the decentralization of residential, commercial, and work places. It has also seen more women entering the labour market. Accompanying these changes has been the relaxation of some constraints, such as the need to commute at fixed hours, thus providing more degrees of freedom of travel. Because of the significantly increased alternative activities and travel patterns from which households can now choose, travel patterns have become more complicated. In addition, the total number of trips has increased, trip chaining is more frequent, and traffic peaks are becoming smoother. All this has resulted in making the analysis of travel behaviour more complex. Understanding travel behaviour is paramount in the design of various policies towards sustainable transportation development that will on the one hand support economic growth and well-being of the population and on the other hand will minimize adverse transport externalities. These externalities are especially pertinent in metropolitan areas because there the infrastructure networks are most intensively used and development densities are high. Increased externalities from motor vehicles called for the development of new policy and planning objectives toward sustainable transportation. In this regard, travel behaviour lies at the core of procedures for analysing and evaluating transportation-related measures aimed at improving urban mobility, environmental quality, safety, and at achieving a wide variety of social objectives. Policy analysis and planning, then, rely on travel behaviour studies and travel-demand models. Policy-making today requires more sophisticated tools, and these have been developed in terms of advanced models, most of them activity-based, that go into different levels of detail on various scales: spatial, temporal, and social. Together with the development of activity-based models, various specific models have been estimated and implemented in support of sustainable policy analysis, some of them as auxiliary to activity-based models and some of them as stand-alone models. The aim of this paper is to highlight and emphasize the important role of understanding travel behaviour and the complex relations between the various travel externalities to the development of sustainable urban development and transport policies.
    Date: 2014–11
  31. By: Kleinhans, Reinout (Delft University of Technology); Veldboer, Lex (University of Amsterdam); Jansen, Sylvia (Delft University of Technology); van Ham, Maarten (Delft University of Technology)
    Abstract: The aging population of European cities raises enormous challenges with regard to employment, pensions, health care and other age-related services. The housing preferences of the aging population are changing rapidly where more and more people want to live independent lives for as long as possible. At the same time governments need to reduce the costs of expensive institutionalized care. A precondition for 'ageing in place' is that elderly people perceive their neighbourhoods as familiar and safe places. In the Netherlands, many neighbourhoods with a rapidly ageing population have been subject to urban regeneration policies. Hence, an important question is to what extent these policies affect the housing situation, social support networks and socioeconomic position of elderly people, because these factors strongly assist the ability of elderly people to live independently. We answer this question through the analysis of a small but unique panel data set with 2007 and 2012 measurements from Hoogvliet, a district of Rotterdam. Contrary to claims about large, disrupting impacts of urban regeneration, the results show that – even in times of economic crisis – regeneration in Hoogvliet has enabled 'ageing in place'. There appears no relationship between the Hoogvliet policies and changes in income of elderly people and their ability to get by financially. Those who have moved home often report regeneration benefits, mostly related to accessing better quality housing in the same area. Finally, we found no clear evidence of decreased social support or increased loneliness through regeneration-induced disruption of social networks.
    Keywords: ageing in place, urban regeneration, social networks, social support, loneliness, Rotterdam
    JEL: J14 O18 R23
    Date: 2014–11
  32. By: Tomaz Dentinho; João Borba
    Abstract: Unemployment and migration are known effects of financial and economic crisis. This paper tries to understand the spatial patterns of those effects in a city and its surroundings considering the direct and induced impacts, the migration flows between the city, the surroundings and the outside and the multiplier effects that come from the changing rents of the economic landscape. We use a spatial interaction model with rent calibration and the cyclical results of the distribution of rents and unemployment subsidies. We apply the model to Portuguese NUTS 3 regions where the reduction of some basic economic activities is producing direct and induced impacts on unemployment, reduction of active population and migration.
    JEL: R10
    Date: 2014–11
  33. By: Ana Maria Bonomi Barufi
    Abstract: The study of disparities in the equilibrium of regional labor markets is crucial in a developing country as Brazil, where personal and regional inequalities are extremely pronounced, even with the recent efforts to alleviate them. Following the recent literature on the determinants of productivity differentials in a regional context, this paper aims to discuss how agglomerations economies are present in the equilibrium outcomes of the Brazilian formal labor market. There has been a wide discussion on how to correctly identify agglomeration economies given all the different types of endogeneity found in the labor market relationships, as well as taking into account all the relevant aspects that may affect the results. We make use of an employer-employee panel database from the Ministry of Labor (RAIS - Annual Report on Social Information, filled by all registered firms in Brazil) with information for six year (2003, 2004, 2005, 2008, 2009 and 2012). The first part of the paper presents a discussion how higher wages can be found in denser areas, where the economic activity is more concentrated. Then, a literature review of agglomeration economies provides the main line of analysis to be pursued With the panel data setting, it is not only possible to account for individual unobserved characteristics constant in time, but also for sectorial and municipal fixed effects. Moreover, identifying skills according to the occupational position of the individuals in each firm, we control for the proximity to different skill levels (in the sector and municipality) to account for different levels of production knowledge externalities. Individual fixed effects control the potential endogeneity of the labor quality. In the case of labor quantity endogeneity, even if there is no consensus of how to best control for it, instruments based on long time lags are considered. The results show that there is a positive and significant effect of density over wages (Urban Economics literature), even when controlling for other relevant characteristics. Moreover, a measure of market potential, related to the New Economic Geography literature, does not capture this positive relationship with wages in the same way, changing sign in a specific setting. Finally, considering a quantile regression approach, there is an indication that agglomeration economies reinforce wage inequality, with a higher effect for the upper part of the wage distribution.
    Keywords: Regional Economic Activity (R11); Skills (J24); Wage Differentials (J31)
    Date: 2014–11
  34. By: Neslihan Sag; Aykut Karaman
    Abstract: Uncontrolled and sprawling growth in physical space is one of the primary problems of metropolitan cities. Urban sprawl, which can be defined as the rapid peripheral growth of cities, is criticized in terms of leading problems such as occupying cultivated areas and environment, removing away many advantages provided by natural open spaces, increasing transport costs, and transforming city centers into decayed areas. Smart growth, which is one of the important agenda topics of planning, creates an opportunity in terms of determining reuse strategies and priorities of urban area. Smart growth refers readdressing of urban macroform and land use preferences by emphasizing economic and environmental dimensions of spatial organization. Smart growth involves indicators that can be used for all cities for ensuring social, economic and physical sustainability required by urban regeneration. This is an explanatory study suggesting use of smart growth principles in urban regeneration. This study is composed of two stages. At the first one, project specific matrix for smart growth is created by making literature investigation in sources dealing with international approaches and practice examples. At the second one, how the proposed development affects the surroundings is evaluated by project specifics matrix. By taking advantage of the matrix, positive or negative aspects of the project and the level of being successful is evaluated in terms of principles take advantage of compact building design, preserve open space farmland, natural beauty, and critical environmental areas as well as strengthen and direct development towards existing communities. Under these titles, following principles are also dealt with: convenience of the projects to high scale plan decisions; parallelism with preservation strategies and development strategies of the city; distribution of density decisions; compact design features; protection of existing areas, nature protection strategies, using brownfield or decayed areas, etc. Three urban regeneration projects, which are the biggest and the most important practices in Konya, the 6th metropolitan city of Turkey in terms of population, are selected for case study. The main determinant of selection of Konya is the fact that the metropolitan city has started to experience urban regeneration period quickly but with problems, and the city has unnecessarily sprawled. The most important difference of the study is the creation of a guideline which will evaluate the management of urban regeneration being applied in Turkey and its effects on the cities as a solution for urban sprawl.
    Keywords: urban sprawl; smart growth; urban regeneration
    Date: 2014–11
  35. By: Franziska Hawranek; Norbert Schanne
    Abstract: Your very private job agency: Job referrals based on residential location networks This paper analyzes job referral effects that are based on residential location. We use georeferenced record data for the entire working population (liable to social security) and the corresponding establishments in the Rhine-Ruhr metropolitan area, which is Germany's largest (and EU's second largest) metropolitan area. We estimate the propensity of two persons to work at the same place when residing in the same neighborhood (reported with an accuracy of 500m×500m grid cells), and compare the effect to people living in adjacent neighborhoods. We find a significant increase in the probability of working together when living in the same neighborhood, which is stable across various specifications. Additionally, we look at how referral effects differ for various groups like age, skill, ethnic groups and industry sectors. We find that especially low skilled workers make use of residential networks for job search, as well as some groups of immigrants. Especially migrants from the new EU countries as well as Italians and people from former Yugoslavia have a highly increased probability of working together when they share the same neighborhood. This is clear sign for network effects especially for some immigrant groups in the German labor market.JobFurther, we are able to investigate a number of issues in order to deepen the insight on actual job referrals: distinguishing between the effects on working in the same neighborhood and working in the same establishment ? probably the more accurate measure for job referrals ? shows that the latter yield overall smaller effects. Further, we find that clusters in employment although having a significant positive effect play only a minor role for the magnitude of the referral effect, which makes us confident that what we find is actually related to a true referral effect and not some spurious correlation. When we exclude short distance commuters, we find the same probabilities of working together, which reinforces our interpretation of this probability as a network effect. The paper investigates the effect of living together on the probability of working together. We find strong evidence for a positive and highly significant relationship, which is robust across several specifications and robustness tests, addressing common issues on the identification of neighborhood effects. JEL Classification: J20, J46, R23
    JEL: J20 R23
    Date: 2014–11
  36. By: Bauer, Thomas; Breidenbach, Philipp; Schmidt, Christoph M
    Abstract: Using the location of baroque opera houses as a natural experiment, Falck et al. (2011) claim to document a positive causal effect of the supply of cultural goods on today’s regional distribution of talents. This paper raises serious doubts on the validity of the identification strategy underlying these estimates, though. While we are able to replicate the original results, we proceed to show that the same empirical strategy also assigns positive causal effects to the location of historical brothels and breweries. These estimated effects are similar in size and significance to those of historical opera houses. We document that all these estimates reflect the importance of institutions for long-run economic growth, and that the effect of historical amenities on the contemporary local share of high skilled workers disappears upon controlling for regions’ historical importance.
    Keywords: historical amenities; human capital; regional competitiveness
    JEL: H42 J24 R11
    Date: 2014–08
  37. By: Alessandro Notarpietro (Bank of Italy); Stefano Siviero (Bank of Italy)
    Abstract: We probe the scope for reacting to house prices in simple and implementable monetary policy rules, using a New Keynesian model with a housing sector and financial frictions on the household side. We show that the social welfare maximizing monetary policy rule features a reaction to house price variations, when the latter are generated by housing demand or financial shocks. The sign and size of the reaction crucially depend on the degree of financial frictions in the economy. When the share of constrained agents is relatively small, the optimal reaction is negative, implying that the central bank must move the policy rate in the opposite direction with respect to house prices. However, when the economy is characterized by a sufficiently high average loan-to-value ratio, then it becomes optimal to counter house price increases by raising the policy rate.
    Keywords: Optimal simple interest rate rules; Housing; Credit frictions.
    JEL: E20 E44 E52
    Date: 2014–10
  38. By: Giulietti, Corrado; Wahba, Jackline; Zenou, Yves
    Abstract: This paper studies the role of strong versus weak ties in the rural-to-urban migration decision in China. We first develop a network model that puts forward the different roles of weak and strong ties in helping workers to migrate to the city. We then use a unique longitudinal data that allows us to test our model by focusing on first-time migration. Strong ties are measured by the closest family contact (excluding household members) while weak ties are determined by the fraction of migrants from the village in which the individual resides. We address the endogeneity of the network formation in the migration decision. Our results indicate that both weak and strong ties matter in the migration decision process, although the impact of weak ties is higher than that of strong ties. We also show that one underestimates the effect of social networks on migration by not taking into account the strong ties in the mobility process. We finally find that weak and strong ties act as complements in the migration decision, which indicates that the interactive effect between weak and strong ties is particularly strong above a certain threshold of the size of weak ties.
    Keywords: China; internal migration; social networks
    JEL: J61 O15
    Date: 2014–11
  39. By: Branch, William A. (University of California, Irvine); Petrosky-Nadeau, Nicolas (Federal Reserve Bank of San Francisco); Rocheteau, Guillaume (University of California, Irvine)
    Abstract: We develop a two-sector search-matching model of the labor market with imperfect mobility of workers, augmented to incorporate a housing market and a frictional goods market. Homeowners use home equity as collateral to finance idiosyncratic consumption opportunities. A financial innovation that raises the acceptability of homes as collateral raises house prices and reduces unemployment. It also triggers a reallocation of workers, with the direction of the change depending on firms’ market power in the goods market. A calibrated version of the model under adaptive learning can account for house prices, sectoral labor flows, and unemployment rate changes over 1996-2010.
    Keywords: credit; unemployment; limited commitment; liquidity
    JEL: D82 D83 E40 E50
    Date: 2014–11
  40. By: Mark van Duijn; Jan Rouwendal; Ruben van Loon
    Abstract: In this paper we study the relationship between cultural heritage and retail store dynamics at the neighbourhood level in the Netherlands. We analyze the total number of stores, number of vacant stores and number of stores by retail sub-industry in neighbourhoods, thereby focusing on the impact of cultural heritage, while controlling for many other factors. We test whether the presence of cultural heritage has a causal impact on the retail activity in neighbourhoods using an instrumental variables strategy for cross-section data. We also compare the development of the various indicators of retail activity over time in neighbourhoods with and without cultural heritage to investigate a the existence of an impact of historical districts and buildings on urban resilience. We use a unique panel dataset from Locatus which has information on the location and type of stores in the Netherlands over a period of 7 years (2004-2010). The results show that the presence of cultural heritage increases the demand for shopping areas. Therefore, there are more stores in neighbourhoods where cultural heritage is present. We also show that the impact of cultural heritage and distance to the city centre for retail activity slowly changes over time, indicating a continuously changing urban environment. Furthermore, we provide evidence on the resilience of stores within cultural-rich neighbourhoods after the recession started in 2007 using a duration analysis.
    JEL: L81 R12 R33 Z1
    Date: 2014–11
  41. By: Ketterer, Tobias; Rodriguez-Pose, Andres
    Abstract: In this paper we investigate the impact of local quality of government on the attractiveness of European regions to migrants. The analysis is based on panel data estimations of 254 regions for the period between 1995 and 2009. Different instrumental variable techniques have been employed in order to assess the extent to which differences in local quality of government affect migration decisions and to account for potential endogeneity concerns. The results point towards an important influence of specific factors related to the regional quality of government, such as the fight against corruption or government effectiveness, on the ability of European regions to attract future residents.
    Keywords: Europe; Institutions; Net migration; Population change; Quality of Government; Regions
    JEL: O43 R23 R50
    Date: 2014–05
  42. By: Matthew Read (Reserve Bank of Australia); Chris Stewart (Reserve Bank of Australia); Gianni La Cava (Reserve Bank of Australia)
    Abstract: We investigate the factors associated with the incidence of mortgage-related financial difficulties in Australia. We use two complementary micro-level datasets: loan-level data on residential mortgages from two Australian banks, which we use to analyse the factors associated with entering 90+ day housing loan arrears; and household-level data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey, which we use to explore the factors associated with households missing mortgage payments. The loan-level analysis indicates that the probability of entering arrears increases with the loan-to-valuation ratio (LVR) at origination, and is particularly high for loans with an LVR above 90 per cent. In contrast, the probability of entering arrears is lower for loans that are repaid relatively quickly. Additionally, the probability of entering arrears varies across different loan types; for example, low-documentation loans are more likely to enter arrears, even after controlling for whether the borrower was self-employed. The likelihood of entering arrears increases with the contract interest rate, which is consistent with lenders setting higher interest rates for riskier borrowers. The household-level analysis suggests that the probability of missing a mortgage payment is particularly high for households with relatively high debt-servicing ratios. Households that have previously missed a payment are also much more likely to miss subsequent payments than households with unblemished payment histories.
    Keywords: household surveys; loan-level data; mortgage default
    JEL: G21 R29 R31
    Date: 2014–11
  43. By: Badarinza, Cristian; Campbell, John Y; Ramadorai, Tarun
    Abstract: The relative popularity of adjustable-rate mortgages (ARMs) and fixed-rate mortgages (FRMs) varies considerably both across countries and over time. We ask how movements in current and expected future interest rates affect the share of ARMs in total mortgage issuance. Using a nine-country panel and instrumental variables methods, we present evidence that near-term (one-year) rational expectations of future movements in ARM rates do affect mortgage choice, particularly in more recent data since 2001. However longer-term (three-year) rational forecasts of ARM rates have a weaker effect, and the current spread between FRM and ARM rates also matters, suggesting that households are concerned with current interest costs as well as with lifetime cost minimization. These conclusions are robust to alternative (adaptive and survey-based) models of household expectations.
    Keywords: adjustable-rate; fixed-rate; household finance; interest rate; international; mortgage choice
    JEL: G21 N20 R21 R31
    Date: 2014–08
  44. By: Börjesson , Maria (KTH); Kristoffersson , Ida (SWECO)
    Abstract: This paper summarizes the traffic effects of the Gothenburg congestion charges introduced in 2013. The system is similar to the system introduced in Stockholm in 2006; both are designed as time-of-day dependent cordon pricing systems. We find that many effects and adaptation strategies are similar to those found in Stockholm, indicating a high transferability between smaller and larger cities with substantial differences in public transport use. However, there are also important differences regarding some of the effects, the accuracy of the model forecasts and public support arising from different topologies, public transport use, congestion levels and marketing of the congestion charges to the public. Finally, the Gothenburg case suggests that whether congestion charges are introduced or not depends on the support among the political parties, and that this is determined primarily by the prevailing institutional setting and power over revenues, and to a lower extent by the public support, and benefits from congestion reduction.
    Keywords: Congestion charges; Behavioural adaptation; Time-dependent cordon; Tolling system; Traffic effects; Public support; Transferability; System design
    JEL: R41 R42 R48
    Date: 2014–12–02
  45. By: Mathias Hoffmann; Iryna Stewen
    Abstract: We explore empirically how capital inflows into the US and financial deregulation within the United States interacted in driving the run-up (and subsequent decline) in US housing prices over the period 1990-2010. To obtain an ex ante measure of financial liberalization, we focus on the history of interstate-banking deregulation during the 1980s, i.e. prior to the large net capital inflows into the US from China and other emerging economies. Our re- sults suggest a long shadow of deregulation: in states that opened their banking markets to out-of-state banks earlier, house prices were more sensitive to capital inflows. We provide evidence that global imbalances were a major positive funding shock for US wide banks: different from local banks, these banks held a geographically diversified portfolio of mort- gages which allowed them to tap the global demand for safe assets by issuing private-label safe assets backed by the country-wide US housing market. This, in turn, allowed them to expand mortgage lending and lower interest rates, driving up housing prices.
    Keywords: House prices, savings glut, global imbalances, credit constraints, state banking deregulation
    JEL: G10 G21 G28 F20 F32 F40
    Date: 2014–12
  46. By: Stacy, Brian
    Abstract: The typical measure used by researchers and school administrators to evaluate teachers is based on how the students' achievement increases after being exposed to the teacher, or based on the teacher's "value-added''. When teacher value-added is heterogeneous across her students, the typically used measure reflects differences in the average value-added the teacher provides. However, researchers, administrators, and parents may care not just about the average value-added, but also its dispersion. In this paper, I examine the robustness of typical teacher quality measures to alternate ranking systems factoring in the variance of value-added. Encouragingly, ranking systems factoring in the variance produce similar rankings as the ranking system based only on the mean. I also examine whether classroom characteristics and teacher experience affect a teacher's value-added variance and find that they explain little of the variation in value-added variances.
    Keywords: teacher value-added,heterogeneity,value-added variance,teacher quality
    JEL: I0 I20 I21 I28 J01 J08 J24 J44 J45
    Date: 2014–12–08
  47. By: Gobillon, Laurent; Magnac, Thierry
    Abstract: In this paper, we investigate the use of interactive effect or linear factor models in regional policy evaluation. We contrast treatment effect estimates obtained by Bai (2009)'s least squares method with the popular difference in differences estimates as well as with estimates obtained using synthetic control approaches as developed by Abadie and coauthors. We show that difference in differences are generically biased and we derive the support conditions that are required for the application of synthetic controls. We construct an extensive set of Monte Carlo experiments to compare the performance of these estimation methods in small samples. As an empirical illustration, we also apply them to the evaluation of the impact on local unemployment of an enterprise zone policy implemented in France in the 1990s.
    Keywords: economic geography; enterprise zones; linear factor models; policy evaluation; synthetic controls
    JEL: C21 C23 H53 J64 R11
    Date: 2014–11
  48. By: Pugatch, Todd (Oregon State University); Schroeder, Elizabeth (Oregon State University)
    Abstract: We evaluate the impact of the Gambian hardship allowance, which provides a salary premium of 30-40% to primary school teachers in remote locations, on student performance. A geographic discontinuity in the policy's implementation provides identifying variation. We find no effects of the hardship allowance on average student performance. These null average effects hide important heterogeneity, with learning gains for students at the top of the distribution and losses for those at the bottom. With over two dozen developing countries implementing similar policies to increase teacher compensation in rural schools, this study offers important evidence on their effectiveness.
    Keywords: teacher compensation, rural schools, Gambia, program evaluation, regression discontinuity
    JEL: I25 I28 J38 J45 O12 O15
    Date: 2014–11
  49. By: Di Caro, Paolo
    Abstract: This paper studies regional economic resilience by exploiting the properties of the nonlinear smooth-transition autoregressive model. A testing procedure to distinguish between engineering and ecological resilience is presented, and a measurement of economic resilience is provided. Regional differences in economic resilience are explained by the presence of spatial interactions and by adopting a set of determinants like economic diversity, export performance, financial constraints, and human and social capital. An empirical investigation is conducted for analysing regional employment evolution in Italy from 1992 to 2012. Some concluding suggestions propose possible future areas of research.
    Keywords: regional resilience, hysteresis, smooth transition regression
    JEL: C34 R1
    Date: 2014
  50. By: Bloom, Nicholas (Stanford University); Lemos, Renata (University of Cambridge); Sadun, Raffaella (Harvard Business School); Van Reenen, John (CEP, London School of Economics)
    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.
    Keywords: management, pupil achievement, autonomy, principals
    JEL: L2 M2 I2
    Date: 2014–11
  51. By: Navarro, Ma. Kresna; Almaden, Catherine Roween
    Abstract: The informal settlements in Butuan City, Philippines pose the intractable problem of housing and providing services for the urban poor. They exact tremendous costs to government infrastructure projects and the city as a whole. In this study, these costs are accounted for, particularly the costs the government will incur to compensate them for being displaced in the implementation of public infrastructure project. Primary data were collected through inventory of losses (IOL), socio-economic survey (SES) and the replacement cost surveys. Secondary data were obtained through key informant interviews with different stakeholders. The paper quantifies the costs of compensating them thru replacement of their affected resources and providing resettlement. It also establishes different types of compensation to secure just terms for all parties. It presents a rich picture of how the informal settlers affect urban environment and the monetary and operational challenges they pose to the government and the society at large.
    Keywords: Informal Settlements, Social Cost, Urbanization
    JEL: O17 O53 Q5 Q51
    Date: 2014–09–01
  52. By: Caliendo, Lorenzo; Parro, Fernando; Rossi-Hansberg, Esteban; Sarte, Pierre-Daniel
    Abstract: We study the impact of regional and sectoral productivity changes on the U.S. economy. To that end, we consider an environment that captures the effects of interregional and intersectoral trade in propagating disaggregated productivity changes at the level of a sector in a given U.S. state to the rest of the economy. The quantitative model we develop features pairwise interregional trade across all 50 U.S. states, 26 traded and non-traded industries, labor as a mobile factor, and structures and land as an immobile factor. We allow for sectoral linkages in the form of an intermediate input structure that matches the U.S. input-output matrix. Using data on trade flows by industry between states, as well as other regional and industry data, we obtain the aggregate, regional and sectoral elasticities of measured TFP, GDP, and employment to regional and sectoral productivity changes. We find that such elasticities can vary significantly depending on the sectors and regions affected and are importantly determined by the spatial structure of the US economy.
    Keywords: input-output; linkages; migration; propagation; trade
    JEL: E0 F1 F16 R12 R13
    Date: 2014–06
  53. By: Klaesson, Johan (Jönköping International Business School (JIBS) & Centre of Excellence for Science and Innovation Studies (CESIS)); Klaesson, Charlie (Jönköping International Business School (JIBS) & Centre of Excellence for Science and Innovation Studies (CESIS))
    Abstract: Abstract: Many phenomena in the economy are influenced by geography. The size of new firm start-ups vary in many dimensions, among them industry and geography. The purpose of this paper is to explore the determinants of the geographical distribution of the size of new firms. Re¬gional size itself can be expected to influence the size of the new firm. Given that there are fixed costs present in the new firms small and low-density regions will demand a larger size of the new firm. The reason for this is that in small regions the firm may not be able to find customers nearby, but need to sell its produce over some distance. This means that the firm must house capacities to do so and this increases the fixed cost component and hence forces the firm to produce a larger amount of the output. Another possible reason can be found in the availability of producer services. In small regions, the number of producer services is more limited and, hence, force the firms to produce some of these services in-house. Gener¬ally, the overall diversity found in small regions is smaller compared to large re-gions. This means that the variation in goods and services available in the market will be smaller, once again forcing the new firm to do more things within the firm. In addition, it is ex¬pected that there is a relationship between entry rate and the size of the entrants.
    Keywords: Entry; Start-up size; Market Potential; Region; Industry; Sweden
    JEL: C21 L11 M13 R11 R12
    Date: 2014–11–26
  54. By: Matthew E. Kahn
    Abstract: In an urbanizing world economy featuring thousands of cities, households and firms have strong incentives to make locational investments and self protection choices to reduce their exposure to new climate change induced risks. This pursuit of self interest reduces the costs imposed by climate change. This paper develops a dynamic compensating differentials model to explore how the “menu” offered by a system of cities insures us against emerging risks. Insights from urban economics offer a series of testable hypotheses concerning the economic incidence of spatially tied climate change risk.
    JEL: H41 Q5 R23 R3
    Date: 2014–11
  55. By: Strulik, Holger; Trimborn, Timo
    Abstract: Recent empirical research has shown that income per capita in the aftermath of natural disasters is not necessarily lower than before the event. In many cases, income is not significantly affected and surprisingly, can even respond 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 equally residential structures and productive capital. We also 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
  56. By: André K. Anundsen (Norges Bank (Central Bank of Norway)); Frank Hansen (Norges Bank (Central Bank of Norway)); Karsten Gerdrup (Norges Bank (Central Bank of Norway)); Kasper Kragh-Sørensen (Norges Bank (Central Bank of Norway))
    Abstract: This paper exploits a quarterly panel data set for 16 OECD countries over the period 1975q1–2013q2 to explore the importance of house prices and credit in affecting the likelihood of a financial crisis. Estimating a set of multivariate logit models, we find that booms in credit to both households and non-financial enterprises are important to account for when evaluating the stability of the financial system. In addition, we find that global housing market developments have predictive power for domestic financial stability. Finally, econometric measures of bubble-like behavior in housing and credit markets enter with positive and highly significant coefficients. Specifically, we find that the probability of a crisis increases markedly when bubble-like behavior coincides with high leverage.
    Keywords: Basel III, Countercyclical capital buffer, Early warning models,Exuberance indicators, Financial market imbalances
    JEL: G01 G18 G21 G28
    Date: 2014–11–24
  57. By: Aoki, Yu (University of Aberdeen)
    Abstract: This paper aims to identify the causal effect of schooling on youth crime. To identify the causal effect, I use the policy interventions that occurred after the Kobe earthquake that hit Japan in 1995 as a natural experiment inducing exogenous variation in schooling. Based on a comparison of the arrest rates between municipalities exposed to similar degrees of earthquake damage but with and without the policy interventions, I find that a higher high school participation rate reduces juvenile arrest rates for violent crime but not for property crime. The estimates of social benefits show that it is less expensive to reach a target level of social benefits by improving schooling than by strengthening the police force.
    Keywords: schooling, youth crime, social externality
    JEL: H52 I28 K42
    Date: 2014–11
  58. By: M. Rouhani, Omid
    Abstract: This paper offers a general overview of the road pricing concept. It first examines the common objectives used in road pricing, namely (a) congestion reduction; (b) raising profits; (c) social welfare maximization; etc. Then, it explores various types of road pricing, including two major ones: (1) road tolls and (2) congestion pricing charges. Next, general modeling approaches used for estimating the impacts of road pricing are discussed. Finally, the paper concludes with a checklist explaining how to promote a successful road pricing scheme.
    Keywords: road pricing, congestion pricing, congestion reduction, profit maximization, road tolls.
    JEL: L91 R4 R41 R48
    Date: 2014–11–03
  59. By: Liang Jiang (Singapore Management University); Peter C.B. Phillips (Cowles Foundation, Yale University); Jun Yu (Singapore Management University)
    Abstract: This paper develops a new hedonic method for constructing a real estate price index that utilizes all transaction price information that encompasses both single-sale and repeat-sale properties. The new method is less prone to specification errors than standard hedonic methods and uses all available data. Like the Case-Shiller repeat-sales method, the new method has the advantage of being computationally efficient. In an empirical analysis of the methodology, we fit the model to all transaction prices for private residential property holdings in Singapore between Q1 1995 and Q2 2014, covering several periods of major price fluctuation and changes in government macroprudential policy. Two new indices are created, one from all transaction prices and one from single-sales prices. The indices are compared with the S&P/Case-Shiller index. The result shows that the new indices slightly outperform the S&P/Case-Shiller index in predicting the price of single-sales homes out-of-sample. However, they underperform the S&P/Case-Shiller index in predicting the price of repeat-sales homes out-of-sample. The empirical findings indicate that specification bias can be more substantial than the sample selection bias when constructing a real estate price index. In a further empirical application, the recursive method of Phillips, Shi and Yu (2014) is used to detect explosive periods in real estate prices of Singapore. The results confirm the existence of an explosive period from Q4 2006 to Q1 2008. No explosive period is found after 2009, suggesting that the ten successive rounds of cooling measures implemented by the Singapore government have been effective in changing price dynamics and preventing a subsequent outbreak of explosive behavior in the Singapore real estate market.
    Keywords: Repeat sales, Hedonic models, Prediction, Index, Explosive, Cooling measures
    JEL: C58 R31
    Date: 2014–12
  60. By: Bertay, A.C. (Tilburg University, Center For Economic Research)
    Abstract: Abstract: This paper investigates the credit supply of banks in response to domestic and foreign real estate price changes. Using a large international dataset of multinational banks, we find evidence of a significant transmission of domestic real estate shocks into lending abroad. A 1% decrease in real estate prices in home country, in particular, leads to a 0.2-0.3% decrease in credit growth in the foreign subsidiary. This response, however, is asymmetric: only negative house price changes are transmitted. Stricter regulation of activities of parent banks can reduce this effect, indicating a role for regulation in alleviating the transmission of real estate shocks. Further, the analysis of the impact of real estate shocks on foreign subsidiary funding indicates that shocks are transmitted through changes in long-term debt funding and equity.
    Keywords: Internal capital markets; multinational banking; transmission of real estate shocks
    JEL: F23 F36 G21
    Date: 2014
  61. By: Massimo Florio (DEAS, Universita' di Milano); Julie Pellegrin (CSIL Centre for Industrial Studies); Emanuela Sirtori (CSIL Centre for Industrial Studies)
    Abstract: This paper discusses some conditions under which the Cohesion Policy of the European Union can effectively contribute to enhance R&I in Europe and the extent to which it offers a relevant framework for devising Research & Innovation policies at regional level overcoming possible tensions and maximising potentials for synergy. To do so, the paper mainly relies on an in-depth illustrative case study of an Italian Southern region, Apulia. The paper describes the regional innovation system put in place by the Apulia Region and analyses the value added that can be attributed to such a system as far as innovation and economic development promotion are concerned; on this basis, findings from the case study are generalised in a set of lessons learned with hopefully more general relevance: these are discussed in Section 4.
    Keywords: Research intensive clusters; regional innovation systems; mechatronics
    JEL: L26 L62 R58
    Date: 2014–11–07

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