nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2015‒01‒03
forty-one papers chosen by
Steve Ross
University of Connecticut

  1. Regional differences in housing price dynamics: Panel data evidence By Elias Oikarinen; Janne Engblom
  2. Homeowner Balance Sheets and Monetary Policy By Aladangady, Aditya
  3. Taxes in Cities By Brülhart, Marius; Bucovetsky, Sam; Schmidheiny, Kurt
  4. The empirics of agglomeration economies By Combes, Pierre-Philippe; Gobillon, Laurent
  5. Regional productivity growth in Europe: a Schumpeterian perspective By Roberto Basile
  6. All or Nothing? The Impact of School and Classroom Gender Composition on Effort and Academic Achievement By Soohyung Lee; Lesley J. Turner; Seokjin Woo; Kyunghee Kim
  7. The Ins and Arounds in the U.S. Housing Market By Bachmann, Rüdiger; Cooper, Daniel
  8. Race, Ethnicity and High Cost Mortgage Lending By Patrick Bayer; Fernando Ferreira; Stephen L. Ross
  9. Assessing Teacher Quality in India By Azam, Mehtabul; Kingdon, Geeta
  10. Urban Spatial Structure, Employement and Social Ties By Pierre Picard; Yves Zenou
  11. Spatial Methods By Gibbons, Steve; Overman, Henry G; Patacchini, Eleonora
  12. Cultural diversity and entrepreneurship in England and Wales By Hardy, Daniel; Rodriguez-Pose, Andres
  13. Neighborhood and Network Effects By Topa, Giorgio; Zenou, Yves
  14. Fatal Attraction: health care agglomeration and its consequences. By Stephen Sheppard; Michael Hellstern
  15. Innovation and Regional Growth in Mexico: 2000-2010 By Rodriguez-Pose, Andres; Villarreal Peralta, Edna Maria
  16. Housing Collateral, Credit Constraints and Entrepreneurship - Evidence from a Mortgage Reform By Laerkholm Jensen, Thais; Leth-Petersen, Søren; Nanda, Ramana
  17. Dynamic Spatial Competition Between Multi-Store Firms By Aguirregabiria, Victor; Vicentini, Gustavo
  18. A Transitions-Based Model of Default for Irish Mortgages By Kelly, Robert; O'Malley, Terence
  19. How to woo the smart ones? Evaluating the determinants that particularly attract highly qualified people to cities By Buch, Tanja; Hamann, Silke; Niebuhr, Annekatrin; Rossen, Anja
  20. What Kind of Teachers Are Schools Looking For? Evidence from a Randomized Field Experiment By Hinrichs, Peter
  21. Informal Network, Spatial Mobility and Overeducation in the Italian Labour Market By Valentina Meliciani; Debora Radicchia
  22. Comparing Consumption-based Asset Pricing Models: The Case of an Asian City By Kwan, Yum K.; Leung, Charles Ka Yui; Dong, Jinyue
  23. Housing and Labor Productivity of Female Tea Pluckers in Sri Lanka By Ajantha Kalyanaratne
  24. Informal environmental regulation of industrial air pollution: Does neighborhood inequality matter? By Klara Zwickl; Mathias Moser
  25. Evaluating the Weights and Factors Used in the New Zealand School Decile Funding System By Jeremy Clark; Susmita Roy Das
  26. How individual characteristics shape the structure of social networks By Yann Girard; Florian Hett; Daniel Schunk
  27. In Search of Opportunities? The Barriers to More Efficient Internal Labor Mobility in Ukraine By Koettl, Johannes; Kupets, Olga; Olefir, Anna; Santos, Indhira
  28. Tax Competition with Heterogeneous Firms By Baldwin, Richard; Okubo, Toshihiro
  29. Inter-regional Collaboration in Research and Innovation Strategies for Smart Specialisation (RIS3). S3 Working Paper Series no 6/2014. By Elvira Uyarra; Jens Sörvik; Inger Midtkandal
  30. Theoretical approaches of regional development By Antonescu, Daniela
  31. The (mis)fortunes of exceeding a small local air market: Comparing Amsterdam and Brussels By Guillaume Burghouwt; Frédéric Dobruszkes
  32. The Effect of Perceived Regional Accents on Individual Economic Behavior: A Lab Experiment on Linguistic Performance, Cognitive Ratings and Economic Decisions By Heblich, Stephan; Lameli, Alfred; Riener, Gerhard
  33. Does fuel price affect trucking industry’s network characteristics?: evidence from Denmark By Abate, Megersa
  34. Homeownership, Informality and the Transmission of Monetary Policy By Uras, R.B.; Elgin, C.
  35. Network Effects of Air Travel Demand, Second Version By Yanhao Wei
  36. Ageing and entrepreneurship across Dutch regions By Jan de Kok; Tommy Span
  37. Perceptions of ethno-cultural diversity and neighborhood cohesion in three European countries By Koopmans, Ruud; Schaeffer, Merlin
  38. An M-estimator of Spatial Tail Dependence By Einmahl, J.H.J.; Kiriliouk, A.; Krajina, A.; Segers, J.
  39. Which countries benefit most from emerging technological opportunities? By Ali Maleki; Alessandro Rosiello
  40. Estimating the Residential Land Damage of the Fukushima Accident By KAWAGUCHI, Daiji; YUKUTAKE, Norifumi
  41. Of Time and Space: Technological Spillovers among Patents and Unpatented Innovations during Early U.S. Industrialization By B. Zorina Khan

  1. By: Elias Oikarinen (Department of Economics, University of Turku); Janne Engblom
    Abstract: In this study, regional differences in housing price dynamics are examined empirically using panel data models. We concentrate on examining the momentum dynamics and the reversion speed towards fundamental price level. The analysis can be seen as a test for the validity of conventionally used fixed-effects panel models to analyse regional housing price dynamics. Based on data over 1988-2012, the findings indicate that the regional differences are generally quite small in the Finnish market. We find a notable difference between Helsinki, by far the greatest city in Finland, and the other cities regarding the strength of the momentum effect, though. The results also provide evidence of cointegration between regional housing prices and income. The long-term coefficient on income considerably varies across cities.
    Keywords: housing price, dynamics, panel data, momentum, bubble
    JEL: R21 R31 C33
    Date: 2014–08
  2. By: Aladangady, Aditya (Board of Governors of the Federal Reserve System (U.S.))
    Abstract: This paper empirically identifies an important channel through which monetary policy affects consumer spending: homeowner balance sheets. A monetary loosening increases home values, thereby strengthening homeowner balance sheets and stimulating household spending due to a combination of collateral and wealth effects. The magnitude of these effects on a given household depends on local housing market characteristics such as local geography and regulation. Cities with the largest geographic and regulatory barriers to new construction see 3-4 percent responses in real house prices compared with unconstrained, elastic-supply cities where construction holds prices in check. Using non-public geocoded microdata from the Consumer Expenditures Survey, house price and consumption responses are compared across areas differing in local land availability and zoning laws to identify a marginal propensity to consume out of housing of 0.07. Homeowners with debt service ratios in the highest quartile have MPCs as high as 0.14 compared with negligible responses for those with low debt service ratios. This indicates a strong role for collateral effects, as opposed to pure wealth effects, in driving the relationship between home values and spending. I discuss the implications of these results for the aggregate effects and regional heterogeneity in responses to monetary shocks.
    Keywords: Consumption; housing; wealth effects; collateral; home equity; monetary policy
    Date: 2014–10–21
  3. By: Brülhart, Marius; Bucovetsky, Sam; Schmidheiny, Kurt
    Abstract: Most cities enjoy some autonomy over how they tax their residents, and that autonomy is typically exercised by multiple municipal governments within a given city. In this chapter, we document patterns of city-level taxation across countries, and we review the literature on a number of salient features affecting local tax setting in an urban context. Urban local governments on average raise some ten percent of total tax revenue in OECD countries and around half that share in non-OECD countries. We show that most cities are highly fragmented: urban areas with more than 500,000 inhabitants are divided into74 local jurisdictions on average. The vast majority of these cities are characterized by a central municipality that strongly dominates the remaining jurisdictions in terms of population. These empirical regularities imply that an analysis of urban taxation needs to take account of three particular features: interdependence among tax-setting authorities(horizontally and vertically), jurisdictional size asymmetries, and the potential for agglomeration economies. We survey the relevant theoretical and empirical literatures, focusing in particular on models of asymmetric tax competition, of taxation and income sorting and of taxation in the presence of agglomeration rents.
    Keywords: agglomeration; cities; fiscal federalism; local taxation; population sorting; tax competition
    JEL: H71 H73 R28 R51
    Date: 2014–08
  4. By: Combes, Pierre-Philippe; Gobillon, Laurent
    Abstract: We propose an integrated framework to discuss the empirical literature on the local determinants of agglomeration effects. We start by presenting the theoretical mechanisms that ground individual and aggregate empirical specifications. We gradually introduce static effects, dynamic effects, and workers' endogenous location choices. We emphasise the impact of local density on productivity but we also consider many other local determinants supported by theory. Empirical issues are then addressed. Most important concerns are about endogeneity at the local and individual levels, the choice of a productivity measure between wage and TFP, and the roles of spatial scale, firms' characteristics, and functional forms. Estimated impacts of local determinants of productivity, employment, and firms' locations choices are surveyed for both developed and developing economies. We finally provide a discussion of attempts to identify and quantify specific agglomeration mechanisms.
    Keywords: agglomeration gains; density; learning; location choices; sorting
    JEL: J31 R12 R23
    Date: 2014–09
  5. By: Roberto Basile (Facoltà di Economia (Faculty of Economics), Seconda Università degli Studi di Napoli (Naples Second University))
    Abstract: Using data for the European regions at NUTS-2 level, we test the predictions of a microfounded Schumpeterian growth model with technological interdependence recently developed by Ertur and Koch (2011, EK11). Spatial interdependence is identified by means ofa semiparametric geoadditive spatial autoregressive model which permits us to disentanglethe effect of nonlinearities, spatial heterogeneity and spatial dependence. A control function approach is applied to estimate this particular SAR-type model using the spatial lag of the quality of regional governance and of its components (corruption, rule of law, government effectiveness and accountability) as instrumental variables for the endogenous term Wy. The results corroborate the predictions of EK11’s model: R&D investments and R&D spillovers are important divers of regional growth in Europe. However, spillover effects are much lower after controlling for spatial unobserved heterogeneity. Moreover, important nonlinearities in the effect of physical capital investments emerge, putting into question the strong homogeneity assumption and suggesting a threshold effect in growth behavior.
    Keywords: Regional growth, spatial dependence, nonlinearities, semiparametric models
    JEL: R11 R12 C14
    Date: 2014–11
  6. By: Soohyung Lee; Lesley J. Turner; Seokjin Woo; Kyunghee Kim
    Abstract: We estimate the causal impact of school and classroom gender composition on achievement. We take advantage of the random assignment of Korean middle school students to single-sex schools, co-educational (coed) schools with single-sex classes, and coed schools with mixed-gender classes. Male students attending single-sex classes within coed schools score 0.10 of a standard deviation below male students in mixed-gender classes, and this achievement gap is entirely accounted for by classroom gender composition. Conversely, male students attending single-sex schools outperform their counterparts in mixed-gender classes by 0.15 of a standard deviation. The significant impact of single-sex schools on male students' achievement are not driven by classroom gender composition, but largely accounted for by increases in student effort and study-time. We find little evidence that classroom or school gender composition affect the outcomes of female students.
    JEL: I20 I21 J24
    Date: 2014–12
  7. By: Bachmann, Rüdiger; Cooper, Daniel
    Abstract: In the U.S., 15 percent of households move in a given year. This result is based on data from the Panel Study of Income Dynamics on gross flows within and between the two segments of the housing market - renter-occupied properties and owner-occupied properties. The gross flows between these two segments are four times larger than the net flows. From a secular perspective, housing turnover exhibits a hump-shaped pattern between 1970 and 2000, which this paper attributes to changes in the age composition of the U.S. population. At higher frequencies, housing turnover is procyclical and tends to lead the business cycle and real house prices. By taking a two-segment view of the U.S. housing market and by documenting carefully the empirics of turnover within and between these segments, the paper provides important moments for and gives empirical guidance to the design, calibration, and evaluation of micro-founded, dynamic, and quantitative models of the U.S. housing market.
    Keywords: housing market; housing turnover; net and gross flows; PSID
    JEL: E30 E32 R21
    Date: 2014–06
  8. By: Patrick Bayer (Duke University); Fernando Ferreira (University of Pennsylvania); Stephen L. Ross (University of Connecticut)
    Abstract: This paper examines how high cost mortgage lending varies by race and ethnicity. It uses a unique panel data that matches a representative sample of mortgages in seven large metropolitan markets between 2004 and 2008 to public records of housing transactions and proprietary credit reporting data. The results reveal a significantly higher incidence of high costs loans for African-American and Hispanic borrowers even after controlling for key mortgage risk factors: they have a 7.7 and 6.2 percentage point higher likelihood of a high cost loan, respectively, in the home purchase market relative to an overall incidence of 14.8 percent among all home purchase mortgages. Significant racial and ethnic differences are widespread throughout the market – they are present (i) in each metro area, (ii) across high and low risk borrowers, and (iii) regardless of the age of the borrower. These differences are reduced by 60 percent with the inclusion of lender fixed effects, implying that a significant portion of the estimated market-wide racial differences can be attributed to differential access to (or sorting across) mortgage lenders.
    Date: 2014–12
  9. By: Azam, Mehtabul (Oklahoma State University); Kingdon, Geeta (Institute of Education, University of London)
    Abstract: Using administrative data from linked private schools from one of districts in India that matches 8,319 pupils to their subject specific teachers at the senior secondary level, we estimate the importance of individual teachers on student outcomes in the high-stake senior secondary exam (at the end of twelfth-grade). We control for prior achievement at the secondary level (at the end of tenth-grade) to estimate the value added of a teacher over a two year course, and define a good teacher as one who consistently gets higher achievement for students. In addition to the prior achievement, we exploit the fact that students took exams in multiple subjects during their senior secondary exam to control for pupil fixed effects. We find a considerable variability in teacher effectiveness over a two year course – a one standard deviation improvement in teacher quality adds 0.38 standard deviation points in students score. Furthermore, consistent with studies in the US, we find that although teacher quality matters, the observed characteristics explain little of the variability in teacher quality.
    Keywords: teacher value-added, teacher quality, student achievement, India
    JEL: I21 O15
    Date: 2014–11
  10. By: Pierre Picard (Université du Luxembourg); Yves Zenou (Stockholm University)
    Abstract: We develop a model where workers both choose their residential location (geographical space) and social interactions (social space). In equilibrium, we show under which condition the majority group resides close to the job center while the minority group lives far away from it. Even though the two populations are ex ante totally identical, we find that the majority group experiences a lower unemployment rate than the minority group and tends to socially interact more with other workers of its own group. Within each group, we demonstrate that workers residing farther away from the job center tend to search less for a job and are less likely to be employed. This model is thus able to explain why ethnic minorities are segregated in the urban and social space and why this leads to adverse labor-market outcomes in the absence of any discrimination against the minority group.
    Keywords: Social interactions, segregation, labor market, spacial mismatch
    JEL: A14 J15 R14 Z13
    Date: 2014
  11. By: Gibbons, Steve; Overman, Henry G; Patacchini, Eleonora
    Abstract: This paper is concerned with methods for analysing spatial data. After initial discussion on the nature of spatial data, including the concept of randomness, we focus most of our attention on linear regression models that involve interactions between agents across space. The introduction of spatial variables in to standard linear regression provides a flexible way of characteristing these interactions, but complicates both interpretation and estimation of parameters of interest. The estimation of these models leads to three fundamental challenges: the ‘reflection problem’, the presence of omitted variables and problems caused by sorting. We consider possible solutions to these problems, with a particular focus on restrictions on the nature of interactions. We show that similar assumptions are implicit in the empirical strategies - fixed effects or spatial differencing - used to address these problems in reduced form estimation. These general lessons carry over to the policy evaluation literature.
    Keywords: agglomeration; neighbourhood effects; spatial analysis; spatial econometrics; weights matrix
    JEL: C1 C5
    Date: 2014–09
  12. By: Hardy, Daniel; Rodriguez-Pose, Andres
    Abstract: British regions are becoming increasingly culturally diverse, with migration as the main driver. Does this diversity benefit local economies? This research examines the impact of cultural diversity on the entrepreneurial performance of UK regions. We focus on two largely overlooked factors, the measurement of diversity, and the skills composition of diverse populations. First, more that demonstrating the importance of cultural diversity for entrepreneurship, we show that the type of cultural diversity measured is a decisive factor. Second, the skill composition of diverse populations is also key. Diversity amongst the ranks of the highly skilled exerts the strongest impact upon start-up intensities. The empirical investigation employs spatial regression techniques and carriers out several robustness checks, including instrumental variables specifications, to corroborate our findings.
    Keywords: cultural diversity; entrepreneurship; high-skilled migration; knowledge spillovers
    JEL: F22 J24 L26 M13
    Date: 2014–11
  13. By: Topa, Giorgio; Zenou, Yves
    Abstract: In this chapter, we provide an overview of research on neighborhoods and social networks and their role in shaping behavior and economic outcomes. We include discussion of empirical and theoretical analyses of the role of neighborhoods and social networks in crime, education and labor-market outcomes. In particular, we discuss in detail identification problems in peer, neighborhood and network effects and the policy implications of integrating the social and the geographical space, especially for ethnic minorities.
    Keywords: ethnic minorities; group-based policies; labor economics; neighborhoods; social networks
    JEL: C23 D85 J15 J64 K42 R14 Z13
    Date: 2014–09
  14. By: Stephen Sheppard (Williams College); Michael Hellstern (Williams College)
    Abstract: In this paper we focus on a fundamental tension between the economies of agglomeration available to health care organizations and the impacts of spatial concentration of health care organizations on overall health outcomes. We identify plausible measures of health care concentration and dispersion, and adapt them to the US urban context. We calculate these measures for nonprofit health organizations for all US metropolitan areas from 1989 to 2009. We use these data to test for signs that agglomeration economies are important for these organizations. We use mortality rates to serve as an indicator of health outcomes, and provide an analysis of the impacts of agglomeration on health outcomes in US cities. This analysis highlights some disturbing results. The analysis suggests that health care organizations in US cities are more clustered than desirable for achieving the best health outcomes.
    Keywords: Health, agglomeration, nonprofits
    JEL: R38 I11 L30
    Date: 2014–11
  15. By: Rodriguez-Pose, Andres; Villarreal Peralta, Edna Maria
    Abstract: This paper looks at the factors driving regional growth in Mexico, paying special attention to the potentially growth-enhancing role of innovation and innovation policy. The analysis combines innovation variables with indicators linked to the formation of adequate social conditions for innovation (the social filter), and spillovers for 31 Mexican states and the Mexico City capital district (the Distrito Federal) during the period 2000-2010. The results indicate that regional economic growth across Mexican states stems from direct investment in R&D in areas with favorable social filters and which can benefit not only from knowledge spillovers, but also from being surrounded by rich neighbors with good social conditions. The results stress that, although Mexican innovation policy has been relatively well targeted in order to generate greater economic growth, its relatively modest size may have undermined the attainment of its main objectives.
    Keywords: economic growth; innovation; Mexico; regional convergence; socio-economic conditions
    JEL: O32 O33 R11 R12
    Date: 2014–09
  16. By: Laerkholm Jensen, Thais; Leth-Petersen, Søren; Nanda, Ramana
    Abstract: We study how a mortgage reform that exogenously increased access to credit had an impact on entrepreneurship, using individual-level micro data from Denmark. The reform allows us to disentangle the role of credit access from wealth effects that typically confound analyses of the collateral channel. We find that a $30,000 increase in credit availability led to a 12 basis point increase in entrepreneurship, equivalent to a 4% increase in the number of entrepreneurs. New entrants were more likely to start businesses in sectors where they had no prior experience, and were more likely to fail than those who did not benefit from the reform. Our results provide evidence that credit constraints do affect entrepreneurship, but that the overall magnitudes are small. Moreover, the marginal individuals selecting into entrepreneurship when constraints are relaxed may well be starting businesses that are of lower quality than the average existing businesses, leading to an increase in churning entry that does not translate into a sustained increase in the overall level of entrepreneurship.
    Keywords: credit constraints; entrepreneurship; household wealth; mortgage finance
    JEL: D14 D31 G21 L25 L26
    Date: 2014–11
  17. By: Aguirregabiria, Victor; Vicentini, Gustavo
    Abstract: We propose a dynamic model of an oligopoly industry characterized by spatial competition between multi-store retailers. Firms compete in prices and decide where to open or close stores depending on demand conditions and the number of competitors at different locations, and on location-specific private-information shocks. We develop an algorithm to approximate a Markov Perfect Equilibrium in our model, and propose a procedure for the estimation of the parameters of the model using panel data on number of stores, prices, and quantities at multiple geographic locations within a city. We also present numerical examples to illustrate the model and algorithm.
    Keywords: cannibalization; industry dynamics; spatial competition; spatial preemption; store location; sunk costs
    JEL: C73 L13 L81 R10 R30
    Date: 2014–11
  18. By: Kelly, Robert (Central Bank of Ireland); O'Malley, Terence (Central Bank of Ireland)
    Abstract: Using a uniquely constructed loan-level dataset of the residential mortgage book of Irish financial institutions, this paper provides a framework for estimating default probabilities of individual mort- gages. In contrast to the popular stock delinquency approach, this model provides estimates of default and cure ows: a requirement of the stress test approach adopted by the European Central Bank's comprehensive assessment. In addition, both default and cure transitions are modelled as functions of micro- and macro-covariates including loan characteristics and current macroeconomic conditions such as house prices and unemployment. When comparing the competing equity and affordability effects, labour market deterioration played a stronger role than house equity in the rise of Irish default rates. For cures, a scarring effect of default is identified and estimated with the probability of a loan returning to performing reducing by 25 per cent each quarter a loan remains delinquent.
    Keywords: Mortgage Default Modelling, Irish Banks, ECB Comprehensive Assessment.
    JEL: G01 G12 G21
    Date: 2014–11
  19. By: Buch, Tanja; Hamann, Silke; Niebuhr, Annekatrin; Rossen, Anja
    Abstract: Human capital is a driving factor of innovation and economic growth. Economic prospects of cities depend on high qualified workers' knowledge and therefore, attracting highly qualified workers plays a fundamental role for cities' prospects. This study contributes to the question which factors primarily determine the mobility-decision of highly qualified workers by investigating the determinants of the migration balance of German cities between 2000 and 2010. Furthermore, it compares the effects of several labour- and amenity-related variables on migration rates of highly qualified workers and the remaining workforce. Findings suggest that local labour market conditions influence the mobility decision but amenities matter too for the high-skilled. The preferences of the highly qualified workers partly differ from those of the rest of the workforce. However, there are also several factors that do not show systematic differences across skill groups.
    Keywords: migration,cities,qualification level,highly qualified,labour market conditions,amenities,Germany
    JEL: C23 J61 R23
    Date: 2014
  20. By: Hinrichs, Peter (Federal Reserve Bank of Cleveland)
    Abstract: Teacher quality is a pressing public policy concern, yet there is little evidence on what types of teachers schools actually prefer to hire. This paper reports the results of an experiment that involved sending schools fictitious resumes with randomly-chosen characteristics in an attempt to determine what characteristics schools value when hiring new teachers. The results of the study suggest that an applicant’s academic background has little impact on the likelihood of success at private and charter schools, although public schools respond more favorably to candidates from more selective colleges. Additionally, private schools demonstrate a slight preference for female candidates, and all three sectors demonstrate a preference for in-state candidates.
    Keywords: resume audit studies; teacher labor markets
    JEL: I21 J45
    Date: 2014–12–10
  21. By: Valentina Meliciani (University of Teramo); Debora Radicchia (Institute for the Development of Vocational Training of Workers and Social)
    Date: 2014–11
  22. By: Kwan, Yum K.; Leung, Charles Ka Yui; Dong, Jinyue
    Abstract: Eight consumption-based asset pricing models are developed, estimated and compared their capacities in accounting for the asset markets in Hong Kong. Results based on conventional metrics or recently developed econometric techniques deliver similar results: introducing housing into the consumption-based models does not always improve the models’ performance; how it is introduced matters. Recursive utility model and its housing-augmented variant, which emphasize the importance of early resolution of uncertainty and long term risk, outperform alternative models in forecasting stock returns. Collateral constraint model outperforms in predicting housing return, suggesting the importance of imperfect capital market in the housing market.
    Keywords: Consumption-based asset pricing model; Recursive utility; Habit formation; Consumption growth risk; Composition risk; Labor income risk; Long-run risk; Collateral constraint; Hansen-Jagannathan distance; Model confidence sets.
    JEL: E20 G12 R30
    Date: 2014–12
  23. By: Ajantha Kalyanaratne
    Abstract: This study analyzes the link between labor productivity of tea-plantation workers in Sri Lanka and their living conditions. The results indicate a significant negative relationship between Indoor Air Pollution (IAP) vulnerable houses and the labor productivity of dwellers. Our analyses suggest that the productivity of a tea worker living in improved houses is 100% to 151% higher than that of a worker living in traditional, IAP vulnerable houses. We also find that a healthy worker plucks 39% more tea leaves than a worker with a respiratory illness. Since investing in housing improvements and new houses for workers yields significant net benefits to both estate management and estate workers, we recommend that estate managers cooperate with the government to develop better estate worker houses.
    Keywords: Indoor Air Pollution; Labor productivity; Tea-estate sector; Sri Lanka; Female labor; Benefits to investors
  24. By: Klara Zwickl (Department of Socio-Economics, Vienna University of Economics and Business); Mathias Moser (Department of Economics, Vienna University of Economics and Business)
    Abstract: This paper analyzes if neighborhood income inequality has an effect on informal regulation of environmental quality, using census tract-level data on industrial air pollution exposure from EPA’s Risk Screening Environmental Indicators and income and demographic variables from the American Community Survey and EPA’s Smart Location Database. Estimating a spatial lag model and controlling for formal regulation at the states level, we find evidence that overall neighborhood inequality – as measured by the ratio between the fourth and the second income quintile or the neighborhood Gini coefficient – increases local air pollution exposure, whereas a concentration of top incomes reduces local exposure. The positive coefficient of the general inequality measure is driven by urban neighborhoods, whereas the negative coefficient of top incomes is stronger in rural areas. We explain these findings by two contradicting effects of inequality: On the one hand, overall inequality reduces collective action and thus the organizing capacities for environmental improvements. On the other hand, a concentration of income at the top enhances the ability of rich residents to negotiate with regulators or polluting plants in their vicinity.
    Keywords: Informal Regulation, Income Inequality, Collective Action, Industrial Air Pollution Disparities, Risk–Screening Environmental Indicators, Spatial Lag Model
    JEL: D3 H4 Q5 R2
    Date: 2014–11
  25. By: Jeremy Clark (University of Canterbury); Susmita Roy Das (University of Canterbury)
    Abstract: In New Zealand, the primary means of addressing the disparities that exist in educational outcomes by students’ socio-economic status is the “decile” funding system. The country’s Ministry of Education uses census data on five socio-economic deprivation factors of the households containing school-aged children in the meshblocks of the children attending each public or public-integrated school. In this paper, we look for evidence whether the decile funding system is using the best weights possible on the five socio-economic characteristics used in the funding formula, and whether other neighbourhood factors should also be included. Using school fixed effects regressions, we test whether the effectiveness of Ministry of Education funding per student in raising school leaver qualification achievement rates is affected more by some deprivation factors than others. We also explore whether additional factors such as health, crime, languages spoken, marital status, immigration status, and others have additional explanatory power on qualification achievement rates. We find that under the current practice of equally weighting the five factors, “low skill occupation” raises the effectiveness of government spending on achievement, while “receiving a benefit” reduces it. This suggests that raising the relative weight on “low skill occupation” and lowering the weight on “receiving a benefit” would increase the effectiveness of decile-adjusted school funding on raising achievement rates.
    Keywords: education funding, socio-economic disadvantage, decile funding
    JEL: H52 I22 I24 I28
    Date: 2014–12–19
  26. By: Yann Girard (GSEFM, Goethe University Frankfurt, Germany); Florian Hett (GSEFM, Goethe University Frankfurt, Germany); Daniel Schunk (Department of Economics, Johannes Gutenberg-Universitaet Mainz, Germany)
    Abstract: We study how students’ social networks emerge by documenting systematic patterns in the process of friendship formation of incoming students; these students all start out in a new environment and thus jointly create a new social network. As a specific novelty, we consider cooperativeness, time and risk preferences - elicited experimentally - together with factors like socioeconomic and personality characteristics. We find a number of robust predictors of link formation and of the position within the social network (local and global network centrality). In particular, cooperativeness has a complex association with link formation. We also find evidence for homophily along several dimensions. Finally, our results show that despite these systematic patterns, social network structures can be exogenously manipulated, as we find that random assignments of students to groups on the first two days of university impacts the students’ friendship formation process.
    Keywords: Social networks, education, link formation, homophily, cooperation, field and lab data
    JEL: C93 D85 I25 J24
    Date: 2014–11–17
  27. By: Koettl, Johannes (World Bank); Kupets, Olga (National University of Kiev-Mohyla Academy); Olefir, Anna (World Bank); Santos, Indhira (World Bank)
    Abstract: Ukraine's economy lacks dynamism, and this is both the cause and the effect of people not moving across the regions. The rate at which Ukrainians move from one region to another within the country is only half of what would be expected in comparison with other countries. This paper examines the barriers that prevent workers from moving within Ukraine, using information from focus group discussions and expert surveys. It also offers recommendations for creating greater labor mobility in Ukraine through addressing institutional bottlenecks and defines five key areas for improvement, including the population registry system, housing and credit markets, vocational education and training systems, labor market institutions, and the social welfare system.
    Keywords: barriers to migration, housing market, internal labor mobility, transition economies
    JEL: J61 J68 P25
    Date: 2014–11
  28. By: Baldwin, Richard; Okubo, Toshihiro
    Abstract: This paper studies tax competition in an economic geography model that allows for agglomeration economies with trade costs and heterogeneous firms. We find that the Nash equilibrium involves the large country charging a higher tax than the small nation. Lower trade costs lead to an intensification of competition, a drop in Nash tax rates, and a narrowing of the gap. Since large, productive firms are naturally more sensitive to tax differences in our model, large firms are the crux of tax competition in our model. This also means that tax competition has consequences for the average productivity of the big and small nations' industry; by lowering tax rates, the small nation can attract high-productivity firms.
    Keywords: average productivity; firm heterogeneity; Nash equilibrium tax; spatial sorting; tax cooperation
    JEL: H32 P16
    Date: 2014–05
  29. By: Elvira Uyarra (Manchester Institute of Innovation Research); Jens Sörvik (European Commission – JRC - IPTS); Inger Midtkandal (European Commission – JRC - IPTS)
    Abstract: The objective of this Smart Specialisation (S3) Platform Working Paper is to examine the role of inter-regional collaboration in national or regional Research and Innovation Strategies for Smart Specialisation (RIS3). It provides a conceptualisation of inter-regional collaboration within the framework of RIS3. It draws from the literature on innovation policy to develop an analytical framework to better understand the multiple dimensions of inter-regional collaboration, namely the why, what, where, who and how of collaboration; and explores how inter-regional collaboration varies according to the six steps of the RIS3 process. Finally, it looks at experiences of inter-regional collaboration for innovation in the Baltic Sea region within this framework.
    Keywords: Inter-regional collaboration, Smart Specialisation, innovation policy, regional development, Baltic Sea Region, dimensions of collaboration, trans-national collaboration
    Date: 2014–11
  30. By: Antonescu, Daniela
    Abstract: This article is a theoretical review regarding to specialised literature of regional development, trying to provide an answers to a general and actual question of cohesion policy: why some regions develop more swiftly than the others? The answers are given preponderantly by the regional economic science, which was supported during its development by other sciences (mathematics, geography, sociology, etc.). The regional theories and policies had changes in the last time in their attempt to meet the new challenges triggered by the expansion of the European Community. Currently, concepts such as endogenous development are already “exiled” by the new theoretic approaches, which are more complex and sophisticated, using notions such as knowledge regions (those regions able to develop based on own resources and adapt to the new competitiveness conditions imposed by globalisation). From this perspective, the new trends of regional policy, after 1990, were focused on regional networks (clusters) and innovation, without losing from sight the development and potential specifics and differences of each area.
    Keywords: regional development theory
    JEL: R0 R11
    Date: 2014–11–17
  31. By: Guillaume Burghouwt; Frédéric Dobruszkes
    Abstract: Comparing air service growth in Amsterdam and Brussels, this paper aims to understand how the strategies of airlines and public authorities allow certain medium-sized cities to succeed in exceeding their local market by connecting passengers, while others do not. In contrast to Brussels, Amsterdam has become one of the most air serviced European cities, reaching a highly disproportionate level of service given both its size and its airport catchment area. Amsterdam has reached its rank thanks to a successful, global hub-and-spokes strategy led by KLM and its partners. Such a success story would have been impossible without support from the State pursuing the expansion of numerous, liberal bilateral air service agreements and a regional development strategy which facilitated the expansion of Amsterdam Schiphol airport in the 1990s. Finally, this paper shows how public and corporate governances might be able to convert themselves to the rules of the market economy.
    Keywords: Air transport; airlines strategy; liberalisation; airport planning; hub-and-spokes; Amsterdam; Brussels
    Date: 2014
  32. By: Heblich, Stephan (University of Bristol); Lameli, Alfred (University of Marburg); Riener, Gerhard (Düsseldorf Institute for Competition Economics (DICE))
    Abstract: Does it matter if you speak with a regional accent? Speaking immediately reveals something of one's own social and cultural identity, be it consciously or unconsciously. Perceiving accents involves not only reconstructing such imprints but also augmenting them with particular attitudes and stereotypes. Even though we know much about attitudes and stereotypes that are transmitted by, e.g. skin color, names or physical attractiveness, we do not yet have satisfactory answers how accent perception affects human behavior. How do people act in economically relevant contexts when they are confronted with regional accents? This paper reports a laboratory experiment where we address this question. Participants in our experiment conduct cognitive tests where they can choose to either cooperate or compete with a randomly matched male opponent identified only via his rendering of a standardized text in either a regional accent or standard accent. We find a strong connection between the linguistic performance and the cognitive rating of the opponent. When matched with an opponent who speaks the accent of the participant's home region – the in-group opponent –, individuals tend to cooperate significantly more often. By contrast, they are more likely to compete when matched with an accent speaker from outside their home region, the out-group opponent. Our findings demonstrate, firstly, that the perception of an out-group accent leads not only to social discrimination but also influences economic decisions. Secondly, they suggest that this economic behavior is not necessarily attributable to the perception of a regional accent per se, but rather to the social rating of linguistic distance and the in-group/out-group perception it evokes.
    Keywords: discrimination, accent, in-group/out-group, lab experiment
    JEL: C90 J70 Z10
    Date: 2014–11
  33. By: Abate, Megersa (VTI)
    Abstract: The 2000s were dominated by rising fuel prices and economic recession. Both had an impact on the structure of the trucking industry and how freight was moved. This paper examines how fuel prices shaped trucking industry’s network characteristics such as the average length of haul, average load, and capacity utilization. In particular, we show the effect of fuel price on average length of haul using 29 quarterly independent surveys from the Danish heavy goods vehicle (HGV) trip diary from 2004 to 2011. The results show that the average length of haul is sensitive to changes in fuel price: a DKK 1 (0.18$) increase in diesel price/liter leads to a 4 percent decrease in the average length of haul in the 2004-2007 period. This implies that firms improve transport efficiency by reducing the number of kilometers needed to transport a tonne of cargo as a short run response to fuel price increases. This result, however, is not confirmed for the years following the 2008 financial crisis. It also depends on where in the distribution of the average length of haul one looks.
    Keywords: Fuel Price; Networks; Trucking industry; Capacity utilization
    JEL: L92 Q41 R40
    Date: 2014–12–12
  34. By: Uras, R.B. (Tilburg University, Center For Economic Research); Elgin, C.
    Abstract: Cross-country aggregate data exhibits a strong (positive) relationship between the size of the informal employment and aggregate homeownership rates. We investigate this empirical observation using a cash-in-advance model with housing markets and argue that the rate of inflation is important in explaining the nexus between informality and homeownership rates. Specifically, we uncover a novel monetary transmission mechanism and show that households with informal employment desire to economize on their short-term cash usage and avoid periodic rental payments when (i) informality is associated with constrained business investment finance, and (ii) inflation expectations are high. Our empirical and theoretical findings highlight an important interaction between the conduct of monetary policy and the performance of housing markets.
    Keywords: Cash-In-Advance,; Informality; Cross-Country Data;; Monetary Transmission.
    JEL: E26 E41 E44
    Date: 2014
  35. By: Yanhao Wei (Department of Economics, University of Pennsylvania)
    Abstract: As demand increases, airline carriers often increase flight frequencies to meet the larger flow of passengers in their networks, which reduces passengers' schedule delays and attracts more demand. Focusing on the “network effects", this paper develops and estimates a structural model of the U.S. airline industry. Compared with previous studies, the model implies higher cost estimates, which seem more consistent with the unprofitability of the industry; below-marginal-cost pricing becomes possible and appears on many routes. I also study airline mergers and find that the network effects can be the main factor underlying their profitability.
    Keywords: Network effects, airline networks, differentiated product markets, airlines, merger
    JEL: L13 L93 D62 C31
    Date: 2014–09–25
  36. By: Jan de Kok; Tommy Span
    Abstract: In this study we examine whether the ageing of the Dutch labour force has had an effect on entrepreneurship rates in the recent past, and if it is likely to have an effect in the future. Because we only have data on a relatively short period of time (2001 – 2009), we focus on variation between regions instead of variation across time. The first two research questions of this study are therefore: to which extent are regional differences in business ownership rates and in start-up rates related to regional differences in the age composition of the workforce? To answer these questions, we have applied a shift-share analysis on available data on the age composition of the labour force and entrepreneurship rates for 12 Dutch provinces for the years 2001 - 2009. We find that there is indeed an age composition effect: regional deviations from the national age structure of the labour force can partly account for regional deviations from the national entrepreneurship rates. This applies for business ownership rates as well as start-up rates. The size of this age composition effect is however not very large. By combining these identified age composition effects with expected changes of the age structure of the Dutch workforce (between 2010 and 2060), we have been able to answer the third and final research question of this study, to which extent the ageing of the workforce would affect entrepreneurship rates at national level. Our results show that there is hardly any effect to be expected. This lack of impact may be due to the combination of different factors. First of all, the identified age composition effects are not very large. Secondly, the expected changes in the shares of the different age groups may not be large enough to cause large changes in the entrepreneurship rates. Finally, the changes that do occur for different age groups may counteract each other.
    Date: 2014–11–27
  37. By: Koopmans, Ruud; Schaeffer, Merlin
    Abstract: The question whether ethnic diversity is associated with declining social cohesion has produced much controversy. We maintain that more attention must be paid to cognitive mechanisms to move the debate ahead. Using survey data from 938 localities in Germany, France, and the Netherlands, we explore a crucial individual-level mechanism: perceptions of diversity. We not only consider perceptions of the amount, but also of the qualitative nature of diversity. By asking about various qualitative aspects of diversity, we test the cognitive salience of three explanations that have been proposed in the literature for negative diversity effects: out-group biases, asymmetric preferences and coordination problems. We show that all three mechanisms matter. Perceptions both mediate statistical diversity effects, and have important explanatory power of their own. Moreover, we are able to address the question to what extend the relationship of perceived diversity and neighborhood social cohesion varies across policy contexts. Based on assumptions in the literature about positive impacts of inclusive and culturally pluralist immigrant integration policy approaches, we hypothesize that ethno-cultural diversity is less negatively related to neighborhood social cohesion in more inclusive policy contexts. Our results provide partial support for this hypothesis as perceived diversity has a significantly stronger negative impact on neighborhood cohesion in Germany.
    Keywords: Social Cohesion,Social Capital,Ethnic Diversity,Immigration,Intergroup Relations,Community Erosion
    Date: 2014
  38. By: Einmahl, J.H.J. (Tilburg University, Center For Economic Research); Kiriliouk, A.; Krajina, A. (Tilburg University, Center For Economic Research); Segers, J. (Tilburg University, Center For Economic Research)
    Abstract: Tail dependence models for distributions attracted to a max-stable law are tted using observations above a high threshold. To cope with spatial, high-dimensional data, a rankbased M-estimator is proposed relying on bivariate margins only. A data-driven weight matrix is used to minimize the asymptotic variance. Empirical process arguments show that the estimator is consistent and asymptotically normal. Its nite-sample performance is assessed in simulation experiments involving popular max-stable processes perturbed with additive noise. An analysis of wind speed data from the Netherlands illustrates the method.
    Keywords: Brown-resnick process; exceedances; multivariate extremes; ranks; spatial statistics; stable tail dependence function
    JEL: C13 C14
    Date: 2014
  39. By: Ali Maleki; Alessandro Rosiello
    Abstract: Which countries benefit most from emerging technological opportunities? An enquiry into the changing geography of knowledge base complexity in the upstream petroleum industry This article aims to unravel the relationship between dynamics of knowledge base complexity and the international geography of innovation with particular emphasis on understanding catch-up processes. Putting the distinction between breadth and systemic complexity at the centre of analysis of the sectorial knowledge base, this research contributes to our understanding of the changing geography of knowledge base complexity. We argue that systemic complexity implies higher geographical proximity, because coordination and integration of different pieces of knowledge is challenging over long distances when there are intensive interactions. However, if the complexity is more of the breadth type and systemic interactions are limited, the possibility of geographical dispersion is higher. This distinction clarifies some of the ambiguities and inconsistencies in the literature with regard to the geographical implications of complexity. In fact, different dimensions of complexity have different geographical impacts. As formulated in our research hypothesis, we expect a higher number of new entries and more opportunities for latecomer catch-up, and therefore more rapid geographical dispersion, when systemic complexity is low and breadth complexity is dominant. In contrast, increasing systemic complexity implies higher barriers to entry, fewer catch-up opportunities, and slower geographical dispersion (or even higher geographical concentration). Relying on patent data, we found empirical evidence to support the hypothesis in the upstream petroleum industry. In addition, the results suggest that in dealing with systemic complexity, the cognitive and organizational proximity available in internal networks of big multinational companies may be more important than geographical proximity. The empirical results also offer some theoretical insights about the dynamics of geographical patterns of innovation. In the last period studied, we observed a high geographical dispersion of innovative activities in conjunction with a highly concentrated ownership structure. This is consistent with the nature of systemic complexity which dominated in that period, creating scale, scope and agglomeration economies. This conditions favour big multinational companies of advanced countries. Although their innovative activities are geographically distributed, in terms of ownership, they control a lion share of innovative activities in the sector. These findings offer valuable insights regarding the development of a dynamic theory of the geography of knowledge base complexity, as an interesting area for further research.
    Keywords: geography of innovation; knowledge base complexity; petroleum industry
    JEL: O30
    Date: 2014–11
  40. By: KAWAGUCHI, Daiji; YUKUTAKE, Norifumi
    Abstract: The cost of nuclear power generation critically depends on the damages caused by plant failure. We estimate the residential land damage caused by the failure of the Fukushima Daiichi nuclear power plant, as it forms a substantial part of the total damage, by observing the change in transaction prices before and after the accident with the degree of radioactive contamination. The estimates based on hedonic price equations, with the degree of radioactive contamination measured by airborne surveys, indicate that the contamination significantly decreased the price of residential land. The estimated total residential depreciation ranges from 2.19 to 2.65 trillion yen, approximately equivalent to 21.9-26.5 billion US dollars, or about 0.5% of Japan's GDP.
    Keywords: Fukushima, Nuclear Power Plant, Land Property Damage, Radioactive Contamination, Land Contamination
    JEL: Q51 Q53 R31
    Date: 2014–11–28
  41. By: B. Zorina Khan
    Abstract: The paper explores the role of institutional mechanisms in generating technological knowledge spillovers. The estimation is over panel datasets of patent grants, and unpatented innovations that were submitted for prizes at the annual industrial fairs of the American Institute of New York, during the era of early industrial expansion. The first section tests the hypothesis of spatial autocorrelation in patenting and in the exhibited innovations. In keeping with the contract theory of patents, the procedure identifies high and statistically significant spatial autocorrelation in the sample of inventions that were patented, indicating the prevalence of geographical spillovers. By contrast, prize innovations were much less likely to be spatially dependent. The second part of the paper investigates whether unpatented innovations in a county were affected by patenting in contiguous or adjacent counties, and the analysis indicates that such spatial effects were large and significant. These results are consistent with the argument that patents enhance the diffusion of information for both patented and unpatented innovations, whereas prizes are less effective in generating external benefits from knowledge spillovers. I hypothesize that the difference partly owes to the design of patent institutions, which explicitly incorporate mechanisms for systematic recording, access, and dispersion of technical information.
    JEL: N11 O31 O33 O34
    Date: 2014–12

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