nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2015‒02‒11
forty-five papers chosen by
Steve Ross
University of Connecticut

  1. Creative Destruction or Mere Niche Creation? Innovation Policy Mixes for Sustainability Transitions By Paula Kivimaa; Florian Kern
  2. Job Loss and Regional Mobility By Huttunen, Kristiina; Moen, Jarle; Salvanes, Kjell G.
  3. Entrepreneurship,Growth, Regional Growth Regimes By Michael Fritsch; Sandra Kublina
  4. GMM Estimation of Fixed Effects Dynamic Panel Data Models with Spatial Lag and Spatial Errors (Revised version of CentER DP 2011-134) By Cizek, P.; Jacobs, J.; Ligthart, J.E.; Vrijburg, H.
  5. In Search of Fiscal Interactions: A Spatial Analysis of Chinese Provincial Infrastructure Spending By Zheng, Xinye; Song, Feng; Yu, Yihua; Song, Shunfeng
  6. Strategic influence in social networks. By Michel Grabisch; Antoine Mandel; Agnieszka Rusinowska; Emily Tanimura
  7. Do upcoming “Smart cities” need to provide smart distribution of higher urban economic growth? Evidence from Urban India By Tripathi, Sabyasachi
  8. Housing over time and over the life cycle: a structural estimation By Li, Wenli; Liu, Haiyong; Yang, Fang; Yao, Rui
  9. Recourse and residential mortgages: the case of Nevada By Li, Wenli; Oswald, Florian
  10. Does the Teacher Beat the Test? The Additional Value of Teacher Assessment in Predicting Student Ability By Feron, Eva; Schils, Trudie; ter Weel, Bas
  11. Community Entrepreneurship in Deprived Neighbourhoods: Comparing UK Community Enterprises with US Community Development Corporations By Varady, David P.; Kleinhans, Reinout; van Ham, Maarten
  12. Identifying technology spillovers and product market rivalry By Nick Bloom; Mark Schankerman; John Van Reenen
  13. Accounting for big-city growth in low-paid occupations: immigration and/or service-class consumption By Ian Gordon; Ioannis Kaplanis
  14. Does poor neighbourhood reputation create a neighbourhood effect on employment? The results of a field experiment in the UK By Rebecca Tunstall; Anne Green; Ruth Lupton; Simon Watmough; Katie Bates
  15. When work disappears: racial prejudice and recession labour market penalties By David W. Johnston; Grace Lordan
  16. Cultural diversity, cities and innovation: firm effects or city effects? By Neil Lee
  17. Do inventors talk to strangers? on proximity and collaborative knowledge creation By Riccardo Crescenzi; Max Nathan; Andrés Rodríguez-Pose
  18. Hard times, new directions? The impact of local government spending cuts in London (interim report summary) By Amanda Fitzgerald; Ruth Lupton
  19. Small-area measures of income poverty By Alex Fenton
  20. Peer effects in endogenous networks By Timo Hiller
  21. Mortgages and monetary policy By Carlos Garriga; Finn E. Kydland; Roman Šustek
  22. My Precious! the location and diffusion of scientific research: evidence from the synchrotron diamond light source By Christian Helmers; Henry G. Overman
  23. Urban renewal after the Berlin wall By Gabriel M. Ahfeldt; Felix J. Richter; Wolfgang Maennig
  24. Immigration and the access to social housing in the UK By Diego Battiston; Richard Dickens; Alan Manning; Jonathan Wadsworth
  25. Accessibility in cities: transport and urban form By Philipp Rode; Graham Floater; Nikolas Thomopoulos; James Docherty; Peter Schwinger; Anjali Mahendra; Wanli Fang
  26. Assessing the effect of school days and absences on test score performance By Esteban Aucejo; Teresa Romano
  27. Steering urban growth: governance, policy and finance By Graham Floater; Philipp Rode; Bruno Friedel; Alexis Robert
  28. Pensions, Savings and Housing: A Life-cycle Framework with Policy Simulations By Creedy, John; Gemmell, Norman; Scobie, Grant
  29. Economic Development: Is Social Capital Persistent?. By Rakesh Gupta N.R.
  30. Monocentric city redux By Rappaport, Jordan
  31. Network geometry and the scope of the median voter theorem By Stefano Vannucci
  32. Voter Turnout and City Performance. By Lo Prete, Anna; Revelli, Federico
  33. Persistence and extinction of brokerage roles in clusters: the role of status, former experiences and extra-cluster relationships By José-Antonio Belso-Martínez; Manuel Expósito-Langa
  34. Breaking Out Of Poverty Traps: Internal Migration And Interregional Convergence In Russia By Sergei Guriev; Elena S. Vakulenko
  35. Urban Green Growth in Dynamic Asia: A Conceptual Framework By Tadashi Matsumoto; Loïc Daudey
  36. Buying First or Selling First in Housing Markets By Moen, Espen R; Nenov, Plamen T.; Sniekers, Florian
  37. Banking Integration and House Price Comovement By Landier, Augustin; Sraer, David; Thesmar, David
  38. Sickness Absence and Local Benefit Cultures By Lindbeck, Assar; Palme, Mårten; Persson, Mats
  39. Is There a Bubble in the German Housing Market? By Konstantin Kholodilin; Claus Michelsen; Dirk Ulbricht
  40. Noisy information, distance and law of one price dynamics across US cities By Crucini, Mario J.; Shintani, Mototsugu; Tsuruga, Takayuki
  41. The role of two frictions in geographic price dispersion: when market friction meets nominal rigidity By Choi, Chi-Young; Choi, Horag
  42. Geographic barriers to commodity price integration: evidence from US cities and Swedish towns, 1732-1860 By Crucini, Mario J.; Smith, Gregor W.
  43. Price dispersion and station heterogeneity on German retail gasoline markets By Haucap, Justus; Heimeshoff, Ulrich; Siekmann, Manuel
  44. The Economics of Temporary Migrations By Christian Dustmann; Joseph-Simon Görlach
  45. Housing Collateral and Entrepreneurship By Thesmar , David; Sraer , David

  1. By: Paula Kivimaa (Finnish Environment Institute,P.O.Box 140,Fi-00251 Helsinki, Finland); Florian Kern (SPRU, University of Sussex, Falmer, Brighton, BN1 9SL, UK)
    Abstract: Recently, there has been an increasing interest in policy mixes in innovation studies. while it has long been acknowledged that the stimulation of innovation and technological change involves different types of policy instruments, how such instruments form policy mixes has only recently. become of interest. We argue that an area in which policy mixes are particularly important is the field of sustainability transitions. Transitions imply not only the development of disruptive innovations but also of policies aiming for wider change in socio?technical systems. We propose that ideally policy mixes for transitions might include elements of‘creative destruction', involving both policies aiming for the ‘creation’ of new and for ‘destabilising’ the old. We develop a novel analytical framework including the two policy mix dimensions (‘creation’"and ‘destruction’) by broadening the technological innovation system functions approach, and by expanding the concept of ‘motors of innovation’. We test this framework by analysing‘low"energy’ policy mixes in Finland and the UK. We find that both countries have diverse policy mixes to support energy efficiency and reduce energy demand with instruments to cover all functions on the creation side. Despite the demonstrated need for such policies, unsurprisingly destabilising functions are addressed by fewer policies, but there are empirical examples of such policies in both countries. The concept of ‘motors" of creative destruction’ is introduced to expand innovation and technology policy debates to go beyond policy mixes consisting of technology push and demand pull instruments, and to consider a wider range of policy instruments which may contribute to sustainability transitions.
    Date: 2015–01
  2. By: Huttunen, Kristiina (Aalto University); Moen, Jarle (Norwegian School of Economics); Salvanes, Kjell G. (Norwegian School of Economics)
    Abstract: It is well documented that displaced workers suffer severe earnings losses, but not why this is so. One reason may be that workers are unable or unwilling to move to regions with better employment opportunities. We study this and find that job displacement increases regional mobility but, surprisingly, we also find that displaced workers who move suffer larger income losses than displaced workers who stay in the same region. This is not a selection effect, but reflects the fact that non-economic factors such as family ties are very important for the decision to migrate. Workers are less likely to move if they have family in the region where they already live, and job loss stimulates workers to relocate with parents and siblings when they live in different regions. Looking at earnings we find that the entire post displacement income difference between displaced movers and stayers is driven by workers moving to regions where their parents live or to rural areas. Furthermore, when looking at long-run family income, we find that the difference between displaced movers and stayers is very modest. With respect to selection, we find that migrants are positively selected on average, but very heterogeneous. They seem to be drawn disproportionately both from the high and the low end of the skill distribution in the region they leave.
    Keywords: plant closures, downsizing, regional mobility, earnings, family ties
    JEL: J61 J63
    Date: 2015–01
  3. By: Michael Fritsch (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Sandra Kublina (School of Economics and Business Administration, Friedrich-Schiller-University Jena)
    Abstract: We distinguish four types of regional growth regimes based on the type of relationship between new business formation and economic development. The distinguishing characteristics of these regime types are analyzed in order to identify the reasons for different growth performance. Although growth regimes are highly persistent over time, typical transition patterns between regime types can be identified. We explain these patterns and draw conclusions for policy. The evidence clearly suggests that entrepreneurship is a key driver of economic development, and one that has long-run effects.
    Keywords: Entrepreneurship, new business formation, economic development, regional growth regimes
    JEL: L26 R11 O11
    Date: 2015–01–26
  4. By: Cizek, P. (Tilburg University, Center For Economic Research); Jacobs, J.; Ligthart, J.E. (Tilburg University, Center For Economic Research); Vrijburg, H.
    Abstract: The three-step generalized methods of moments (GMM) approach of Kapoor, Kelejian and Prucha (2007), which corrects for spatially correlated errors in static panel data models, is extended by introducing fixed effects, a spatial lag, and a one-period lag of the dependent variable as additional explanatory variables. Combining this approach with the dynamic panel-data GMM estimators of Arellano and Bond (1991) and Blundell and Bond (1998) and specifying moment conditions for various time lags, spatial lags, and sets of exogenous variables yields new spatial dynamic panel data estimators. The proposed spatially corrected GMM estimates are based on a spatial lag and a transformation correcting for the spatial error correlation. We prove their consistency and asymptotic normality for a large number of spatial units and a fixed number of time periods. Feasible spatial correction based on estimated spatial error correlation is shown to lead to estimators that are asymptotically equivalent to the infeasible estimators based on a known spatial error<br/>correlation. Monte Carlo simulations show that the root mean squared error of spatially corrected GMM estimates is generally smaller than that of corresponding spatial GMM estimates in which spatial error correlation is ignored.
    Keywords: Dynamic panel models,; spatial lag,; spatial error,; GMM estimation
    JEL: C15 C21 C22 C23
    Date: 2015
  5. By: Zheng, Xinye; Song, Feng; Yu, Yihua; Song, Shunfeng
    Abstract: Using a dataset for 31 Chinese provinces from 1998 to 2006, this paper provides a spatial Durbin panel analysis to test for fiscal interactions among China's provinces in their public spending on infrastructure. We find significant positive interactions across Chinese provincial governments. Further analysis attempting to distinguish between the possible sources of such fiscal interactions reveals evidence of expenditure competition instead of yardstick competition.
    Keywords: Infrastructure expenditure, Fiscal interactions, Spatial Durbin panel model, Two-stage least squares
    JEL: C23 H54 H7
    Date: 2014–12
  6. By: Michel Grabisch (Paris School of Economics - Centre d'Economie de la Sorbonne); Antoine Mandel (Paris School of Economics - Centre d'Economie de la Sorbonne); Agnieszka Rusinowska (Paris School of Economics - Centre d'Economie de la Sorbonne); Emily Tanimura (Centre d'Economie de la Sorbonne)
    Abstract: We consider a model of influence with a set of non-strategic agents and two strategic agents. The non-strategic agents have initial opinions and are linked through a simply connected network. They update their opinions as in the DeGroot model. The two strategic agents have fixed opinions, 1 and 0 respectively, and are characterized by the magnitude of the impact they can exert on non-strategic agents. Each strategic agent forms a link with one non-strategic agent in order to alter the average opinion that eventually emerges in the network. This procedure defines a zero-sum game whose players are the two strategic agents and whose strategy set is the set of non-strategic agents. We focus on the existence and the characterization of equilibria in pure strategy in this setting. Simple examples show that the existence of a pure strategy equilibrium does depend on the structure of the network. The characterization of equilibrium we obtain emphasizes on the one hand the influenceability of target agents and on the other hand their centrality whose natural measure in our context defines a new concept, related to betweenness centrality, that we call intermediacy. We also show that in the case where the two strategic agents have the same impact, symmetric equilibria emerge as natural solutions whereas in the case where the impacts are uneven, the strategic players generally have differentiated equilibrium targets, the high-impacts agent focusing on centrality and the low-impact agent on influenceability.
    Keywords: Influence networks, beliefs, DeGroot model, strategic player, convergence, consensus, equilibrium.
    JEL: C71 D85
    Date: 2015–01
  7. By: Tripathi, Sabyasachi
    Abstract: The present paper tries to understand the causes behind the emergence of India‘s large agglomeration (or giant cities) and how these large agglomerations are linked with economic growth. In addition, the distribution of urban economic growth is measured by the estimation of poverty, inequality and pro-poorness. The paper suggests that the upcoming ―Smart cities‖ in India will emerge as a greater platform for future development of urban India, only if these cities surely ensure smart distribution of the fruits of urban economic growth to the poorer section of urban dwellers.
    Keywords: Agglomeration, Economic growth, Poverty, Inequality, Urban India
    JEL: D63 O18 R11
    Date: 2015–01–10
  8. By: Li, Wenli (Federal Reserve Bank of Philadelphia); Liu, Haiyong (East Carolina University); Yang, Fang (Louisiana State University); Yao, Rui (Baruch College)
    Abstract: Supersedes Working Paper 09-7. We estimate a structural model of optimal life-cycle housing and nonhousing consumption in the presence of labor income and house price uncertainties. The model postulates constant elasticity of substitution between housing service and nonhousing consumption and explicitly incorporates a housing adjustment cost. Our estimation fits the cross-sectional and time-series household wealth and housing profies from the Panel Study of Income Dynamics (1984 to 2005) reasonably well and suggests an intratemporal elasticity of substitution between housing and nonhousing consumption of 0.487. The low elasticity estimate is largely driven by moments conditional on state house prices and moments in the latter half of the sample period and is robust to different assumptions of housing adjustment cost. We then conduct policy analyses in which we let house price and income take values as those observed between 2006 and 2011. We show that the responses depend importantly on the housing adjustment cost and the elasticity of sub-stitution between housing and nonhousing consumption. In particular, compared with the benchmark, the impact of the shocks on homeownership rates is reduced, but the impact on nonhousing consumption is magnified when the house selling cost is sizable or when housing service and nonhousing consumption are highly substitutable.
    Keywords: Life cycle; Housing adjustment costs; Intratemporal substitution
    JEL: E21 R21
    Date: 2015–01–17
  9. By: Li, Wenli (Federal Reserve Bank of Philadelphia); Oswald, Florian (University College London)
    Abstract: The state of Nevada passed legislation in 2009 that abolished deficiency judgments for purchase mortgage loans made after October 1, 2009, and collateralized by primary single-family homes. In this paper, we study how the law change affected lenders’ decisions to grant mortgages and borrowers’ decisions to apply for them and subsequently default. Using unique mortgage loan-level application and performance data, we find strong evidence that lenders tightened their lending standards for mortgages affected by the new legislation. In particular, lenders reduced approval rates and loan sizes for mortgages after implementation of the law. Borrowers, by contrast, did not delay their mortgage applications until after the law change. Furthermore, the law change did not appear to have affected borrowers’ default decisions. These results cast a cautionary note on the effectiveness of policy recommendations that intend to use deficiency laws to curb mortgage defaults.
    Keywords: Deficiency judgment; Default; Foreclosure; Approval; Interest rate; Nevada
    JEL: G21 K11 R20
    Date: 2014–12–01
  10. By: Feron, Eva (Maastricht University); Schils, Trudie (Maastricht University); ter Weel, Bas (CPB Netherlands Bureau for Economic Policy Analysis)
    Abstract: This research investigates to what extent subjective teacher assessment of children's ability adds to the use of test scores in the explanation of children's outcomes in the transition from elementary to secondary school in terms of initial track allocation, track switching in the first three years of secondary education and subsequent test scores. We apply micro-data from the Netherlands about cognitive test scores and teacher assessment in elementary schools and about track placement, track switching and test scores in secondary schools. Our estimates suggest that subjective teacher assessment is about twice as important as the elementary school cognitive test scores for initial track placement in secondary school. In addition, teacher assessment is more predictive of track allocation in 9th grade compared to cognitive test scores. Next, children who switch tracks are more likely to be placed in tracks based on test scores. Also, test scores in 9th grade are predicted by subjective teacher assessment, not by test scores in 6th grade. Finally, a back-of-the-envelope calculation shows that switching could be reduced by at least ten percent if children would have been allocated according to the teacher's assessment.
    Keywords: test scores, teacher assessment, school careers
    JEL: I21 I28 J24
    Date: 2015–01
  11. By: Varady, David P. (University of Cincinnati); Kleinhans, Reinout (Delft University of Technology); van Ham, Maarten (Delft University of Technology)
    Abstract: Through a review of the recent American community development literature, this paper tests the assertion that British community enterprises (CEs) are fundamentally similar to American community development corporations (CDCs), and therefore, that CEs can learn from CDCs. In the context of the current austerity regimes, CEs and community entrepreneurship are increasingly considered as a means to continue small-scale urban regeneration, not only in the UK but also in several other European countries. While the CDC sector has achieved a relatively successful record in affordable housing production in distressed areas, CDCs are fundamentally limited in terms of reversing the processes of community decline. Our comparison of CDCs and CEs reveals similarities, but also differences with regard to organizational characteristics, co-operation on multiple scales, comprehensiveness, targeting and community participation. Apart from outlining lessons that CEs can learn from CDS, we provide recommendations for further research that should cover the lack of empirical evidence in this field.
    Keywords: community development corporations, community enterprises, neighborhood revitalization, entrepreneurship, regeneration, United States, United Kingdom
    JEL: L26 L31 R23
    Date: 2015–01
  12. By: Nick Bloom; Mark Schankerman; John Van Reenen
    Abstract: The impact of R&D on growth through spillovers has been a major topic of economic research over the last thirty years. A central problem in the literature is that firm performance is affected by two countervailing "spillovers" : a positive effect from technology (knowledge) spillovers and a negative business stealing effects from product market rivals. We develop a general framework incorporating these two types of spillovers and implement this model using measures of a firm's position in technology space and productmarket space. Using panel data on U.S. firms, we show that technology spillovers quantitatively dominate, so that the gross social returns to R&D are at least twice as high as the private returns. We identify the causal effect of R&D spillovers by using changes in federal and state tax incentives for R&D. We also find that smaller firms generate lower social returns to R&D because they operate more in technological niches. Finally, we detail the desirable properties of an ideal spillover measure and how existing approaches, including our new Mahalanobis measure, compare to these criteria.
    Keywords: market value; patents; productivity; R&D; spillovers
    JEL: O31 O33 O32 L1 F23
    Date: 2013–07–17
  13. By: Ian Gordon; Ioannis Kaplanis
    Abstract: The growth of “global cities” in the 1980s was supposed to have involved an occupational polarization, including the increase in low-paid service jobs. Although held to be untrue for European cities at the time, some such growth did emerge in London a decade later than first reported for New York. The question is whether there was simply a delay before London conformed to the global city model or whether another distinct cause was at work in both cases. This article proposes that the critical factor in both cases was actually an upsurge of immigration from poor countries that provided an elastic supply of cheap labor. This hypothesis and its counterpart based on the growth in elite jobs are tested econometrically for the British case with regional data spanning 1975–2008, finding some support for both effects, but with immigration from poor countries as the crucial influence in late 1990s London.
    Keywords: polarization; global cities thesis; migrant labor; labor markets; London; wages; untraded services
    JEL: N0 R14 J01
    Date: 2014–01
  14. By: Rebecca Tunstall; Anne Green; Ruth Lupton; Simon Watmough; Katie Bates
    Abstract: There are substantial variations in labour market outcomes between neighbourhoods. One potential partial explanation is that residents of some neighbourhoods face discrimination from employers. Although studies of deprived areas have recorded resident perceptions of discrimination by employers and negative employer perceptions of certain areas, until now there has been no direct evidence on whether employers treat job applicants differently by area of residence. This paper reports a unique experiment to test for a neighbourhood reputation effect involving 2001 applications to 667 real jobs by fictional candidates nominally resident in neighbourhoods with poor and bland reputations. The experiment found no statistically significant difference in employer treatment of applicants from these areas, indicating that people living in neighbourhoods with poor reputations did not face ‘postcode discrimination’ in the labour market, at the initial selection stage.
    JEL: R14 J01
    Date: 2014–03
  15. By: David W. Johnston; Grace Lordan
    Abstract: This paper assesses whether racial prejudice and labour market discrimination is counter-cyclical. This may occur if prejudice and discrimination are partly driven by competition over scarce resources, which intensifies during periods of economic downturn. Using British Attitudes Data spanning three decades, we find that prejudice does increase with unemployment rates. We find greater countercyclical effects for highly-educated, middle-aged, full-time employed men. For this group, a 1%-point increase in unemployment raises self-reported racial prejudice by 4.1%-points. This result suggests that non-White workers are more likely to encounter racially prejudiced employers and managers in times of higher unemployment. Consistent with the estimated attitude changes, we find using the British Labour Force Survey that racial employment and wage gaps increase with unemployment. The effects for both employment and wages are largest for high-skill Black workers. For example, a 1%-point increase in unemployment increases Black-White employment and wage gaps for the highly educated by 1.3%-points and 2.5%. Together, the attitude and labour market results imply that non-Whites disproportionately suffer during recessions. It follows that recessions exacerbate existing racial inequalities.
    Keywords: Prejudice; Attitudes; Recessions; Racism; Discrimination
    JEL: J7
    Date: 2014
  16. By: Neil Lee
    Abstract: Growing cultural diversity is seen as important for innovation. Research has focused on two potential mechanisms: a firm effect, with diversity at the firm level improving knowledge sourcing or ideas generation, and a city effect, where diverse cities helping firms innovate. This paper uses a dataset of over 2,000 UK SMEs to test between these two. Controlling for firm characteristics, city characteristics and firm and city diversity, there is strong evidence for the firm effect. Firms with a greater share of migrant owners or partners are more likely to introduce new products and processes. This effect has diminishing returns, suggesting that it is a ‘diversity’ effect rather than simply the benefits of migrant run firms. However, there is no relationship between the share of foreign workers in a local labour market and firm level innovation, nor do migrant-run firms in diverse cities appear particularly innovative. But urban context does matter and firms in London with more migrant owners and partners are more innovative than others.
    Keywords: cultural diversity; innovation; cities; SMEs; migration
    JEL: J61 L21 M13 O11 O31 R23
    Date: 2013–10
  17. By: Riccardo Crescenzi; Max Nathan; Andrés Rodríguez-Pose
    Abstract: This paper investigates how physical, organisational, institutional, cognitive, social, and ethnic proximities between inventors shape their collaboration decisions. Using a new panel of UK inventors and a novel identification strategy, this paper systematically explores the net effects of all these ‘proximities’ on co-patenting. The regression analysis allows us to identify the full effects of each proximity, both on choice of collaborator and on the underlying decision to collaborate. The results show that physical proximity is an important influence on collaboration, but is mediated by organisational and ethnic factors. Over time, physical proximity increases in salience. For multiple inventors, geographic proximity is, however, much less important than organisational, social, and ethnic links. For inventors as a whole, proximities are fundamentally complementary, while for multiple inventors they are substitutes.
    Keywords: innovation; patents; proximities; cities; regions; knowledge spillovers; collaboration; ethnicity
    JEL: O31 O33 R11 R23
    Date: 2014–01
  18. By: Amanda Fitzgerald; Ruth Lupton
    Abstract: Key Points: London local government has taken a 33 per cent real terms cut in service funding from central government between 2009/10 and 2013/14. Councils have been making strenuous efforts to make large savings without cutting front line services, and to protect services for those who need them most. Most savings have come through efficiencies, the sorts of savings which Councils have argued are neither detrimental to, nor noticeable at, the frontline. However, Councils have, reluctantly, had to reduce their own role in the provision of discretionary services. More of these services are being delivered by voluntary and community sector partners, so the landscape of local service provision has seen some change. The need for Councils to pare their own provision back to statutory services, increasingly targeting those most in need, may, ultimately, result in less local variation rather than more. In this the cuts could be running counter to the promotion of the localism agenda. A focus on the most in need, seen in greater targeting of services, could also further fuel rising demand, as lower level need goes unaddressed. Council officers and Members are concerned that the 'limits of efficiency' have been reached, and there is little scope for further large-scale savings without significant effects on frontline services.
    Keywords: regions and area inequalities; cities; london; area inequalities; social policy; inner london; outer london; london local government; metropolitan governance
    JEL: N0 E6
    Date: 2014–01
  19. By: Alex Fenton
    Abstract: This paper considers techniques for measuring the prevalence of income poverty within small areas, or “neighbourhoods”, in Britain. The ultimate purpose is applying such statistics to investigating how the micro-spatial distribution of poverty within cities and regions changes over time as a consequence of political decisions and economic events. In the paper, some general criteria for small-area poverty measures are first set out, and two broad methods, poverty proxies and modelled income estimates, are identified. Empirical analyses of the validity and coverage of poverty proxies derived from UK administrative data, such as social security benefit claims, are presented. The concluding section assesses a new poverty proxy that will be used within a wider programme of analysis of the spatial-distributional effects of tax and welfare changes and of economic trends in Britain from 2000 to 2014. Particular attention is paid to the relationship between the proxy values and other local poverty measures in different kinds of places. These suggest that the proxy is an adequate, albeit imperfect, tool for investigating changes in intra-urban distributions of poverty.
    Keywords: small-area poverty estimates; small-area poverty estimation; poverty proxies; poor neighbourhoods; deprivation indices
    JEL: I32 I38 R23
    Date: 2013–05
  20. By: Timo Hiller
    Abstract: This paper presents a simple model of strategic network formation with local complementarities in effort levels and positive local externalities for a general class of payoff functions. Results are obtained for one-sided and two-sided link creation. In both cases (pairwise) Nash equilibrium networks are nested split graphs, which are a strict subset of core-periphery networks. The relevance of the convexity of the value function (gross payoffs as a function of neighbours' effort levels when best responding) in obtaining nested split graphs is highlighted. Under additional assumptions on payoffs, we show that the only efficient networks are the complete and the empty network. Furthermore, there exists a range of linking cost such that any (pairwise) Nash equilibrium is inefficient and for a strict subset of this range any (pairwise) Nash equilibrium network structure is different from the efficient network. These findings are relevant for a wide range of social and economic phenomena, such as educational attainment, criminal activity, labor market participation, and R&D expenditures of firms.
    Keywords: strategic network formation; peer effects; strategic complements; positive externalities
    JEL: J1
    Date: 2013–09
  21. By: Carlos Garriga; Finn E. Kydland; Roman Šustek
    Abstract: Mortgage loans are a striking example of a persistent nominal rigidity. As a result, under incomplete markets, monetary policy affects decisions through the cost of new mortgage borrowing and the value of payments on outstanding debt. Observed debt levels and payment to income ratios suggest the role of such loans in monetary transmission may be important. A general equilibrium model is developed to address this question. The transmission is found to be stronger under adjustable- than fixed-rate contracts. The source of impulse also matters: persistent inflation shocks have larger effects than cyclical fluctuations in inflation and nominal interest rates.
    Keywords: mortgages; debt servicing costs; monetary policy; transmission mechanism; housing investment
    JEL: E32 E52 G21 R21
    Date: 2013–12–05
  22. By: Christian Helmers; Henry G. Overman
    Abstract: We analyze the impact of the establishment of a GBP 380 million basic scientific research facility in the UK on the geographical distribution of related research. We investigate whether the siting of the Diamond Light Source, a 3rd generation synchrotron light source, in Oxfordshire induced a clustering of related research in its geographic proximity. To account for the potentially endogenous location choice of the synchrotron, we exploit the availability of a `runner-up' site near Manchester. We use both academic publications and patent data to trace the geographical distribution of related knowledge and innovation. Our results suggest that the siting of the synchrotron in Oxfordshire created a highly localized cluster of related scientific research.
    Keywords: synchrotron; location; innovation; patents defaults; unobserved components model
    JEL: O31 O38 R12 R58
    Date: 2013–03
  23. By: Gabriel M. Ahfeldt; Felix J. Richter; Wolfgang Maennig
    Abstract: Urban renewal areas are popular but empirically understudied spatial planning instruments designed to prevent urban decline and induce renewal. We use a quasi-experimental research design to study the effects of 22 renewal areas implemented in Berlin, Germany, to increase housing and living quality in the aftermath of the city’s division during the Cold War period. Our results suggest that the policy has helped reduce (increase) the number of buildings in poor (good) condition by 25% (10%). Property prices increased at an annual rate of 0.4-1.7% according to our preferred estimates. Evidence is weak at best, however, for positive housing externalities. More generally, our findings indicate that the efficiency of program evaluations for place based -policies using quasi-experimental methods increases with the number of targeted areas and areas that provide the counterfactual.
    JEL: J1
    Date: 2013–12
  24. By: Diego Battiston; Richard Dickens; Alan Manning; Jonathan Wadsworth
    Abstract: This paper investigates the impact of immigration on the probability of being in social housing in the UK. In recent years immigrant households are slightly more likely than natives to be in social housing but once one controls for relevant household characteristics immigrants are significantly less likely to be in social housing than natives. However, there has been change over time – the immigrant penalty has fallen over time probably because of changes in allocation rules. Overall we find that the rising number of immigrants and the change in the allocation rules can explain about one-third of the fall in the probability of being in social housing with two-thirds being the result of the fall in the social housing stock.
    Keywords: Immigration; social housing
    JEL: F22 H75 R21
    Date: 2014–04
  25. By: Philipp Rode; Graham Floater; Nikolas Thomopoulos; James Docherty; Peter Schwinger; Anjali Mahendra; Wanli Fang
    Abstract: This paper focusses on one central aspect of urban development: transport and urban form and how the two shape the provision of access to people, goods and services, and information in cities. The more efficient this access, the greater the economic benefits through economies of scale, agglomeration effects and networking advantages. This paper discusses how different urban accessibility pathways impact directly on other measures of human development and environmental sustainability. It also presents the enabling conditions for increasing accessibility and low-carbon mobility in cities. This paper is one of three papers by LSE Cities that form part of the cities research programme of the New Climate Economy (NCE) project for the Global Commission on the Economy and Climate. The two other contributing papers cover ‘Cities and the New Climate Economy: the Transformative Role of Global Urban Growth’ (NCE Paper 01) and ‘Steering Urban Growth: Governance, Policy and Finance’ (NCE Paper 02).
    JEL: Q15 L91 L96
    Date: 2014–11
  26. By: Esteban Aucejo; Teresa Romano
    Abstract: While instructional time is viewed as crucial to learning, little is known about the effectiveness of reducing absences relative to increasing the number of school days. In this regard, this paper jointly estimates the effect of absences and length of the school calendar on test score performance. Using administrative data from North Carolina public schools, we exploit a state policy that provides variation in the number of days prior to standardized testing and find substantial differences between these effects. Extending the school calendar by ten days increases math and reading test scores by only 0.8% and 0.2% of a standard deviation, respectively; a similar reduction in absences would lead to gains of 5.8% and 3% in math and reading. We perform a number of robustness checks including utilizing u data to instrument for absences, family-year fixed effects, separating excused and unexcused absences, and controlling for a contemporaneous measure of student disengagement. Our results are robust to these alternative specifications. In addition, our findings indicate considerable heterogeneity across student ability, suggesting that targeting absenteeism among low performing students could aid in narrowing current gaps in performance.
    Keywords: Economic growth; business cycles; subjective well-being; loss aversion
    JEL: I20
    Date: 2014–09
  27. By: Graham Floater; Philipp Rode; Bruno Friedel; Alexis Robert
    Abstract: We live in an urban age. Over half the world’s population now lives in urban areas, while the urban population is expected to reach 60% by 2030. At the same time, the importance of cities for national economic growth and climate change continues to increase. Three groups of cities will be particularly important for the global economy and climate: Emerging Cities, Global Megacities and Mature Cities. When combined, these 468 cities are projected to contribute over 60% of global GDP growth and over half of global energy-related emissions growth between 2012 and 2030 under business as usual. However, not all countries and cities will benefit from the potential economic gains of urban growth under business as usual. The winners and losers of urban expansion will depend on the policy decisions that national and sub-national governments make over the next few years. Evidence suggests that urban growth that is poorly managed by governments can lead to a range of economic, social and environmental costs, such as traffic congestion, inefficient public transport, air pollution with associated health impacts, and inadequate infrastructure for basic services such as energy, water and waste.
    JEL: R14 J01 E6
    Date: 2014–11
  28. By: Creedy, John; Gemmell, Norman; Scobie, Grant
    Abstract: The objective of the paper is to explore the saving and consumption responses of a representative household to a range of policy interventions such as changes in taxes and pension settings. To achieve this, it develops a two-period life-cycle model. The representative household maximises lifetime utility through its choice of optimal levels of consumption, housing and saving. A key feature of the approach is modelling the consumption of housing services as a separate good in retirement along with the implications for saving. Importantly, the model incorporates a government budget constraint involving a pay-as-you-go universal pension. In addition, the model allows for a compulsory private retirement savings scheme. Particular attention in the simulations is given to the potential impact on household saving rates of a range of policy changes. Typically the effect on saving rates is modest. In most instances, it would take very substantial changes in existing policy settings to induce significant increases in household saving rates.
    Keywords: Savings, Housing, Retirement, Intertemporal elasticity of substitution, Rate of interest, Taxation,
    Date: 2015
  29. By: Rakesh Gupta N.R. (Centre d'Economie de la Sorbonne - Paris School of Economics and ESSEC Business School - IRENE-CODEV)
    Abstract: This paper, on the one hand, goes a step closer to demonstrate the causality of social capital on economic performance. On the other hand, we confirm a continued role of social capital effects on economic performance in this paper by using a much larger sample, spanning three decades and increasing the scope of countries. This paper is unique in the sense that it contributes to revisiting questions of economic performance, social capital and institutions with a clearly better and updated dataset from the last 28 years building upon existing empirical evidence. We employ a longitudinal analysis (pooled unbalanced multiple cross-section datasets) with fixed effects in this study. Our sample includes both the World Values Survey and European Values Study dating back to the 1980s. Our results are twofold: Firstly, to confirm that trust has a significant positive effect on growth. And more importantly, they have a significant effect on growth for at least 5 years (for growth at 5, 7 and 10 years following a period of trust measure). Secondly, associational activities – another measure in the overarching definitions of social capital, along with institutions, inequality, and education are consistently significant determinants of trust.
    Keywords: Interpersonal trust, trust, associational activities, social capital, economic development, institutions, inequality.
    JEL: Z13 O11 O43
    Date: 2015–01
  30. By: Rappaport, Jordan (Federal Reserve Bank of Kansas City)
    Abstract: This paper argues that centralized employment remains an empirically relevant stylization of midsize U.S. metros. It extends the monocentric model to explicitly include leisure as a source of utility but constrains workers to supply fixed labor hours. Doing so sharpens the marginal disutility from longer commutes. The numerical implementation calibrates traffic congestion to tightly match observed commute times in Portland, Oregon. The implied geographic distribution of CBD workers' residence tightly matches that of Portland. The implied population density, land price, and house price gradients approximately match empirical estimates. Variations to the baseline calibration build intuition on underlying mechanics.
    Keywords: Urban Land Use; Commuting; Leisure; Value of Time
    JEL: R12 R14 R41
    Date: 2014–11–01
  31. By: Stefano Vannucci
    Abstract: It is shown that the median voter theorem for committee-decisions holds over a full unimodal preference domain whenever (i) the underlying median interval space satisfi?es interval antiexchange and (ii) unimodality is defi?ned with respect to the incidence-geometry of the relevant outcome space or network. Thus, in particular, the interval spaces canonically induced by trees do support the median voter theorem on their own full unimodal preference domains. Conversely, validity of the median voter theorem on the full unimodal preference domain of a certain median interval space on a discrete outcome space requires that the graph canonically induced by that interval space be precisely a tree.
    JEL: D71
    Date: 2015–01
  32. By: Lo Prete, Anna; Revelli, Federico (University of Turin)
    Abstract: We study the impact of exogenous variation in Italian municipal elections' voter turnout rates on city performance scores and elected mayors'indicators of valence. First, we build a simple model of voluntary and costly expressive voting, where the relative weight of ideology and valence issues over voting costs determines how people vote, and if they actually turn out to vote. We show that the cost of voting depresses voter turnout, yet can raise the chances of selecting higher valence candidates and thereby improve government performance. Empirically, city performance is measured along a number of dimensions including a unique index of overall urban environmental quality, and mayors'valence is proxied by variables refecting their professional experience and competence. The staggered nature of the municipal election schedule allows us to exploit exogenous variation in voter turnout rates through the 2000s due to the presence of concomitant regional, general and European parliament elections, and to weather conditions (rainfall) on the election day. The results from a number of speciÖcations and quality of policy-making indicators consistently point to a negative impact of voter turnout rates on the performance of cities and the valence of mayors.
    Date: 2014–10
  33. By: José-Antonio Belso-Martínez; Manuel Expósito-Langa
    Abstract: Shifting away from traditional approaches orientated towards the analysis of the benefits associated with brokerage, this paper provides valuable insights on the dynamics of this particular network position. Using fine grain micro data collected in a Spanish industrial cluster, the evolution of five different brokerage profiles is analysed in depth. Particularly, we observe how firm-level characteristics (status, former mediating experience and external openness), and their interactions may generate changes in the different brokerage roles over a period of time. Findings endorse our expectations mainly based on the social capital and network approaches. Status and previous mediating experience facilitate the creation of partnerships, fostering brokerage. Conversely, interaction effects demote brokerage activity at the intra-cluster level, suggesting the selective nature of broker’s relational behaviour.
    Keywords: Brokerage, Clusters, Social Network Analysis, Social Status, Extra-cluster Linkage
    Date: 2015–01
  34. By: Sergei Guriev (New Economic School); Elena S. Vakulenko (National Research University Higher School of Economics)
    Abstract: We study barriers to labour mobility using panel data on gross region-to-region migration flows in Russia in 1996-2010. Using both parametric and semiparametric methods and controlling for region-to-region pairwise fixed effects, we find a non-monotonic relationship between income and migration. In richer regions, higher incomes result in lower migration outflows. However, in the poorest regions, an increase in incomes results in higher emigration. This is consistent with the presence of geographical poverty traps: potential migrants want to leave the poor regions but cannot afford to move. We also show that economic growth and financial development have allowed most Russian regions to grow out of poverty traps bringing down interregional differentials of wages, incomes and unemployment rates
    Keywords: labour mobility, poverty traps, liquidity constraints
    JEL: J61 R23
    Date: 2015
  35. By: Tadashi Matsumoto; Loïc Daudey
    Abstract: The development of Asian cities is characterised by rapid and continuous urbanisation on an unprecedented scale, with rapid economic growth led in most places by the manufacturing industry, and rapidly increasing motorisation. The result has been escalating greenhouse gas emissions, sprawling urban development and local environmental impacts, as well as disparities in income, education levels and job opportunities in the urban population. These trends differ sharply from those in most of the OECD area and call for a green growth model that differs from those identified in previous OECD studies and that addresses the specific circumstances of Asian cities.<P> This paper proposes an analytical framework for assessing policies for green growth in rapidly growing cities in the emerging world. It builds on Cities and Green Growth: A Conceptual Framework (Hammer et al., 2011) and is adapted to the urban policy context of dynamic Asia. Its three main elements are: i) identification of the key policy strategies for urban green growth in fast-growing Asian cities, highlighting similarities to and differences from OECD cities; ii) opportunities for green growth; and iii) enabling strategies for implementing urban green growth.
    Keywords: Asia, transport, water, government policy, climate change, cities, green growth, solid waste management, land use, energy
    JEL: O18 O19 Q53 Q54 R11 R58
    Date: 2014–12–22
  36. By: Moen, Espen R; Nenov, Plamen T.; Sniekers, Florian
    Abstract: Housing transactions by owner-occupiers take two steps, purchase of a new property and sale of the old housing unit. This paper shows how the transaction sequence decision of owner-occupiers depends on, and in turn, affects housing market conditions in an equilibrium search-and-matching model of the housing market. We show that home-owners prefer to buy first whenever there are more buyers than sellers in the market. This behavior leads to multiple steady state equilibria and to self-fulfilling fluctuations in prices and time-on-market. Equilibrium switches creates large fluctuations in the housing market, which are broadly consistent with stylized facts on the housing cycle.
    Keywords: housing market; order of transactions; search frictions; strategic complementarities
    JEL: R21 R31
    Date: 2015–01
  37. By: Landier, Augustin; Sraer, David; Thesmar, David
    Abstract: The correlation across US states in house price growth increased steadily between 1976 and 2000. This paper shows that the contemporaneous geographic integration of the US banking market, via the emergence of large banks, was a primary driver of this phenomenon. To this end, we first theoretically derive an appropriate measure of banking integration across state pairs and document that house price growth correlation is strongly related to this measure of financial integration. Our IV estimates suggest that banking integration can explain up to one third of the rise in house price correlation over the period.
    Keywords: banking deregulation; comovement; real estate
    JEL: G10 G21 R30
    Date: 2014–12
  38. By: Lindbeck, Assar (Research Institute of Industrial Economics (IFN)); Palme, Mårten (Department of Economics); Persson, Mats (Institute for International Economic Studies)
    Abstract: In many countries, sickness absence financed by generous insurance benefits is an important concern in the policy debate. There are strong variations in absence behavior among local geographical areas. Such variations are difficult to explain in terms of observable socioeconomic factors. In this paper, we investigate whether such variations are related to group effects in the form of social interaction among individuals within neighborhoods. Well-known methodological problems arise when trying to answer this question. A special feature of our efforts to deal with these problems is that we adopt several alternative approaches to identify group effects. Our study is based on a rich set of Swedish panel data, and we find indications of group effects in each of our approaches.
    Keywords: Income insurance; Sic-pay; Social norms; Neighborhood Effects; Sickness Absence
    JEL: H56 I38 J22 Z13
    Date: 2014–12–22
  39. By: Konstantin Kholodilin; Claus Michelsen; Dirk Ulbricht
    Abstract: After a period of stagnation that lasted for almost two decades, German house prices began to grow at an accelerated pace since late 2010. Real house prices that even had been declining in 2000-2008 started to climb up steeply from the second half of 2010, followed by a recovery of construction activities. This development raised concerns about the formation of a speculative house price bubble among German policy makers and central bankers. However, empirical evidence of a misalignment of house prices from their fundamentals is mixed.
    Date: 2015
  40. By: Crucini, Mario J. (Vanderbilt University); Shintani, Mototsugu (Vanderbilt University); Tsuruga, Takayuki (Kyoto University and CAMA)
    Abstract: Using US micro price data at the city level, we provide evidence that both the volatility and the persistence of deviations from the law of one price (LOP) are rising in the distance between US cities. A standard, two-city, stochastic equilibrium model with trade costs can predict the relationship between volatility and distance but not between persistence and distance. To account for the latter fact, we augment the standard model with noisy signals about the state of nominal aggregate demand that are asymmetric across cities. We further show that the main predictions of the model continue to hold even if we allow for the interaction of imperfect information, sticky prices, and multiple cities.
    JEL: D40 E31 F31
    Date: 2014–11–01
  41. By: Choi, Chi-Young (University of Texas at Arlington); Choi, Horag (Monash University)
    Abstract: This paper empirically investigates and theoretically derives the implications of two frictions, market friction and nominal rigidity, on the dynamic properties of intra-national relative prices, with an emphasis on the interaction of the two frictions. By analyzing a panel of retail prices of 45 products for 48 cities in the U.S., we make two major arguments. First, the effect of each type of friction on the dynamics of intercity price gaps is quite different. While market frictions arising from physical distance and transportation costs contribute significantly to volatile and persistent movements of intercity price disparities, nominal rigidity is associated with higher persistence, but not with a greater volatility of the intercity price disparity. This empirical evidence is different from what is predicted by standard theoretical models based on price stickiness. Second, the strength of the marginal effect of a market friction hinges on the extent of nominal rigidity, in a counteracting manner. The marginal effect of a market friction dwindles as the extent of price stickiness increases. We provide an alternative theoretical explanation for this finding by extending the state- dependent pricing(SDP)model of Dotsey et al.(1999) and show that our two-city model with nominal rigidity andd market frictions can successfully explain the salient features of the dynamic behavior of intercity price differences.
    JEL: E31 F15 L16 R12
    Date: 2014–12–01
  42. By: Crucini, Mario J. (Vanderbilt University); Smith, Gregor W. (Federal Reserve Bank of Dallas)
    Abstract: We study the role of distance and time in statistically explaining price dispersion for 14 commodities from 1732 to 1860. The prices are reported for US cities and Swedish market towns, so we can compare international and intranational dispersion. Distance and commodity-specific fixed effects explain a large share - roughly 60% - of the variability in a panel of more than 230,000 relative prices over these 128 years. There was a negative "ocean effect": international dispersion was less than would be predicted using distance, narrowing the effective ocean by more than 3000 km. Price dispersion declined over time beginning in the 18th century. This process of convergence was broad-based, across commodities and locations (both national and international). But there was a major interruption in convergence in the late 18th and early 19th centuries, at apoleonic Wars, stopping the process by two or three decades on average.
    JEL: N70
    Date: 2014–11–01
  43. By: Haucap, Justus; Heimeshoff, Ulrich; Siekmann, Manuel
    Abstract: Price levels and movements on gasoline and diesel markets are heavily debated among consumers, policy-makers, and competition authorities alike. In this paper, we empirically investigate how and why price levels differ across gasoline stations in Germany, using eight months of data from a novel panel data set including price quotes from virtually all German stations. Our analysis specifically explores the role of station heterogeneity in explaining price differences across gasoline stations. Key determinants of price levels across fuel types are found to be ex-refinery prices as key input costs, a station's location on roads or highway service areas, and brand recognition. A lower number of station-specific services implies lower fuel price levels, so does a more heterogeneous local competitive environment.
    Keywords: Gasoline Pricing,Price Dispersion,Fuel Prices,Gasoline Stations
    JEL: L11 L71
    Date: 2015
  44. By: Christian Dustmann; Joseph-Simon Görlach
    Abstract: Many migrations are temporary – a fact that has often been ignored in the economic literature on migration. Such omission may be serious in that expected migration temporariness can impart a distinct dynamic element to immigrants’ economic behavior, generating possible consequences for non-migrants in both home and host countries. In this paper we provide a thorough examination of the various aspects of temporary migrations that matter for the analysis of economic phenomena. We demonstrate the extent of temporary migrations in population movements. We show how temporariness can affect the various economic choices and how better data have improved both the measurement of nonpermanent migrations and the analyses of various aspects of migrant behavior. We propose a general theoretical framework for modeling temporary migration decisions, based on which we outline the various motives for temporariness while simultaneously reviewing related literature and available data sources. We discuss the possible consequences of migration temporariness for non-migrants in both home and host countries.
    Keywords: immigrant behaviour, temporary migration
    JEL: F22 J61 O15
    Date: 2015
  45. By: Thesmar , David; Sraer , David
    Abstract: This paper shows that collateral constraints restrict firm entry and post-entry growth, even in the long-run. The authors' empirical strategy uses French administrative data and exploits cross-sectional variation in local house-price appreciation as shocks to the value of collateral available to homeowners. They control for local demand shocks by comparing homeowners to two control groups that live in the same region but do not experience collateral shocks: (i) renters and (ii) homeowners with a mortgage outstanding, who -- in France -- cannot take out a second mortgage on their house. In both comparisons, the authors find that an increase in collateral value leads to a higher probability of becoming an entrepreneur. Conditional on entry, entrepreneurs with access to more valuable collateral start larger firms, use more debt, and create more value added, for at least six years after creation.
    Keywords: Collateral; Entrepreneurship; Real estate
    JEL: L26
    Date: 2014–12–20

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