nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2015‒02‒16
57 papers chosen by
Steve Ross
University of Connecticut

  1. Urban renewal after the Berlin Wall - A place-based policy evaluation By Felix, Richter; Ahlfeldt, Gabriel; Maennig, Wolfgang
  2. Credit supply and the housing boom By Justiniano, Alejandro; Primiceri, Giorgio E.; Tambalotti, Andrea
  3. Housing markets and current account dynamics By Gete, Pedro
  4. House price volatility: The role of different buyer types By Coates, Dermot; Lydon, Reamonn; McCarthy, Yvonne
  5. Macro-prudential measures and the housing market By Kennedy, Gerard; Stuart, Rebecca
  6. The Greener, the Happier? - The Effects of Urban Green and Abandoned Areas on Residential Well-Being By Christian Krekel; Jens Kolbe; Henry Wüstemann
  7. School Management and Sexual Behavior of Teenagers By Andrea Atencio; Juan Gallego; Darío Maldonado
  8. The Czech Housing Market Through the Lens of a DSGE Model Containing Collateral-Constrained Households By Jan Bruha; Jaromir Tonner
  9. How Reliable Are the Geographical Spatial Weights Matrices? By Davide Fiaschi; Angela Parenti
  10. Retail Productivity: Investigating the Influence of Market Size and Regional Hierarchy By Öner, Özge
  11. History and the sizes of cities By Bleakley, Hoyt; Lin, Jeffrey
  12. Does the teacher beat the test? The additional value of teacher assessment in predicting student ability By Bas ter Weel; Eva Feron en Trudie Schils (Department of Economics; Maastricht University)
  13. Profiles of local growth and industrial change: Facts and an Explanation By Dauth, Wolfgang; Südekum, Jens
  14. Flat Prices, Cell Phone Base Stations, and Network Structure By Wirth, Benjamin; Mense, Andreas
  15. Does Improved Local Supply of Schooling Enhance Intergenerational Mobility in Education? Evidence from Jordan By Assaad, Ragui; Saleh, Mohamed
  16. Ethnic Spatial Dispersion and Immigrant Identity By Zimmermann, Klaus F.; Constant, Amelie; Schüller, Simone
  17. Technical efficiency of local public institutions in Colombia By William Orlando Prieto Bustos
  18. Student assessment and grade retention: evidence from a natural experiment By Kimura, Marlies; Ochsen, Carsten
  19. Will skyscrapers save the planet? By Borck, Rainald
  20. Race to the debt trap? Spatial econometric evidence on debt in German municipalities By Martin, Thorsten; Fossen, Frank M.; Freier, Ronny
  21. Spatial Clubs in European Regions. By Davide Fiaschi; Lisa Gianmoena; Angela Parenti
  22. The Governance Of Economic Resilience: 20 Years Of Urban Adaptation Projects In Brussels By Stephan Kampelmann; Sarah V.S. Van Hollebeke; Paula Vandergert
  23. Unconditional Transformed Likelihood Estimation of Time-Space Dynamic Panel Data Models By Kripfganz, Sebastian
  24. On The Origins of Gender Human Capital Gaps: Short and Long Term Consequences of Teachers’ Stereotypical Biases By Victor Lavy; Edith Sand
  25. ntreatreg: A Stata module for estimation of treatment effects in the presence of neighborhood interactions By Giovanni Cerulli
  26. Identifying Booms and Busts in House Prices under Heterogeneous Expectations By Wilko Bolt; Maria Demertzis; Cees Diks; Cars Hommes; Marco van der Leij
  27. Spatial GAS models for systemic risk measurement By Schaumburg, Julia; Blasques, Francisco; Koopman, Siem Jan; Lucas, Andre
  28. Institutions and the Location Decisions of Highly Skilled Migrants to Europe By Klaus Nowotny
  29. Modeling the Budgetary Costs of FHA's Single Family Mortgage Insurance: Working Paper 2014-05 By Francesca Castelli; Damien Moore; Gabriel Ehrlich; Jeffrey Perry
  30. The Effect of Ethnic Clustering on Migrant Integration in Germany By Treude, Barbara
  31. Cities and Ideas By Mikko Packalen; Jay Bhattacharya
  32. Law of One Price in the euro area: an empirical investigation using Nielsen disaggregated price data By Dmitry Kulikov
  33. Safe Routes to Transit Program Evaluation Final Report By Sanders, Rebecca L.; Weinzimmer, David; Dittrich, Heidi; Cooper, Jill F.
  34. Empirical Games of Market Entry and Spatial Competition in Retail Industries By Victor Aguirregabiria; Junichi Suzuki
  35. The influence of noise on net revenue and values of investment properties: Evidence from Switzerland By Stefan Sebastian Fahrländer; Michael Gerfin; Manuel Lehner
  36. Long Lasting Differences in Civic Capital: Evidence from a Unique Immigration Event in Italy By Bracco, Emanuele; De Paola, Maria; Green, Colin P.
  37. City Silhouette, World Climate By Dascher, Kristof
  38. “Regional wage gaps, education, and informality in an emerging country. The case of Colombia.” By Paula Herrera-Idárraga; Enrique López-Bazo; Elisabet Motellón
  39. War-Time Destruction and the Persistence of Economic Activity By Glocker, Daniela; Sturm, Daniel
  40. The Cost of Binge Drinking By Marco Francesconi; Jonathan James
  41. The External Effect of Urban Schooling Attainment on Workers’ Incomes in Ecuador By Theodore R. Breton; Juan Pablo Jaramillo
  42. Spectrum scarcity and Canada's urban core By Taylor, Gregory; Middleton, Catherine; Fernando, Xavier
  43. Urbanization in China, ca. 1100–1900 By XuYi; Bas van Leeuwen; Jan Luiten van Zanden
  44. The Bottleneck Model: An Assessment and Interpretation By Kenneth Small
  45. Fiscal Equalization, Tax Salience, and Tax Competition By Altemeyer-Bartscher, Martin
  46. Do Wages Affect Politicians' Performance? A regression discontinuity approach for Dutch municipalities By Daan van der Linde; Swantje Falcke; Ian Koetsier; Brigitte Unger
  47. No news is costly news: the link between the diffusion of the press and public spending By Ilaria Petrarca
  48. Does higher learning intensity affect student well-being? Evidence from the National Educational Panel Study By Quis, Johanna Sophie
  49. Behavioral Responses to Local Tax Rates: Quasi-Experimental Evidence from a Foreigners Tax Scheme in Switzerland By Slotwinski, Michaela; Schmidheiny, Kurt
  50. Regional Disparity and Dynamic Development of China: a Multidimensional Index By Bin, Peng
  51. Fiscal Decentralization and Economic Growth: Evidence from Regional-Level Panel Data for Colombia By Luis Ignacio Lozano-Espitia; Juan Manuel Julio-Román
  52. Equilibrium Price Dispersion Across and Within Stores By Menzio, Guido; Trachter, Nicholas
  53. Two-way models for gravity By Koen Jochmans
  54. A location quotient-based interregional input-output (IRIOLQ) framework By Jahn, Malte
  55. Regional inequalities, fiscal decentralization and government quality: empirical evidence from simultaneous equations. By Andreas P. Kyriacou; Leonel Muinelo-Gallo; Oriol Roca-Sagalés
  56. From progress to nightmare - European regional unemployment over time By Robert Beyer; Michael Stemmer
  57. Culture, Selection, and International Migration By Renner, Laura; Krieger, Tim; Ruhose, Jens

  1. By: Felix, Richter; Ahlfeldt, Gabriel; Maennig, Wolfgang
    Abstract: 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 within the targeted areas 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 0.4-1.8%. However, evidence is weak at best for positive housing externalities. More generally, our findings suggest that estimated place-based policy effects are less sensitive to unobserved local shocks the more treatment and control areas are considered in the analysis.
    JEL: H23 R21 R31
    Date: 2014
  2. By: Justiniano, Alejandro; Primiceri, Giorgio E.; Tambalotti, Andrea (Federal Reserve Bank of New York)
    Abstract: The housing boom that preceded the Great Recession was the result of an increase in credit supply driven by looser lending constraints in the mortgage market. This view on the fundamental drivers of the boom is consistent with four empirical observations: the unprecedented rise in home prices, the surge in household debt, the stability of debt relative to home values, and the fall in mortgage rates. These facts are difficult to reconcile with the popular view that attributes the housing boom to looser borrowing constraints associated with lower collateral requirements. In fact, a slackening of collateral constraints at the peak of the lending cycle triggers a fall in home prices in our framework, providing a novel perspective on the possible origins of the bust.
    Keywords: housing and credit boom; house prices; collateral constraints; leverage restrictions
    JEL: E32 E44
    Date: 2015–02–01
  3. By: Gete, Pedro (Georgetown University)
    Abstract: I document a strong negative correlation, both across and within countries, between housing and current account dynamics. I use two methodologies to analyze three potential drivers of housing markets. First, in a quantitative two-country model, I input the dynamics of population, loan-to-value and housing price expectations that have been observed in the OECD economies since the mid 1990s. The model generates housing and current account dynamics very similar to the data. Second, I derive sign restrictions to identify the previous shocks in a vector autoregression. The results confirrm the importance of housing demand shocks in driving both housing and current account dynamics.
    JEL: E32 F32 F44 G28 R21
    Date: 2015–01–01
  4. By: Coates, Dermot (Central Bank of Ireland); Lydon, Reamonn (Central Bank of Ireland); McCarthy, Yvonne (Central Bank of Ireland)
    Abstract: This Economic Letter examines the link between house price dynamics in Ireland during the recent housing boom and the composition of buyers in the market. The analysis provides information on the relative riskiness of different buyer types, a topic that has increased in importance with the recent Central Bank of Ireland proposals to cap loan-to-value and loan-to-income ratios for new mortgage borrowings. The analysis points to an association between periods of strong house price growth and the changing composition of Irish property purchasers, and in particular, the rise in the BTL segment.
    Date: 2015–01
  5. By: Kennedy, Gerard (Central Bank of Ireland); Stuart, Rebecca (Central Bank of Ireland)
    Abstract: The Central Bank recently published a Consultation document on macro-prudential policy for residential mortgage lending including limits on loan-to-value and loan-to-income ratios. The consultation process highlighted a number of potential implications of these measures for the housing market, particularly for the rental market and for housing supply. This Letter rst discusses some of the underlying economics of the housing market in a simple analytical framework. It then considers the potential implications of the proposed macro-prudential measures on the rental market and on housing supply in more detail, including possible policy options to counteract negative aspects.
    Date: 2015–01
  6. By: Christian Krekel; Jens Kolbe; Henry Wüstemann
    Abstract: This paper investigates the effects of urban green and abandoned areas on residential well-being in major German cities, using panel data from the German Socio-Economic Panel (SOEP) for the time period between 2000 and 2012 and cross-section data from the European Urban Atlas (EUA) for the year 2006. Using a Geographical Information System (GIS), it calculates the distance to urban green and abandoned areas, measured as the Euclidean distance in 100 metres between households and the border of the nearest urban green and abandoned area, respectively, and the coverage of urban green and abandoned areas, measured as the hectares covered by urban green and abandoned areas in a pre-defined buffer area of 1,000 metres around households, respectively, as the most important determinants of access to them. It shows that, for the 32 major German cities with more than 100,000 inhabitants, access to urban green areas, such as parks, is significantly positively associated, whereas access to abandoned areas, such as brown fields, is significantly negatively associated with residential well-being, in particular with life satisfaction, as well as mental and physical health. The effects are strongest for residents who are older, accounting for up to a third of the size of the effect of being unemployed on life satisfaction. Using data from the Berlin Aging Study II (BASE-II) for the time period between 2009 and 2012, this paper also shows that (older) residents who report living closer to greens have been diagnosed significantly less often with certain medical conditions, including diabetes, sleep disorder, and joint disease.
    Keywords: Life satisfaction, mental health, physical health, urban land use, green areas, greens, forests, waters, abandoned areas, SOEP, BASE-II, EUA, GIS, spatial analysis
    JEL: C23 Q51 Q57 R20
    Date: 2015
  7. By: Andrea Atencio; Juan Gallego; Darío Maldonado
    Abstract: Abstract: This paper asks whether school based management may help reducing risky sexual behavior of teenagers. For this purpose we use student level data from Bogota to identify students from Concession School (CS), who are enrolled in public education system with a more school management autonomy at school level, and to compare them with those students at the traditional public education system. We use propensity score matching methods to have a comparable sample between pupils at CS and traditional schools. Our results show that on average the behavior of students from CS do not have a sexual behavior that diers from those in traditional public schools except for boys in CS who have a lower probability of being sexual active. However, there are important dierences when heterogeneity is considered. For example we nd that CS where girls per boys ratio is higher have lower teenage pregnancy rates than public schools with also high girls per boys ratios. We also nd that teachers' human capital, teacher-pupil ratio or whether school oers sexual education are also related to statistically signicant dierences between CS and traditional public schools.
    Keywords: Sexual Behavior, School Management, Concession Schools, Bogota
    JEL: H51 I28 J13 O15
    Date: 2015–01–16
  8. By: Jan Bruha; Jaromir Tonner
    Abstract: We incorporate a housing market with liquidity-constrained households into the Czech National Bank's core forecasting model (g3) to analyze the relationship between housing market and aggregate fluctuations in a small open economy framework. We discuss the historical shock decomposition of house prices and interpret the results in the light of recent empirical work. For a wide range of model calibrations, the interaction between the housing market and the aggregate economy is weak and so the monetary policy implications of house price fluctuations for the Czech Republic are not strong. We interpret this – in line with recent empirical evidence – as an indication that the wealth effects stemming from house ownership are not significant in the Czech Republic. Nevertheless, we show that the collateral mechanism significantly improves the forecasting properties of the extended model, especially for private consumption. This indicates the importance of the collateral effect, which can be caused by assets other than houses.
    Keywords: Aggregate consumption, DSGE models, housing market
    JEL: E32 E37 R31
    Date: 2014–12
  9. By: Davide Fiaschi; Angela Parenti
    Abstract: This paper shows how it is possible to estimate the interconnections between regions by a connectedness matrix recently proposed by Diebold and Yilmaz (2014), and discusses how the connectedness matrix is strictly related to the spatial weights matrix used in spatial econometrics. An empirical application using growth rate volatility of per capita GDP of 199 European NUTS2 regions (EU15) over the period 1981-2008 illustrates how our estimated connectedness matrix is not compatible with the most popular geographical weights matrices used in literature.
    Keywords: First-order Contiguity, Distance-based Matrix, Connectedness Matrix, European Regions, Network.
    JEL: C23 R11 R12 O52
    Date: 2015–02–01
  10. By: Öner, Özge (Research Institute of Industrial Economics (IFN))
    Abstract: This paper investigates the determinants of the productivity of independent retail stores in Sweden by focusing on the impact of market size and regional hierarchy while controlling for several store and employee characteristics over time. The analysis utilizes Swedish store-level data for the years 2002–2008. To capture the urban-periphery interaction in retail markets, the analysis (i) uses an accessible market potential measure, which captures the impact of the potential demand both in close proximity in the region, and from outside the region separately, and (ii) investigates the stores that are located in central and non-central markets respectively. The results show an approximately 10 percent higher productivity premium associated with the market size in close proximity for centrally located independent stores, whereas regional market size is found to play an equally important role for both stores located in central markets and stores located in peripheral markets. The findings also show that employee characteristics do not contribute to the productivity of stores in central markets but that small but significant productivity returns are captured for stores located in peripheral markets. The differences in the impact arising from the market potential measures highlight the importance of taking the spatial continuum and regional hierarchy into account in an examination of the market size–productivity relationship for retailers.
    Keywords: Retail; Productivity; Urban rural hierarchy; Market accessibility
    JEL: D24 L81 R11 R12
    Date: 2014–11–06
  11. By: Bleakley, Hoyt (University of Michigan); Lin, Jeffrey (Federal Reserve Bank of Philadelphia)
    Abstract: We contrast evidence of urban path dependence with efforts to analyze calibrated models of city sizes. Recent evidence of persistent city sizes following the obsolescence of historical advantages suggests that path dependence cannot be understood as the medium-run effect of legacy capital but instead as the long-run effect of equilibrium selection. In contrast, a different, recent literature uses stylized models in which fundamentals uniquely determine city size. We show that a commonly used model is inconsistent with evidence of long-run persistence in city sizes and propose several modifications that might allow for multiplicity and thus historical path dependence.
    Keywords: Multiple equilibria; Locational fundamentals; Path dependence
    JEL: F12 N90 R12
    Date: 2015–01–12
  12. By: Bas ter Weel; Eva Feron en Trudie Schils (Department of Economics; Maastricht University)
    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. This 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 sixth 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.
    JEL: I21 I28 J24
    Date: 2015–01
  13. By: Dauth, Wolfgang; Südekum, Jens
    Abstract: In this paper we take a detailed look at the sectoral anatomy of regional growth in German regions over the period 1978-2008. In the aggregate, the German economy is characterized by a secular decline of the manufacturing sector and a rise of the modern service economy. This trend of structural change (Petty s law) by no means occurs uniformly across space, however. Some regions exhibit this trend even at an accelerated pace, while other regions develop their local economic structures against the trend and expand their manufacturing bases. We first develop a novel empirical approach that allows us to categorize all German regions into one out of three groups with pro-trend , anti-trend or featureless regional growth. Afterwards we show that the differential exposure to international trade is an important cause of the divergent patterns of local industrial change.
    JEL: R11 R12 F16
    Date: 2014
  14. By: Wirth, Benjamin; Mense, Andreas
    Abstract: Following the critique of Pinkse & Slade (2010) and Gibbons & Overman (2012), we develop an instrument for the estimation of local price effects of cell phone base stations (CPBS) in an urban area. The instrument is derived from the spatial structure of the network and technical and regulatory requirements. Such a strategy could be useful in other contexts in which location choice is endogenous but depends on an existing network structure. We find a significantly negative impact of nearby CPBS on flat prices. The discount amounts to 3.3% of a property s value when two similar flats at distances of 50 and 100 m to the nearest CPBS are compared. The small difference between OLS and IV results suggests that the distance to the nearest CPBS is not endogenous, in opposition to Brandt & Maennig (2012).
    JEL: R39 Q51 Q53
    Date: 2014
  15. By: Assaad, Ragui; Saleh, Mohamed
    Abstract: This paper examines the effect of increased local supply of schooling on intergenerational mobility in education in Jordan. We use a unique data set that links individual data on own schooling and parents’ schooling for adults, from a household survey, with the annual supply of schools in the sub-district of birth, from a school census. We identify the effect by exploiting the variation in the supply of basic and secondary public schools across cohorts and sub-districts of birth in Jordan, controlling for both cohort and sub-district of birth fixed effects. School availability is determined based on the number of sex-appropriate public schools in the individual’s sub-district of birth at the time the individual was ready to start that schooling stage. Our findings show that the local availability of basic public schools does in fact increase intergenerational mobility in education. For instance, an increase in the supply of basic public schools of one school per 1,000 people reduces the father-son and mother-son associations of schooling by 10 percent and the father-daughter and mother-daughter associations by nearly 30 percent. However, an increase in the local supply of secondary public schools does not seem to have a similar effect on intergenerational mobility in education.
    Keywords: Supply of schooling, education, intergenerational mobility, inequality of opportunity, Middle East
    JEL: I24 I28
    Date: 2015–01
  16. By: Zimmermann, Klaus F.; Constant, Amelie; Schüller, Simone
    Abstract: Ethnic groups tend to agglomerate and assemble, mostly in urban areas. While ethnic clustering is critically debated in societies and the consequences for economic outcomes are under debate in research, the process is not yet well understood. A separate literature has also examined the cultural and ethnic identity of immigrants and how these affect their economic performance and societal integration. However, an unexplored channel connects ethnic clustering with ethnic identity formation. Therefore this paper examines the role of ethnic geographic clustering in the sociocultural integration of immigrants. It employs survey data from the German Socio-Economic Panel, combined with disaggregated information at a low geographical level from the unexploited German full census of 1970 and 1987. We employ the exogenous placement of immigrants during their recruitment in the 1960s and 1970s and find that local co-ethnic concentration affects immigrants cultural integration. Residential ethnic clustering strengthens immigrants retention of an affiliation with their respective country of origin and weakens identification with the host society. The effects are nonlinear and only become significant at relatively high levels of co-ethnic concentration for the minority identity and at very low levels of local concentration for the majority identity. Our findings are robust to the use of an instrumental variable approach.
    JEL: J15 R23 Z10
    Date: 2014
  17. By: William Orlando Prieto Bustos
    Abstract: Using a theoretical recursive model based on cognitive synergy measured by five dimensions (economical, judiciary, civil conflict, geography, and urban) as restrictions to allow better results on institutional quality, the research shows a link between economic, social, and political environment with public efficiency in local governments. Impacts on local public government efficiency of different levels of advancement for each dimension are estimated for 23 major cities in Colombia in 2010 by implementing a Data Envelopment Analysis followed by a Tobit model similar to what has been proposed in recent literature of public efficiency analysis. The main findings showed an average of public local efficiency of 76% when an output oriented DEA model is adjusted using a Financial Public Performance index (FPI) as input and the Multidimensional Poverty Index (MPI) as output. After correcting for technology differences public average efficiency score reduces to 60% meaning that local government can increased their performance by 40% in poverty results measured by IPM with the same level of inputs measured by FPI. In order to narrow gap performances between cities reductions in unemployment levels, informal markets and transaction costs of doing business are required, there is also a positive significant impact of internet access and a negative impact of increasing urban population. The decentralization process is showing a negative impact over local public efficiency measured by the distance in square kilometers towards the central government capital. Other dimensions relevant such as the civil conflict and the judiciary system efficiency show negative and positive impacts as expected however they are not statically significant. Constraint aggregate effect on cognitive synergy developments over institutional quality reduces is impact to 38% when calculated following the structural equation on institutional determinants defined by the theoretical model.
    JEL: D02 H11 H79 R5 R51
    Date: 2013–12–30
  18. By: Kimura, Marlies; Ochsen, Carsten
    Abstract: In Germany and many other countries, students are tracked into various secondary school types. This paper studies whether parents or teachers assess students potential educational performance more adequately. Educational attainment is measured by grade retention rates. We take advantage of a reform in the German state of North Rhine- Westphalia (NRW) in 2006. The reform replaced parents choice about their children s secondary school type by a binding teacher recommendation. Our data comprises class-level information on all public secondary schools in the state. We find that binding teacher recommendations cause less grade retentions. The effect is mainly driven by students from better situated districts. This finding may capture that with free parental choice, overambitious parents tend to select too demanding tracks for their children.
    JEL: I20 I28 I21
    Date: 2014
  19. By: Borck, Rainald
    Abstract: This paper studies the effectiveness of building height limits as a policy to limit greenhouse gas (GHG) emissions. It shows that building height limits lead to urban sprawl and higher emissions from commuting. On the other hand, aggregate housing consumption may decrease which reduces emissions from residential energy use. The paper uses numerical simulation to show that total GHG emissions may be lower under building height restrictions. It also studies the effect of endogenous transport technology and the urban heat island effect.
    JEL: Q54 R14 R21
    Date: 2014
  20. By: Martin, Thorsten; Fossen, Frank M.; Freier, Ronny
    Abstract: Through an intertemporal budget constraint, jurisdictions may gain advantages in tax and spending competition by 'competing' on debt. While the existing spatial econometric literature focuses on tax and spending competition, very little is known about spatial interaction via public debt. This paper estimates the spatial interdependence of public debt among German municipalities using a panel on municipalities in the two largest German states from 1999 to 2006. We find signifi cant and robust interaction eff ects between debt of neighboring municipalities, which we compare to spatial tax and spending interactions. The results indicate that a municipality increases its per capita debt by 16-33 Euro as a reaction to an increase of 100 Euro in neighboring municipalities.
    JEL: C23 H63 H74
    Date: 2014
  21. By: Davide Fiaschi; Lisa Gianmoena; Angela Parenti
    Abstract: This paper finds evidence of spatial clubs in a sample of 254 European regions in the period 1991-2008. A dynamic extension of the Moran scatter plot, consisting in a non parametric estimate of the joint dynamics of GDP per worker and its spatial lag, suggests the emergence of three spatial clubs: one populated by regions belonging to the former Eastern Bloc countries, one by regions of PIGS countries (Portugal, Italy, Greece and Spain) and the last one by regions of other EU countries (notably Germany, France, UK and Northern Europe countries). In the long run the convergence process is evident only to two spatial clubs with Eastern regions converging to PIGS regions. Spatial spillovers are present across European regions, and their contribution to the emergence of spatial clubs is crucial. On the contrary, cross-region heterogeneity in human capital has a very limited impact on the distribution of GDP per worker. Finally, unobserved heterogeneity explains a substantial share of inequality and polarization.
    Keywords: Moran scatter plot, spatial panels, spatial spillovers, bipolarization, core-periphery pattern.
    JEL: C21 R11 O52 F41
    Date: 2015–02–01
  22. By: Stephan Kampelmann; Sarah V.S. Van Hollebeke; Paula Vandergert
    Abstract: This paper is an empirical investigation on how cities use urban renovation projects to adapt to structural economic change. We use methodological triangulation with case study evidence from Brussels to investigate causal links between the governance and the implementation of a large ongoing urban renovation programme that started in 1993. Having classified all investments in our database according to a list of urban adaptation tools, we are able to document how the governance of the programme influenced a) the allocation of funds to different adaptation tools; b) the content of intangible investments; c) the link between tangible and intangible investments. We conclude that urban renovation in Brussels is similar to policies in other cities in that it invested substantial resources both at the top and the bottom of adaptation governance, but that a disconnection between bottom-up and top-down strategies risks foregoing potential complementarities and synergies.
    JEL: R11 R38 R58
    Date: 2015–02–03
  23. By: Kripfganz, Sebastian
    Abstract: I derive the unconditional transformed likelihood function and its derivatives for a fixed-effects panel data model with time lags, spatial lags, and spatial time lags that encompasses the pure time dynamic and pure space dynamic models as special cases. In addition, the model can accommodate spatial dependence in the error term. I demonstrate that the model-consistent representation of the initial-period distribution involves higher-order spatial lag polynomials. Their order is linked to the minimal polynomial of the spatial weights matrix and, in general, tends to infinity with increasing sample size. Consistent estimation requires an appropriate truncation of these lag polynomials unless the spatial weights matrix has a regular structure. The finite sample evidence from Monte Carlo simulations shows that a misspecification of the spatial structure for the initial observations results in considerable biases while the correctly specified estimator behaves well. As an application, I estimate a time-space dynamic wage equation allowing for peer effects within households.
    JEL: C13 C23 J31
    Date: 2014
  24. By: Victor Lavy; Edith Sand
    Abstract: In this paper, we estimate the effect of primary school teachers’ gender biases on boys’ and girls’ academic achievements during middle and high school and on the choice of advanced level courses in math and sciences during high school. For identification, we rely on the random assignments of teachers and students to classes in primary schools. Our results suggest that teachers’ biases favoring boys have an asymmetric effect by gender— positive effect on boys’ achievements and negative effect on girls’. Such gender biases also impact students’ enrollment in advanced level math courses in high school—boys positively and girls negatively. These results suggest that teachers’ biased behavior at early stage of schooling have long run implications for occupational choices and earnings at adulthood, because enrollment in advanced courses in math and science in high school is a prerequisite for post-secondary schooling in engineering, computer science and so on. This impact is heterogeneous, being larger for children from families where the father is more educated than the mother and larger on girls from low socioeconomic background.
    JEL: J16 J24
    Date: 2015–01
  25. By: Giovanni Cerulli (CNR-CERIS National Research Council of Italy, Institute for Economic Research on Firms and Growth)
    Abstract: This presentation presents a parametric counterfactual model identifying average treatment effects (ATEs) by conditional mean independence when externality (or neighborhood) effects are incorporated within the traditional Rubin potential-outcome model. As such, it tries to generalize the usual control-function regression, widely used in program evaluation and epidemiology, when the stable unit treatment value assumption (SUTVA) is relaxed. As a by-product, the paper also presents ntreatreg, a user-written Stata command for estimating ATEs when social interaction may be present. Finally, an instructional application of the model and of its Stata implementation (using ntreatreg) through two examples (the first on the effect of housing location on crime; the second on the effect of education on fertility) is shown and results compared with a no-interaction setting.
    Date: 2014–11–13
  26. By: Wilko Bolt; Maria Demertzis; Cees Diks; Cars Hommes; Marco van der Leij
    Abstract: This paper provides a method for identifying when rising house prices are in danger of becoming bubbles on the verge of bursting. As a result, it is a first step towards establishing an early warning system for house price changes that could help prevent important welfare costs. By examining over 40 years of housing market data in eight countries (US, UK, Spain, the Netherlands, Belgium, Switzerland, Japan) we attempt to provide a methodology that links the conditions that lead to dangerous house price movements to policy variables such as interest rates and macro-prudential tools. This is important because by understanding how they are related, policy can intervene at appropriate times to prevent undesirable outcomes. Mainstream macroeconomic models typically fail to allow for abrupt changes or to capture instability driven by self-fulfilling expectations, the mechanism at the heart of market bubbles. In this paper we attempt to identify when instability occurs, i.e. when the economy can become very unpredictable. This type of methodology should be used in parallel with our mainstream models to inform policy makers.
    JEL: C53 R21 R31
    Date: 2014–12
  27. By: Schaumburg, Julia; Blasques, Francisco; Koopman, Siem Jan; Lucas, Andre
    Abstract: A new model for time-varying spatial dependencies is introduced. It forms an extension to the popular spatial lag model and can be estimated conveniently by maximum likelihood. The spatial dependence parameter is assumed to follow a generalized autoregressive score (GAS) process. The theoretical properties of the model are established and its satisfactory finite sample performance is shown in a small simulation study. In an empirical application, spatial dependencies between nine European sovereign CDS spreads are estimated for the time period from November 2008 until October 2013. The empirical model features a spatial weights matrix constructed from cross-border lending data and regressors including country-specific and Europe-wide risk factors. The estimation results indicate a high, time-varying degree of spatial spillovers in the spread data. A spatial GAS model with t-distributed errors provides the best fit. There is evidence for a downturn in spatial dependence after the Greek default in winter 2012, which can be explained economically by a change in bank regulation.
    JEL: C58 C23 G15
    Date: 2014
  28. By: Klaus Nowotny
    Abstract: This paper investigates the economic, labor market and institutional factors that make regions and countries attractive for highly skilled migrants vis-`a-vis lowskill migrants. Based on micro-data for 11 EU countries, a discrete choice model estimated at the NUTS-2 level shows that location decisions are not only determined by factors related to earnings opportunities, distance, networks, common language and colonial relationships, but also by institutional factors such as migration policy, the income tax system, or labor market institutions; it also lends some support to the welfare magnet hypothesis: a higher unemployment replacement rate increases the attractiveness of a country. The empirical analysis however reveals only minor differences in the effects of institutions on location decisions by skill level, limiting the scope for policy makers to affect the skill composition of migration.
    Keywords: Highly skilled migration, regional location decisions, institutions, migration policy
    JEL: F22 R23 C35
    Date: 2015–01
  29. By: Francesca Castelli; Damien Moore; Gabriel Ehrlich; Jeffrey Perry
    Abstract: This paper presents the simulation model that the Congressional Budget Office (CBO) uses to project the budgetary costs of the Federal Housing Administration's (FHA's) single-family mortgage insurance program. CBO simulates defaults, recoveries, and prepayments on cohorts of mortgages insured by FHA with key parameters estimated from a dataset of FHA-insured mortgages. Those simulations are used to estimate the loan guarantees' subsidy rates, which are the lifetime cost of FHA's insurance claim payments minus fees, expressed as a percentage of the original loan amounts. The simulations are
    JEL: G00 H50
    Date: 2014–09–11
  30. By: Treude, Barbara
    Abstract: Even though ethnic clustering is common, both economic theory and empirical research have not been able to provide a clear-cut answer on its effects on the integration of immigrants. In this paper, we study the effect of residential clustering on the labour market outcome of immigrants in Germany. Thereby, we use two measures for labour market integration: the employment probability and the wage levels. Our paper contributes to the existing literature twofold: First, we extend it to Germany on which hardly any research has been conducted. Second, we employ a new methodological approach which allows for the identification of smaller ethnic clusters and thus a more precise estimation of its effects. This is achieved by including neighbouring spatial units in the regression model. In order to control for the endogeneity of the location decision, we use a two-step strategy, combining a control function and an instrumental variable (IV) approach. We observe immigrant clustering in Germany, using a Moran s I analysis. In addition, the analysis suggests the importance of residential clustering for the employment probability of immigrants, and for second or higher generation migrants, a positive impact of clustering on wages.
    JEL: J61 J31 R23
    Date: 2014
  31. By: Mikko Packalen; Jay Bhattacharya
    Abstract: Faster technological progress has long been considered a key potential benefit of agglomeration. Physical proximity to others may help inventors adopt new ideas in their work by increasing awareness about which new ideas exist and by enhancing understanding of the properties and usefulness of new ideas through a vigorous debate on the ideas' merits (Marshall, 1920). We test a key empirical prediction of this theory: that inventions in large cities build on newer ideas than inventions in smaller cities. We analyze the idea inputs of nearly every US patent granted during 1836–2010. We find that a larger city size provided a considerable advantage in inventive activities during most of the 20th century but that in recent decades this advantage has eroded.
    JEL: O18 O31 O32 O33 R12
    Date: 2015–01
  32. By: Dmitry Kulikov
    Abstract: This paper examines the Law of One Price using Nielsen disaggregated price data covering 13 euro area countries and 45 different product categories over the time period 2008 to 2012. The empirical methodology is based on a non-structural log-linear regression with spatial effects in both the geographical and product-variety dimensions, estimated by the Bayesian methods. The models link the relative prices of homogenous products in the sample of euro area countries to four distinct groups of factors: product-specific consumption preferences, country-specific macroeconomic and regional characteristics, volatility of prices and volumes, and spatial effects. The estimated reduced-form Law of One Price models uncover a strong interdependence of relative prices both on the geographical scale and across “similar” product varieties, going beyond the included set of explanatory variables and warranting further empirical investigation.
    Keywords: disaggregated prices, spatial dependence, Bayesian estimation, Law of One Price
    JEL: C21 D40 E31
    Date: 2015–01–20
  33. By: Sanders, Rebecca L.; Weinzimmer, David; Dittrich, Heidi; Cooper, Jill F.
    Abstract: Safe Routes to Transit (SR2T) was initiated in 2004 with the adoption of the San Francisco Bay Area’s Regional Measure 2 which established a $1 increase in Bay Area bridge tolls. The intended purpose of this funding was to support various transportation projects within the region in order to reduce congestion along the seven state-owned toll bridge corridors. Consistent with this purpose, the SR2T Program was awarded $20 million to fund enhancements to increase walking and cycling to regional transit stations. SR2T funds were used for the following improvements, among others: ssecure bicycle storage at transit stations; safety enhancements for pedestrian and bicycle station access to transit stations/stops; removal of pedestrian/bicycle barriers near transit stations; and system-wide transit enhancements to accommodate bicyclists or pedestrians. MTC collaborated with Fehr & Peers and the UC Berkeley Safe Transportation Research and Education Center (SafeTREC) to oversee the assessment of the SR2T program on mode share, perceived traffic safety, traffic behaviors and perceived air quality. Additional data was collected to obtain economic feedback on spending behavior as related to mode choice. Transit stations were chosen based on key variables associated with travel behavior and mode choice, such as population density, employment density, and the percentage of households living beneath the poverty line. The transit stations included in the before and after study were the Balboa Park, Bay Fair, Civic Center, Glen Park, Lafayette, and Pittsburg BART stations, as well as the Palo Alto Transit station. Fremont and Rockridge BART stations were the control sites.
    Keywords: Engineering, Safe Routes to Transit, pedestrians, bicyclists
    Date: 2014–05–02
  34. By: Victor Aguirregabiria; Junichi Suzuki
    Abstract: We survey the recent empirical literature on structural models of market entry and spatial competition in oligopoly retail industries. We start with the description of a framework that encompasses various models that have been estimated in empirical applications. We use this framework to discuss important specification assumptions in this literature: firm heterogeneity; specification of price competition; structure of spatial competition; firms' information; dynamics; multi-store firms; and structure of unobservables. We next describe different types of datasets that have been used in empirical applications. Finally, we discuss econometric issues that researchers should deal with in the estimation of these models, including multiple equilibria and unobserved market heterogeneity. We comment on the advantages and limitations of alternative estimation methods, and how these methods relate to identification restrictions. We conclude with some issues and topics for future research.
    Keywords: Retail industries; Market entry and exit; Spatial competition; Econometrics of discrete choice games
    JEL: L11 L13 L81 R30
    Date: 2015–02–02
  35. By: Stefan Sebastian Fahrländer; Michael Gerfin; Manuel Lehner
    Abstract: In this study we use hedonic models to measure the influence of noise nuisance on rents, costs and values of investment properties in Switzerland. Countrywide data is provided by institutional real estate investors. The effects are measured for aircraft noise, road traffic noise and railroad noise. We show that negative effects appear between lower and upper tresholds which vary between different noise types and across residential and non-residential properties. Rents, costs and values are affected below the administrative tresholds given by the LSV and the negative impact ceases at an upper threshold. However high noise nuisance might influence investment decisions, i.e. offices are built instead of housing etc. These important effects are not given account in the data. In addition, directly measured reductions on market values are lower than the expected reductions based on empirical effects on rents and costs. The reasons for the different market value reductions may be found in the Swiss tenancy law. Rents for dwellings within existing rental agreements can only be adjusted in accordance with the change of the “reference interest rate” (Referenzzinssatz) and the CPI. The analysis shows that the average contract duration is dependent on the noise nuisance, which leads to a significant reduction of noise-induced losses within periods of increasing market rents.
    Keywords: Hedonic prices; investment property; Switzerland; noise nuisance; GAM; spline
    Date: 2015–01
  36. By: Bracco, Emanuele (Lancaster University); De Paola, Maria (University of Calabria); Green, Colin P. (Lancaster University)
    Abstract: A range of evidence exists demonstrating that social capital is associated with a number of important economic outcomes such as economic growth, trade and crime. A recent literature goes further to illustrate how historical events and variation can lead to the development of differing and consequential social norms. This paper examines the related questions of how persistent initial variations in social capital are, and the extent to which immigrant groups, do or do not converge to the cultural and social norms of their recipient country by examining a unique and geographically concentrated immigration event in 16th century Italy. We demonstrate that despite the substantial time since migration these communities still display different behaviour consistent with higher civic capital than other comparable Italian communities. Moreover, we demonstrate that this difference does not appear to have changed over the last 70 years. For instance, differences in voter turnout apparent in the late 1940s remain in the 21st century. This latter finding has implications for our view of the likelihood of assimilation of immigrant groups to local norms, particularly in cases of large-scale migration.
    Keywords: social capital, electoral turnout, migration, persistence
    JEL: A13 D72 P16
    Date: 2015–01
  37. By: Dascher, Kristof
    Abstract: A country's urban silhouettes prophesy its future climate policy, or so this paper argues. The more its city silhouettes are skewed to the periphery, the more likely a country is to implement the carbon tax. This is why the effect of a country's urban form on greenhouse gas emissions -- a bone of contention in the recent literature -- cannot be separated from that country's choice of carbon tax. From this paper's perspective, a country with greater city silhouette skews may emit less greenhouse gases not so much because its cities are more compact but because it places a higher price on carbon consumption.
    JEL: R12 Q54 H41
    Date: 2014
  38. By: Paula Herrera-Idárraga (Department of Econometrics. University of Barcelona); Enrique López-Bazo (Department of Econometrics. University of Barcelona); Elisabet Motellón (Department of Econometrics. University of Barcelona)
    Abstract: This paper uses Colombian micro-data to analyze the role of education and informality on regional wage differentials. Our hypothesis is that apart from differences in the endowment of human capital across regions, regional heterogeneity in the incidence of informality is another important source of regional wage inequality in developing and emerging countries. This is confirmed by the evidence from Colombia, which in addition reveals remarkable heterogeneity across territories in the wage return to individuals’ characteristics. Regional heterogeneity in returns to education is especially intense in the upper part of the wage distribution. In turn, heterogeneity in the informal pay penalty is more relevant in the lower part.
    Keywords: Regions, Wage differentials, Quantile-based decompositions, Formal/Informal Jobs, Economic Development JEL classification: C21, J31, J38
    Date: 2015–01
  39. By: Glocker, Daniela; Sturm, Daniel
    Abstract: A key prediction of a large class of theoretical models is that the location of economic activity is not necessarily determined by fundamentals. To test the empirical relevance of these ideas requires a natural experiment in which a large but ultimately temporary shock dislocates economic activity. Following Davis and Weinstein (2002) a number of papers have used war-time destruction as such a temporary shock. In this paper we revisit this debate and use the cities that were part of pre-war Germany and become part of Poland after the Second World War as a natural experiment. We show that also in this case cities recover surprisingly fast from the war-time shock despite heavy destruction and the expulsion of the entire population. Our results suggest that either the location and size of cities is indeed determined by fundamentals or that even heavily destroyed cities are rebuilt because the ruins contain valuable surviving structures. We provide suggestive qualitative evidence that the second interpretation is more likely correct.
    JEL: F14 F15 N74
    Date: 2014
  40. By: Marco Francesconi; Jonathan James
    Abstract: We estimate the effect of binge drinking on accident and emergency attendances, road accidents, arrests and the number of police officers on duty using a variety of unique data from Britain and a two-sample minimum distance estimation procedure. Our estimates, which reveal sizeable effects of bingeing on all outcomes, are then used to monetize the short-term externalities of binge drinking. We find that these externalities are on average £4.9 billion per year ($7 billion), about £80 for each man, woman and child liing in the UK. The price that internailizes this externality is equivalent to an additional 9p per alcoholic unit, implying a 20% increase with respect to the current avarage prices.
    Date: 2015–02–05
  41. By: Theodore R. Breton; Juan Pablo Jaramillo
    Abstract: We estimate the direct and external effects of levels of schooling on personal income in Ecuador in 2011, using data for 69,653 individuals in 567 municipalities. Using a Mincerian model that includes municipal levels of schooling and the size of the municipality and controls for endogeneity, we find that each year of individual schooling raises individual income by 8.5 percent and each year of municipal schooling raises individual income by 2.2 percent. The external effect of an additional year of schooling is larger for workers with more schooling, for those with higher incomes, and for those in more educated municipalities.
    Keywords: Ecuador; Schooling; External Effects; Regional Economics; Human Capital
    JEL: I25 R1 O
    Date: 2014–12–02
  42. By: Taylor, Gregory; Middleton, Catherine; Fernando, Xavier
    Date: 2014
  43. By: XuYi; Bas van Leeuwen; Jan Luiten van Zanden
    Abstract: This paper presents new estimates of the development of the urban population andthe urbanization ratio for the period spanning the Song and late Qing dynasties. Urbanizationis viewed, as in much of the economic historical literature on the topic, as an indirectindicator of economic development and structural change. The development of the urbansystem can therefore tell us a lot about long-term trends in the Chinese economy between1100 and 1900. During the Song the level of urbanization was high, also by internationalstandards – the capital cities of the Song were probably the largest cities in the world. This remained so until the late Ming, but during the Qing there was a downward trend in the levelof urbanization from 11–12% to 7% in the late 18th century, a level at which it remained untilthe early 1900s. In our paper we analyse the role that socio–political and economic causesplayed in this decline, such as the changing character of the Chinese state, the limited impactof overseas trade on the urban system, and the apparent absence of the dynamic economiceffects that were characteristic for the European urban system.
    Keywords: China, Urbanization, Song Dynasty, Ming dynasty, Qing dynasty, cities, commercialization.
    Date: 2015–02
  44. By: Kenneth Small (Department of Economics, University of California-Irvine)
    Abstract: The bottleneck model of congestion with endogenous scheduling has become a standard tool of transportation economics. It provides surprising insights about the time pattern of congestion, optimal pricing, and many distinct inefficiencies of unpriced equilibria including wrong departure order with heterogeneous preferences, wrong allocation of users across links of a network, and wrong order in which parking spaces are occupied. It illuminates the roles of travel-time reliability, traffic information, and extreme congestion (“hypercongestionâ€). It has been developed for use in practical network planning. Future use will probably emphasize greater realism, leading to more practical applications.
    Keywords: Congestion; Bottleneck; Scheduling; Congestion pricing; Parking; Reliability
    JEL: R41 R48
    Date: 2015–01
  45. By: Altemeyer-Bartscher, Martin
    Abstract: This paper analyzes the efficiency consequences of local revenue policies if jurisdictions try to attenuate the pressures of inter-regional competition for mobile factors by substituting attention-grabbing tax instruments that spotlight an additional tax burden with rather inconspicuous ones. We show that the substitution of tax instruments with the view to reduce the perceived tax price may suppress the under-exploitation of tax bases that typically goes along with fiscal equalization.
    JEL: H77 H22 H30
    Date: 2014
  46. By: Daan van der Linde; Swantje Falcke; Ian Koetsier; Brigitte Unger
    Abstract: This paper examines the effects of local politician pay on performance for Dutch municipalities. Although literature has argued wages partly determine the value of holding political office and thereby higher wages may improve the quality of a candidate pool, no straightforward theoretical prediction exists relating politicians’ remuneration to performance. Data on municipal finances is used in a regression discontinuity design that exploits population thresholds which exogenously determine the wages of local politicians. We find higher wages significantly increase municipal net debt and local budgets, at the same time finding some evidence for increased satisfaction with public space. We contrast our findings to previous research on Italy which found similar effects concerning significance, albeit differences regarding the direction. We argue that even though the direction of the effect may differ, both findings could entail better performance given institutional differences between the two countries.
    Keywords: politicians' wages, local finance, regression discontinuity design
    Date: 2014–10
  47. By: Ilaria Petrarca (Department of Economics (University of Verona))
    Abstract: This paper studies the link between the diffusion of news and spending decisions. We develop a canonical model that illustrates how the spread of information affects expenditures close to elections, conditional on the electoral rules. With the indirect election of the incumbent, news limits total spending by reducing the most targetable expenditure item; with the direct election of the government, it leaves unaffected total spending and narrows the gap between the opposite variations of the most and the least targetable expenditure items. We test these hypotheses on a dataset of Italian Regions from 1984 to 2008, approximating the spread of information with the diffusion of newspapers. We estimate the effect of news conditional on the electoral rule, exploiting a reform that introduced the direct election of the governor in 1999. The empirical analysis confirms the expectations, and suggests that capital expenditure is the most targetable item. The results are robust to alternative categorizations of press and indicate a deeper effectiveness of the diffusion of local press.
    Keywords: Local diffusion of newspapers, expenditure composition, electoral expenditure cycles, dynamic panel estimation
    JEL: D72 H72 D83
    Date: 2013–09
  48. By: Quis, Johanna Sophie
    Abstract: Starting in 2004/2005, the German state Baden-Wurttemberg reduced academic track duration from nine to eight years, leaving cumulative instruction time mostly unchanged. I use this change in schooling policy to identify the effect of schooling intensity on student well-being in life and school, perceived stress, mental health indicators and self-efficacy. Using rich data from the National Educational Panel Study (NEPS), estimates show higher strains for girls in terms of stress and mental health than for boys. Unexpectedly, male subjective general well-being slightly increases with the reform. Student well-being in school and self-efficacy remain mostly unchanged.
    Keywords: self-efficacy,high school reform,subjective well-being,mental health,stress,NEPS
    JEL: I12 I28 I21 J24
    Date: 2015
  49. By: Slotwinski, Michaela; Schmidheiny, Kurt
    Abstract: For a long time two main obstacles have prevented researchers from empirically identifying the causal effect of income taxes on individuals behavior: omitted variable bias and the inherent reverse causality between income taxes and the tax base. This paper exploits an institutional feature of Swiss tax law concerning the income taxation of foreign employees living in Switzerland (Quellenbesteuerung). The implied discontinuities (tax notches) allow us to draw causal inferences on behavioral reactions of individuals to taxation within a quasi-random setting. We study the effect of local taxes on individuals location choice and income adjustment to preferential tax schemes at such institutional tax notches. We find strong evidence that foreigners with income around the tax notch strategically adjust their income. We do not find evidence that local income tax rates affect the initial location choice of newly arriving foreigners. However, we do find significant effects of local income tax rates on the location choice once these foreigners receive permanent residence status after 5 years of arrival. These effects materialize mainly for high income earners.
    JEL: J22 H24 J61
    Date: 2014
  50. By: Bin, Peng
    Abstract: This paper investigates the evolution of regional socio-economic disparity in China during the period 1998-2010. A new composite index of development (CIRD) is developed to capture the five main dimensions of regional development: macroeconomic conditions, science and innovation performance, environmental sustainability, human capital accumulation, and public facilities provision. The investigation benchmarks 30 (out of 31) Chinese regions according to such multidimensional index of development and thus improves the understanding of the evolution of regional disparity in China in terms of the various dimensions of socio-economic development. Finally, on the basis of stochastic kernel density estimation, the paper reveals the existence of a triple-clubs pattern of convergence in the period under scrutiny, thereby informing both the literature on regional convergence and the current strategy of balancing the uneven process of growth in China.
    Keywords: regional disparity, multidimensional index of development, stochastic kernel, distribution dynamics, Chinese regions
    JEL: O18 P48 R58
    Date: 2015–02
  51. By: Luis Ignacio Lozano-Espitia; Juan Manuel Julio-Román
    Abstract: This paper provides evidence on the positive role of fiscal decentralization on regional economic growth in Colombia since the promulgation of the Political Constitution of 1991. The empirical strategy involved the choice of a suitable estimator for the panel data approach, the Augmented Mean Group Estimator, which allows adding unobserved determinants suggested by literature to traditional long term explanatory factors. The strategy was complemented with exercises that helped us to support the results coming from (i) cross-section models for different periods and various control variables, (ii) test on the complementarity hypothesis between public goods provided by different jurisdictions (spillover effects), and (iii) an assessment of unconditional convergence in regional income differences.
    Keywords: Fiscal decentralization, Economic growth, Complementarity, Panel Data Models
    JEL: O40 H77 C33
    Date: 2015–02–03
  52. By: Menzio, Guido (University of Pennsylvania); Trachter, Nicholas (Federal Reserve Bank of Richmond)
    Abstract: We develop a search-theoretic model of the product market that generates price dispersion across and within stores. Buyers differ with respect to their ability to shop around, both at different stores and at different times. The fact that some buyers can shop from only one seller while others can shop from multiple sellers causes price dispersion across stores. The fact that the buyers who can shop from multiple sellers are more likely to be able to shop at inconvenient times induces price dispersion within stores. Specifically, it causes sellers to post different prices for the same good at different times in order to discriminate between different types of buyers.
    JEL: D43
    Date: 2015–01–15
  53. By: Koen Jochmans (Département d'économie)
    Abstract: Empirical models for panel data frequently feature fixed effects in both directions of the panel. Settings where this is prevalent include student-teacher interaction, the allocation of workers to firms, and the import-export flows between countries. Estimation of such fixed-effect models is difficult. We derive moment conditions for models with multiplicative unobservables and fixed effects and use them to set up generalized method of moments estimators that have good statistical properties. We estimate a gravity equation with multilateral resistance terms as an application of our methods.
    Date: 2015–02
  54. By: Jahn, Malte
    Abstract: The regionalization of national input-output tables is a major issue in regional science as corresponding regional data is often unavailable. In this paper, a framework is developed to estimate intra- and interregional input-output tables. The intraregional estimates are based on the wellaccepted FLQ method. The interregional estimates include gravity model-based estimates to account for geographical distances between the regions. The estimates are embedded in an interregional accounting framework which ensures consistency of regional values with the national aggregates. The framework is applied to the German economy of 2010. We are able to show the importance of taking into account interregional input-output relations in the derivation of (regional) demand multipliers.
    Date: 2015
  55. By: Andreas P. Kyriacou; Leonel Muinelo-Gallo; Oriol Roca-Sagalés
    Abstract: There are theoretical arguments supporting the view that regional income inequalities, the degree of fiscal decentralization and the quality of government are simultaneously determined. To the extent that previous work has considered feedback effects between them, it has done so through instrumental variable estimates based on instruments whose validity can be questioned. Moreover, most existing work has estimated the relationship between any two of these variables in the absence of the third. Our empirical evidence, drawn from a sample of 23 OECD countries and based on a simultaneous equation model which accounts for the joint determination of these three variables, suggests that a process of fiscal decentralization, accompanied by measures to improve the quality of government, would be an effective strategy for reducing regional inequalities.
    Keywords: regional inequalities, fiscal decentralization, governance, reverse causality, panel data, simultaneous equations models
    JEL: C33 D73 H71 H73
    Date: 2015–02
  56. By: Robert Beyer; Michael Stemmer
    Abstract: We analyze the distribution of regional unemployment in Europe over the last three decades using non-parametric kernel densities and stochastic kernels. In addition, we employ a multi-level factor model to separate European, country, and region-specific unemployment fluctuations. Three phases of distributional change of EU relative unemployment rates are detected: they polarized from 1986 to 1996, converged after the introduction of the Euro and have been polarizing again since the outbreak of the financial crisis, having reached the highest levels ever. We find that European fluctuations account for roughly two fifths of the total variance confirming the existence of a European unemployment cycle. Country fluctuations are equally important, which leaves one fifth to be explained by region-specific movements. German regions are found to respond negatively to the European factor and country movements cause diverse responses in particular in Italy and England. The convergence prior to 2007 can be attributed to country affects and the divergence thereafter both to country and region-specific factors. Finally, we also discuss within country heterogeneity.
    Keywords: unemployment; European regions; distribution dynamics; multi-level factor model
    JEL: R12 R23 C14
    Date: 2015–01
  57. By: Renner, Laura; Krieger, Tim; Ruhose, Jens
    Abstract: This paper looks at the e ffect of cultural barriers on the skill selection of international migration. The data covers bilateral migration stocks by skill level in 2000 from about 99 sending countries to the main 15 destination countries. We use genetic distance as a proxy for cultural distance and exploit exogenous variation in genetic distance in 1500 to show that a higher genetic distance leads to a higher selectivity of migrants. This reveals that cultural traits are an important determinant of the skill mix of current migrant populations.
    JEL: F22 J61 Z10
    Date: 2014

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