nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2015‒02‒22
seventy papers chosen by
Steve Ross
University of Connecticut

  1. Distant Event, Local Effects? Fukushima and the German Housing Market By Kvasnicka, Michael; Bauer, Thomas K.; Braun, Sebastian
  2. Airport Improvements and Urban Growth By Nicholas Sheard
  3. Warping Space: High-Speed Rail and Returns to Scale in Local Labor Markets By Heuermann, Daniel F.; Schmieder, Johannes F.
  4. The Impact of Refugee Crises on Host Labor Markets: The Case of the Syrian Refugee Crisis in Turkey By Akgündüz, Yusuf Emre; van den Berg, Marcel; Hassink, Wolter
  5. Disruptive School Peers and Student Outcomes By Kristoffersen, Jannie H. G.; Kraegpøth, Morten Visby; Nielsen, Helena Skyt; Simonsen, Marianne
  6. Agglomeration and directional imbalance of freight rates : the role of density economies in the transport sector By Tsubota, Kenmei
  7. History, Path Dependence and Development: Evidence from Colonial Railroads, Settlers and Cities in Kenya By Remi Jedwab; Edward Kerby; Alexander Moradi
  8. Empowering cities : good for growth ? evidence from China By Zhu, T. Juni; Mukim, Megha
  9. Imitate, or innovate and collaborate? On innovation strategy choices in the urban economy By Herstad, Sverre J.
  10. Does Improved Local Supply of Schooling Enhance Intergenerational Mobility in Education? Evidence from Jordan By Assaad, Ragui; Saleh, Mohamed
  11. Budgetary Estimates for the Single-Family Mortgage Guarantee Program of the Federal Housing Administration By Congressional Budget Office
  12. The Price of Distance: Pricing to market, producer heterogeneity, and geographic barriers By KANO Kazuko; KANO Takashi; TAKECHI Kazutaka
  13. Continuous Logit Polycentric City Model By Wrede, Matthias
  14. Transportation Technology and Economic Change: The Impact of Colonial Railroads on City Growth in Africa By Remi Jedwab; Alexander Moradi
  15. A DMP Model of Intercity Trade By Yannis M. Ioannides
  16. A Model of Mortgage Losses and its Applications for Macroprudential Instruments By Hott, Christian
  17. Industry location and wages: The role of market size and accessibility in trading networks By Barbero, Javier; Behrens, Kristian; Zofio, Jose L.
  18. Better residential than ethnic discrimination! : Reconciling audit's findings and interviews' findings in the Parisian housing market By François Bonnet; Etienne Lalé; Mirna Safi; Etienne Wasmer
  19. HOUSING FINANCE and INCLUSIVE GROWTH: Benchmarking, Determinants and Effects By Christian Lambert Nguena; Fulbert Tchana Tchana; Albert Zeufack
  20. Transitioning to Alternative Structures for Housing Finance By Congressional Budget Office
  21. Governance, Firm Size and Innovative Capacity: Regional Empirical Evidence for Germany By Jahn, Vera; Berlemann, Michael
  22. Research-driven clusters & green mobility: A cross-regional comparison By David, Alexandra; Terstriep, Judith; Welschhoff, Jessica
  23. Segregation in Education and Labour Market Discrimination: The Role of Peer Beliefs By Levy, Gilat; Razin, Ronny
  24. The Coalition's Record on Housing: Policy, Spending and Outcomes 2010-2015 By Rebecca Tunstall
  25. Knowledge base combinations and innovation performance in Swedish regions By Grillitsch, Markus; Martin, Roman; Srholec, Martin
  26. The persistent effects of regional policy - Evidence from the West-German Zonenrandgebiet By Seidel, Tobias; von Ehrlich, Maximilian
  27. Railroads and Growth in Prussia By Hornung, Erik
  28. Human capital externalities vs. substitution effects as determinants of regional wages: Evidence from German micro data By Thönnessen, Rasmus
  29. Fraudulent Income Overstatement on Mortgage Applications during the Credit Expansion of 2002 to 2005 By Atif R. Mian; Amir Sufi
  30. Economic Shocs and Internal Migration By Joan Monras
  31. Local Political Budget Cycles in a Federation: Evidence from West German Cities By Furdas, Marina; Homolkova, Katerina; Kis-Katos, Krisztina
  32. Subprime borrowers, securitization and the transmission of business cycles By Grodecka, Anna
  33. Spatial aspects of economic growth. Review of theoretical literature By Tomasz Brodzicki
  34. New insights into the development of regional unemployment disparities By Werner, Daniel
  35. Shifting Taxes from Labour to Property. A Simulation under Labour Market Equilibrium By Coda Moscarola, Flavia; Colombino, Ugo; Figari, Francesco; Locatelli, Marilena
  36. Does minimum wage reduce youth employment on regional labour markets in Poland? By Paulina Broniatowska; Aleksandra Majchrowska; Zbigniew ¯ó³kiewski
  37. The Cost of Migrating to a Culturally Different Location By Ruhose, Jens; Falck, Oliver; Lameli, Alfred
  38. Teacher Characteristics, Actions and Perceptions: What Matters for Student Achievement in Pakistan? By Shenila Rawal; Monazza Aslam; Baela Jamil
  39. The National Rise in Residential Segregation By Trevon Logan; John Parman
  40. The productivity effect of migrants : wage cost advantages and heterogeneous firms By Lucht, Michael; Haas, Anette
  41. Migration feedback effects in networks: an agent-based model By Miriam Rehm; Ali Asjad Naqvi
  42. The role of universities in the location of innovative start-upsa By Giorgio Calacagnini; Ilario Favaretto; Germana Giombini; Francesco Perugini; Rosalba Rombaldoni
  43. Public policies, growth, and agglomeration By Ott, Ingrid; Soretz, Susanne
  44. Global Liquidity, House Prices, and the Macroeconomy: Evidence from Advanced and Emerging Economies By Ambrogio Cesa-Bianchi; Luis Felipe Cespedes; Alessandro Rebucci
  45. Conspicuous Consumption and Peer Effects among the Poor: Evidence From a Field Experiment By Christopher P. Roth
  46. Local Segregation and Well-Being By Coral del Río; Olga Alonso-Villar
  47. Extracurricular educational programs and school readiness: Evidence from a quasi-experiment with preschool children By Makles, Anna; Schneider, Kerstin
  48. Spillover Effects in Local Labor Markets: Evidence from Mass Layoffs By Gathmann, Christina; Helm, Ines; Schönberg, Uta
  49. Average and Heterogeneous Effects of Class Size on Educational Achievement in Lesotho By Ramaele Moshoeshoe
  50. Underestimated Benefits from Periphery: Internal Migration and Subjective Well-being By Kopmann, Angela; Rehdanz, Katrin
  51. Innovation in Europe's cities: a report by LSE Cities on Bloomberg Philanthropies' 2014 Mayors Challenge By Ricky Burdett; Peter Griffiths; Catarina Heeckt; Fracis Moss; Shan Vahidy; Philipp Rode; Tony Travers
  52. Optimal taxation under regional inequality By Zoubek, Malte; Kessing, Sebastian G.; Lipatov, Vilen
  53. The Economic Effect of Corruption in Italy: A Regional Panel Analysis By Lisciandra, Maurizio; Millemaci, Emanuele
  54. Two-way models for gravity By Koen Jochmans
  55. Provincial Convergence and Divergence in Canada, 1926 to 2011 By Brown, W. Mark; Macdonald, Ryan
  56. Networks and Manufacturing Fims in Africa: Results from a Randomized Field Experiment By Marcel Fafchamps; Simon Quinn
  57. Layers of co-existing innovation systems By Johannes Meuer; Christian Rupietta; Uschi Backes-Gellner
  58. Coworkers, Networks, and Job Search Outcomes By Weber, Andrea; Saygin, Peri; Weynandt, Michele
  59. The Effect of Early Childhood Language Training Programs on the Contemporary Formation of Grammar Skills By Kamhöfer, Daniel
  60. Gaming the Boston School Choice Mechanism in Beijing By He, Yinghua
  61. The Impact of Intergroup Contact on Racial Attitudes and Revealed Preferences By Scott E. Carrell; Mark Hoekstra; James E. West
  62. Ethnic heterogeneity and public goods provision in Zambia: Further evidence of a subnational .diversity dividend. By Gisselquist, Rachel M.; Leiderer, Stefan; Nino-Zarazua, Miguel
  63. Is education really underfunded in resource-rich economies? Evidence from a panel of U.S. states By Alexander James
  64. Employment Effects of Local Business Taxes By Siegloch, Sebastian
  65. Higher taxes, more evasion? Evidence from border differentials in TV license fees By Berger, Melissa; Fellner-Röhling, Gerlinde; Sausgruber, Rupert; Traxler, Christian
  66. Fiscal federalism and tax enforcement By Bönke, Timm; Jochimsen, Beate; Schröder, Carsten
  67. The Impact of Teacher Skills on Student Performance across Countries By Piopiunik, Marc; Hanushek, Eric A.; Wiederhold, Simon
  68. Effect of Homophily on Network Evolution By Kibae Kim; Jörn Altmann
  69. Endogenous Social Identity and Group Choice By Mechtel, Mario; Hett, Florian; Kröll, Markus
  70. Natural Disasters and Labour Markets By Martina Kirchberger

  1. By: Kvasnicka, Michael; Bauer, Thomas K.; Braun, Sebastian
    Abstract: The Fukushima Daiichi accident in Japan in March 2011 caused a fundamental change in Germanys energy policy which led to the immediate shut down of nearly half of its nuclear power plants. Using data from Germanys largest internet platform for real estate and employing a difference-in-differences approach, we find that Fukushima reduced house prices near nuclear power plants that were in operation before Fukushima by almost 5%. House prices near sites that were shut down right after the accident even fell by 9.7%. Our results suggest that economic reasons are of prime importance for this observed fall in house prices.
    JEL: R31 Q48 Q58
    Date: 2014
  2. By: Nicholas Sheard (Aix-Marseille University (Aix-Marseille School of Economics), CNRS, & EHESS)
    Abstract: This paper estimates the effects of airports on economic growth in the local areas they serve, using data from US metropolitan areas. It applies a novel identification technique that uses the overall development of the air transport network to identify changes in airport size that are not influenced by local factors. Airport size is found to have positive effects on local employment with an elasticity of 0.02 and on GDP with an elasticity of 0.035. This means that for every job created at the airport by an exogenous increase in traffic, there are three jobs created outside of the airport. Airport size is also found to have positive effects on local wages and on the number of firms. In addition there is a positive effect on the employment rate, the magnitude of which suggests that around half of jobs created by airport expansion represent a net increase in the employment of existing residents, while half are taken up by workers who migrate to the area.
    Keywords: transportation infrastructure, air travel, urban growth
    JEL: H54 L93 R11 R42
    Date: 2015–02
  3. By: Heuermann, Daniel F.; Schmieder, Johannes F.
    Abstract: Local returns to scale in the labor market have been notoriously difficult to disentangle from increasing returns in the product market and from the spatial sorting of workers and firms as a source for regional variation in productivity. In this paper we use the introduction of high-speed rail as a natural experiment in order to isolate the impact of labor market size on urban wages from product market and sorting effects. The key idea underlying our identification approach is that high-speed trains reduce commuting times between regions and thereby effectively increase the size of local labor markets without directly affecting product markets. The exact timing of the opening of high-speed rail connections can be regarded as exogenous, as a high-speed rail network is very expensive to build, requires a long planning phase and is mainly the result of political decisions. Furthermore, especially in the second wave of network expansion, several small towns were connected to the high-speed rail network simply because of their location between major metropolitan hubs and in this way got 'lucky' compared to neighboring towns. Drawing on a large and novel panel data set on the introduction of ICE-stations and on connection times between regions in Germany, as well as on a full sample of workers' employment histories, we examine the effect of high-speed trains on commuting behavior and wages. Using case studies, a pooled event study, and gravity equations with instrumental variables and propensity score matching we show that high-speed trains reduce traveling times by sixteen percent on average and significantly raise the number of commuters between local labor markets. We find that commuters incur wage gains of about three percent after the opening of an ICE-station, indicating that improved access to larger urban labor markets is associated with productivity gains for workers living in peripheral regions. In sum, our results suggest that between one third and half of overall agglomeration externalities are rooted in increasing returns to scale in local labor markets.
    JEL: J31 R12 R42
    Date: 2014
  4. By: Akgündüz, Yusuf Emre (Utrecht University); van den Berg, Marcel (Statistics Netherlands); Hassink, Wolter (Utrecht University)
    Abstract: The civil war in Syria has culminated into major refugee crises in its neighboring countries. By the end of 2013 more than half a million people were seeking shelter in cities and refugee camps in Turkey. We analyze how the Syrian refugee influx in Turkey has affected food and housing prices, employment rates and internal migration patterns in regions of Turkey where refugees are being accommodated. Refugee camps are geographically concentrated near the Syrian border, which enables us to employ the rest of regional Turkey as control group with a difference-in-difference approach to analyze the impact on local economies. Our findings suggest that housing and to a lesser degree food prices increased, but employment rates of natives in various skill groups are largely unaffected. Incumbent natives appear to be staying put considering the limited migration out of the region, but there is a significant decline in internal migration into regions hosting refugees. Nevertheless, the decline in internal in-migration is less than a tenth of the refugee influx, implying that there is little evidence of refugees crowding out natives in local labor markets.
    Keywords: refugees, employment, migration, inflation, regional economy, difference-in-difference
    JEL: F22 J61 R23
    Date: 2015–02
  5. By: Kristoffersen, Jannie H. G. (Copenhagen Business School); Kraegpøth, Morten Visby (Aarhus University); Nielsen, Helena Skyt (Aarhus University); Simonsen, Marianne (Aarhus University)
    Abstract: This paper estimates how peers' achievement gains are affected by the presence of potentially disruptive and emotionally sensitive children in the school-cohort. We exploit that some children move between schools and thus generate variation in peer composition in the receiving school-cohort. We identify three groups of potentially disruptive and emotionally sensitive children from detailed Danish register data: children with divorced parents, children with parents convicted of crime, and children with a psychiatric diagnosis. We find that adding potentially disruptive children lowers the academic achievement of peers by about 1.7-2.3 percent of a standard deviation.
    Keywords: student mobility, special educational needs, education, value added model
    JEL: I21 J12
    Date: 2015–01
  6. By: Tsubota, Kenmei
    Abstract: This paper examines the conventional assumption that bilateral transport costs are symmetric. We develop an economic geography model with transport sector in which asymmetric freight rates can occur as a result of density economies. Comparing this to models without density economies, we show that agglomeration of economic activities is more likely to emerge and that multiple equilibria can emerge for some parameters. Then we show the change in its bifurcation and stability of equilibrium and conclude that economies of density in transport flows can act as an agglomeration force.
    Keywords: Transportation, Economic geography, Costs, Agglomeration, Asymmetric transport costs, Directional imbalance of freight rates, Density economies
    JEL: L91 R12 R41
    Date: 2015–02
  7. By: Remi Jedwab; Edward Kerby; Alexander Moradi
    Abstract: Little is known about the extent and forces of urban path dependence in developing countries.  Railroad construction in colonial Kenya provides a natural experiment to study the emergence and persistence of this spatial equilibrium.  Using new data at a fine spatial level over one century shows that colonial railroads causally determined the location of European settlers, which in turn decided the location of the main cities of the country at independence.  Railroads declined and settlers left after independence, yet cities persisted.  Their early emergence served as a mechanism to coordinate investments in the post-independence period, yielding evidence for how path dependence influences development.
    Keywords: Path Dependence, Urbanisation, Transportation, Colonialism
    JEL: R11 R12 R40 O18 N97
    Date: 2014–01–12
  8. By: Zhu, T. Juni; Mukim, Megha
    Abstract: This paper utilizes a countrywide, county-to-city upgrade in the 1990s to identify whether extending the powers of urban local governments leads to better firm outcomes. The paper hypothesizes that since local leaders in newly-promoted cities have an incentive to utilize their new administrative remit to maximize gross domestic product and employment growth, there should be improvements in economic outcomes. The analysis finds that aggregate firm-level outcomes do not necessarily improve after county-to-city graduation. However, it does find that state-owned enterprises perform better post-graduation, with increased access to credit through state-owned banks as a possible explanation for the improvement in performance. The most important finding is that newly-promoted cities with high capacity generally produce better aggregate firm outcomes compared with newly-promoted cities with low capacity. The conclusions are twofold. First, in terms of access to credit, the paper provides evidence that relaxing credit constraints for firms could lead to large increases in firm operation and employment. Second, increasing local government's administrative remit is not enough to lead to better firm and economic outcomes; local capacity is of paramount importance.
    Keywords: Subnational Economic Development,Banks&Banking Reform,City Development Strategies,Access to Finance,Public Sector Management and Reform
    Date: 2015–02–01
  9. By: Herstad, Sverre J. (NIFU Nordic Institute for Studies in Innovation, Research and Education)
    Abstract: This paper explores how the innovation strategies of firms reflect the density, diversity and connectivity of their urban locations. Firms located outside the four large-city regions of Norway are generally more committed to development work than are their urban counterparts. Still, once engaged, firms in certain large-city locations exhibit unique preferences towards geographically dispersed collaboration that are most pronounced within the Western business district of the Capital. This shows that firm-level decisions along interconnected activity dimensions must be considered in order for different strategy choices, and the interdependencies between them that are an essential feature of urban economies, are to be revealed. The study provides new insights into the large-city region knowledge dynamics that are increasingly important to human capital formation, employment and growth.
    Keywords: urbanization; innovation; collaboration; knowledge dynamics; Norway
    JEL: O31 O33 R11
    Date: 2015–02–15
  10. 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
  11. By: Congressional Budget Office
    Abstract: Loan guarantees made in the Federal Housing Administration's single-family mortgage program between 1992 and 2013 are now projected to generate small costs over their lifetimes rather than the significant savings that were recorded in the federal budget at the time the guarantees were made. That deterioration stems largely from the sharp downturn in the housing market in the late 2000s.
    JEL: G17 H20 H61
    Date: 2014–09–23
  12. By: KANO Kazuko; KANO Takashi; TAKECHI Kazutaka
    Abstract: Transport costs are generally attributable to price differentials across geographically separated regions. However, when using price differential data, the identification of distance-elastic transport costs depends on how producers handle transport costs and set prices in remote markets. To address this problem, we adopt a nonhomothetic preference framework with heterogeneous producers. We show that the presence of nonhomothetic preferences is important in causing producer heterogeneity to alter individual pricing behavior depending on market conditions, a property absent in the constant elasticity of substitution heterogeneity framework. This also exhibits the property that producers do not fully pass on the increase in transport costs. By not accounting for these features, the distance elasticity of transport costs is underestimated. However, by incorporating these features in our model and using empirical analysis and microlevel data, we reveal that the distance effect is significantly large, suggesting that the price of geographic barriers for regional transportation is high.
    Date: 2015–02
  13. By: Wrede, Matthias
    Abstract: This paper analyzes a closed linear polycentric city with homogenous households who probabilistically select their workplace and residence locations. The study utilizes a continuous logit model to describe household location choices. In contrast to the classic urban model with deterministic location choices, the continuous logit model predicts noticeable direct effects of more than one workplace on land rents, asymmetry of the land rent schedule around secondary business districts, incomplete segregation of citizens who work in different business centers and, therefore, cross commuting, and incomplete segregation of workers and farmers.
    JEL: R13 R14 R12
    Date: 2014
  14. By: Remi Jedwab; Alexander Moradi
    Abstract: What is the impact of modern transportation technology on long-run economic change in poor countries with high trade costs?  Rail construction in colonial Sub-Saharan Africa provides a natural experiment: 90% of African rail-road lines were built before independence, in a context where headloading was the dominant transportation technology.  Using new data on railroads and cities over one century within one country, Ghana, and Africa as a whole, we find large permanent effects of transportation technology on economic development.  First, colonial railroads had strong effects on commercial agriculture and urban growth before independence. We exploit various identification strategies to ensure these effects are causal.  Second, using the fact that African railroads fell largely out of use post-independence, due to mismanagement and lack of maintenance, we show that colonial railroads had a persistent impact on cities.  While colonial sunk investments (e.g. schools, hospitals and roads) partly contributed to urban path dependence, evidence suggests that railroad cities persisted because their early emergence served as a mechanism to coordinate contemporary investments for each subsequent period.  Railroad cities are also wealthier than non-railroad cities of similar sizes today.  This suggests a world where shocks to economic geography can trigger an equilibrium in which cities will emerge to facilitate the accumulation of factors, and thus have long-term effects on economic growth.
    Keywords: Transportation Technology, Development, Path Dependence, growth
    JEL: R4 R1 O1 O3 N97
    Date: 2013–11–18
  15. By: Yannis M. Ioannides
    Abstract: The paper presents a model of an economy whose urban structure consists of cities of different types. All cities of different types. All cities produce a non-tradeable final good using both types of tradeable intermediate varieties. Each city has an internal spatial structure: individuals commute to the CBD in order to work, when employed, and to seek jobs, when unemployed. Hiring by each intermediate producing firm is subject to frictions, which are modeled in the Diamond-Mortensen-Pissarides fashion. Job matching requires either travel to the CBD for face to face contacts or, alternatively, referrals from social contacts.City type is conferred by specialization in producing one of the two types of intermediate varieties, diversified cities, where both types are produced, and there is intercity trade in intermediate varieties. The paper examines the properties of equilibrium with intercity trade and its dependence on such parameters as those pertaining to productivity, the matching process, the rate of job destruction and their consequences for unemployment, output and welfare across the economy along a steady state. The model's use of international trade tools confers a central role to labor market tightness, akin to factor intensity. A natural dependence of unemployment on city size is generated. The paper provides a framework for studying spatial mismatch. Equilibrium outcomes generically diverge from the planner's optimum: socially optimal unemployment trades off the probability of employment to search socts of firms independently for each skill type and independently of city size, and city sizes are independent of labor market tightness considerations but reflect both market size effects and the skill composition of the economy.
    JEL: E24 F12 F16 J60 J63 J64 R12
  16. By: Hott, Christian
    Abstract: We develop a theoretical model of mortgage loss rates that evaluates their main underlying risk factors. Following the model, loss rates are positively influenced by the house price level, the loan-to-value of mortgages, interest rates, and the unemployment rate. They are negatively influenced by the growth of house prices and the income level. The calibration of the model for the US and Switzerland demonstrates that it is able to describe the overall development of actual mortgage loss rates. In addition, we show potential applications of the model for different macroprudential instruments: stress tests, countercyclical buffer, and setting risk weights for mortgages with different loan-to-value and loan-to-income ratios.
    JEL: E51 G21 G28
    Date: 2014
  17. By: Barbero, Javier; Behrens, Kristian; Zofio, Jose L.
    Abstract: We investigate the geographical distribution of economic activity and wages in a general equilibrium model with many asymmetric regions and costly trade. As shown by extensive simulations on random networks, local market size better explains a region’s industry share, whereas accessibility better explains a region’s wage. The correlation between equilibrium wages and industry shares is low, thus suggesting that the two variables operate largely independently. The model replicates well the spatial distribution of industry using Spanish data, yet overpredict changes in that distribution due to changes in 'generalized transport costs'. The latter had only small impacts on changes in the geographical distribution of economic activity in Spain from 1980 to 2007.
    Keywords: generalized transport costs; industry location; size; trading networks; wages
    JEL: C63 F12 R12
    Date: 2015–02
  18. By: François Bonnet (ASAP); Etienne Lalé (École Nationale de la Statistique et de l'Administration Économique (ENSAE)); Mirna Safi (Observatoire sociologique du changement); Etienne Wasmer (Département d'économie)
    Abstract: This article investigates discrimination and the interplay of residential and ethnic stigma on the French housing market using two different methods, paired-testing au- dit study of real estate agencies and face-to-face interviews with real estate agents. The juxtaposition of their findings leads to a paradox: interviews reveal high levels of ethnic discrimination but little to none residential discrimination, while the audit study shows that living in deprived suburbs is associated with a lower probability of obtaining an appointment for a housing vacancy but ethnic origin (signaled by the candidate’s name) has no significant discriminatory effect. We have three priors po- tentially consistent with this apparent paradox and re-evaluate their likelihood in light of these findings: (i) agents make use of any statistical information about insolvency, including residency; (ii) there are two distinct and independent taste discriminations, one about space and one about ethnicity; (iii) these two dimensions exist and comple- ment each other.
    Date: 2015–02
  19. By: Christian Lambert Nguena (Association of African Young Economists); Fulbert Tchana Tchana (The World Bank); Albert Zeufack (The World Bank Group)
    Abstract: Using panel database of 48 Sub-Saharan African countries from 2000 to 2013, this paper analyses the structure of housing finance in Africa, its determinants, and its impact on inclusive growth. Our empirical investigation provides the following findings regarding each questions of interest. Specifically, we find that market capitalization and urbanization are key positive determinants of housing finance while a post-conflict environment is conductive for greater housing finance development – this result suggests that housing finance is driven by demand and supply as any standard market. Besides, we find that housing finance development in Africa is not yet an effective tool for inequality reduction, given that it remains at a very earlier stage; however, we show that above a given threshold housing finance could be efficient for inequality reduction. Finally, housing finance is loosely positively related to greater economic development in Africa. All these findings suggest that policies to boost housing finance development in Africa should be viewed as measures that would yield fruit in the medium to long terms.
    Keywords: Housing Finance, Sub-Saharan Africa, inclusive growth, Shared prosperity
    JEL: G21 R1 O4
    Date: 2015–01
  20. By: Congressional Budget Office
    Abstract: CBO analyzed possible transitions to four alternative market structures that involve choices about whether and how the government would continue to guarantee payment on mortgages and mortgage-backed securities. This report examines various mechanisms that policymakers could use to attract more private capital to the secondary mortgage market and addresses how those mechanisms could be combined in different ways to help the market transition to a new structure during the coming decade.
    JEL: G21 G28
    Date: 2014–12–16
  21. By: Jahn, Vera; Berlemann, Michael
    Abstract: Successful innovation is a precondition for economic prosperity. While various potential determinants of innovative activity have been considered, little empirical evidence is yet available for the influence of firm governance issues. This paper aims at filling this gap in the literature by studying whether the relative importance of owner-managed small and medium sized enterprises has an effect on regional innovative capacity. We therefore combine patent data with data from the firm database of Creditreform, containing information on the governance structure of regional operating enterprises. Using a cross section of German NUTS-3-regions, we identify a significantly positive relation between the relative importance of owner-managed SMEs and innovative capacity. This finding is highly robust when controlling for various sorts of spatial correlation.
    JEL: O31 C21 D23
    Date: 2014
  22. By: David, Alexandra; Terstriep, Judith; Welschhoff, Jessica
    Abstract: The improvement and sustainability of urban transport systems is a necessity for quality of life, wellbeing and safety of citizens. Germany, France, Norway, the UK, the Netherlands and Sweden are anticipated to be the top six European countries for Battery Electric Vehicles (BEVs) on the road in 2020. In total 4 regional and 24 national electromobility-related RTDI policy measures have been identified for Austria, Czech Republic, France, Hungary, Germany and Switzerland, comprising top-down and bottom-up initiatives. Research-driven clusters (RDCs) entail a high potential to stimulate electromobility-related RTDI activities at the regional level and increase the competitiveness of regional economies. Electromobility is expected to become a central topic in several regions. Hence, it is even more important for regions engaging in this field to specialise. "Smart Specialisation Strategies" (S3) can be viewed as promising approach for "specialised diversification" that exploits the economies derived from related variety.
    Date: 2015
  23. By: Levy, Gilat; Razin, Ronny
    Abstract: In this paper we examine the long term effects of socialization and segregation in schools, on labour market outcomes. We incorporate a model of “informational” peer influence by which beliefs of pupils are affected by exposure to other pupils’ posterior beliefs. Specifically, we focus on the beliefs of private school graduates about the productivity of state school graduates. We incorporate this into a dynamic model of parental school choice (state versus private) and labour market decisions (whether to hire a state or a private school graduate). We provide necessary and sufficient conditions for segregation in education and discrimination in the labour market to hold.
    Keywords: discrimination; education; labor market; School choice; Segregation
    JEL: D83 I24 J7
    Date: 2015–02
  24. By: Rebecca Tunstall
    Abstract: Coalition Ministers were highly critical of the state of UK housing when they took power. How far were they able to improve a system they had described as "dysfunctional"?
    Date: 2015–01
  25. By: Grillitsch, Markus (CIRCLE, Lund University); Martin, Roman (CIRCLE, Lund University); Srholec, Martin (CIRCLE, Lund University & CERGE-EI, Charles University and Economics Institute of the Academy of Sciences of the Czech Republic)
    Abstract: The literature on geography of innovation suggests that innovation outcomes depend on the type of knowledge base employed by firms. While knowledge bases are distinct categories with regards to the nature and the rational of knowledge creation, existing studies also stress that innovation usually involves more than one knowledge base. In fact, new ideas often occur when analytical, synthetic and symbolic knowledge intertwines. It remains unclear, though, which combinations of knowledge bases are most conducive to innovation at the level of the firm, and how this is influenced by the knowledge bases available in the regional milieu. Therefore the contribution of this paper is threefold: i) to measure knowledge bases of firms and their regional heterogeneity in a more comprehensive way than the existing empirical literature has been able to do so far, ii) to quantitatively assess the impact of combinations of knowledge bases on innovation output, iii) to analyze the interplay between firm- and region-level knowledge bases (and combinations thereof) in generating innovations. Empirically, the paper applies econometric analysis on firm- and region-level data from Sweden. The knowledge base of firms is captured using detailed occupational data derived from linked employer-employee datasets that is merged at the firm-level with information from Community Innovation Surveys. The empirical analysis reveals in a quantitative way the extent to which the knowledge base combinations affect innovativeness of firms.
    Keywords: Knowledge bases; knowledge combination; regions; innovation performance; microdata; cross-level interaction; Sweden
    JEL: O30 O31 R10
    Date: 2015–02–08
  26. By: Seidel, Tobias; von Ehrlich, Maximilian
    Abstract: In this paper, we provide novel evidence on the contemporaneous and persistent effects of regional policy. We apply a quasi-experimental identification strategy exploiting the fact that municipalities in the West-German Zonenrandgebiet (ZRG) were eligible for substantial regional transfers between 1971 and 1994. The ZRG was an approximately 40km-band adjacent to the Iron Curtain during the Cold War in West Germany. Apart from determining transfer eligibility, this pure geographic threshold did not have any institutional, cultural or economic relevance. We use regression discontinuity to estimate the causal effects of regional policy on economic activity. Using disaggregated data on the municipality level and satellite night light data (as a proxy for GDP), we find that the ZRG treatment led to an increase of income per square kilometer of about 50 percent in 1986. Importantly, economic density remained high in 2010 although the transfers had phased out in 1994. This speaks against unique equilibria determined by locational advantage, but rather strengthens market externalities as an important explanation for the spatial distribution of economic activity. We also examine several potential channels finding strong contemporaneous and persistent effects of transfers on population density and the business tax base.
    JEL: H25 R12 O18
    Date: 2014
  27. By: Hornung, Erik
    Abstract: We study the effect of railroad access on urban population growth. Using GIS techniques, we match triennial population data for roughly 1,000 cities in nineteenth-century Prussia to georeferenced maps of the German railroad network. We find positive short- and long-term effects of having a station on urban growth for different periods during 1840--1871. Causal effects of (potentially endogenous) railroad access on city growth are identified using propensity score matching, instrumental variables, and fixed-effects estimation techniques. Our instrument identifies exogenous variation in railroad access by constructing straight-line corridors between nodes. Counterfactual models using pre-railroad growth yield no evidence to support the hypothesis that railroads appeared as a consequence of a previous growth spurt.
    JEL: O18 O33 N73
    Date: 2014
  28. By: Thönnessen, Rasmus
    Abstract: This article reconsiders the empirical evidence on regional human capital externalities using longitudal survey data from the German Socio-Economic Panel (SOEP). It complements the empirical literature on the role of human capital for explaining regional wage differences. Based on the framework by Moretti (2004a), the impact of different proxies of regional human capital intensity on regional wages is estimated while controlling for individual productivity determinants and regional characteristics. The results are compared with the constant-composition approach by Ciccone and Peri (2006) which accounts for imperfect substitution between unskilled and skilled labor. The Mincerian panel results with level data indicate that one additional year of education has an external wage effect of 2%. However, once a difference specification is estimated, external effects are no longer present. The theoretical predictions by Ciccone and Peri (2006) that the Mincerian approach leads to an upward biased estimate cannot be verified.
    JEL: J24 R23 R11
    Date: 2014
  29. By: Atif R. Mian; Amir Sufi
    Abstract: Academic research, government inquiries, and press accounts show extensive mortgage fraud during the housing boom of the mid-2000s. We explore a particular type of mortgage fraud: the overstatement of income on mortgage applications. We define “income overstatement” in a zip code as the growth in income reported on home-purchase mortgage applications minus the average IRS-reported income growth from 2002 to 2005. Income overstatement is highest in low credit score, low income zip codes that Mian and Sufi (2009) show experience the strongest mortgage credit growth from 2002 to 2005. These same zip codes with high income overstatement are plagued with mortgage fraud according to independent measures. Income overstatement in a zip code is associated with poor performance during the mortgage credit boom, and terrible economic and financial economic outcomes after the boom including high default rates, negative income growth, and increased poverty and unemployment. From 1991 to 2007, the zip code-level correlation between IRS-reported income growth and growth in income reported on mortgage applications is always positive with one exception: the correlation goes to zero in the non-GSE market during the 2002 to 2005 period. Income reported on mortgage applications should not be used as true income in low credit score zip codes from 2002 to 2005.
    JEL: E3 E4 E5 G01 G2 R31
    Date: 2015–02
  30. By: Joan Monras (Département d'économie)
    Abstract: Previous literature shows that internal migration rates are strongly procyclical. This would seem to imply that geographic relocation does not help mitigate negative local economic shocks during recessions. This paper shows that this is not the case. I document that net in-migrationrates decreased in areas more affected by the Great Recession. Using various IV strategies that rely on the importance of the construction sector and the indebtedness of households before the crisis, I conclude that internal migration might help to alleviate up to one third of the effects of the crisis on wages in the most affected locations. This is due to a disproportionate decrease in in-migration into those locations rather than an increase in out-migration. More generally, I show that differences in population growth rates across locations are mainly explained by differences in in-migration rates rather than in out-migration rates. I introduce a model to guide the empirical analysis and to quantify the spill-over effects caused by internal migration.
    Keywords: Internal migration and local labor demand shocks.
    JEL: J61 J20 J30 F22 J43 R23
    Date: 2015–02
  31. By: Furdas, Marina (University of Freiburg); Homolkova, Katerina (University of Kiel); Kis-Katos, Krisztina (University of Freiburg)
    Abstract: This paper analyzes the occurrence of political budget cycles in 604 West German cities between 1975 and 2007. Due to the idiosyncratic timing of state and local elections, the budgetary changes before elections at two tiers of the federalist government can be separately estimated and can also be distinguished from common time effects. Both local and state elections result in pre-election manipulation of the local finances of moderate size. Before both types of elections, we observe an increase in building investments, accompanied by increasing intergovernmental grants for investment purposes but also a halt in the increase of local tax rates. By contrast, elections at the two tiers of the government affect the size of the current budget differently: current revenues and expenditures decrease before local but increase before state elections, suggesting a difference in the tightness of the local budget constraint. The extent of these political budget cycles is more pronounced in municipalities that are politically aligned with the state governments and are politically more contested.
    Keywords: political budget cycles, German cities, municipal finances, local and state elections
    JEL: D72 H71 H72
    Date: 2015–01
  32. By: Grodecka, Anna
    Abstract: One of the roots of the recent global financial crisis has been seen in the design of subprime mortgage contract leading to high sensitivity of such type of loans to house price changes. The market of subprime loans, especially in the last years preceding the crisis, has been highly financed by securitization. The paper investigates how borrowers with subprime characteristics influence the transmission mechanism of business cycles in the economy and whether the securitization of subprime loans has a positive effect on the economy. The formal setup is a DSGE model with different types of borrowers and banks acting as financial intermediaries, in which households and entrepreneurs borrow against housing collateral. The economy is subject to four shocks: monetary, inflationary, preference and technology. It is shown that alone the existence of subprime borrowers does not make the economy more responsive to different shocks at the aggregate level (it has only redistributional effects) and that under certain circumstances the securitization of subprime loans (in form of residential mortgage backed securities) may lead to amplification of the business cycles.
    JEL: E32 E44 G21
    Date: 2014
  33. By: Tomasz Brodzicki (University of Gdansk; Institute for Development)
    Abstract: This paper addresses the spatial aspects of economic growth at regional level. We review the theoretical and empirical literature on economic growth and new economic geography (NEG) paying particular attention to dynamic NEG models. Both economic growth and location of economic activity are endogenous. Complex interdependencies exist between them and they are only to a limited extent included in the current theoretical models. A review of the literature leads to the conclusion on the existence of a negative relationship between the rate of economic growth at the national level and the degree of differentiation at regional level. Thus, equalization-oriented policy aimed at equilibrating development opportunities may lead to a general slowdown. Emerging theoretical models a la Melitz in the heterogeneous firms models take into account the stochastic distribution of productivity at the firm level lead to interesting conclusions, but at the same time lose clarity and explicitness of generated recommendations. The ideal theoretical model adapted to Polish conditions should be of a dynamic and multi-sector, multi-regional type with core-periphery setup - allowing for hierarchical policentricity and endogenous economic growth (broadly defined capital accumulation), allowing for the flow of goods and factors of production, taking into account imperfect diffusion of knowledge (localized diffusion) . The ultimate version of the model should envisaged random variation in productivity of firms and consumer preferences. At the same time it would not eliminate the problem of the black-boxes. Due to the complexity of the model does not exist, what is more, it is unlikely to be created in the future. In all likelihood, the model would not lead to clear policy conclusions. Its usefulness from the perspective of regional policy would be thus very limited.
    Keywords: economic growth, new economic geography, regional development
    JEL: O40 O43 R11 R12
    Date: 2014–12
  34. By: Werner, Daniel
    Abstract: Large regional unemployment disparities are a common feature of the labor market in many countries. This study deals with the question whether regional unemployment disparities in western Germany widen, become narrower or remain constant over time. It examines the hypothesis of convergence for regional unemployment rates of western German Federal States and the time period 1968 to 2009 following different concepts of convergence. Western German regional unemployment rates exhibit beta-convergence but no sigma-convergence. Further, regional unemployment rates show a high degree of intra-distributional dynamics. Panel unit root tests designed for cross-sectional dependent panels are applied to investigate the hypothesis of stochastic convergence. This is necessary because the assumption of cross-sectional independency does not hold. The results do not indicate the existence of stochastic convergence. This is in contrast to previous studies that do not take cross-sectional dependence into account. However, additional robustness checks show that evidence of stochastic convergence depends on the underlying assumption about the shape of the equilibrium relationship between regional unemployment rates and their national counterpart. Western German regional unemployment is not characterized by a catching-up process between high and low unemployment regions. The development of regional unemployment disparities is mainly driven by economic disturbances.
    JEL: C33 J60 R12
    Date: 2014
  35. By: Coda Moscarola, Flavia; Colombino, Ugo; Figari, Francesco; Locatelli, Marilena (University of Turin)
    Abstract: A tax shifting from labour income to housing taxation is generally advocated on efficiency grounds. However, most of the empirical literature focuses on the distributional implications of property tax reforms without paying much attention to potential consequences on the labour market. The aim of this paper is to fill this gap by investigating the effects of at ax shifting from labour income to property, guaranteeing revenue neutrality, and to assess the consequences of labour market equilibrium, both on occupation rates and income distribution. We propose to consider a hypothetical tax reform in Italy which uses the revenue of the tax on house property (actually implemented in 2012) for increasing tax credits on low incomes and making them refundable. In order to evaluate the reform we have developed a structural model of household labour supply which takes into account the labour market equilibrium conditions. Overall, the simulated policy provides a more effective income support and better incentives to work for low wage households and determines an improvement in inequality indexes.
    Date: 2015–01
  36. By: Paulina Broniatowska (Warsaw School of Economics; National Bank of Poland); Aleksandra Majchrowska (Faculty of Economics and Sociology, University of Lodz; National Bank of Poland); Zbigniew ¯ó³kiewski (National Bank of Poland)
    Abstract: The main aim of the paper was to verify whether the changes in minimum to average wage ratio in Poland negatively affected youth (15-24 years old) employment rate. Moreover we tried to answer the question if this impact differs among regions. We analysed a model where changes in youth employment rate were the function of changes in minimum to average wage ratio as well as other (demand and supply) variables. The analyses were conducted on 16 Polish NUTS2 regions in 1999-2012. The analyses conducted in the paper showed that when we estimated the average impact of changes in minimum to average wage ratio on changes in youth employment rate the parameter was not significant. Changes in youth employment were driven mostly by changes in business cycle and in school enrolment ratio. After having checked for the regional variation of the determination of the youths’ employment rate we found that the impact of minimum on employment differed significantly among regions, both in terms of size and sign. The regions where youth employment rates were negatively affected in the whole period by changes in minimum to average wage ratio were the rural, less developed districts of Poland (Lubelskie and Podkarpackie). The results of our analyses indicate in regions with low productivity and low average wages the level of unique minimum wage may be too high. Low youth employment rates in those regions in Poland may not only result from insufficient aggregate demand but also from relatively high costs of employing young workers.
    Keywords: minimum wages, youth employment rates, regional labour markets in Poland.
    JEL: R23 J31
    Date: 2015–01
  37. By: Ruhose, Jens; Falck, Oliver; Lameli, Alfred
    Abstract: Ever since Sjaastad (1962), researchers have struggled to quantify the psychic cost of migration. We monetize psychic cost as the wage premium for moving to a culturally different location. We combine administrative social security panel data with a proxy for cultural difference based on unique data on historical dialect dissimilarity between German counties. Conditional on geographic distance and pre-migration wage profiles, we find that migrants demand a wage premium of about 1 percent for overcoming one standard deviation in cultural dissimilarity. The effect is driven by males, more pronounced for geographically short moves, and persistent over time.
    JEL: D51 J61 R23
    Date: 2014
  38. By: Shenila Rawal; Monazza Aslam; Baela Jamil
    Abstract: Substandard teaching is believed to be the foremost reason for poor quality schooling in the developing world.  This paper uses unique data from primary schools in the state of Punjab in Pakistan to delve into the issues that may determine what makes one teacher more effective than another.  The hypothesis that differential teacher effectiveness stems from far more than observable teacher characteristics is tested and more nuanced reasons behind these differences are examined.  In particular, teacher attitudes and opinions are investigated to give a more holistic approach to researching teacher effectivenes and its impact on student learning.
    Keywords: teacher effectiveness, student achievement, teacher attitudes, teacher opinions, fixed effects, Pakistan
    Date: 2013–11–30
  39. By: Trevon Logan; John Parman
    Abstract: This paper introduces a new measure of residential segregation based on individual-level data. We exploit complete census manuscript files to derive a measure of segregation based upon the racial similarity of next-door neighbors. Our measure allows us to analyze segregation consistently and comprehensively for all areas in the United States and allows for a richer view of the variation in segregation across time and space. We show that the fineness of our measure reveals aspects of racial sorting that cannot be captured by traditional segregation indices. Our measure can distinguish between the effects of increasing racial homogeneity of a location and the tendency to segregate within a location given a particular racial composition. Analysis of neighbor-based segregation over time establishes several new facts about segregation. First, segregation doubled nationally from 1880 to 1940. Second, contrary to previous estimates, we find that urban areas in the South were the most segregated in the country and remained so over time. Third, the dramatic increase in segregation in the twentieth century was not driven by urbanization, black migratory patterns, or white flight to suburban areas, but rather resulted from a national increase in racial sorting at the household level. The likelihood that an African American household had a non-African American neighbor declined by more than 15 percentage points (more than a 25% decrease) through the mid-twentieth century. In all areas of the United States -- North and South, urban and rural -- racial segregation increased dramatically.
    JEL: J1 N3 N9 N91 N92
    Date: 2015–02
  40. By: Lucht, Michael; Haas, Anette (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "Empirical evidence for the US shows that migrants increase the productivity of regions. To explain the impact of migrants on the average firm productivity we construct a general equilibrium model with monopolistic competition a la Melitz (2003). We consider heterogeneous firms with different productivity levels and imperfect substitutability between migrants and natives. This gives rise to wage differences between natives and migrants. As a consequence, firms with a higher share of migrants realize wage cost advantages. The heterogeneous distribution of migrants in our model fosters regional disparities. In equilibrium, it depends on the migrant share which kind of firms survives in the market. The only firms to stay in the market are those which are highly productive or able to compensate a lower productivity level through wage cost advantages. We show that a higher migrant share may explain a higher average productivity in a region. The welfare effects for natives are ambiguous." (Author's abstract, IAB-Doku) ((en))
    JEL: R23 J15 J24 J61
    Date: 2015–02–05
  41. By: Miriam Rehm (Chamber of Labour, Austria); Ali Asjad Naqvi (Center for Economic Research in Pakistan (CERP))
    Keywords: migration, agent-based modeling, networks
    JEL: C63 F22 J61
    Date: 2013–10
  42. By: Giorgio Calacagnini (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo"); Ilario Favaretto (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo"); Germana Giombini (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo"); Francesco Perugini (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo"); Rosalba Rombaldoni (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo")
    Abstract: Start-ups increasingly find the prospect of university-industry collaborations to be a powerful driver of innovation and entrepreneurship activity. Moreover, at the geographical level, they are attracted by teaching and research institutions, either public or private. This paper focuses on the role played by universities. Our hypothesis is that geographical proximity favors the transfer of knowledge and technology from universities to industries and, consequently, represents a positive factor for regional economic development. Results show that university spillovers are positively correlated with the creation of innovative start-ups. Furthermore, the presence of human capital (graduates) exerts a significant influence on the location decisions of start-ups, being a source for competitiveness for firms close to universities. Research quality, especially in the social sciences area, attracts innovative start-ups, while third-mission activities have a weak impact on locational choice.
    Keywords: CKnowledge transfer, Innovative start-up, University spillovers
    JEL: M13 L20 R30
    Date: 2014
  43. By: Ott, Ingrid; Soretz, Susanne
    Abstract: This paper analyzes within a two-region endogenous growth model how different types of public policies affect the equilibrium spatial distribution of economic activity. Integration is modeled as a continuum and enables firms to access the public input of the respective other region. Given a dominance of agglomeration forces, multiple equilibria arise at which spreading becomes unstable and the stable equilibrium is characterized by a core-periphery structure. If only partial coordination of the two goverments decisions is realized, the positive productivity impact of one region s public input on the other region s marginal capital return becomes a positive externality. Then, the concentration of public inputs may end up to be suboptimally high or low, depending on the degree of scale effects. We perform numerical simulations to derive the equilibrium capital distribution and to disentangle the impact of the various determinants on equilibrium agglomeration.
    JEL: O40 R50 D50
    Date: 2014
  44. By: Ambrogio Cesa-Bianchi; Luis Felipe Cespedes; Alessandro Rebucci
    Abstract: In this paper we first compare house price cycles in advanced and emerging economies using a new quarterly house price data set covering the period 1990-2012. We find that house prices in emerging economies grow faster, are more volatile, less persistent and less synchronized across countries than in advanced economies. We also find that they correlate with capital flows more closely than in advanced economies. We then condition the analysis on an exogenous change to a particular component of capital flows. We find that a global liquidity shock, identified by aggregating bank-to-bank cross border flows and by using the external instrumental variable approach of Stock and Watson (2012) and Mertens and Ravn (2013), has a much stronger impact on house prices and consumption in emerging markets than in advanced economies. In our empirical model, holding house prices or the exchange rate constant in response to this shock tends to dampen its effects on consumption in emerging economies.
    Keywords: Housing prices;Business cycles;Capital flows;International liquidity;Emerging markets;Developed countries;Capital flows, emerging markets, global liquidity, house prices, external instrumental variables
    Date: 2015–01–29
  45. By: Christopher P. Roth
    Abstract: I use a randomised conditional cash transfer program from Indonesia to provide evidence on peer effects in consumption of poor households.  I combine this with consumption visibility data from Indonesia to examine whether peer effects in consumption differ by a good's visibility.  In line with a model of conspicuous consumption, I find that the expenditure share of visible (nonvisible) goods rises (falls) for untreated households in treated sub-districts, whose reference group visible consumption is exogeneously increased.  Finally, I provide evidence on the mechanisms underlying the estimated spillovers using data on social interactions and social punishment norms.  In line with Veblen's (1899) claim that conspicuous consumption is more prevalent in societies with less social capital, I show that the peer effects in visible goods are larger in villages and for households with lower levels of social activities.
    Keywords: Conspicuous Consumption, Peer Effects, Relative Concerns, Spillovers, Social Interactions, Social Norms
    JEL: D12 C21 I38
    Date: 2015–02–04
  46. By: Coral del Río; Olga Alonso-Villar
    Abstract: This paper deals with the quantification of the well-being loss/gain of a demographic group associated with its occupational segregation, an issue that, as far as we know, has not been formally tackled in the literature. For this purpose, this paper proposes several properties to take into account when measuring this phenomenon. Building on standard assumptions of social welfare functions, it also defines and characterizes a parameterized family of indices that satisfy those properties. In particular, the indices are equal to zero when either the group has no segregation or all occupations have the same wage, and the indices increase when individuals of the group move into occupations that have higher wages than those left behind. In addition, ceteris paribus, the indices increase more the lower the wage is of the occupation left behind, and consider small improvements for many people to be more important than large improvements for a few.
    Keywords: Segregation measures; occupations; well-being
    JEL: D63 J15 J16
    Date: 2015–02
  47. By: Makles, Anna; Schneider, Kerstin
    Abstract: The paper adds to the literature on extracurricular early childhood education and child development by exploiting unique data on an educational project in Germany, the Junior University (JU). By utilizing a quasi-experimental study design we estimate the causal short-term effect of JU enrollment and show that attending JU significantly leads to higher school readiness, i.e. higher cognitive and non-cognitive abilities. Although the effect of attending JU on school readiness is quite small, the results are plausible and pass various robustness checks.
    JEL: I20 I21 I28
    Date: 2014
  48. By: Gathmann, Christina; Helm, Ines; Schönberg, Uta
    Abstract: Governments are often willing to subsidize firms on the verge of bankruptcy. The main economic rationale behind these interventions is that a plant closure would not only harm the workers employed in that plant, but create a domino effect on the regional economy as a whole. Yet, little is still known empirically how important these spillover effects are for economic development in the region. In this paper, we use administrative data of all workers and firms in Germany to quantify the spillover effects of mass layoffs. For the empirical analysis, we combine a difference-in-differences estimator with an event-study approach. We find sizeable negative spillover effects on the regional economy: regions, and especially firms producing in the same sector as the firm hit by a mass layoff, lose many more jobs than in the initial layoff. In contrast, we find few negative effects for workers employed (but not directly affected by the layoff) in the region. As such, mass layoffs seem to have negative spillovers locally, but not nationally.
    JEL: J21 J31 R12
    Date: 2014
  49. By: Ramaele Moshoeshoe
    Abstract: Understanding class size effects on educational achievement remains a preoccupation of many economists. But empirical results are, to this far, still inconclusive. I use the two-stage least squares and the instrumental variable quantile regression methods on Lesotho’s grade 6 students maths and reading test scores to estimate, respectively, the mean and distributional effects of class size. I find strong evidence for putative class size effects on reading achievement, but not on maths achievement. Using the bounds methods of Conley et al (2012), I show that these findings are robust to weak violations of the instrumental variable exclusion restriction requirement. I also find that a small class size generally benefits the low-ability students the most.
    Keywords: Class size, Instrumental variable, Quantile Treatment Effects
    JEL: H52 I21 I28 O15
    Date: 2015
  50. By: Kopmann, Angela; Rehdanz, Katrin
    Abstract: This paper is among the first to link internal migration and subjective well-being in developed countries. Economic theory predicts that individuals migrate towards urban agglomerations, if the potential gain in income is sufficient to cover costs. However, this narrow view cannot explain why migration exists also to the rural periphery. In our analysis, we investigate non-monetary benefits beyond economics from internal migration. Using highly disaggregated spatial information on people s migration decisions and their subjective well-being from 2006 to 2010 for Germany, we control for selection bias by applying an individual fixed effect model with additional controls on the labor market region level. We find positive benefits from migration, which are positive and diminishing with distance. Urban-to-rural migration provides higher benefits than rural-to-urban migration in general. Older generations derive large negative benefits from rural-to-urban migration, but positive benefits from urban-to-rural migration. The latter suggests that economic theory underestimates benefits from migration to the periphery when ignoring non-monetary compensating differentials.
    JEL: A12 C33 R23
    Date: 2014
  51. By: Ricky Burdett; Peter Griffiths; Catarina Heeckt; Fracis Moss; Shan Vahidy; Philipp Rode; Tony Travers
    Abstract: Innovation in European Cities sets out the context for Bloomberg Philanthropies’ European Mayors Challenge. It gives an overview of the key themes facing European cities today and provides an independent analysis of the 155 submissions to the award and a detailed review of the five winning proposals. Throughout 2014, researchers from LSE Cities provided input to Bloomberg Philanthropies on the political and demographic make-up of selected European cities, and carried out an objective assessment of the level of innovation shown by the shortlisted proposals. In writing this report, LSE Cities also interviewed representatives from the winning cities. The report draws on this work as well as research on the social, economic and political dynamics of cities at a global and European level, a wider lens through which to better view and understand the themes uncovered by the European Mayors Challenge. The report is organised into four parts. The first offers an overview of global dynamics in an urban age, the second identifies the key themes addressed by the submissions for the award and the third focuses on the five winning proposals. The report concludes by offering a series of reflections on what the European Mayors Challenge tells us about some of the key issues facing city governments across Europe today, and what lessons might be drawn from the Challenge, worldwide.
    JEL: Q15
    Date: 2015–02
  52. By: Zoubek, Malte; Kessing, Sebastian G.; Lipatov, Vilen
    Abstract: Regional productivity di erences are large and provide scope for productivity-enhancing inter-regional labor mobility. Using an optimal taxation framework that combines an intensive labor supply margin with an extensive, productivity- enhancing migration margin, we explore the implications of regional productivity differences for the design of optimal tax transfer-schemes. Regional inequality poses an additional restriction on the government which can limit optimal redistribution. With intra-regional migration marginal tax rates tend to be reduced and negative tax rates are possible. Our simulations indicate that the additional restriction can be quantitatively important and that negative tax rates can occur for empirically plausible cases.
    JEL: H11 H21 R12
    Date: 2014
  53. By: Lisciandra, Maurizio; Millemaci, Emanuele
    Abstract: This paper provides a within-country analysis of the impact of corruption on economic growth using a panel of Italian regions from 1968 to 2011 through a robust measure of corruption. This measure is averaged over 5-year periods to reduce short-run fluctuations and to reduce probable delayed effects, which are typical for latent phenomena such as corruption. The results show a significant negative impact of corruption on long-term growth in all specifications, both on average and for each Italian region. As a consequence, a zero-level of corruption is growth maximizing. This effect is non-linear such that the negative impact of corruption on growth becomes less intense as corruption increases.
    Keywords: corruption; economic growth; cross-regional analysis; dynamic panel data
    JEL: D73 K4 O10 R11
    Date: 2015–02
  54. 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
  55. By: Brown, W. Mark; Macdonald, Ryan
    Abstract: This analysis examines provincial income convergence in Canada from 1926 to 2011 using National Accounts-based estimates of per capita household disposable income. Household disposable income is the income available for consumption and saving, and is, therefore, closely aligned with material well-being. Convergence is a long-run tendency for income levels between economies to become more similar. In its most literal sense, convergence implies that all provincial per capita disposable incomes across Canada will eventually reach the same level. Less exacting forms of convergence allow for differences in per capita income levels due to structural differences across provinces. Factors such as resource endowments, urbanization, human capital, and industry structure are believed to be sources of such differences.
    Keywords: Business performance and ownership, Consumer price indexes, Economic accounts, Energy, Prices and price indexes, Regional and urban profiles
    Date: 2015–02–12
  56. By: Marcel Fafchamps; Simon Quinn
    Abstract: We run a novel field experiment to link managers of African manufacturing firms.  The experiment features exogenous link formation, exogenous seeding of information and exogenous assignment to treatment and placebo.  We study the impact of the experiment on firm business practices outside of the lab.  We find that the experiment successfully created new variation in social networks.  We find some limited evidence of diffusion of management practices, particularly in terms of firm formalisation and innovation.  Such diffusion appears to be a combination of diffusion of innovation and simple imitation.
    JEL: D22 L26 O33
    Date: 2014–06–19
  57. By: Johannes Meuer (Department of Business Administration, University of Zurich); Christian Rupietta (Department of Business Administration, University of Zurich); Uschi Backes-Gellner (Department of Business Administration, University of Zurich)
    Abstract: The innovation systems approach, which has taken a prominent position in the academic literature, has also influenced policy-makers around the globe. Most research analyses innovation systems taking a national, regional or sectoral perspective, following a 'technological imperative'. Yet changes in institutional conditions and the importance of non-technological innovation question the accuracy and the relevance of the existing boundaries of innovation systems. These developments ask for a better understanding of how innovation systems integrate within and across different levels. Drawing on a novel combination of configurational and econometric analysis, we analyse 384 Swiss firms and identify five co-existing innovation systems: two generic innovation systems, the autarkic and the knowledge-internalisation; one regional innovation system, the protected hierarchy; and two sectoral innovation systems, the public sciences and the organised learning. The generic innovation systems entail the 'Science, Technology and Innovation' (STI) and the 'Doing, Interacting and Using' (DUI) learning modes. These systems are structurally distinct and do not integrate. In contrast, all regional and sectoral innovation systems integrate the learning modes of the generic innovation systems and complement them with idiosyncratic elements. The perspective on co-existing innovation systems that we develop here indicates the existence of two layers of innovation systems: a 'central' layer that hosts generic innovation systems and that constitutes the foundation for a second 'surface' layer that hosts regional and sectoral innovation systems. We discuss the implications of layers of co-existing innovation systems for policy-makers and future research.
    Keywords: Innovation systems, technological and organisational innovation, firms' learning behaviour, institutional frameworks, fsQCA, SUR model
    Date: 2015–01
  58. By: Weber, Andrea; Saygin, Peri; Weynandt, Michele
    Abstract: Social networks are an important channel of information transmission in the labor market. In this paper investigate how displaced workers searching for new jobs benefit from information provided by their former coworkers. In line with the theoretical and empirical literature we find that the employment status networks members matters for the job finding rate. We further analyze the mechanisms through which employed contacts affect job search outcomes and find that (i) the types of firms at which the contacts work are important and (ii) contacts with similar characteristics as the displaced worker lead to better outcomes. Our findings strongly indicate that job referrals from network members are the main mechanism by which social contacts influence job search outcomes.
    JEL: J01 J64 J63
    Date: 2014
  59. By: Kamhöfer, Daniel
    Abstract: While there is a big literature on the benefits of pre-school education, only little is known why kindergarten attendance improves later-life outcomes. This is partly because most studies analyze the effect of complete 2 years pre-school programs. In order to shed light into the black box of kindergarten education, I am using the German National Educational Panel Study and regress the level of grammar skills - a main intelligence component - on the participation in a nationwide-used language training program and a rich set of conditioning variables. Taking information on mathematical skills into account, this paper also employs matching and differences-in-differences methods as well as a combination of both. The estimated effects of participating in a language training program at the kindergarten on grammar skills range between 11% and 17% of a standard deviation.
    JEL: I21 I28 J24
    Date: 2014
  60. By: He, Yinghua
    Abstract: The Boston mechanism is criticized for its poor incentive and welfare performance compared with the Gale-Shapley deferred-acceptance mechanism (DA). Using school choice data from Beijing, I investigate parents' behavior under the Boston mechanism, taking into account parents' possible mistakes when they strategize. Evidence shows that parents are overcautious as they play "safe" strategies too often. There is no evidence showing that wealthier and more-educated parents are any more adept at strategizing. If others behave as in the data, an average naive parent who is always truth-telling experiences a utility loss in switching from the Boston to the DA, equivalent to an 8% increase in the distance from home to school or substituting a 13% chance at the best school with an equal chance at the second best. She has a 27% chance to be better off and a 55% chance being worse off. If instead parents are either sophisticated (always playing a best response against others) or naive, results are mixed: Under the DA, naive ones enjoy a utility gain on average when less than 80% of the population is naive, while still about 42% worse off and only 39% better off. Sophisticated parents always loose more.
    Keywords: Boston Mechanism, Gale-Shapley Deferred-Acceptance Mechanism, School Choice, Bayesian Nash Equilibrium, Strategy-Proofness, Moment Inequalities
    JEL: C72 D61 I24
    Date: 2015–01
  61. By: Scott E. Carrell; Mark Hoekstra; James E. West
    Abstract: Understanding whether racial attitudes are malleable is critical for addressing the underlying causes of racial discrimination. We examine whether white males' stated attitudes and behavior toward African Americans change based on the number and type of black peers to whom they are exposed. To overcome selection bias, we exploit data from the U.S. Air Force Academy in which students are randomly assigned to peer groups. Results show significant evidence in favor of the contact hypothesis. White males are significantly affected by both the number (quantity) and aptitude (quality) of the black peers with whom they are exposed. Specifically, white men randomly assigned to higher-aptitude black peers report being more accepting of blacks in general and are more likely to match with a black roommate the following year after reassignment to a new peer group with a different set of black peers. We also find that, ceteris paribus, exposure to more black peers significantly increases the probability of a bi-racial roommate match.
    JEL: I24 J15
    Date: 2015–02
  62. By: Gisselquist, Rachel M.; Leiderer, Stefan; Nino-Zarazua, Miguel
    Abstract: The hypothesis that ethnic diversity has a negative impact on public goods provision is widely accepted. Notably, most work on this issue fails to distinguish adequately between national versus subnational governance. We find that subnational empirical ev
    Keywords: ethnic diversity, government performance, education, health, Zambia
    Date: 2014
  63. By: Alexander James (Department of Economics and Public Policy, University of Alaska Anchorage)
    Abstract: Existing development literature has argued that natural-resource endowments ``curse'' economic prosperity by reducing expenditures on education. According to this theory, public and private agents lack sufficient foresight to make optimal economic decisions and become poor as a result. Using a panel of U.S. state-level data, this paper offers evidence to the contrary. Public spending on education in resource-rich states greatly exceeds that in resource-scarce ones, and private education services are imperfectly crowded out as a result. More generally, this paper highlights the importance of exploiting both spatial and temporal variation in resource wealth when studying resource-rich economies.
    Keywords: Natural Resources, Education, Public Policy, Resource Curse
    JEL: Q32 Q33 Q38
    Date: 2015–01
  64. By: Siegloch, Sebastian
    Abstract: This is the first paper to thoroughly investigate the employment effects of corporate taxation. Higher taxes are theoretically shown to have a negative impact on employment through reduced investments, if labor is regionally mobile. I test this prediction by exploiting the specific setting of the German local business tax, where on average 10% of the 11,441 German municipalities change their tax rate each year. Relying on rich administrative linked employer-employee panel data, I provide non-parametric and parametric evidence that employment declines if corporate tax rates increase. For given wages, a one euro increase in the tax bill of corporate firms leads to a reduction in the wage bill by 30 cents over two years. I show empirically that the negative employment effect is triggered by reduced net investments and that workers are mobile within labor market regions.
    JEL: H22 H25 J21
    Date: 2014
  65. By: Berger, Melissa; Fellner-Röhling, Gerlinde; Sausgruber, Rupert; Traxler, Christian
    Abstract: This paper studies the evasion of TV license fees in Austria. We exploit border differentials to identify the effect of fees on evasion. Comparing municipalities at the low- and high-fee side of state borders reveals that higher fees trigger significantly more evasion. The central estimate from a spatial regression discontinuity design indicates that a one percent increase in fees raises the evasion rate by 0.3 percentage points. The positive effect of fees on evasion is confirmed in different parametric and non-parametric approaches and survives several robustness checks.
    Keywords: Evasion,TV License Fees,Border Tax Differentials,Regression Discontinuity Design
    JEL: H26 H27
    Date: 2015
  66. By: Bönke, Timm; Jochimsen, Beate; Schröder, Carsten
    Abstract: In many federations, fiscal equalization schemes soften fiscal imbalances across the member states. Such schemes usually imply that a member state internalizes only a small fraction of the additional tax revenue from an expansion of the state-specific tax base, while the remainder of the additional tax revenue is redistributed horizontally or vertically. We address the question as to which extent state-level authorities in such a federation under-exploit their tax bases. By means of a stylized model we show that the state authorities in such a federation have incentives to align the effective tax rates of the state residents to the internalized marginal return from a stricter enforcement of the tax law. We empirically test the model using two approaches. In a state-level approach, we explore whether the state-specific internalized marginal returns matter for the states investments in tax enforcement. In a micro-econometric approach, using OLS regressions and natural-experiments, we explore whether internalized marginal returns matter for the effectiveness of the states tax enforcement activities, captured by the tax deductions granted to tax units. All our estimates support the results from our theoretical model.
    JEL: H21 H77 C21
    Date: 2014
  67. By: Piopiunik, Marc; Hanushek, Eric A.; Wiederhold, Simon
    Abstract: Student performance differs greatly across countries, but little is known about the role of teacher quality in explaining these differences. New international data from the PIAAC survey of adult skills allow for the first time to quantify teacher skills in numeracy and literacy, providing country-level measures of teacher subject knowledge. Our student-level regressions with PISA data exploit between-subject variation to overcome bias from unobserved country heterogeneity and control for parent skills to account for the persistence of skills across generations. We find that a one-standard-deviation increase in subject-specific teacher skills raises student performance by 7 percent of a standard deviation in math and 6 percent in reading.
    JEL: I20 H40 H52
    Date: 2014
  68. By: Kibae Kim (Technology Management, Economics, and Policy Program; College of Engineering; Seoul National University); Jörn Altmann (Technology Management, Economics, and Policy Program; College of Engineering; Seoul National University)
    Abstract: As empirical studies have found that large complex networks (e.g., WWW) are scale-free, the preferential attachment model is commonly applied to generate this network topology. This model assumes a node with higher degree is more likely to gain a new link, and ignore node attributes except the node degree. However, recent empirical studies also found that node attributes are not identical across all nodes of a network, and a node prefers connecting to other nodes with similar attributes. This preference is called homophily. Therefore, the research question rises whether the preferential attachment model always generates a scale-free network if homophily exists. In this paper, we explore the effect of homophily on network evolution by applying the preferential attachment model with homophily to five different seed networks (i.e., a single dipole, a multiple dipoles, a ring, a star, and a random network). Our simulation results for all five seed networks suggest that homophily distorts the network evolution of a scale-free network, which has a concavely shaped cumulative degree distribution, towards a convexly shaped cumulative degree distribution. These results can explain why some of the empirical complex networks show a linear cumulative degree distribution in log-log scale while others show either concave or convex shape. The implication of our results calls for attention when applying network formation models to complex network studies. These models should consider not only the graph theoretic properties but also node attributes, depending on the environment that governs the network evolution.
    Keywords: Network Evolution, Scale-Free Networks, Preferential Attachment Rule, Homophily, Concave/Convex Power-Law.
    JEL: A12 C63 C73 D85 Z13
    Date: 2015–01
  69. By: Mechtel, Mario; Hett, Florian; Kröll, Markus
    Abstract: This paper tests social identity theory with respect to individuals' self-identification behavior. We report results from a laboratory experiment in which subjects choose their group membership, which is interpreted as decision to identify with the respective group. Inducing a trade-off between monetary payoffs and different group identification choices we elicit the respective implicit valuations of identifying with different groups. The variation of these valuations is in line with the predictions from social identity theory: Subjects have a higher valuation for identifying with groups with a higher status and with groups to which they have a smaller social distance. Finally, we show that this behavior predicts individual out-group discrimination in allocation decisions, which has previously been shown to be associated with social identity. Overall our results provide strong support for the notion that individuals optimize behavior with respect to social identity.
    JEL: D01 D03 C90
    Date: 2014
  70. By: Martina Kirchberger
    Abstract: While it is clear that natural disasters have serious welfare consequences for affected populations, less is known with respect to how local labour markets in low income countries adjust to such large shocks in particular the general equilibrium effects of the increase in the demand for construction as well as the inflow of resources in the aftermath of natural disasters.  Combining data from the Indonesia Famiy Life Survey, the Desinventar database, the US Geological Survey and district level employment indicators, this paper explores how a large earthquake in Indonesia affected local labour markets, in particular the evolution of wages and employment across sectors.  We find that wage growth in the agriculture sector is significantly higher in earthquake affected areas.  We propose two mechanisms for this result: a higher growth rate of the price of rice in agricultural communities which switch from being net sellers to net buyers of rice and a downward shift in the supply of workers in the agricultural sector.  We show evidence for both mechanisms.
    Keywords: Local labour markets, natural disasters
    JEL: J20 Q54 O10
    Date: 2014–05–01

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