nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2015‒03‒05
38 papers chosen by
Steve Ross
University of Connecticut

  1. Capitalization of Charter Schools into Residential Property Values By Scott A. Imberman; Michael Naretta; Margaret O’Rourke
  2. How mortgage finance affects the urban landscape By Chan, Sewin; Haughwout, Andrew F.; Tracy, Joseph
  3. Which Way to Recovery? Housing Market Outcomes and the Neighborhood Stabilization Program By Schuetz, Jenny; Spader, Jonathan; Buell, Jennifer Lewis; Burnett, Kimberly; Buron, Larry; Cortes, Alvaro; DiDomenico, Michael; Jefferson, Anna; Redfearn, Christian; Whitlow, Stephen
  4. The Determinants and Welfare Implications of US Workers' Diverging Location Choices by Skill: 1980-2000 By Diamond, Rebecca
  5. Moving House By Kevin Sheedy; Rachel Ngai
  6. The Determinants of Subprime Mortgage Performance Following a Loan Modification By Schmeiser, Maximilian D.; Gross, Matthew B.
  7. The Interaction between Job Search and Housing Decisions By Núria Quella; Silvio Rendon
  8. Urban house prices: A tale of 48 cities By Kholodilin, Konstantin A.; Ulbricht, Dirk
  9. Institutions, Smart Specialisation Dynamics and Policy By Grillitsch , Markus
  10. Proposition 13: An Equilibrium Analysis By Ayse Imrohoroglu
  11. Opportunities and Strategies for Mainstreaming Open Data in Transport Projects in St. Petersburg By World Bank
  12. Housing habits and their implications for life-cycle consumption and investment By Kraft, Holger; Munk, Claus; Wagner, Sebastian
  13. Place-based policies By David Neumark; Helen Simpson
  14. Dynamic Co-movements between Economic Policy Uncertainty and Housing Market Returns By Nikolaos Antonakakis; Rangan Gupta; Christophe Andre
  15. Why has the mortgage debt increased by so much in Canada? By Fortin Mario
  16. Endogenous unrestricted locations in markets with network effects By Ribeiro, Vitor
  17. Determinants of total factor productivity of Polish districts. The impact of territorial capital By Dorota Ciołek; Tomasz Brodzicki
  18. Diversity and employment prospects: neighbors matter! By Camille Hémet
  19. The effect of perceived regional accents on individual economic behavior: A lab experiment on linguistic performance, cognitive ratings and economic decisions By Heblich, Stephan; Lameli, Alfred; Riener, Gerhard
  20. Nanopolitans and Picopolitans: Exploring the Value of Core-Based Definitions Below the Micropolitan Level By Eathington, Liesl
  21. Teachers’ Pay for Performance in the Long-Run: Effects on Students’ Educational and Labor Market Outcomes in Adulthood By Victor Lavy
  22. Taming Global Finance in an Age of Capital? Wage-Setting Institutions' Mitigating Effects on Housing Bubbles By Alison Johnston; Aidan Regan
  23. A Quantitative Analysis of Subsidy Competition in the U.S. By Ralph Ossa
  24. The impact of immigration on the local labor market outcomes of blue collar workers: panel data evidence By Javier Ortega; Gregory Verdugo
  25. Does Early Educational Tracking Increase Migrant-Native Achievement Gaps? Differences-In-Differences Evidence Across Countries By Jens Ruhose; Guido Schwerdt
  26. Access to Affordable and Low-Income Housing in East Asia and the Pacific By World Bank
  27. Smart specialisation: Sources for new path development in a peripheral manufacturing region By Asheim , Bjørn; Grillitsch , Markus
  28. Combining knowledge bases in transnational innovation - microfoundations and the geography of organization By Strambach , Simone
  29. Distance, Time since Foreign Entry, and Knowledge Spillovers from Foreign Direct Investment By Bruno Merlevede; Victoria Purice
  30. Food environment and childhood obesity: The effect of dollar stores By Drichoutis, Andreas C.; Nayga, Rodolfo M.; Rouse, Heather L.; Thomsen, Michael R.
  31. Online social networks and trust By Sabatini, Fabio; Sarracino, Francesco
  32. Culture, Ethnicity and Diversity By Desmet, Klaus; Ortuño-Ortín, Ignacio; Wacziarg, Romain
  33. Spillover Effects in a Federal Country with Vertical Tax Externalities By Lisa Grazzini; Alessandro Petretto
  34. The use (and misuse) of Pisa in guiding policy reform: the case of Spain By Álvaro Choi; John Jerrim
  35. Effects of fiscal policy in the North and South of Italy By Piacentini, Paolo; Prezioso, Stefano; Testa, Giuseppina
  36. Economic Growth and Migration By Jan Ditzen
  37. The Efficiency of “Benefit-Related” Business Taxes By Elisabeth Gugl; George R. Zodrow
  38. Taking the High Road? Compliance with commuter tax allowances and the role of evasion spillovers By Jörg Paetzold; Hannes Winner

  1. By: Scott A. Imberman; Michael Naretta; Margaret O’Rourke
    Abstract: While prior research has found clear impacts of schools and school quality on property values, little is known about whether charter schools have similar effects. Using sale price data for residential properties in Los Angeles County from 2008 to 2011 we estimate the neighborhood level impact of charter schools on housing prices. Using an identification strategy that relies on census block fixed-effects and variation in charter penetration over time, we find little evidence that the availability of charter schools affect housing prices on average. However, we do find that when restricting to charter schools located in the same school district as the household, housing prices outside Los Angeles Unified School District fall in response to an increase in nearby charter penetration.
    JEL: H41 I21 I22 R21
    Date: 2015–02
  2. By: Chan, Sewin (Federal Reserve Bank of New York); Haughwout, Andrew F. (Federal Reserve Bank of New York); Tracy, Joseph (Federal Reserve Bank of New York)
    Abstract: This chapter considers the structure of mortgage finance in the U.S., and its role in shaping patterns of homeownership, the nature of the housing stock, and the organization of residential activity. We start by providing some background on the design features of mortgage contracts that distinguish them from other loans, and that have important implications for issues presented in the rest of the chapter. We then explain how mortgage finance interacts with public policy, particularly tax policy, to influence a household’s decision to own or rent, and how shifts in the demand for owner-occupied housing are translated into housing prices and quantities, given the unusual nature of housing supply. We consider the distribution of mortgage credit in terms of access and price, by race, ethnicity, income, and over the lifecycle, with particular attention to the role of recent innovations such as non-prime mortgage securitization and reverse mortgages. The extent of negative equity has been unprecedented in the past decade, and we discuss its impact on strategic default, housing turnover, and housing investment. We describe spatial patterns in foreclosure and summarize the evidence for foreclosure spillovers in urban neighborhoods. Finally, we offer some thoughts on future innovations in mortgage finance.
    Keywords: mortgage; cities
    JEL: G21 R21 R31
    Date: 2015–02–01
  3. By: Schuetz, Jenny (Board of Governors of the Federal Reserve System (U.S.)); Spader, Jonathan (Abt Associates); Buell, Jennifer Lewis (Abt Associates); Burnett, Kimberly (Abt Associates); Buron, Larry (Abt Associates); Cortes, Alvaro (Abt Associates); DiDomenico, Michael (Abt Associates); Jefferson, Anna (Abt Associates); Redfearn, Christian (University of Southern California); Whitlow, Stephen (Abt Associates)
    Abstract: To help communities recover from the foreclosure crisis, Congress enacted a set of policies known as the Neighborhood Stabilization Program (NSP). NSP's objective was to mitigate the impact of foreclosures on neighboring properties, through reducing the stock of distressed properties and removing sources of visual blight. This paper presents evidence on production outcomes achieved through the second round of NSP funding (NSP2), and discusses the housing market context under which the program operated from 2010 to 2013. Two key findings emerge. First, local grantees undertook quite different approaches to NSP2. The type and scale of activity, expenditures per property and spatial concentration vary widely across grantees. Second, census tracts that received NSP2 investment had poor economic and housing market conditions prior to the program, but generally saw improved housing markets during the program's implementation period, as did non-NSP2 tracts in the same counties. Based on these findings, we outline topics and suggested approaches for additional research.
    Keywords: Urban redevelopment; mortgages; housing markets; federal housing policy; fiscal federalism
    JEL: H50 H70 R10 R30 R50
    Date: 2014–12–03
  4. By: Diamond, Rebecca (Stanford University)
    Abstract: From 1980 to 2000, the rise in the U.S. college-high school graduate wage gap coincided with increased geographic sorting as college graduates concentrated in high wage, high rent cities. This paper estimates a structural spatial equilibrium model to determine causes and welfare consequences of this increased skill sorting. While local labor demand changes fundamentally caused the increased skill sorting, it was further fueled by endogenous increases in amenities within higher skill cities. Changes in cities' wages, rents, and endogenous amenities increased inequality between high-school and college graduates by more than suggested by the increase in the college wage gap alone.
    Date: 2013–12
  5. By: Kevin Sheedy (London School of Economics); Rachel Ngai (London School of Economics)
    Abstract: The majority of transactions in housing market involve moving from one house to another. This process entails a listing (putting up for sale) of an existing house and the eventual purchase of another house. Existing models of the housing market have focused solely on buying and selling decisions, taking moving from the current house as exogenous. This paper builds a model to analyse moving house and presents two empirical observations to show the importance of understanding moving decisions. The model generates new dynamics relative to the case of exogenous moving where movers would simply be a random sample of homeowners. Endogenous moving means that those who move come from the bottom of the match quality distribution, which gives rise to a cleansing effect and leads to overshooting of housing-market variables.
    Date: 2014
  6. By: Schmeiser, Maximilian D. (Board of Governors of the Federal Reserve System (U.S.)); Gross, Matthew B. (University of Michigan)
    Abstract: We examine the evolution of mortgage modification terms obtained by distressed subprime borrowers during the recent housing crisis, and the effect of the various types of modifications on the subsequent loan performance. Using the CoreLogic LoanPerformance dataset that contains detailed loan level information on mortgages, modification terms, second liens, and home values, we estimate a discrete time proportional hazard model with competing risks to examine the determinants of post-modification mortgage outcomes. We find that principal reductions are particularly effective at improving loan outcomes, as high loan-to-value ratios are the single greatest contributor to re-default and foreclosure. However, any modification that reduces total payment and interest (P&I) reduces the likelihood of subsequent re-default and foreclosure. Modifications that involve increasing the loan principal--primarily through capitalized interest and fees--are more likely to fail, even controlling for change in P&I.
    Keywords: Mortgage Modification; Subprime; Mortgage Default; Foreclosure; HAMP
    JEL: D12 G21 R20 R28
    Date: 2014–12–15
  7. By: Núria Quella (SUNY - Stony Brook University); Silvio Rendon (Stony Brook University)
    Abstract: In this paper we explain how easier home financing and higher homeownership rates increase unemployment rates. To this purpose we build a model of job search with liquid wealth accumulation and consumption of housing, that can be rented, bought on credit, or sold. In our model, more relaxed house credit conditions increase workers' reservation wages, making them more selective in their job search. More selective job searches deteriorate employment transitions: job finding and job-to-job transitions rates decline while job loss rates increase, causing the overall unemployment rate to rise. We estimate this model structurally using NLSY data from 1978 until 2005. We find that more relaxed housing lending conditions, particularly lower downpayment requirements, increase unemployment rates by 6 percent points. We also find that declining labor demand decreases homeownership rates by 14 percent points.
    Date: 2014
  8. By: Kholodilin, Konstantin A.; Ulbricht, Dirk
    Abstract: In this paper, the authors construct a unique data set of Internet offer prices for flats in 48 large European cities from 24 countries. The data are collected between January and May 2012 from 33 websites, where the advertisements of flats for sale are placed. Using the resulting sample of 750,000 announcements the authors compute the average city-specific house prices. Based on this information they investigate the determinants of the apartment prices. Four factors are found to be relevant for the flats' price level: income per capita, population density, unemployment rate, and income inequality. The results are robust both to excluding variables and to applying two alternative estimation techniques: OLS and quantile regression. Based on their estimation results the authors are able to identify the cities, where the prices are overvalued. This is a useful indication of a build-up of house price bubbles.
    Keywords: internet ads,flats' prices,large European cities,fundamental prices
    JEL: C21 R31
    Date: 2015
  9. By: Grillitsch , Markus (CIRCLE, Lund University)
    Abstract: Smart specialisation features prominently in the European regional policy context. This paper discusses how the configuration of the regional institutional framework affects smart specialisation dynamics and policy. It elaborates why and how institutional diversity and integration promote entrepreneurial discovery processes, spillovers and agglomeration effects, and thereby structural change in regions. Policy challenges arising from the regional institutional framework are identified, discussed and related to well-research system failures of regional innovation systems.
    Keywords: regional policy; smart specialisation; institutions; regional innovation systems; system failures
    JEL: B52 O17 O43 P48 R10 R11 R58
    Date: 2015–02–26
  10. By: Ayse Imrohoroglu (USC)
    Abstract: In 1978, California passed one of the most significant tax changes initiated by voters in the United States. Proposition 13, stipulated rolling back property assessments for tax purposes to 1975 market value levels, and restricted future property tax increases. In this paper, we study the implications of Proposition 13 on house prices, housing choices, turnover over the life cycle, and welfare of the households in an economy populated with overlapping generations of agents who derive utility from consumption of goods and housing. We find that Proposition 13 distorts housing choices by lowering turnover and smoothing housing consumption over the life cycle. We study the transition dynamics of moving from an economy featuring Proposition 13 to alternative revenue-neutral regimes with proportional real estate taxes. We find that different revenue-neutral regimes generate very different levels of support. While most middle-aged and older households prefer the status-quo with Proposition 13, younger agents may support the elimination of Propostion 13 as long as the reform does not lead to an increase in house prices.
    Date: 2014
  11. By: World Bank
    Keywords: Urban Transport Urban Development - Transport in Urban Areas Roads and Highways Private Sector Development - E-Business Transport Economics Policy and Planning Transport
    Date: 2014–12
  12. By: Kraft, Holger; Munk, Claus; Wagner, Sebastian
    Abstract: We set up and solve a rich life-cycle model of household decisions involving consumption of both perishable goods and housing services, stochastic and unspanned labor income, stochastic house prices, home renting and owning, stock investments, and portfolio constraints. The model features habit formation for housing consumption, which leads to optimal decisions closer in line with empirical observations. Our model can explain (i) that stock investments are low or zero for many young agents and then gradually increasing over life, (ii) that the housing expenditure share is age- and wealth-dependent, (iii) that perishable consumption is more sensitive to wealth and income shocks than housing consumption, and (iv) that non-housing consumption is hump-shaped over life.
    Keywords: habit formation,life-cycle household decisions,housing expenditure share,consumption hump,stock market participation,renting vs. owning home,human capital
    JEL: G10 D14 D91 E21 R21
    Date: 2015
  13. By: David Neumark (University of California, Irvine); Helen Simpson (University of Bristol)
    Abstract: Place-based policies commonly target underperforming areas, such as deteriorating downtown business districts and disadvantaged regions. Principal examples include enterprise zones, European Union Structural Funds, and industrial cluster policies. Place-based policies are rationalized by various hypotheses in urban and labor economics, such as agglomeration economies and spatial mismatch – hypotheses that entail market failures and often predict overlap between poor economic performance and disadvantaged residents. The evidence on enterprise zones is very mixed. We need to know more about what features of enterprise zone policies make them more effective or less effective, who gains and who loses from these policies, and how we can reconcile the existing findings. Some evidence points to positive benefits of infrastructure expenditure, and also investment in higher education and university research – likely because of the public-goods nature of these policies. However, to better guide policy, we need to know more about what policies create self-sustaining longer-run gains.
    Keywords: place-based policies, employment, enterprise zones, discretionary grants, higher education, industrial clusters, infrastructure
    Date: 2014
  14. By: Nikolaos Antonakakis (Vienna University of Economics and Business, Department of Economics, Vienna, Austria); Rangan Gupta (Department of Economics, University of Pretoria); Christophe Andre (Economics Department, Organisation for Economic Co-operation and Development (OECD))
    Abstract: We examine dynamic correlations between housing market returns and economic policy uncertainty in the United States. Our findings suggest that correlations are time-varying and sensitive to economic fundamentals and US recessions.
    Keywords: Economic policy uncertainty, housing market return, dynamic correlation, US recession
    JEL: C32 E60 E66 G10 G18
    Date: 2015–02
  15. By: Fortin Mario (Departement d'economique and GREDI, Faculte d'administration, Universite de Sherbrooke)
    Abstract:  This paper estimates a reduced form model of the Canadian mortgage demand from 1971 to 2010. Three equations are estimated, one for the average real value of new mortgage loans originated, another one for the number of new loans and a third for the flow of real repayment of existing loans. The results show that the nominal interest rate is the main source of change in the number of new loans while real housing price is the main determinant of the value of new loans. Two other variables, the real per-capita disposable income and the inflation rate, are also significant in changing the flow of new loans originated. A fall in the inflation rate accompanied by a concomitant reduction in the interest rate is in average the main source of increase in households' mortgage debt, because it increase the flow of new loans and at the same time reduces the rate of repayment of existing loans. Between 2000 and 2007, the unprecedented increase in real housing price while inflation was stable became the main factor behind the rise in mortgage debt, mostly because the average mortgage debt increased significantly. After that, the reduction in the interest rate sustained an increase in the number of new loans. The model does not find indications that a change in the supply side of the mortgage market played a significant role in the increased level of mortgage debt.
    Keywords:  Mortgage market, household debt, Canada
    JEL: D14 D91 E44
    Date: 2015–02
  16. By: Ribeiro, Vitor
    Abstract: The paper studies indirect network effects in a market composed by two incompatible intermediaries that choose price (short-term issue) in addition to location (long-term issue). The paper first shows that (i) when the network externality is sufficiently weak, only maximum differentiation prevails, (ii) the location equilibrium can be asymmetric for an intermediate level of the network externality, given that the first entrant locates at the city centre while the follower chooses an extreme (niche) positional location and (iii) tipping occurs favouring the leader in the location choice when the intensity of the network externality is sufficiently strong. Moreover, the paper concludes that the likelihood of an asymmetric location equilibrium is higher when there is no mismatch between the product space occupied by consumers and intermediaries. Finally, the author concludes that a penetration pricing strategy conducted by a third intermediary is more successful when the pre-entry condition is not the tipping equilibrium location.
    Keywords: simple network effect,unconstrained spatial competition,location leadership
    JEL: D43 L13 R12
    Date: 2015
  17. By: Dorota Ciołek (Institute for Development, Sopot, Poland; University of Gdansk, Faculty of Economics, Department of Macroeconomics, Gdańsk, Poland); Tomasz Brodzicki (University of Gdansk, Faculty of Economics; Institute for Development)
    Abstract: In contrast to most previous analyzes in the present study we have adopted a highly spatially disaggregated NUTS-4 level, or districts, which is particularly relevant for analysis of spatial and territorial interactions and relationships. At this level of aggregation presence of various externalities and spillovers in development processes can be detected. Territorial capital, as a specific carrier concept of territorial cohesion is significantly different from the classical factors of production. We thus can assume that the territorial capital does not affect directly the production, but indirectly through the impact on TFP. The analysis uses different specifications of an econometric model with TFP as the dependent variable. We attempt to identify potential interactions between spatial districts. This requires, however, determination of the value of GDP per capita of Polish districts and, secondly, estimation of TFP for counties. The results are very interesting and to a large extent in line with theoretical postulates. On the basis of in-depth discussion of the results obtained we have developed a series of recommendations for economic policy. The paper uses the results of the project financed by the Polish National Science Centre “Concept of the territorial cohesion in cohesion policy. Implications for Economic Growth" (no. 2012/05/B/HS4/04212).
    Keywords: regional development, estimation of GDP per capita, TFP determinants, territorial capital, spatial econometrics
    JEL: O40 O47 R11 R12 C31
    Date: 2015–01
  18. By: Camille Hémet (Universidad de Barcelona & IEB)
    Abstract: This paper explores how diversity affects individuals’ employment prospects, using data from the French Labor Force Survey. Employment correlates positively with local labor market diversity, but negatively with neighborhood diversity. Using an instrumental variable approach to deal with local labor market diversity drives the positive correlation to zero, confirming the suspicion of self-selection. Regarding neighborhood diversity, I adopt the strategy of Bayer et al. (2008), taking advantage of the very precise localization of the data: the negative effect of diversity is reinforced. I also show that nationalitybased diversity matters more than parents’ origin-based diversity, giving insights on the underlying mechanisms.
    Keywords: Diversity, employment, neighborhood effects
    JEL: J15 J60 R23 Z13
    Date: 2015
  19. By: Heblich, Stephan; Lameli, Alfred; Riener, Gerhard
    Abstract: Does it matter if you speak with a regional accent? Speaking immediately reveals something of one's own social and cultural identity, be it consciously or unconsciously. Perceiving accents involves not only reconstructing such imprints but also augmenting them with particular attitudes and stereotypes. Even though we know much about attitudes and stereotypes that are transmitted by, e.g. skin color, names or physical attractiveness, we do not yet have satisfactory answers how accent perception affects human behavior. How do people act in economically relevant contexts when they are confronted with regional accents? This paper reports a laboratory experiment where we address this question. Participants in our experiment conduct cognitive tests where they can choose to either cooperate or compete with a randomly matched male opponent identified only via his rendering of a standardized text in either a regional accent or standard accent. We find a strong connection between the linguistic performance and the cognitive rating of the opponent. When matched with an opponent who speaks the accent of the participant's home region - the in-group opponent - individuals tend to cooperate significantly more often. By contrast, they are more likely to compete when matched with an accent speaker from outside their home region, the out-group opponent. Our findings demonstrate, firstly, that the perception of an out-group accent leads not only to social discrimination but also influences economic decisions. Secondly, they suggest that this economic behavior is not necessarily attributable to the perception of a regional accent per se, but rather to the social rating of linguistic distance and the in-group/out-group perception it evokes.
    Date: 2015
  20. By: Eathington, Liesl
    Abstract:   Federal definitions of core-based metropolitan and micropolitan statistical areas (CBSAs) recognize the importance of large, central places in broader regional economies.  Although CBSAs are officially defined for statistical reporting purposes only, the construct is widely used in regional science as a framework for analyzing economic change.     Metro and micro area designations, by definition, exclude large swaths of territory often colloquially described as “rural.† Half of all counties in Midwestern states and more than one third of all U.S. counties fall outside of a CBSA.  While other county typologies exist to help characterize this remaining, undifferentiated space, few if any operationalize the importance of small central places as anchors for a broader region.  This paper extends the concept of core-based areas definitions to include “nanoplitan†counties, which contain an urbanized area between 5,000 and 9,999 residents, and “picopolitan†counties, which contain an urbanized area between 2,500 and 4,999 residents.  The paper examines whether these types of counties differ meaningfully in their economic structure and patterns of recent change.  If so, an extended core-based typology may be useful for applied regional analysis and rural economic development outreach efforts.
    Keywords: county typology; regionalism
    Date: 2015–03–03
  21. By: Victor Lavy
    Abstract: The long term effect of teachers’ pay for performance is of particular interest, as critics of these schemes claim that they encourage teaching to the test or orchestrated cheating by teachers and schools. In this paper, I address these concerns by examining the effect of teachers’ pay for performance on long term human capital outcomes, in particular attainment and quality of higher education, and labor market outcomes at adulthood, in particular employment and earnings. I base this study on an experiment conducted a decade and a half ago in Israel and present evidence that the pay for performance scheme increased a wide range of long run human capital measures. Treated students are 4.3 percentage points more likely to enroll in a university and to complete an additional 0.17 years of university schooling, a 60 percent increase relative to the control group mean. These gains are mediated by overall improvements in the high school matriculation outcomes due to the teachers’ intervention at 12th grade. The pay scheme led also to a significant 7 percent increase in annual earnings, to a 2 percent reduction in claims for unemployment benefits, and a 1 percent decline in eligibility for the government disability payment.
    JEL: J24 J3
    Date: 2015–02
  22. By: Alison Johnston; Aidan Regan
    Abstract: Analyses in international political economy (IPE) identify interest rate convergence, magnified in the process of European monetary integration, and financial market liberalization as causal factors behind the rise of house prices. Despite these common credit supply shocks, developed economies experienced heterogeneous trends in housing inflation throughout the 1990s and 2000s. Turning towards demand determinants of housing prices, we focus on whether wage-setting institutions blunt financial liberalization’s impact on housing inflation via their restraining effect on incomes. Employing both a panel regression analysis and a structured comparison of housing developments in Ireland and the Netherlands, we uncover two findings. First, income growth is a more important predictor of housing bubbles across OECD economies than financial variables (although income’s impact on house prices is severely mitigated for the United States). Second, countries with coordinated labor market institutions that grant political coalitions in the export sector veto powers over non-tradable sector interests, realize more restrained income growth and, in turn, are less prone to housing bubbles.
    Keywords: housing prices, wage setting institutions, financial liberalization, Ireland, the Netherlands
    Date: 2015–02
  23. By: Ralph Ossa
    Abstract: What motivates regional governments to subsidize firm relocations and what are the implications of the subsidy competition among them? In this paper, I address these questions using a quantitative economic geography model which I calibrate to U.S. states. I show that states have strong incentives to subsidize firm relocations in order to gain at the expense of other states. I also show that subsidy competition creates large distortions so that there is much to gain from a cooperative approach. Overall, I find that manufacturing real income can be up to 3.9 percent higher if states stop competing over firms.
    JEL: F12 F13 R12 R58
    Date: 2015–02
  24. By: Javier Ortega; Gregory Verdugo
    Abstract: Using a large administrative French panel data set for 1976-2007, we examine how low- educated immigration affects the wages, employment, occupations and locations of blue-collar native workers. The natives in the sample are initially in occupations heterogeneous in the presence of immigrants, which might reflect a different degree of competition with low-educated immigrants. We first show that larger immigration inflows into locations are accompanied by larger outflows of negatively selected natives from these locations. At the same time, larger immigrant inflows into occupations come with larger outflows of positively selected natives towards occupations with less routine tasks. While we find no negative impact on employment, there is substantial evidence that immigration lowers the median annual wages of natives. The estimated negative effects are also much larger in cross-section than in estimates controlling for composition effect, which is consistent with the idea that endogenous changes in occupation and location attenuate the impact of immigration on natives’ wages. We also find much larger wage decreases for workers initially in non-tradable sectors and more particularly in the construction sector, which are much less likely to upgrade their occupation or change location in response to immigration inflows.
    Keywords: immigration; wages; employment
    JEL: J15 J31
    Date: 2015–02
  25. By: Jens Ruhose (Ifo Institute and IZA, Munich, Germany); Guido Schwerdt (Department of Economics, University of Konstanz, Germany)
    Abstract: We study whether early tracking of students based on ability increases migrant-native achievement gaps. To eliminate confounding impacts of unobserved country traits, we employ a differences-in-differences strategy that exploits international variation in the age of tracking as well as student achievement before and after potential tracking. Based on pooled data from 12 large-scale international student assessments, we show that cross-sectional estimates are likely to be downward-biased. Our differences-in-differences estimates suggest that early tracking does not significantly affect overall migrant-native achievement gaps, but we find evidence for a detrimental impact for less integrated migrants.
    Keywords: Immigration, educational inequalities, educational tracking, differences-in-differences
    JEL: I21 J15 I28
    Date: 2015–03–01
  26. By: World Bank
    Keywords: Public Sector Economics Urban Development - Urban Governance and Management Public Sector Management and Reform Finance and Financial Sector Development Public Sector Development Communities and Human Settlements Communities and Human Settlements - Housing & Human Habitats Finance and Financial Sector Development - Banks & Banking Reform
    Date: 2014
  27. By: Asheim , Bjørn (UiS Business School/Centre for Innovation Research, University of Stavanger & CIRCLE, Lund University); Grillitsch , Markus (CIRCLE, Lund University)
    Abstract: Smart specialisation as a strategic approach for an innovation-driven regional development policy is extremely important in the European policy context and a precondition for accessing significant amounts of funding. In this paper, we pursue two aims: First, we clarify what smart specialisation means and introduce theoretical perspectives strengthening this policy approach. We will discuss the role of different modes of innovation and knowledge bases for different types of new path development. Second, we aim at identifying the sources for new path development within the smart specialisation framework for a peripheral manufacturing region. We present the key findings from a case study of Møre and Romsdal, in the western parts of Norway, which has been successful economically despite low scores on the typical innovation indicators. The case study was conducted in autumn 2014 and combines an in-depth analysis of relevant policy documents and 17 semi-structured interviews. Thereby, we illustrate to what extent a smart specialisation policy can add value in Norway. As Norway is not part of the EU, it is not compulsory for Norwegian counties to design smart specialisation strategies.
    Keywords: Smart specialisation; new path development; periphery; innovation; regional development
    JEL: P48 R10 R11 R58
    Date: 2015–02–26
  28. By: Strambach , Simone (Department of Geography, Philipps-University of Marburg)
    Abstract: The aim of the paper is to contribute both conceptually and empirically to a deeper understanding of the territorial shaping of knowledge combination and its development dynamics underpinning innovation. The importance of combining and integrating knowledge bases from different sources, geographical scales and heterogeneous actors is increasingly recognized in innovation studies. Yet, the question of what limits or enables knowledge combinations in innovation processes and what generates relatedness among unrelated knowledge bases in time and space is not fully answered. Conceptually the paper suggests a more specific focus on microfoundations and temporality by taking into account the economics of organization in more detail. This appears a particularly promising approach, as the causal relations and mechanisms across and between aggregated levels such as firms, sectors, regions, or nations are not well understood. Empirically the paper explores the micro-dynamics of knowledge combination and its territorial shaping from a transnational perspective. German-Chinese innovation projects in sustainable construction are investigated by using the methodology of innovation biography. This method allows following the time-space path of innovation. It enables capturing knowledge interactions and their unfolding in multi-scalar and cross-sectoral ways. The results underline a very dynamic geography of organization and barriers for knowledge integration at the micro-level rooted in organizational and institutional path dependencies. The investigation in the interplay between more permanent and temporary organizational forms and its geography holds a large potential for further research to provide new insights into the spatiality of combining knowledge bases in innovation processes.
    Keywords: knowledge dynamics; transnational innovation; microfoundations; economics of organization; innovation biography
    JEL: D83 L14 L20 L84 O31
    Date: 2015–02–26
  29. By: Bruno Merlevede; Victoria Purice (-)
    Abstract: This paper investigates the effect of foreign direct investment on the productivity of local firms. We decompose traditional country-wide spillover measures in different components according to both distance between foreign and domestic firms and timesince- foreign-entry. We find larger and faster spillover effects for local suppliers of foreign firms at shorter distance, driven mainly by recent foreign entrants. Irrespective of distance, foreign firms of medium maturity generate backward spillover effects that fade away with longer presence. A positive effect on local competitors is not significantly affected by distance and requires the presence of mature foreign firms.
    Keywords: FDI, Spillovers, Dynamics, Timing, Regions, Distance
    JEL: F2 D24
    Date: 2014–12
  30. By: Drichoutis, Andreas C.; Nayga, Rodolfo M.; Rouse, Heather L.; Thomsen, Michael R.
    Abstract: In this paper we examine the effect of dollar stores on children's Body Mass Index (BMI). We use a dataset compiled by the Arkansas Center for Health Improvement which created and implemented the BMI screening process for all public school children in the state of Arkansas. We combine propensity score matching with difference-in-differences methods to deal with time-invariant as well time-varying unobserved factors. We find no evidence that the presence of dollar stores within a reasonably close proximity of the child's residence increases BMI. In fact, we see an increase in BMI when dollar stores leave a child's neighborhood. Given the proliferation of dollar stores in rural and low-income urban areas, the question of how dollar stores could contribute to dietary health should be considered in efforts to combat childhood obesity.
    Keywords: Childhood obesity; foot-at-home; propensity score matching; difference-in-difference
    JEL: C31 C33 D10 I10 R1
    Date: 2014–04–02
  31. By: Sabatini, Fabio; Sarracino, Francesco
    Abstract: We explore how participation in social networking sites (SNS) such as Facebook and Twitter affects the most economically relevant aspect of social capital, trust. We use measures of trust in strangers (or social trust), trust in neighbours and trust in the police. We address endogeneity in the use of SNS by exploiting the variation in the availability of broadband for high-speed Internet, which relates to technological characteristics of the pre-existing voice telecommunication infrastructures. We find that all the proxies of trust significantly decrease with participation in online networks. We discuss several interpretations of the results in light of the specific features of Internet-mediated social interaction.
    Keywords: Internet; broadband; online networks; social networking sites; Facebook; trust; social capital; hate speech
    JEL: D89 O33 Z1 Z13 Z19
    Date: 2015–03–01
  32. By: Desmet, Klaus; Ortuño-Ortín, Ignacio; Wacziarg, Romain
    Abstract: We investigate the empirical relationship between ethnicity and culture, defined as a vector of traits reflecting norms, attitudes and preferences. Using surveys of individual values in 76 countries, we find that ethnic identity is a significant predictor of cultural values, yet that within-group variation in culture trumps between-group variation. Thus, in contrast to a commonly held view, ethnic and cultural diversity are unrelated. We explore the correlates of cultural diversity and of the overlap between culture and ethnicity, finding that the level of economic development is positively associated with cultural diversity and negatively associated with the overlap between culture and ethnicity. Finally, although only a small portion of a country's overall cultural heterogeneity occurs between groups, this does not imply that cultural differences between groups are irrelevant. Indeed, we find that civil conflict becomes more likely when there is greater overlap between ethnicity and culture.
    Keywords: between-group diversity; civil conflict; cultural fractionalization; cultural traits; culture; ethnicity; heterogeneity; identity; social norms; within-group diversity
    JEL: D74 J15 P48 Z10
    Date: 2015–03
  33. By: Lisa Grazzini (Università di Firenze); Alessandro Petretto (Università di Firenze)
    Abstract: We analyse how spillover effects may affect the choice of a federal tax rate in a federal country with vertical tax externalities. Our main result shows under which conditions the federal tax rate with spillover effects is lower or higher than the federal tax rate without spillover effects. The standard result on inefficiently high tax rates due to ver- tical tax externalities can be modi?fied by the reaction of the federal government to the horizontal externality due to spillover effects.
    Keywords: fiscal federalism, median voter, positive spillovers
    JEL: H71 H77 H41
  34. By: Álvaro Choi (Universidad de Barcelona & IEB); John Jerrim (University Colleage of London)
    Abstract: In 2013 Spain introduced a series of educational reforms explicitly inspired by the Programme for International Student Assessment (PISA) 2012 results. These reforms were mainly implemented in secondary education – based upon the assumption that this is where Spain’s educational problems lie. This paper questions this assumption by attempting to identify the point where Spanish children fall behind young people in other developed counties in terms of their reading skills. Specifically, by drawing data from multiple international assessments, we are able to explore how cross-national differences in reading skills change as children age. Consideration is given to both the average level of achievement and the evolution of educational inequalities. Our conclusion is that policymakers have focused their efforts on the wrong part of the education system; educational achievement is low in Spain (and educational inequalities large) long before children enter secondary school. This study therefore serves as a note of caution against simplistic interpretation of the PISA rankings; policymakers must take a more nuanced approach when enacting important educational reforms.
    Keywords: Educational policy, academic performance, PISA, PIRLS
    JEL: I21 I24 I28
    Date: 2015
  35. By: Piacentini, Paolo; Prezioso, Stefano; Testa, Giuseppina
    Abstract: Abstract: This paper contributes to a growing body of work within ‘fiscal policy studies’, investigating for the recent role of fiscal policy on the Italian economy. Using annual data collected on regional basis, this study estimates and compares the (impact and cumulative) fiscal multipliers across the North and the South, the less developed area, of Italy. With recourse to a simultaneous equation model for the two macro-regions of Italy, it estimates the overall impact of the measures of budget consolidation policies in the period 2011-2013. Our analysis reveals that tax rises and spending cuts hit the South harder than the North.
    Keywords: Keywords: Tax multiplier, Government spending multiplier, Fiscal Policy.
    JEL: E23 E62 H20 H24
    Date: 2015–02–24
  36. By: Jan Ditzen (Heriot-Watt University)
    Abstract: The literature on growth theory lacks a precise sense of why there are interactions and dependencies between countries. Correspondingly, the spatial econometrics literature on growth empirics accounts for endogenous cross-country interactions, but lacks crucial insights from economic theory as to how such linkages should be precisely modeled. I address this weakness, by proposing a new economic model as a combination of an endogenous Romer-style growth model and a New Economic Geography model. The model admits two distinct sources of interactions between countries: mobility of high skilled workers and inter-country trade. Both of these sources develop from the New Economic Geography models, while the engine of the growth process is adapted from the endogenous growth literature. Motivated by higher wages, highly skilled workers migrate to the richer country, and there they work in the R&D sector. This in turn contributes towards economic growth in the richer country, and leads to divergence between the two countries. Trade in the manufactured good increases the difference between the two countries further. In its focus on both migration of highly skilled labour and its conclusion of divergence, the model captures the phenomenon of the Great Divergence in the 19th century. It is also consistent with evidence of club convergence in the 20th century. The implications of the model are verified by simulation.
    Keywords: Economic growth, New Economic Geography, Cross-country interactions, Convergence, Migration, Trade
    JEL: O41 F22 F43 O31 N10
    Date: 2014
  37. By: Elisabeth Gugl (Department of Economics, University of Victoria); George R. Zodrow (Baker Institute for Public Policy, Rice University; Centre for Business Taxation, Oxford University)
    Abstract: Most of the tax competition literature focuses on the provision of local public services to households. However, a number of papers, dating back to Zodrow and Mieszkowski (1986), analyze tax competition when capital taxes are used to finance local public services provided to businesses, examining to which extent such services are provided efficiently, under-provided, or over-provided. In addition, several prominent observers have noted that “benefit-related” business taxation is desirable on efficiency and equity grounds and argued that such taxation should take the form of a production tax, such as an origin-based value added tax. We evaluate this contention in this paper, comparing within the context of a model of interjurisdictional competition the relative efficiency properties of business taxes that are assessed on production to those assessed on capital. We also provide a brief review of the literature on capital tax competition when public services are provided to businesses.
    Keywords: business public services, infrastructure, tax competition, capital taxes
    JEL: H41 H42 H21 H11
    Date: 2014
  38. By: Jörg Paetzold (University of Salzburg); Hannes Winner (University of Salzburg)
    Abstract: We provide first field evidence on evasion spillovers as an important determinant of the individual compliance decision. Exploiting discontinuities in a self-reported commuter tax allowance, we observe a substantial share of taxpayers misreporting their claims. Using exogenous variation in job changes we find that individual evasion decisions are influenced by the compliance behaviour of other co-workers, with job changers from low- to high-cheating companies starting to evade much more after they move. In contrast, movers from high- to low-cheating companies do not alter their reporting. The most likely explanation is information transmission, including increased knowledge about the possibilities for non-compliance.
    Keywords: Tax Evasion, Self-Reporting, Spillover Eects, Information Frictions industrial clusters, infrastructure
    JEL: H24 H26 D83
    Date: 2014

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