nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2015‒08‒01
thirty-two papers chosen by
Steve Ross
University of Connecticut

  1. Congestion Pricing in Urban Polycentric Networks with Distorted Labor Markets: A Spatial General Equilibrium Model for the Area Randstad By Ioannis Tikoudis
  2. The behaviour of housing developers and aggregate housing supply By Jacek Laszek; Krzysztof Olszewski
  3. Long-Run Equilibrium Shift and Short-Run Dynamics of U.S. Home Price Tiers during the Housing Bubble By Damianov, Damian S; Escobari, Diego
  4. Validating Spatial Hedonic Modeling with a Behavioral Approach: Measuring the Impact of Water Quality Degradation on Coastal Housing Markets By Mahesh, Ramachandran
  5. Agglomeration Economies and Productivity Growth: U.S. Cities, 1880-1930 By Alexander Klein; Nicholas Crafts
  6. The Impact of Teacher-Student Gender Matches: Random Assignment Evidence from South Korea By Jaegeum Lim; Jonathan Meer
  7. Estimating the Value of Water from Property Sales in an Arid High Environmental Amenity Region: A Difference-in-Difference in Approach By Brady, Michael; Tantihkarkhana, Pitchayaporn
  8. Inattention and Inertia in Household Finance: Evidence from the Danish Mortgage Market By Steffen Andersen; John Y. Campbell; Kasper Meisner Nielsen; Tarun Ramadorai
  9. The Ins and Outs of Selling Houses By Kevin Sheedy; Rachel Ngai
  10. Weak Markets, Strong Teachers: Recession at Career Start and Teacher Effectiveness By Nagler, Markus; Piopiunik, Marc; West, Martin R.
  11. Monetary Policy Pass-Through: Household Consumption and Voluntary Deleveraging By Rodney Ramcharan; Amir Kermani; Marco Di Maggio
  12. How important is spatial correlation in randomized controlled trials? By Baylis, Kathy; Ham, Andres
  13. Impacts of Fuel price, Supply/Demand, and Seasonality on Class I Milk Price Differentials By Seo, HongSeok; McCarl, Bruce A.
  14. Workplace-anchored migration in US counties By Han, Yicheol; Goetz, Stephan J.
  15. Early Math Coursework and College Readiness: Evidence from Targeted Middle School Math Acceleration By Joshua Goodman; Dougherty, Shaun; Darryl Hill; Erica Litke; Lindsay Page
  16. Customer discrimination and employment outcomes: Theory and evidence from the French labor market By Pierre-Philippe Combes; Bruno Decreuse; Morgane Laouénan; Alain Trannoy
  17. Local government cooperation at work: A control function approach By Zineb Abidi; Edoardo Di Porto; Angela Parenti; Sonia Paty
  18. Capturing More Relevant Measures of Spatial Heterogeneity in Stated Preference Willingness to Pay: Using an Iterative Grid Search Algorithm to Quantify Proximate Environmental Impacts By Holland, Benedict M.; Johnston, Robert J.
  19. Confronting Price Endogeneity in a Duration Model of Residential Subdivision Development By Wrenn, Douglas H.; Klaiber, H. Allen; Newburn, David A.
  20. Resetting the Urban Network 117-2012 By Ferdinand Rauch
  21. An Assignment Model of Knowledge Diffusion and Income Inequality By Erzo Luttmer
  22. Nice Neighborhood or Network Capital: What drives Residential Quality of Life? By Zarnekow, Nana; Henning, Christian H.C.A.
  23. Small Price Responses to Large Demand Shocks By Gagnon, Etienne; López-Salido, J David
  24. Do performance agreements help improve service delivery ? the experience of Brazilian states By Vinuela,Lorena; Zoratto,Laura De Castro
  25. Partisan Alignment and Political Corruption. Theory and Evidence from Spain Job Market Paper By Miguel Ángel Borrella Mas
  26. Regionally-varying and Regionally-uniform Electricity Pricing Policies Compared across Four Usage Categories By Cho, Seong-Hoon; Kim, Taeyoung; Kim, Hyun J.; Park, Kihyun; Roberts, Roland K.
  27. Can social interactions change the brain? Social network effects on obesity and related co-morbidities By Henning, Christian H.C.A.; Zarnekow, Nana; Laudes, Matthias
  28. School Entry Cutoff Date and the Timing of Births By Hitoshi Shigeoka
  29. School attendance and the perceived value of formal education: Evidence from Tanzania By Gustafson, Christopher R.
  30. The Spillover Effects of Public Works on Migration, Labor Allocation and Wages: Evidence from National Rural Employment Guarantee Scheme, India By Prasann, Ashesh
  31. Testing the effect of new neighboring open space on development By Towe, Charles
  32. Does Social Capital Explain Small Business Resilience? A Panel Data Analysis Post-Katrina By Torres, Ariana P.; Marshall, Maria I.

  1. By: Ioannis Tikoudis (VU University Amsterdam, the Netherlands)
    Abstract: The paper presents a polycentric general equilibrium model with congestion externalities and distortionary labor taxation calibrated to fit the key empirical regularities of the regional economy and transport system of Randstad conglomeration. In line with more stylized models, marginal external cost pricing (i.e. a quasi first-best Pigouvian toll that ignores the pre-existing taxation in the labor market) is shown to generate considerable welfare losses. Surprisingly, the quasi first-best Pigouvian toll is welfare decreasing even when the road tax revenue is used to finance labor tax cuts. This is due to the large deviation of marginal external costs from the optimal toll levels, as the latter are found to be negative in many of the network links. Approximations of the key double-dividend effects show that, in those links, the tax interaction effect is strong enough to outweigh both the revenue-recycling and the Pigouvian effect.
    Keywords: applied general equilibrium; network; road pricing; commuting; polycentricity; environmental taxation; double-dividend
    JEL: D58 H21 H23 C63 R13 R40
    Date: 2015–07–23
  2. By: Jacek Laszek; Krzysztof Olszewski
    Abstract: The article presents an theoretical analysis of the developer sector, which bases on the observed functioning of the market. We explain the behaviour of developers in the short and medium run and show why they add to the creation of a real estate bubble instead of mitigating it. The bubbles result from the interactions between housing developers who keep high prices and households, who increase housing demand even if house prices rise. The housing developer, due to the asymmetry of information, is able to take advantage of a local monopoly and differentiate prices. This allows him to sell apartments of a similar construction to each client at a different price, thanks to which he maximizes profits. However, when the developer overestimates demand or the competition gets tougher, his production costs grow and the possibility to differentiate prices is reduced. This has a direct impact on the profits that he can generate. The consequence of this phenomenon is a more flexible ex post curve of developer supply. As a result, there is a tendency to overproduction in the developer sector, which deepens the cyclical nature of the housing market.
    Keywords: Real and virtual supply curve, monopolistic competition, price discrimination, acceleration of demand, overproduction.
    JEL: O18 M2 R31
    Date: 2015
  3. By: Damianov, Damian S; Escobari, Diego
    Abstract: We use vector error correction models to examine the interdependence between the high and the low price tiers during the latest housing market boom and bust. For 118 of the 364 US statistical areas analyzed, the tiered price indexes are bound by a long-run relationship. In general, low tier homes appreciated more than high tier homes in the past two decades. In contrast to previous periods of high volatility, however, low tier homes appreciated more during the boom and lost more value during the bust of the market. We find a shift in the long-run equilibrium during the bubble -the cointegration parameter that ties the tiers together is greater in absolute value during the bubble period compared to the periods of more moderate appreciation and depreciation rates. Moreover, the shift in the long-run equilibrium can be explained by differences in subprime originations across housing markets. We also find that short run price dynamics is driven by momentum in both segments of the market.
    Keywords: Residential real estate markets, Housing Price Tiers
    JEL: C3 C32 R3 R30 R32
    Date: 2015–07–21
  4. By: Mahesh, Ramachandran
    Abstract: Human perception of water quality that determines utility and behavior may not correspond to often used science-based measures, leading to mismeasurement of implicit prices in hedonic models. This paper seeks to estimate the effect of water quality degradation on the sale price of coastal single-family residential properties using a spatially explicit hedonic approach, while validating the measure of water quality using a behavioral approach. The results show that a combined approach of hedonic modeling and behavioral validation is an important preliminary step in addressing omitted variable and perception biases present in traditional hedonic modeling approaches.
    Keywords: Hedonic, coastal, spatial, behavioral, water quality, Community/Rural/Urban Development, Environmental Economics and Policy, Institutional and Behavioral Economics, Land Economics/Use, Public Economics, Research Methods/ Statistical Methods, Q5, Q510,
    Date: 2015
  5. By: Alexander Klein; Nicholas Crafts
    Abstract: WWe investigate the role of industrial structure in labor productivity growth in U.S. cities between 1880 and 1930 using a new dataset constructed from the Census of Manufactures. We find that increases in specialization were associated with faster productivity growth but that diversity only had positive effects on productivity performance in large cities. We interpret our results as providing strong support for the importance of Marshallian externalities. Industrial specialization increased considerably in U.S. cities in the early 20th century, probably as a result of improved transportation, and we estimate that this resulted in significant gains in labor productivity.
    Keywords: agglomeration economies; Jacobian externalities; manufacturing productivity; Marshallian externalities; industrial structure
    JEL: N91 N92 R32
    Date: 2015–06
  6. By: Jaegeum Lim; Jonathan Meer
    Abstract: Gender disparities in academic performance may be driven in part by the interaction of teacher and student gender, but systematic sorting of students into classrooms makes it difficult to identify causal effects. We use the random assignment of students to Korean middle school classrooms and show that the female students perform substantially better on standardized tests when assigned to female teachers; there is little effect on male students.
    JEL: I21 I24 J16
    Date: 2015–07
  7. By: Brady, Michael; Tantihkarkhana, Pitchayaporn
    Abstract: This paper reports results from an analysis of residential property sales in a high environmental amenity region of Washington State characterized increasingly by water scarcity problems. Kittitas County sits on the dry Eastern side of the Cascade Mountains and is in close proximity to the greater Seattle metropolitan area. While water law restricts any additional uses of water without purchasing an existing water right there was a domestic well exemption until 2009 that allowed wells to be dug without acquiring a right. This exemption became increasingly controversial as the number of new homes in rural areas increased in the 1990’s and 2000’s. A moratorium was put in place in 2009 that removed this exemption but was only applied to the upper half of the county. We exploit this fact to use a difference-in-difference estimation strategy that helps remove other unobserved factors that would make a more straightforward hedonic analysis difficult. Our goal in estimating the hedonic regression is to estimate the impact of the moratorium under the idea that the value of water is capitalized into home prices following 2009. We compare sales of properties with a house and those without a house to provide a robustness check. A so-called difference-in-difference-in-difference model is estimated which provides additional controls thanks to the fact that the moratorium did not directly affect houses in municipalities which always had to acquire a water right. Our results are important in the development of water markets in the state which are an efficient way to reallocate water from low to high value uses, but are only just beginning to be used in the region.
    Keywords: water, difference-in-difference, housing market, Community/Rural/Urban Development, Demand and Price Analysis, Land Economics/Use,
    Date: 2015–05–27
  8. By: Steffen Andersen; John Y. Campbell; Kasper Meisner Nielsen; Tarun Ramadorai
    Abstract: This paper studies inattention to mortgage refinancing incentives among Danish households. Danish data are particularly suitable for this purpose because there are minimal barriers to refinancing, yet many borrowers fail to refinance optimally, and the characteristics of these borrowers can be accurately measured. The paper estimates a mixture model of household refinancing types in which household characteristics affect both inattention (a low proportion of rational refinancers) and residual inertia (a low probability that fully inattentive households refinance). Many characteristics move inattention and inertia in the same direction, implying a positive cross-sectional correlation of 0.62 between these two household attributes. Younger, better educated, and higher-income households have less inertia and less inattention. Financial wealth and housing wealth have opposite effects, with the least inertia and inattention among households whose housing wealth is high relative to their financial wealth. There is suggestive evidence of persistent unobserved heterogeneity in attention.
    JEL: G11 G21
    Date: 2015–07
  9. By: Kevin Sheedy (London School of Economics); Rachel Ngai (london school of economics)
    Abstract: The number of houses for sale is as volatile as sales volume and much more volatile than house prices, yet it has received relatively little attention. What drives volatility in the number of houses for sale? Is it due to changes in the diculty of selling houses or changes in the incentive to put houses up for sale? This paper presents evidence that both inflows and outflows are important using a variance decomposition. It then uses a search-and-matching model with both the decision of when to agree a sale (outflows) and the decision of when to put a house up for sale (inflows) to understand the behaviour of sales, listings, and prices in the housing market. Quantitatively, the model does a much better job of matching relative volatility and correlations between housing-market variables than those that abstract from the inflow decision.
    Date: 2015
  10. By: Nagler, Markus; Piopiunik, Marc; West, Martin R.
    Abstract: How do alternative job opportunities affect teacher quality? We provide the first causal evidence on this question by exploiting business cycle conditions at career start as a source of exogenous variation in the outside options of potential teachers. Unlike prior research, we directly assess teacher quality with value-added measures of impacts on student test scores, using administrative data on 33,000 teachers in Florida public schools. Consistent with a Roy model of occupational choice, teachers entering the profession during recessions are significantly more effective in raising student test scores. Results are supported by placebo tests and not driven by differential attrition.
    Keywords: teacher value-added; talent allocation; business cycle; Roy model
    JEL: E32 H75 I20 J24
    Date: 2015–07
  11. By: Rodney Ramcharan (Federal Reserve Board); Amir Kermani (UC Berkeley); Marco Di Maggio (Columbia)
    Abstract: Do households benefit from expansionary monetary policy? We investigate how indebted households' consumption and saving decisions are affected by anticipated changes in monthly interest payments. We focus on borrowers with adjustable rate mortgages originated between 2005 and 2007 featuring an automatic reset of the interest rate after five years. The monthly payment due from the average borrower falls by 52 percent ($900) upon reset, resulting in an increase in disposable income totaling tens of thousands of dollars over the remaining life of the mortgage. We uncover three patterns. First, the average household increases monthly car purchases by 40 percent ($150) upon reset. Second, this expansionary effect is attenuated by the borrowers' voluntary deleveraging, as a significant fraction of the increased income is deployed to accelerate debt repayment. Third, the marginal propensity to consume is significantly higher for low income borrowers and for those that had experienced a larger decline in housing wealth. To complement these household-level findings, we employ county-level data to provide evidence that consumption responded more to a reduction in short-term interest rates in counties with a larger fraction of adjustable rate mortgage debt. Our results shed light on the income channel of monetary policy as well as the role of debt rigidity in reducing the effectiveness of monetary policy.
    Date: 2015
  12. By: Baylis, Kathy; Ham, Andres
    Abstract: Randomized controlled trials have become the gold standard for impact evaluation since they provide unbiased estimates of causal effects. This paper studies randomized settings where treatment is assigned over geographical units. We analyze how omitting spatial correlation in outcomes or unobservables affects treatment effect estimates. First, we study spatial dependence in Mexico's Progresa program. Second, we conduct Monte Carlo simulations to generalize our results. Findings reveal that spatial correlation is more relevant than the literature suggests, and may affect both the precision of the estimate and the estimate itself. Existing spatial econometric methods may provide solutions to mitigate the consequences of omitting spatial correlation.
    Keywords: randomization, spatial correlation, treatment effects, estimation, inference, International Development, Research Methods/ Statistical Methods, C15, I38, R58,
    Date: 2015–05
  13. By: Seo, HongSeok; McCarl, Bruce A.
    Abstract: The Class I price differentials for milk were established in 2000 and continue in use today. These differentials are to reflect transport and other factors that vary across space. Since 2000 some key factors have changed like fuel price and supply/demand locations. We examine how the differentials match up with the distribution of shadow prices in a spatial transport model. We find consideration of fuel costs and supply demand location shifts raises the magnitude of the differentials by about 75%. We also find that consideration of seasonality also affects the differentials. Collectively the results indicate that it may be desirable to revisit the policy determined price differentials.
    Keywords: Classified Pricing, Class I price differentials, spatial transport model, Industrial Organization, Marketing,
    Date: 2014–01
  14. By: Han, Yicheol; Goetz, Stephan J.
    Abstract: Residential amenities and access to employment are major factors in migration decisions. Yet traditional migration models are unable to reveal the causes (and effects) of migration because current data capture only movers who change their place of residence; depending on how far they move, these migrants may or may not also change their jobs. Migration flows thus could be categorized into two groups depending on whether the migrants also change their workplace. In this paper, we identify the number of movers who do and do not change their workplace by using overlapping county-to-county migration and commuting data. We refer to this as workplace-anchored and unanchored migration. Then we compare the local factors that affect both types of migration. Our analysis reveals that the most important local factors that separate workplace-anchored and unanchored migration are the poverty rate, commuting time, and age demographics of the origin and destination counties.
    Keywords: migration, commuting, residential amenities, Community/Rural/Urban Development,
    Date: 2015
  15. By: Joshua Goodman; Dougherty, Shaun; Darryl Hill; Erica Litke; Lindsay Page
    Abstract: To better prepare students for college-level math and the demands of the labor market, school systems have tried to increase the rigor of students? math coursework. The failure of universal ?Algebra for All? models has led recently to more targeted approaches. We study one such approach in Wake County, North Carolina, which began using prior test scores to assign middle school students to an accelerated math track culminating in eighth grade algebra. The policy has reduced the role that income and race played in course assignment. A regression discontinuity design exploiting the eligibility threshold shows that acceleration has no clear effect on test scores but lowers middle school course grades. Acceleration does, however, raise the probability of taking and passing geometry in ninth grade by over 30 percentage points, including for black and Hispanic students. Nonetheless, most students accelerated in middle school do not remain so by high school and those that do earn low grades in advanced courses. This leaky pipeline suggests that targeted math acceleration has potential to increase college readiness among disadvantaged populations but that acceleration alone is insufficient to keep most students on such a track.
    Date: 2015–07
  16. By: Pierre-Philippe Combes (Groupement de Recherche en Économie Quantitative d'Aix-Marseille); Bruno Decreuse (Groupement de Recherche en Économie Quantitative d'Aix-Marseille); Morgane Laouénan (Sciences Po LIEPP); Alain Trannoy (Aix-Marseille School of Economics)
    Abstract: The paper investigates the link between the over-exposure of African immigrants to unemployment in France and their under-representation in jobs in contact with customers. We build a two-sector matching model with ethnic sector-specific preferences, economy-wide employer discrimination, and customer discrimination in jobs in contact with customers. The outcomes of the model allow us to build a test of ethnic discrimination in general and customer discrimination in particular. We run the test on French individual data in a cross-section of local labor markets (Employment Areas). Our results show that there is both ethnic and customer discrimination in the French labor market.
    Keywords: Discrimination; Matching Frictions; Jobs in Contact; Ethnic Unemployment; Local Labor Markets
    JEL: J15 J61 R23
    Date: 2014–04
  17. By: Zineb Abidi; Edoardo Di Porto; Angela Parenti; Sonia Paty
    Abstract: We analyze voluntary coalition formation using a unique panel data for 1,056 municipalities in the French region of Brittany between 1995 and 2002. We use a control function approach to develop a binary discrete choice model with spatial interactions. We find that a municipality’s decision to cooperate over the provision local public goods depends on the decisions of its neighbours. Comparison with spatial econometrics models (SAR and Durbin) shows that the decision to cooperate is over estimated by these more traditional models. The results are in line with the recent applied spatial economics literature but are derived for a discrete choice model setting.
    Keywords: Inter-municipal Cooperation; Panel Data; Control Function.
    JEL: C3 H2 H4 H7
    Date: 2015–07–01
  18. By: Holland, Benedict M.; Johnston, Robert J.
    Abstract: Willingness to pay (WTP) for public goods is often spatially heterogeneous; the relevance of this heterogeneity for policy analysis is increasingly recognized. Within stated preference (SP) analysis, the most commonly analyzed form of spatial heterogeneity is distance decay, in which WTP is assumed to diminish as a monotonic function of distance from the affected resource. This distance is typically calculated from each respondent’s household to the nearest point of the affected resource, using either Euclidean or travel distance. A small but increasing literature, however, now suggests the limitations of a simple distance decay paradigm as the sole means to evaluate spatial heterogeneity. This article illustrates a novel approach to account for spatial welfare heterogeneity that may better capture the systematic sensitivity of preferences to resource proximity. The model accounts for the amount of the affected resource surrounding each respondent’s home location, at distance bands of varying length, rather than the distance to the closest point. This alternative “quantity-within-distance-x” measure is used as a substitute for the common “distance-to-nearestpoint” measure with distance-related models of spatial welfare heterogeneity. Methods and results are illustrated using a choice experiment addressing preferences for riparian land restoration in south coastal Maine. Results suggest that the resulting models better capture spatial elements relevant to respondents’ preferences. Comparison to standard distance decay models shows the additional insight provided by this novel approach.
    Keywords: choice experiment, distance decay, nonmarket valuation, Environmental Economics and Policy, Land Economics/Use,
    Date: 2015
  19. By: Wrenn, Douglas H.; Klaiber, H. Allen; Newburn, David A.
    Abstract: Spatial equilibrium implies that distant factors are correlated with proximate locations through market mechanisms. Using this logic, we develop a novel approach for handling price endogeneity in reduced-form land use models. We combine a control function approach with a duration model of land development to shed new light on the role of price and supply-side factors that influence subdivision development at a micro level. We find that failure to control for endogeneity results in large differences in estimates of residential land supply price elasticities. Specifically, we find an elasticity of 2.06 compared to 0.67 in a model that ignores potential endogeneity.
    Keywords: Endogeneity, Control Function, Duration Model, Land Supply Elasticity, Land Economics/Use, Research Methods/ Statistical Methods, C26, R12, R14, R52,
    Date: 2015
  20. By: Ferdinand Rauch (Oxford)
    Abstract: Do locational fundamentals such as coastlines and rivers determine town locations, or can historical events trap towns in unfavorable locations for centuries? We examine the effects on town locations of the collapse of the Western Roman Empire, which temporarily ended urbanization in Britain, but not in France. As urbanization recovered, medieval towns were more often found in Roman-era town locations in France than in Britain, and this difference persists today. The resetting of Britain's urban network gave it better access to natural navigable waterways when this was important, while many French towns remained without such access. We show that towns without coastal access grew more slowly in both Britain and France from 1200-1800, and calculate that with better coastal access, France's urban network would have been up to 20-30 percent larger in 1800.
    Date: 2015
  21. By: Erzo Luttmer (University of Minnesota)
    Abstract: Randomness in individual discovery tends to spread out productivities in a population, while learning from others keeps productivities together. In combination, these two mechanisms for knowledge accumulation give rise to long-term growth and persistent income inequality. This paper considers a world in which those with more useful knowledge can teach those with less useful knowledge, with competitive markets assigning students to teachers. In equilibrium, students who are able to learn quickly are assigned to teachers with the most productive knowledge. The long-run growth rate of this economy is governed by the rate at which the fastest learners can learn. The income distribution reflects learning ability and serendipity, both in individual discovery and in the assignment of students to teachers. Because of naturally arising indeterminacies in this assignment, payoff irrelevant characteristics can be predictors of individual income growth. Ability rents can be large when fast learners are scarce, when the process of individual discovery is not too noisy, and when overhead labor costs are low.
    Date: 2015
  22. By: Zarnekow, Nana; Henning, Christian H.C.A.
    Keywords: social network, quality of life, latent class estimation, Community/Rural/Urban Development, Institutional and Behavioral Economics,
    Date: 2015–05
  23. By: Gagnon, Etienne; López-Salido, J David
    Abstract: We study the pricing response of U.S. supermarkets to large demand shocks triggered by labor conflicts, mass population relocation, and shopping sprees around major snowstorms and hurricanes. We find that these large swings in demand have, at best, modest effects on the level of retail prices, consistent with flat short- to medium-term supply curves. This finding holds even when shocks are highly persistent and even though stores adjust prices frequently. We also uncover evidence that retailers with radically different demand shocks nonetheless seek to match their local competitors' pricing movements and recourse to sales and promotions.
    Keywords: Demand shocks; inflation; labor conflicts; mass population displacement; sales; severe weather events
    JEL: E30 L11
    Date: 2015–07
  24. By: Vinuela,Lorena; Zoratto,Laura De Castro
    Abstract: A growing number of states and municipalities in Brazil rely on results-based management, and many other local and state governments are considering adopting the practice. This paper examines the experiences of the Brazilian states that have implemented results agreements linked to variable pay. The analysis compares current with pre-intervention outcomes in the education, health, and security sectors. The changes are examined in relation to regional trends to determine whether the improvements depart in meaningful ways from the overall trend. In addition, a truncated time-series cross-section model is used to control for several additional factors influencing service delivery outcomes. The results suggest that, at least in the short and medium term, the implementation of results agreements is associated with significant and positive changes in outcomes in the security and education sectors. On average, states using team-level targets and performance-related pay have 15 fewer homicides per 100,000 inhabitants than those that do not, all else equal. Similarly, states that have introduced performance agreements and a bonus for teachers and school staff have improved their Basic Education Development Index score for public secondary schools by 0.3 additional points compared with the scores of states with similar characteristics. The conclusions are in line with the findings of in-depth impact evaluations and case study work in the education and security sectors (Bruns, Evans and Luque 2011, Milagres de Assis 2012). The paper does not analyze unit or team level data, which would be necessary to draw more rigorous conclusions about how results-based interventions affect the behavior of civil servants and outcomes over time. Therefore, the results should be interpreted with caution, as some of the assumptions behind the models cannot be examined with the available data.
    Keywords: E-Business,Public Sector Development,Health Monitoring&Evaluation,Population Policies,Labor Policies
    Date: 2015–07–22
  25. By: Miguel Ángel Borrella Mas (Dpto. Fundamentos del Análisis Económico)
    Abstract: I study the effect of partisan alignment between local and regional governments on political corruption. I estimate the effect by using rich panel data on three consecutive municipal and regional elections in Spain and also on corrupt practices carried out by local politicians. I find significantly more corruption in aligned municipalities. Partisan alignment increases corruption by 2.2 percentage points with respect to the 5.7% mean level of non-aligned municipalities. This effect is more pronounced among municipalities with i) more than 10,000 inhabitants, ii) a budget size above the mean level, iii) local and regional elections held on the same day and the regional government ruling the Autonomous Community with absolute majority and iv) the main right-wing party in the country ruling both government layers. The empirical results are consistent with a simple model of electoral accountability in which politicians in office have to decide between pleasing voters and extracting rents for their own benefit conditional on alignment. Specifically, the model highlights that corruption is an increasing function of the benefits of being aligned and the budget size, with a complementary response due to the interaction between both effects.
    Keywords: corruption, elections, partisan alignment, political career concerns, political economy, Spain
    JEL: D72 D73 H77 P16
    Date: 2015–06
  26. By: Cho, Seong-Hoon; Kim, Taeyoung; Kim, Hyun J.; Park, Kihyun; Roberts, Roland K.
    Abstract: The objective of our research is to predict how electricity demand varies spatially between status quo regionally-uniform electricity pricing and hypothetical regionally-varying electricity pricing across usage categories. We summarize the empirical results of a case study of electricity demand in South Korea with three key findings and their related implications. First, the price elasticities of electricity demand differ across usage categories. Specifically, electricity demands for manufacturing and retail uses were price inelastic and close to unit elastic, respectively, while those for agricultural and residential uses were not statistically significant. This information is important in designing energy policy, because higher electricity prices could reduce electricity demands for manufacturing and retail uses, resulting in slower growth in those sectors. Second, spatial spillovers in electricity demand vary across uses. Understanding the spatial structure of electricity demand provides useful information to energy policy makers for anticipating changes in demand across regions via regionally-varying electricity pricing for different uses. Third, simulation results suggest that spatial variations among electricity demands by usage category under a regionally-varying electricity-pricing policy differ from those under a regionally-uniform electricity-pricing policy. Differences in spatial changes between the policies provide information for developing a realistic regionally-varying electricity-pricing policy according to usage category.
    Keywords: Elasticities of electricity demand, Regionally-varying electricity pricing, Spatial spillovers, Resource /Energy Economics and Policy, C33, L94, Q4,
    Date: 2015
  27. By: Henning, Christian H.C.A.; Zarnekow, Nana; Laudes, Matthias
    Abstract: The aim of the present study was to examine to what extend different social network mechanisms are factors explaining the spread of obesity and obesity associated co-morbidities. Based on our theoretical framework we derive testable hypotheses regarding an indirect and direct impact of social networks on EGO’s BMI and insulin resistance. To test our hypotheses we undertook a clinical and social survey including a sample of 1397 probands. Collected data include anthropometric and biochemical measures as well as health attitudes, behavioural and socio-economic variables and social network data. We used nonparametric and parametric regression models to analyse whether EGO’s BMI and insulin resistance are determined by EGO’s social network characteristics controlling for EGO’s individual characteristics. We found significant PSM and GPS treatment effects for high sport activities, a frequent diet behaviour (p=0.000) of EGO’s social peer group. Since our regression analyses results that obesity is the main determinant of the HOMA-index this established a significant indirect network effect on insulin resistance. We also found significant direct social network effects on EGO’s insulin resistance, i.e. controlling for EGO’s obesity status frequent diet behaviour (p=0.033) and sport activities (p=0.041) of EGO’s peer group decreases EGO’s HOMA index. Network phenomena appear not only to be relevant for the spread of obesity, but also for the spread of associated co-morbidities.
    Keywords: Social network, obesity, peer group effects, generalized matching method, Food Consumption/Nutrition/Food Safety, Health Economics and Policy, Institutional and Behavioral Economics,
    Date: 2015–05
  28. By: Hitoshi Shigeoka
    Abstract: Using birth records in Japan, where school entry rule is strictly enforced, this paper shows that more than 1,800 births a year are shifted from one week before the school entry cutoff date to one week following the cutoff date. Because older children perform better academically than their younger peers, parents who value potential long-term academic gains over the short-term gain of childcare cost savings do exploit birth timing as a means of early childhood investment. Heterogeneous responses by parents violate the assumption of regression discontinuity design that births around the school entry cutoff dates are random.
    JEL: I24 J11 J13
    Date: 2015–07
  29. By: Gustafson, Christopher R.
    Abstract: The benefits of universal primary education (UPE)—ranging from increased personal wellbeing to socially important outcomes such as lower population growth and improved maternal and child health—are widely documented, and donor organizations have invested significant amounts of money to reduce barriers to education. However, there are still many children—and girls, in particular—who do not attend school. Countries in sub-Saharan Africa (SSA) have not attained rates of primary school attendance as high as countries in other parts of the developing world. Authors of the Millennium Development Goals (MDGs) listed UPE in SSA as a core need for achievement of the MDGs. Economic models of educational choice have provided an important framework to think about determinants of school attendance (Becker, 1975). These determinants include benefits, such as higher wages, and costs—both the direct costs households incur in paying school attendance fees, and indirect costs to the household, such as lost labor (e.g. Glick, 2008; Handa, 2002). Pairing these theoretical models with data on school attendance has yielded important insights into decision-making. These insights have been used to guide policy (Fiszbein, Schady, & Ferreira, 2009), and school attendance rates in SSA have increased significantly over the past thirty years (Lincove, 2015). However, as attendance rates have increased, the children who are not in school tend to live increasingly in marginalized, rural communities that do not have the data necessary to understand parents’ schooling choices with the standard model. In many of these communities formal labor markets are thin or non-existent, requiring students to migrate to urban areas to take advantage of the financial benefits of increased education. Additionally, these communities are much less likely to have a history of formal education, reducing opportunities for parents to learn about benefits of education through experience or social networks. Gender disparities in school attendance are frequently also higher than in the general population, and may be due to cultural beliefs or household reliance on female labor. Cumulatively, these factors may engender more inter-household heterogeneity in the conceptualization of the benefits of education. To address gaps in the evidence, this paper introduces data on household leaders’ ideas about the positive or negative effects of education into a model of schooling choice. We collected data on current education decisions and expenditures for children (both children attending and not attending school), educational levels achieved for adults, and male and female assets and income from 196 households of three sedentarized pastoralist and agro-pastoralist tribes living in rural south-central Tanzania. Further, we gathered data separately from male and female heads of household on perceptions of the effects of education for male and female children and on whom in the household or community makes decisions about school attendance for the household’s children. We also have, among other variables, household-level data such as distance to water sources, agricultural and livestock holdings (a factor in the household’s opportunity cost of sending their children to school), and distance to school. There is marked variation in education choices among the tribes, ranging from a low of 25 percent of school-aged children (with 15 percent of them female) attending school to over half of school-aged children (and 49 percent of them female) attending school at the high end. Interestingly, the tribe investing the most in schooling is also on average the poorest in terms of livestock and agricultural holdings, which comprise the bulk of these communities’ wealth. Household leaders’ perceptions of the effects of education encompass a range of benefits and costs. Among these are beliefs that would fit with the motivations commonly assumed to be drivers of education—the ability to get a job, earn wages or a salary, or improve their (and their family’s) material standards of living. However, other households viewed education as a safeguard against exploitation (more frequently listed for females than males), as a way to help their families adapt to a changing environment, as a public good for the entire community, or as a benefit to the students’ abilities to manage the household’s livestock. A significant minority of households expressed ambivalence (“there is no value to education”) or opposition, citing the potential for moral decay, to education; non-positive sentiments tended to be expressed more frequently about educating female than male children. Using data on household composition, school attendance, and education perceptions, we estimate models of whether a household chooses to educate any students, and of the number of students currently being educated, for the entire sample and for males and females separately. Our findings confirm previous results from work on education, while adding new insights. The education levels of household leaders—and of mothers in particular—are an important determinant of children’s schooling. Households in which fathers alone make the schooling decisions educate fewer females and fewer children in general. More female income is associated with higher school attendance. New insights stem from perceptions of education. We find that perceptions of the educational benefits are important in understanding the schooling decisions. Interestingly, however, there are differential effects among the benefits. Households indicating that the opportunity to get a job and earn wages is an important benefit of education are more likely to educate children than households that do not view this as a benefit, while households stating that education is important for children to become better herders are less likely to educate children than those who think this is not an important effect. The novel integration of decision-makers’ perceptions of the benefits of education into the analysis of education choice yields interesting findings. While some of these findings support the standard assumptions of human capital accumulation models and corroborate previous findings, there are new insights into households’ educational choices that will stimulate healthy discussion about the nature of education in marginalized populations, and implications for the achievement of MDGs in SSA. References Becker, G. (1975). Human Capital. New York: National Bureau of Economic Research. Fiszbein, A., Schady, N.R., & Ferreira, F.H. (2009). Conditional cash transfers: Reducing present and future poverty. Washington, DC: World Bank Publications Glick, P. (2008). What policies will reduce gender schooling gaps in developing countries: Evidence and interpretation. World Development, 36(9), 1623–1646. Handa, S. (2002). Raising primary school enrolment in developing countries: The relative importance of supply and demand. Journal of Development Economics, 69, 103–128. Lincove, J.A. (2015). Improving identification of demand-side obstacles to schooling: Findings from revealed and state preference models in two SSA countries. World Development 66: 69-83
    Keywords: Education, Tanzania, Pastoralism, International Development, Labor and Human Capital,
    Date: 2015
  30. By: Prasann, Ashesh
    Abstract: Rural workfare programs guaranteeing work at above market wages are intended to provide security to the unemployed during the agricultural off-season and are an increasingly used feature of labor market policy in developing countries. In recent work, India’s National Rural Employment Guarantee Scheme (NREGS), the largest rural workfare program in the world, has been attributed with crowding out work, raising private sector wages and lowering rural-urban migration. However, the empirical literature is agnostic about the sign and magnitude of spillovers generated by the large scale program. This paper studies the spatial spillover effects of NREGS on migration, time allocation and casual wages in areas which did not receive the program over the study period. Standard economic theory predicts that wage differentials across labor markets linked by migration should lead to equalization of wages in a competitive equilibrium. This analysis exploits the plausibly exogenous variation in wage differentials introduced by the staggered rollout of NREGS across contiguous program and non-program districts. It then tests the hypothesis that the program generated labor market spillovers to non-program districts using a nationally representative employment survey. Our results show that on average, real wage for casual labor increased by 2.7% with every additional program neighbor in non-program districts. Additionally, the impact of having only program neighbors was estimated to be a 17.5% rise in real wage for casual labor in non-program districts, relative to districts without any NREGS neighbors. The effects on individual level labor supply, non-labor force participation and unemployment are not statistically significant. Together, these results provide empirical support for predicted effects from theory.
    Keywords: Public Works, Spillovers, Spatial, Labor Market, International Development, Labor and Human Capital,
    Date: 2015–05
  31. By: Towe, Charles
    Abstract: We examine both the short- and long-term effects of newly preserved open space in an exurban landscape. The open space is secured via voluntary perpetual easements that sever the development right from the land. We find mixed results with significant impacts on developable neighboring parcels, both on their likelihood of subdividing and on their likelihood of entering a preservation easement. We show that subdivision and preservation activity disproportionately locates near past neighboring preservation easement activity. The first outcome is an unintended consequence in contrast to policy objectives while the latter is, in fact, a policy induced effect. The analysis relies on a unique spatially explicit parcel-level dataset documenting residential development and preservation activity for almost 30 years, the primary objective is to test for interaction effects among parcels which would be impossible with any other sort of data and the results are robust across models addressing endogeneity concerns.
    Keywords: Land Use, Policy Evaluation, Open Space Amenities, Propensity Score Matching, Environmental Economics and Policy, Q24, R14,
    Date: 2015
  32. By: Torres, Ariana P.; Marshall, Maria I.
    Abstract: How small businesses fare after a natural disaster and what it takes for them to survive is very important to the economy because they employ approximately half of America’s private workforce (SBA, 2013) and are a critical component of and major contributor to the vitality of cities, states, and the country (Cochrane, 1992; Robbins, 2001). It is widely known that small businesses tend to feel greater economic repercussions after natural disasters when compared to larger businesses (Schrank et al., 2013). Following a disaster, a business can be closed or remain operating, but this status varies with time and depends on the business’ vulnerability or its level of resilience (Alesch, 2003; Cutter, 2008), especially after considering that small business owners are hit twice by disasters: as business owners and as local citizens (Runyan, 2006). Post-disaster resilience is a multidimensional and complex process that takes place over time, is related to the rebuilding of the life of individuals, businesses, communities, and institutions, and is strongly influenced by the interaction of the agents that are affected by a disaster (Chang, 2010; Olshansky, 2005). Aldrich (2012) illustrated how social capital—networks that formally or informally offer resources—explains the ability to withstand a disaster and build resilience by quickly disseminating information and financial and physical assistance within a community. This study takes a step further and aims to understand how social capital explains the resilience of small businesses after Hurricane Katrina. Most studies have focused mainly on the macroeconomic impacts of disasters using aggregated data and have lightly addressed small business resilience using the business as the unit of analysis (Zhang et al., 2008; Aldrich, 2012). Although the aggregated analysis is useful to understand the effects of disasters on the recovery of businesses, it does not shed light on the how and why of the resilience process. This study uses the Small Business Disaster Recovery Framework (SBDRF) to assess how social capital explains the resilience of small businesses hit by Hurricane Katrina (Marshall and Schrank, 2014). Based on the SBDRF, post-disaster operating businesses were categorized as closed, survived, recovered, and resilient depending on the comparison between pre- and post-disaster indicators (Marshall and Schrank, 2014). After a disaster, a business can be closed or open, and for those businesses that are can be classified as survived, recover, or resilient. The SBDRF categorizes operating business as survived as those that have not reached pre-event levels, a recovered business has return to its pre-disaster state, and a resilient business has exceeded the baseline performance pre-disaster (Bruneau et al., 2003; Marshall and Schrank, 2014). A panel regression was used with the level of gross revenues pre- and post-Katrina as dependent variables (2004, 2011, and 2013). To assess the level of post-disaster business resilience this study used quantitative (e.g. gross revenues comparisons) and qualitative indicators (owner’s perceptions of success). The methodology addresses the assumptions that 1) simultaneity between resilience, recovery, and survival can create possible endogeneity, and 2) the status of the business as open or closed may involve a non-random sample selection. Business owner’s perceptions are key for studies on small businesses and these tend to be ignored if research and conclusions are drawn only from simulation models or aggregated data. This study addresses the lack of a finer measurement of social capital in economic and social studies by incorporating multiple categories of the key independent variable, social capital, such as bonding (support received from similar individuals such as family and friends), bridging (support received from dissimilar individuals such as communities), and linking (support received from institutions) (Aldrich, 2012; Hawkins and Maurer, 2010). This study incorporated several control variables at the community, family, and small business level often included in small and family business studies. For instance, this study included control variables for human capital, financial capital, location, a county socioeconomic vulnerability index, a rurality index, and demographic variables of the business and business’ owner that can affect the operation of the business after disaster. The data for this study comes from the first and second wave of the Small Business Survival and Demise after a Natural Disaster Project (SBSD). This data set is unique because it includes information about both open and closed businesses at different points in time and allows us to determine the differences to those that remained operating. The primary sampling unit within the model is the small business, which was defined as those that had 0-200 employees and were headquartered in the state of Mississippi. Of the 2,610 business owners reached, the cooperation rate was 19.12% providing a random sample size of 499 businesses. Preliminary results show that from the 420 small business used in this study, 11.90% of the business are closed and 88.10% are operating. From those operating, the majority have survived and only 18.81% have recovered and 25.00% are resilient. The results suggest that few business are resilient or even recovered. Small business that received social capital were significantly more likely to be operating after Katrina and the probability of being resilient significantly increases with the level of social capital. For instance, small businesses are 23.95%, 28.57%, and 21.35% (at P<0.001) more likely to be resilient when they received support from family and friends, the community, or institutions, respectively. In addition, the results suggest that linking is the most effective type of social capital to build small business resilience. This study bridges the gap existing between the impact of natural disaster and small businesses to analyze how social capital explains business resilience. Two main questions were answered. First, does social capital explain small business resilience after Hurricane Katrina? Second, what is the most effective type of social capital for building small business resilience? The results illustrate how small business owners, especially those who lack physical and financial resources, connected to their communities and forming part of tighter local networks can overcome disaster and build resilience. The more links business owners have to the community, families, friends, and institutions (i.e. the more social capital they have), the better off they will be when they go through a crisis; therefore, self-reliance only cannot assure post-disaster recovery. This study shows that social capital, sources of information and assistance during crisis, should be taken into account as another tangible asset for mitigation and recovery. Finally, scholars, planners, and government agencies can use these results to advocate for increasing social capital by incorporating incentives and interventions to support the creation and strengthening of bonds between citizens and local social networks through community participation and leadership development.
    Keywords: Katrina, social capital, resilience, small business, Community/Rural/Urban Development, Consumer/Household Economics, Environmental Economics and Policy,
    Date: 2015

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