nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2015‒10‒17
forty-two papers chosen by
Steve Ross
University of Connecticut

  1. Structural Demand Estimation with Borrowing Constraints By Ouazad, Amine; Rancière, Romain
  2. Are Rural Costs of Living Lower? Evidence from a Big Mac Index Approach By Scott Loveridge; Dusan Paredes
  3. Nonpublic Competition and Public School Performance: Evidence from West Virginia By Richard J. Cebula; Joshua C. Hall; Maria Y. Tackett
  4. The External Cruising Costs of Parking By Eren Inci; Jos N. van Ommeren; Martijn Kobus
  5. Location choice of German multinationals in the Czech Republic. The importance of agglomeration economies By Veronika Hecht
  6. Poverty Measurement: We Know Less Than Policy Makers Realize By John Gibson
  7. Social interactions in inappropriate behavior for childbirth services: theory and evidence from the Italian hospital sector By Guccio, C.;; Lisi, D.;
  8. Bobos in Paradise: Urban Politics and the New Economy By Gilles Saint-Paul
  9. Estimating the demand for housing attributes in Chile By Esteban Lopez; Dusan Paredes
  10. The causal effects of increased learning intensity on student achievement: Evidence from a natural experiment By Andrietti, Vincenzo
  11. On the role of the property tax in financing local expenditure: the case of Italy By Ernesto Longobardi
  12. ICT and Education: Evidence from Student Home Addresses By Benjamin Faber; Rosa Sanchis-Guarner; Felix Weinhardt
  13. A dirty deed done dirt cheap: reporting the blame of a national reform on local politicians By Cassette, Aurélie; Farvaque, Etienne
  14. Economic Freedom and Economic Growth Across U.S. States: A Spatial Panel Data Analysis By Kaitlyn Harger; Brad R. Humphreys; Amanda Ross
  15. How does fiscal decentralization affect within-regional disparities in well-being? Evidence from health inequalities in Italy By Di Novi, C.;; Piacenza, M.;; Robone, S.;; Turati, G.;
  16. Household Debt and Crises of Confidence By Hintermaier, Thomas; Koeniger, Winfried
  17. Road freight transport policies and their impact: a comparative study of Germany and Sweden By Vierth , Inge; Schleussner , Heike; Mandell , Svante
  18. Infrastructure Investment in the Western Balkans By Mario Holzner; Robert Stehrer; Hermine Vidovic
  19. Social Closure, Surnames and Crime By P. Buonanno; P. Vanin
  20. Matching and credit frictions in the housing market By Eerola , Essi; Määttänen , Niku
  21. Natural Expectations and Home Equity Extraction By Pancrazi, Roberto; Pietrunti, Mario
  22. The Effect of a Transfer Program for the Elderly in Mexico City on Co-Residing Children's School Enrollment By Gutierrez Emilio; Juárez González Laura; Rubli Adrian
  23. Offshoring and the Geography of Jobs in Great Britain By Luisa Gagliardi; Simona Iammarino; Andrés Rodríguez-Pose
  24. Strategies of the unemployed in South Africa: Does moving allow the unemployed to get ahead? By Amina Ebrahim; Murray Leibbrandt; Ingrid Woolard
  25. Jobless Capital? The Role of Capital Subsidies By Carlianne E. Patrick
  26. Financial and Economic Development Nexus: evidence from Brazilian municipalities By Marcos Soares da Silva
  27. Mapping the Occupational Segregation of White Women in the U.S.: Differences across Metropolitan Areas By Olga Alonso-Villar; Coral del Río
  28. Community Leaders and the Preservation of Cultural Traits By Prummer, Anja; Siedlarek, Jan-Peter
  29. Estimation of Spatial Autoregressions with Stochastic Weight Matrices By Abhimanyu Gupta
  30. The role of networks for migration flows - an update By Michel Beine
  31. Why do empirical tests tend to accept the NEG? An alternative approach to the 'wage equation' in European regions By Fernando Bruna
  32. Is crime in Mexico a disamenity? Evidence from hedonic valuation approach By Dusan Paredes; Scott Loveridge
  33. In Focus: For Massachusetts Students, PARCC and MCAS Exams Comparable in Predicting College Outcomes By Ira Nichols-Barrer; Kate Place; Erin Dillon; Brian Gill
  34. Predictive Validity of MCAS and PARCC: Comparing 10th Grade MCAS Tests to PARCC Integrated Math II, Algebra II, and 10th Grade English Language Arts Tests By Ira Nichols-Barrer; Kate Place; Erin Dillon; Brian Gill
  35. Effects of further reductions in the LTV limit By Johan Verbruggen; Remco van der Molen; Steven Jonk; Jan Kakes; Willem Heeringa
  36. Knowledge Clusters and Multidimensional Proximity: An Agent-Based Simulation. By Bottai, carlo; Iori, Martina
  37. Residential trade and industry: European market analysis, future trends and influencing factors By Cervelló-Royo, Roberto; Martínez, Francisco Guijarro; Pfahler, Thomas; Preuss, Marion
  38. Food Choices and Store Proximity By Rahkovsky, Ilya; Snyder, Samantha
  39. Tax(i)ing the poor? Commuting costs in South Africa By Andrew Kerr
  40. Textual Analysis in Real Estate By Adam Nowak; Patrick Smith
  41. Estimating the Impact of House Prices on Household Labour Supply in the UK By Zhechun He
  42. Industrial Agglomeration and Use of the Internet By Chang, C-L.; McAleer, M.J.; Wu, Y-C.

  1. By: Ouazad, Amine; Rancière, Romain
    Abstract: Structural models of housing or product choice use observed demand to estimate household preferences. However, household demand may be partly determined by borrowing constraints, limiting households’ choice set. Such borrowing constraints will differ across locations, households, and years. We put forward a model of neighborhood choice with borrowing constraints that accounts for mortgage credit approval rates. We estimate the model's parameters using micro-level data on households, property transactions and mortgage applications for the San Francisco Bay. Approval rates vary significantly both across households and across neighborhoods. The model with borrowing constraints yields significantly higher estimated willingness to pay to live close to good schools and in majority-white neighborhoods. The model provides general equilibrium estimates of the impact of a relaxation of lending standards. Between 2000 and 2006, the model provides two out-of-sample predictions: (i) a compression of the price distribution and (ii) a decline in black households' exposure to white households. Both predictions are supported by empirical observation.
    Keywords: demand estimation; house prices; housing; mortgage credit; segregation
    JEL: G21 R21 R23
    Date: 2015–10
  2. By: Scott Loveridge (Michigan State University); Dusan Paredes (Departamento de Economia, Universidad Catolica del Norte)
    Abstract: Rural leaders can point to low housing costs as a reason that their area should be competitive for business attraction. To what extent do rural housing costs offset transportation and other locational disadvantages in costs structures? The US lacks information to systematically answer the question. We adapt a strategy employed by The Economist in exploring purchasing power parity: the Big Mac Index. We gather information on Big Mac prices with a random sample of restaurants across the contiguous US. We find that core metro counties exhibit slightly higher Big Mac prices than other counties, but that differences across the balance of the rural-urban continuum code are not significant, implying that costs in a metro-adjacent county are not different than areas that are much more rural. We show that some groups of states exhibit lower prices, especially in the southeast. Furthermore, we test for the presence of spatial monopoly, and find that distance to other MacDonald’s restaurants has some influence on price. Stores at a greater distance from their competitors tend to charge more, ceteris paribus. Our general findings could help rural decision makers determine whether their area truly holds cost advantages for firms looking to relocate
    Date: 2015–09
  3. By: Richard J. Cebula (Jacksonville University, Davis College of Business); Joshua C. Hall (West Virginia University, Department of Economics); Maria Y. Tackett (West Virginia University, Department of Economics)
    Abstract: In this study, we investigate whether nonpublic school enrollment affects the performance of public school districts. If homeschooling and private schools act as competition, public school districts test scores should be positively associated with nonpublic enrollment. Using data on West Virginia county school districts, and controlling for endogeneity with an instrumental variables approach, we find that a one standard deviation increase in relative nonpublic enrollment in a county is associated with statistically significant increases in public school district test scores. Our findings thus confirm that nonpublic enrollment and the competition it provides act to improve, rather than impede, public school performance.
    Keywords: competition, markets, education
    JEL: H52 I28
    Date: 2015–07
  4. By: Eren Inci (Sabanci University, Turkey); Jos N. van Ommeren (VU University Amsterdam, the Netherlands); Martijn Kobus (MuConsult, the Netherlands)
    Abstract: Existing work emphasizes the importance of traffic congestion externalities, but typically ignores cruising-for-parking externalities. We introduce a novel methodology to estimate the marginal external cruising costs of parking. The level of cruising is identified by examining to what extent the car inflow rate into the parking location falls with parking occupancy level. For a commercial street in Istanbul, we demonstrate that a marginal car parking for one hour induces 3.6 other cars to cruise for parking. This translates into an external cruising cost that far exceeds the external traffic congestion cost created by the trip.
    Keywords: administrative parking data; cruising for parking; external costs of parking; parking fee; parking occupancy rate
    JEL: D62 H23 L91 R41 R48
    Date: 2015–10–13
  5. By: Veronika Hecht
    Abstract: This paper analyses the location choice of German investors in the Czech Republic based on a unique dataset covering all Czech companies with a German equity holder in 2010. The identification of the regional determinants of foreign direct investment (FDI) location is an important regional policy issue as FDI is supposed to improve the labour market conditions of the host region. Using a nested logit approach the impact of agglomeration economies, labour market conditions and distance on the location choice decision is investigated. The main result of the paper is that apart from a low distance to the location of the parent company the attractiveness of a Czech district for German investors is mainly driven by agglomeration economies. Besides localisation economies the agglomeration of German companies in a region plays a decisive role. The importance of labour market characteristics differs between investment sectors, sizes and periods.
    Keywords: Location choice, FDI, Multinational enterprises, Germany, Czech Republic, Agglomeration Economies
    JEL: F24 R12 R30
    Date: 2015–10
  6. By: John Gibson (University of Waikato)
    Abstract: The locations of agglomeration economies and their effects on city-level productivity and wages in China are examined. Previous studies rely on inaccurate measures of city scale based on China’s hukou household registration system but more accurate resident-based measures from the 2010 census are used here. The size of agglomeration effects is similar to what is found in other countries. These agglomeration effects occur only in urban districts and operate only through tertiary sector activity. Government-directed efforts to create a dispersed form of urbanization, by stimulating construction and manufacturing activity in less urbanized counties, is unlikely to create beneficial agglomeration effects.
    Keywords: happiness; household surveys; inequality; poverty; prices; shared prosperity;
    JEL: O15 I38
    Date: 2015–10–05
  7. By: Guccio, C.;; Lisi, D.;
    Abstract: Empirical evidence supports the conjecture that social interactions among agents can produce both positive and negative effects. We build on this literature by exploring the role of social interactions in the hospital sector using the large incidence of cesarean sections, usually considered an inappropriate outcome in the childbirth service. In doing so, we lay out a simple model of hospitals’ behavior where the effect of peers’ behavior emerges simply by sharing the same institutional authority responsible for auditing inappropriate behavior. In this setting, enforcement congestion induces a peer effect among hospitals that could make inappropriate behaviors more likely. Then, using the risk-adjusted cesarean section rate of a large panel of Italian hospitals, we empirically investigate whether the behavior of each hospital is affected by the behavior of hospitals withinthe same region, after controlling for demand, supply, and financial factors. In particular, our empirical test employs both peer effects estimate and the spatial econometric approach, exploiting the panel dimension of our data. Both estimates show a significant and strong presence of peer effects among hospitals. We interpret this evidence as a presence of constraint interactions within the hospital sector, which has important implications for healthcare policies against inappropriateness.
    Keywords: social interactions; peer effects; cesarean section; spatial econometrics;
    JEL: I11 C31
    Date: 2015–09
  8. By: Gilles Saint-Paul (New York University Abu Dhabi - Abu Dhabi, PSE - Paris-Jourdan Sciences Economiques - CNRS - Institut national de la recherche agronomique (INRA) - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics)
    Abstract: This paper provides some elements to explain the observed takeover in some urban areas of a new kind of elite associated with new economy jobs, also known as "bourgeois bohème" (bobos). This takeover has been associated with greater investment in urban amenities and "clean" means of transport, with adverse e¤ects on commuting time. The model allows us to explain those developments by productivity is growth in the new economy, and by the di¤erences in production processes between the new and old economies. The consequences of bobo takeover for house prices and employment of unskilled service workers are also discussed. A bunkerized equilibrium in which skilled workers in the old economy no longer reside in the city and have been replaced by service workers is studied. In such an equilibrium urban amenities are at their maximum and commuting .ows have been eliminated. For some parameter values, bobos are better-o¤ under bunkerization, in which case they may gain by favoring it with a "diversity" subsidy for unskilled workers to reside in the city.
    Keywords: New economy,urban amenities,bobos,residential choice,local public goods,urban voting models,bunkerization
    Date: 2015–10
  9. By: Esteban Lopez (Regional Economics Applications Laboratory, University of Illinois at Urbana-Champaign); Dusan Paredes (Departamento de Economia, Universidad Catolica del Norte)
    Abstract: This paper estimates income and price elasticities for housing attributes for each region of Chile in order to evaluate the sensitivity of their demand to price changes as well as whether they are considered luxuries or basic necessities. Using five cross-section household surveys (CASEN) from 2000-2011, our results suggest that based on income elasticities, Housing Size (HS) and Housing Location (HL) are basic necessities. Contrarily, Housing Quality (HQ) and Housing Features (HF) are considered luxury goods. HS and HL are more price-inelastic than the other attributes. These results are consistent across regions.
    Date: 2015–09
  10. By: Andrietti, Vincenzo
    Abstract: I exploit a unique educational policy - implemented in most German states between 2001 and 2007 - that reduced high school duration by one year while keeping its curriculum unaltered to investigate how the resulting increase in learning intensity affected student achievement. Using 2000-2009 PISA data and a difference-in-differences approach, I find robust evidence that the reform significantly improved the reading, mathematics, and science literacy skills acquired by academic-track high school students upon treatment. A more direct estimate of the effects of the increased learning intensity - as measured by the cumulative weekly number of instructional hours delivered in high school grades - corroborates the latter finding. Furthermore, there is some evidence that the effects of the reform differ by gender and grade retention. Finally, I find no evidence of a significant average effect of the reform on high school grade retention, although I do find that the latter increased significantly for boys and for students with a migration background.
    Keywords: G8,Learning intensity,Instructional hours,Student achievement,Academic-track high school,Difference-in-Differences
    JEL: I21 I28 D04
    Date: 2015–06–01
  11. By: Ernesto Longobardi (University of Bari)
    Abstract: The paper discusses some issues concerning the local property tax in the light of the Italian experience. The main developments concerning the municipal property tax in Italy, since its introduction and until the most recent events, are briefly described. Then three main issues regarding the local property tax are addressed. First, the question whether there is any economic rationality in exempting owner occupied houses, a theme that has been central in the Italian debate and in the political arena in the last years; second, the long debated issue of whether the local property tax is a good benefit tax; and, finally, the possibility that a “residence tax”, levied on the occupant of the dwelling, would represent a better opportunity for implementing the benefit principle than the traditional property tax levied on the owners.
    Keywords: property tax, benefit principle, tax reform, political economy
    JEL: H2 H71 H77 D7
    Date: 2015–10
  12. By: Benjamin Faber; Rosa Sanchis-Guarner; Felix Weinhardt
    Abstract: Governments are making it a priority to upgrade information and communication technologies (ICT) with the aim to increase available internet connection speeds. This paper presents a new empirical strategy to estimate the causal effects of these policies, and applies it to the questions of whether and how ICT upgrades affect educational attainment. We draw on a rich collection of microdata that allows us to link administrative test score records for the population of English primary and secondary school students to the available ICT at their home addresses. To base estimations on exogenous variation in ICT, we notice that the boundaries of usually invisible telephone exchange station catchment areas give rise to substantial and essentially randomly placed jumps in the available ICT across neighboring residences. Using this design across more than 20,000 boundaries in England, we find that even very large changes in available broadband connection speeds have a precisely estimated zero effect on educational attainment. Guided by a simple model we then bring to bear additional microdata on student time and internet use to quantify the potentially opposing mechanisms underlying the zero reduced form effect. While jumps in the available ICT appear to increase student consumption of online content, we find no significant effects on student time spent studying online or offline, or on their learning productivity.
    Keywords: Education, information and communication technology, internet
    JEL: I20 D83
    Date: 2015–10
  13. By: Cassette, Aurélie; Farvaque, Etienne
    Abstract: This paper tests the hypothesis that upper-level governments can transfer the accountability of the costs of a reform to a lower one. The reform of the school rhythm in France provides the ground for a verification of this hypothesis, as it was nationally decided and locally implemented, right before a municipal election. The results confirm that local incumbents have taken the blame of the reform, especially in larger cities and if they belong to the governing coalition. In this case, thus, the cost of the reform is borne twice by the lower level of government, financially and politically, offering a double gain to the government. That mayors who have announced a boycott of the reform have received electoral gains confirms the perception of the local cost of the reform.
    Keywords: Reforms, Elections, Municipalities, Reform
    JEL: D04 D72 D78 H77 I28
    Date: 2015–08–20
  14. By: Kaitlyn Harger (Florida Gulf Coast University); Brad R. Humphreys (West Virginia University, Department of Economics); Amanda Ross (West Virginia University, Department of Economics)
    Abstract: There is a substantial literature estimating the effect of economic freedom on economic growth. Most studies examine the relationship between freedom and growth for countries, while a few examine the relationship for U.S. states. Absent in the state{level literature is consideration of the presence of spatial spillovers affecting the freedom{growth relationship. Neglecting to account for spatial autocorrelation can bias estimation results and therefore inferences drawn. We find evidence of a spatial pattern in real per-capita GSP that affects non-spatial estimates of the freedom{growth relationship. Taking into account the direct and indirect effects of economic freedom on GSP, we find a 10 percent increase in economic freedom is associated with a 4.2 percent increase in GSP.
    Keywords: spatial panel data model, spatial econometrics, economic freedom
    Date: 2015–07
  15. By: Di Novi, C.;; Piacenza, M.;; Robone, S.;; Turati, G.;
    Abstract: This paper aims at investigating empirically the impact of fiscal decentralization reforms on inequality in well-being. In particular, we look at the effects on health inequalities following the assignment of larger tax power to the Italian Regions for financing their health expenditure, starting from the end of the Nineties. Exploiting large differences in the size of the tax base across Regions, we find that fiscal decentralization processes that attribute a greater tax power to lower government tiers, besides reducing inefficiencies of healthcare policies, seem to be effective in reducing also within-regional disparities in health outcomes. However, thedegree of economic development – on which depends the actual fiscal autonomy from Central government – significantly affects the effectiveness of these reforms and highlights the importance to take properly into account the specific features of the context where the decentralization of power is implemented.
    Keywords: fiscal decentralization; regional governments; healthcare policy; health inequalities;
    JEL: H75 I14 I1 R50
    Date: 2015–09
  16. By: Hintermaier, Thomas; Koeniger, Winfried
    Abstract: We show that the size of collateralized household debt determines an economy's vulnerability to crises of confidence. The house price feeds back on itself by contributing to a liquidity effect, which operates through the value of housing in a collateral constraint. Over a specific range of debt levels this liquidity feedback effect is strong enough to give rise to multiplicity of house prices. In a dynamic setup, we conceptualize confidence as a realization of rationally entertainable belief-weightings of multiple future prices. This delivers debt-level-dependent bounds on the extent to which confidence may drive house prices and aggregate consumption.
    Keywords: collateral constraints; consumer confidence; household debt; multiple equilibria
    JEL: D91 E21 E32
    Date: 2015–10
  17. By: Vierth , Inge (VTI); Schleussner , Heike (VTI); Mandell , Svante (KTH/VTI)
    Abstract: We compare policy implications from time-based charges on road freight transports, represented by the case of Sweden, to those from distance-based charges, represented by the case of Germany. The analyses based on official statistics from 2005-2014 indicate that the German road freight policy has resulted in substantially larger revenues and a cleaner truck fleet and mileage. Some support is found for that the German policy causes spill-overs to the neighbouring countries. It can be shown that the Swedish hauliers use cleaner trucks for international than for national transports. In general, the firms have incentives to use the cleanest trucks in the countries that have introduced distance-based tolls. As an estimate of the consequences of this in Sweden, the difference in environmental impact is estimated between the case with the actual composition of trucks using the Swedish network and the hypothetical case where the composition is the same as on the German toll roads. The socio-economic costs are estimated to be around € 16 million per year. This puts pressure on countries as Sweden to implement stronger policies to counter the spill-over effect. The time based charges, e.g., the Eurovignette, seem to be outdated.
    Keywords: Road freight transport; Road charges; Policy comparison
    JEL: R40
    Date: 2015–10–08
  18. By: Mario Holzner (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw); Hermine Vidovic (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Summary Although a certain amount of catching-up in the Western Balkans has been recorded in the construction of transport infrastructure in recent years, the railway density remains low and the motorway density is even lower. Also, the deficiency in energy infrastructure is substantial. The current initiative of the ‘Core Network and Priority Projects’ in the context of the ‘Berlin Process’ should secure growth and employment in the region over the short and medium term and contribute to a substantial improvement of competitiveness of the Western Balkans in the long term. It is shown in the analysis that a comprehensive transport infrastructure investment package of EUR 7.7 billion over a period of 15 years could lead to an additional growth spurt of up to one percentage point per annum for the six Western Balkan countries. Some 200,000 new jobs could be created in the region.
    Keywords: infrastructure, public investment, economic development, simulation model, Berlin Process, Western Balkans
    JEL: E27 H54 O18
    Date: 2015–09
  19. By: P. Buonanno; P. Vanin
    Abstract: This paper studies the effect of social closure on crime and tax evasion rates using disaggregated data for Italian municipalities. It measures the degree of social openness of a community by the diversity of its surname distribution, which reflects the history of migration and inbreeding. It shows that, all else equal, communities with a history of social closure have lower crime rates and higher tax evasion rates than more open communities. The effect of social closure is likely to be causal, it is relevant in magnitude, statistically significant, and robust to changes in the set of included controls, in the specific measures of dependent and independent variables, in the specification of the regression equation, and in the possible sample splits. Our findings are consistent with the idea that social closure strengthens social sancions and social control, thus leading to more cooperative outcomes in local interactions, but it reduces cooperation on a larger scale.
    JEL: A14 K42 Z13
    Date: 2015–10
  20. By: Eerola , Essi (Bank of Finland Research); Määttänen , Niku (Research Institute of the Finnish Economy, Aalto University and HECER)
    Abstract: We study the interaction of matching and credit frictions in the housing market. In the model, risk-averse households may save or borrow in order to smooth consumption over time and finance owner housing. Prospective sellers and buyers meet randomly and bargain over the price. We analyze how borrowing constraints influence house price determination in the presence of matching frictions. We also show that credit frictions greatly magnify the effects of matching frictions. For instance, in the presence of matching frictions, a moderate tightening of the borrowing constraint increases idiosyncratic price dispersion and the average time-on-the-market substantially.
    Keywords: housing; borrowing constraint; matching
    JEL: C78 E21 R21
    Date: 2015–10–05
  21. By: Pancrazi, Roberto (Department of Economics University of Warwick); Pietrunti, Mario (Banca d’Italia and Toulouse School of Economics)
    Abstract: In this paper we propose a novel explanation for the increase in households' leverage during the recent boom in U.S. housing prices. We use the U.S. housing market's boombust episode that led to the Great Recession as a case study, and we show that biased long-run expectations of both households and, especially, nancial intermediaries about future housing prices had a large impact on households' indebtedness. Specically, first we show that it is likely that financial intermediaries used forecasting models that ignored the long-run mean reversion of housing prices after a short-run momentum, thus leading to an overestimation of future households' housing wealth. We frame this finding in the theory of natural expectations, proposed by Fuster et al. (2010), to the housing market. Then, using a tractable model of collateralized credit market populated by households and banks, we find that: (1) mild variations in long-run forecasts of housing prices result in quantitatively considerable dierences in the amount of home equity extracted during a housing price boom; (2) the equilibrium levels of debt and interest rate are particularly sensitive to nancial intermediaries' naturalness; (3) home equity extraction data are better matched by models in which agents are fairly natural.
    Keywords: Natural expectations ; Home equity extraction ; Consumption/saving decision ; Housing pricecreation-date: 2015
    JEL: E21 E32 E44 D84
  22. By: Gutierrez Emilio; Juárez González Laura; Rubli Adrian
    Abstract: This paper studies whether the increase in government transfers, induced by an old-age pension program for individuals age 70 and older in Mexico, affects co-residing children's school enrollment, using a regression discontinuity analysis. Results suggest that while household composition and other household-level characteristics do not change significantly at the cutoff age for program eligibility, co-residing children's school enrollment increases significantly. This suggests that public resources for older adults might generate benefits for other age groups. An additional finding is that the increase in school enrollment takes places mostly at the program eligibility cutoff and not before. Given that the program transfer is known and potentially anticipated by individuals who are only a few years away from being eligible, this suggests that households might have credit constraints.
    Keywords: Government transfers; school enrollment.
    JEL: J14 I25
    Date: 2015–04
  23. By: Luisa Gagliardi; Simona Iammarino; Andrés Rodríguez-Pose
    Abstract: This paper investigates the impact of the offshoring of production activities on domestic jobs in Great Britain. The paper considers both the spatial heterogeneity across local labour markets and variations in the intensity of outward flows of investments abroad (OFDI) across industries in order to shed new light on the job creation/destruction implications of offshoring. The results suggest that offshoring may generate significant job losses in routine occupations in areas that have been more exposed to the relocation of production abroad, regardless of whether the relocation has been to developed or developing/emerging countries. Offshoring to developing/emerging countries has, by contrast, a positive effect on the generation of non-routine jobs. Efficiency gains accruing from the international reorganization of production increase in the long-run, with compensation mechanisms operating through growth of employment in higher value added activities at home. Overall, our results uncover important spatial and interpersonal inequalities in job creation, which provide new challenges for public policy.
    Keywords: Offshoring, local labour markets, job creation and destruction, routine and non-routine occupations
    JEL: F21 J42 J23 J24
    Date: 2015–10
  24. By: Amina Ebrahim (PhD student in SALDRU, the School of Economics, University of Cape Town); Murray Leibbrandt (SALDRU, School of Economics, University of Cape Town); Ingrid Woolard (SALDRU, School of Economics, University of Cape Town)
    Abstract: This paper examines the survival strategies of the unemployed using the balanced panel of the first three waves of the National Income Dynamics Study. We find that in response to unemployment and almost no unemployment insurance, unemployed individuals look to parents, relatives and friends for economic support. They are more likely to attach themselves to household that have some income through an employed member or in receive of state support. In many cases the unemployed delay setting up their own households while others move back into family households when faced with persistent unemployment. We use a probit model to show that the unemployed who move are more likely to be employed in a successive wave. The effect of moving on employment status remains significant and positive when we take into account household and individual characteristics. Moving allows the unemployed to get ahead.
    Keywords: Unemployment, national income dynamics study, South Africa
    Date: 2015
  25. By: Carlianne E. Patrick (Georgia State University)
    Abstract: Using tax abatements, financial incentives, and public investments to attract (or retain) firms is the primary economic development tool for many local governments. Often local job creation policies focus on increasing capital through grants, low-interest financing, and other economic development incentives. Theory predicts that capital subsidies induce firm behaviors that limit their job creation effects. This paper employs the Incentives Environment Index, constructed from state constitutional provisions that limit and structure the ability of state and local governmental entities to aid private enterprises, and five-year county panels to test theoretical predictions on county capital expenditure and input mixes as well as industry establishment shares. The results indicate the act of increasing capital subsidy tools is associated with capital-labor substitution, decreased employment density, and changes in local industry mix. Results are robust to alternative empirical specifications and measures of capital subsidy availability.
    Keywords: economic development incentives, capital subsidies, capital-labor substitution
    JEL: R32 H25 R11
    Date: 2015–10
  26. By: Marcos Soares da Silva
    Abstract: This paper investigates the relationship between financial development and economic development for 5,564 Brazilian municipalities in 2012. Using supply-side information, we propose a way to measure financial development at the municipality level. This composite index is used to evaluate how financial service is distributed throughout the country. Our empirical strategy consists in examining the effect of spatial dependence among municipalities by applying a spatial-autoregressive with spatial-autoregressive disturbance model (SARAR). We find a positive and significant association of the economic development between the municipality and its neighbors, after controlling for relevant factors. The results also suggest that financial development has a large positive impact on local economic development
    Date: 2015–09
  27. By: Olga Alonso-Villar; Coral del Río
    Abstract: This paper investigates the occupational segregation of white women in the U.S. at a metropolitan area level. Our results show substantial variation across areas and suggest that the national scale does not reveal the real situation of white women. The proportion of white women who would have to shift occupations to achieve zero segregation ranges between 20% in some areas and 40% in others. The consequences that occupational segregation has in terms of earnings also vary dramatically within the country, which suggests that in dealing with labor inequalities, local authorities should play an active role.
    Date: 2015–10
  28. By: Prummer, Anja (Cambridge-INET Institute); Siedlarek, Jan-Peter (Federal Reserve Bank of Cleveland)
    Abstract: We explain persistent differences in cultural traits of immigrant groups with the presence of community leaders. Leaders influence the cultural traits of their community, which have an impact on the group’s earnings. They determine whether a community will be more assimilated and wealthier or less assimilated and poorer. With a leader, cultural integration remains incomplete. The leader chooses more distinctive cultural traits in high-productivity environments and if the community is more connected. Lump-sum transfers to immigrants can hinder cultural integration. These findings are in line with integration patterns of various ethnic and religious groups.
    Keywords: Cultural Integration; Cultural Transmission; Leadership; Immigrants; Labor Market Outcomes; Social Influence; Networks
    JEL: D02 J15 Z10
    Date: 2015–10–09
  29. By: Abhimanyu Gupta
    Abstract: We examine a higher-order spatial autoregressive model with stochastic, but exogenous, spatial weight matrices. Allowing a general spatial linear process form for the disturbances that permits many common types of error specifications as well as potential ‘long memory’, we provide sufficient conditions for consistency and asymptotic normality of instrumental variables and ordinary least squares estimates. The implications of popular weight matrix normalizations and structures for our theoretical conditions are discussed. A set of Monte Carlo simulations examines the behaviour of the estimates in a variety of situations and suggests, like the theory, that spatial weights generated from distributions with ‘smaller’ moments yield better estimates. Our results are especially pertinent in situations where spatial weights are functions of stochastic economic variables.
  30. By: Michel Beine (CREA, Université de Luxembourg)
    Abstract: This paper covers the literature on the role migrants networks in explaining aggregate migration flows between countries. We first provide a small review of the literature and the issues at stake. We then provide an update of the estimates of the network elasticities using the dataset on migration stocks and flows from Ozden et al. (2011). Using micro-founded gravity models, we estimate the network elasticities and discuss the key driving mechanisms explaining their size as well the variation in the amplitude across categories of destination and over time. We emphasize the specific role of family immigration policies. To that purpose, we cover briefly the recent experience of four receiving countries to highlight the importance of these policies in explaining part of the observed network elasticities.
    Keywords: F22, O15, R11, R15
    Date: 2015
  31. By: Fernando Bruna (University of A Coruña, Economics and Business Department)
    Abstract: This paper posits a new approach to the ‘wage equation’ of the New Economic Geography (NEG) stressing the uncertain interpretation of its empirical results. It emphasizes the generality of the variable to be explained, marginal costs. Then, two artificial (noNEG) tests are proposed in order to identify the statistical features explaining why wagetype equations tend to be accepted in tests for European data. The estimation results are shown to be similar not only when Market Potential is built for variables that do not measure market size but also when the focus of attention changes from global to local spatial patterns
    Keywords: New Economic Geography, wage equation, Market Potential, spillovers, global trend, spatial autocorrelation
    JEL: C21 F12 R12
    Date: 2015–11
  32. By: Dusan Paredes (Departamento de Economia, Universidad Catolica del Norte); Scott Loveridge (Michigan State University)
    Abstract: Since Roback (1982)’s seminal work, the literature has evaluated the role of the amenities to equilibrate the regional differentials of nominal wages and prices. While these studies generally find evidence for traditional amenities and disamenities in developed countries, it still exists a scarce exploration on how those characteristics assessed, like violence, affect the equilibrium in less developed countries. In this paper, we explore violence as amenity or disamenity for the case of Mexico as a particular and unique natural experiment. We use the hedonic wage and rent theory proposed by Roback using data from the Mexican Household Income and Expenditure Survey, along with other information at municipal and state level. For our particular hypothesis, we find evidence to support that inhabitants in traditional drug trafficking states could consider drug-related crime as an amenity.
    Keywords: Hedonic Valuation, Wages, Rents, Amenities, Crime, Mexico
    JEL: D5 H4 J3 Q2 R1 R2
    Date: 2015–09
  33. By: Ira Nichols-Barrer; Kate Place; Erin Dillon; Brian Gill
    Abstract: A new report by Mathematica Policy Research shows that students’ scores on the existing high school assessment in Massachusetts predict college performance as well as scores on a new test that was recently developed by a consortium of states to align with Common Core standards.
    Keywords: Education, standardized testing, student performance, college readiness, Common Core, PARCC, MCAS, Massachusetts
    JEL: I
    Date: 2015–10–13
  34. By: Ira Nichols-Barrer; Kate Place; Erin Dillon; Brian Gill
    Abstract: A new report by Mathematica Policy Research shows that students’ scores on the existing high school assessment in Massachusetts predict college performance as well as scores on a new test that was recently developed by a consortium of states to align with Common Core standards.
    Keywords: Education, standardized testing, student performance, college readiness, Common Core, PARCC, MCAS, Massachusetts
    JEL: I
    Date: 2015–10–05
  35. By: Johan Verbruggen; Remco van der Molen; Steven Jonk; Jan Kakes; Willem Heeringa
    Abstract: The statutory loan-to-value (LTV) limit for residential 5 mortgage loans was introduced in the Netherlands in 2012. This LTV limit is being reduced by one percentage point per year, from 103% today to 100% in 2018. The government has stated that a further reduction in the LTV limit is desirable in due course.1 This is in line with the recent recommendations made by the IMF and the Wijffels Commission, which advocate further reduction of the LTV limit to 80%.2 In this context, the Financial Stability Committee (FSC) is discussing the desired structural level of the LTV limit and the pathway to achieving this.
    Date: 2015–05
  36. By: Bottai, carlo; Iori, Martina (University of Turin)
    Abstract: We will use an Agent-Based Model in order to study how innovation can emerge from the interaction between firms. In particular, we are interested in studying how the clusters that emerges from these interactions influence the ability of bounded rational firms in reacting creatively to out-of-equilibrium conditions. Moreover, we will introduce two type of firms – traditional and innovative – and we will observe if and how this difference influences the outcomes.
    Date: 2015–07
  37. By: Cervelló-Royo, Roberto; Martínez, Francisco Guijarro; Pfahler, Thomas; Preuss, Marion
    Abstract: [Preface] Residential trade and industry assets are a basic need of individuals with the result of assessing housing as a right in several nations all over the world. Though there is a strong focus on the relationship between populations and housing demands, there is no direct interaction between them for two reasons: it is mainly households and not individuals that require real estate and, secondly, the needs of households change over time. Therefore, various correlations can be identified in order to clarify the movements detected in housing asset stock on a foundation of household characteristics as well as population and society performance structures. The analysis of housing stock in terms of demographic development is important for gaining an in-depth understanding of housing tendencies, general characteristics and underlying economic factors. In the present volume of the FOM Arbeitspapiere the authors establish a market and trend analysis of the European member countries on the basis of specified criteria. Thus they identify numerous streams as well as analogical tendencies.
    Date: 2015
  38. By: Rahkovsky, Ilya; Snyder, Samantha
    Abstract: In 2010, 9.7 percent of the U.S. population lived in low-income areas more than 1 mile from the nearest supermarket. The diet quality of these consumers may be compromised by their food environment. Some may be unable to reach supermarkets regularly or without effort, instead buying food from nearer stores that offer less healthy food products. This report investigates the correlation between households that live in low income,low-access (LILA) areas and their purchases of 14 major food groups that vary in dietary quality. The report finds a modest negative effect, particularly among urban LILA consumers, and this effect is only slightly alleviated when LILA consumers travel farther from their homes to purchase food.
    Keywords: access to supermarkets, food, transportation, food environment, low-income, diet and health, Agricultural and Food Policy, Community/Rural/Urban Development, Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, Health Economics and Policy,
    Date: 2015–09
  39. By: Andrew Kerr (DataFirst and SALDRU, University of Cape Town)
    Abstract: In this paper I describe the monetary and time costs of commuting to work in South Africa. I find that these costs are high and that monetary costs of commuting have increased faster than inflation, mainly through a shift away from walking and towards minibus taxis and driving. Journey times are substantially higher than the OECD country average. Using a method suggested by Hausmann (2013) I estimate the effective tax on hourly earnings that the time and monetary costs of commuting impose. I find high effective tax rates, which are a disincentive to working far from home. This only deepens the puzzle of why South Africa's informal sector is so small, since more than half of the informally self-employed work at home and pay no transport costs. I show that whilst minibus taxis conveyed around 71% of commuters that used public transport in 2013, the industry receives less than 1% of the direct public transport subsidy provided by the South African government. I find that the subsidy accrues mainly to bus and train users in the lower middle part of the labour income distribution.
    Date: 2015
  40. By: Adam Nowak (West Virginia University, Department of Economics); Patrick Smith (Georgia State University, J. Mack Robinson College of Business)
    Abstract: This paper incorporates text data from MLS listings from Atlanta, GA into a hedonic pricing model. Text is found to decrease pricing error by more than 25%. Information from text is incorporated into a linear model using a tokenization approach. By doing so, the implicit prices for various words and phrases are estimated. The estimation focuses on simultaneous variable selection and estimation for linear models in the presence of a large number of variables. The LASSO procedure and variants are shown to outperform least-squares in out-of-sample testing.
    Keywords: textual analysis, big data, real estate valuation
    JEL: C01 C18 C51 C52 C65 R30
    Date: 2015–08
  41. By: Zhechun He
    Abstract: This paper applies the British Household Panel Survey (BHPS) from 1997-2008 and study the impact of local authority district house prices on labour supply of couples via bivariate seemingly unrelated regression (SUR) probit and tobit models after imputing potential wages for both workers and non-workers using the Heckman selectivity approach. The use of local authority district house prices has the virtue of being disaggregate and exogenous to the individual. This avoids the potential simultaneity bias from using self-reported house prices (this and labour supply may both be affected by unobserved individual heterogeneity). We allow for the interdependent nature of the couple's labour supply decisions and enhance efficiency of estimation by exploiting the structure in the error terms of the two-equation system. We find heterogeneous responses of labour supply from different household types to house prices as well as the joint decision making of spouses/partners within a household on labour supply. Gender and age differences are present. Our results give interpretations on the role of the different channels through which this impact is driven, including wealth effects, borrowing constraints, precautionary savings, bequest motives and habit formation.
    Keywords: labour supply, house prices
    JEL: J22 D1
    Date: 2015–10
  42. By: Chang, C-L.; McAleer, M.J.; Wu, Y-C.
    Abstract: Taiwan has been hailed as a world leader in the development of global innovation and industrial clusters for the past decade. This paper investigates the effects of industrial agglomeration on the use of the internet and internet intensity for Taiwan manufacturing firms, and analyses whether the relationships between industrial agglomeration and total expenditure on internet usage for industries are substitutes or complements. The sample observations are based on 153,081 manufacturing plants, and covers 26 2-digit industry categories and 358 geographical townships in Taiwan. The Heckman selection model is used to adjust for sample selectivity for unobservable data for firms that use the internet. The empirical results from two-stage estimation show that: (1) for the industry overall, a higher degree of industrial agglomeration will not affect the probability that firms will use the internet, but will affect the total expenditure on internet usage; and (2) for 2-digit industries, industrial agglomeration generally decreases the total expenditure on internet usage, which suggests that industrial agglomeration and total expenditure on internet usage are substitutes.
    Keywords: industrial agglomeration and clusters, global innovation, internet penetration, manufacturing firms, sample selection, incidental truncation
    JEL: D2 L60
    Date: 2015–08–01

This nep-ure issue is ©2015 by Steve Ross. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.