nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2016‒01‒18
twenty-two papers chosen by
Steve Ross
University of Connecticut

  1. Credit conditions, macroprudential policy and house prices By Kelly, Robert; McCann, Fergal; O'Toole, Conor
  2. Co-worker networks, labour mobility, and productivity growth in regions By Balazs Lengyel; Rikard Eriksson
  3. Owner occupancy fraud and mortgage performance By Elul, Ronel; Tilson, Sebastian
  4. Can subsidized housing help address homelessness in New England? By Clifford, Robert; Jackson, Osborne
  5. Natural amenities, neighborhood dynamics, and persistence in the spatial distribution of income By Lee, Sanghoon; Lin, Jeffrey
  6. Households in long-term mortgage arrears:lessons from economic research By Kelly, Robert; McCann, Fergal
  7. Spanish fiscal federalism at the crossroad: A survey. By Xoaquín Fernández Leiceaga; Santiago Lago Peñas; Alberto Vaquero
  8. The Economic Drivers of Differences in House Price Inflation Rates across MSAs By Fuess, Roland; Zietz, Joachim
  9. On The Origins of Gender Human Capital Gaps: Short and Long Term Consequences of Teachers’ Stereotypical Biases By Lavy, Victor; Sand, Edith
  10. From urban core to wealthy towns: nonschool fiscal disparities across Connecticut municipalities By Zhao, Bo
  11. Something New: Where do new industries come from? By Feldman , Maryann P.; Tavassoli , Sam
  12. Hedonic Regression Models for Tokyo Condominium Sales By Diewert, W. Erwin; Shimizu, Chihiro
  13. Ethnic Diversity and Educational Attainment By Awaworyi Churchill, Sefa; Nuhu, Ahmed Salim
  14. Does it matter how much time students spend on line outside of school? By OECD
  15. Some defaults are deeper than others: Understanding long-term mortgage arrears By Kelly, Robert; McCann, Fergal
  16. On the sustainability of a monocentric city : lower transport costs from new transport facilities By Gokan, Toshitaka
  17. Concentration of Population in Tokyo: A Survey By Kenji Umetani; Tadashi Yokoyama
  18. Spatial mismatch through local public employment agencies: Answers from a French quasi-experiment By Mathieu Bunel; Elisabeth Tovar
  19. Endogenous Infrastructure Development and Spatial Takeoff By Alex Trew
  21. Persistence and Change of Regional New Business Formation in the National League Table By Michael Fritsch; Sandra Kublina
  22. Working hard in the wrong place: a mismatch-based explanation to the UK productivity puzzle By Patterson, Christina; Sahin, Aysegul; Topa, Giorgio; Violante, Giovanni L.

  1. By: Kelly, Robert (Central Bank of Ireland); McCann, Fergal (Central Bank of Ireland); O'Toole, Conor (Central Bank of Ireland)
    Abstract: We provide a micro-empirical link between the large literature on credit and house prices and the burgeoning literature on macroprudential policy. Using loan-level data on Irish mortgages originated between 2003 and 2010, we construct a measure of credit availability which varies at the borrower level as a function of income, wealth, age, interest rates and prevailing market conditions around Loan to Value ratios (LTV), Loan to Income ratios (LTI) and monthly Debt Service Ratios (DSR). We deploy a property-level house price model which shows that a ten per cent increase in credit available leads to an 1.5 per cent increase in the value of property purchased. Coeffcients from this model are then used to fit values under scenarios of macroprudential restrictions on LTV, LTI and DSR on credit availability and house prices in Ireland for 2003 and 2006. Our results suggest that macroprudential limits would have had substantial impacts on house prices, and that both the level at which they are set and the timing of their introduction is a crucial determinant of their impact on housing values.
    Keywords: Mortgages, credit availability, macroprudential policy, house prices.
    Date: 2015–12
  2. By: Balazs Lengyel (Institute of Economics - Centre for Economic and Regional Studies - Hungarian Academy of Sciences); Rikard Eriksson (Department of Geography and Economic History, Umea University)
    Abstract: This paper provides a new empirical perspective for analysing the role of social networks for an economic geography approach on regional economic growth by constructing large-scale networks from employee-employee co-occurrences in plants in the entire Swedish economy 1990-2008. We calculate the probability of employee-employee ties at plant level based on homophily-biased random network assumptions and trace the most probable relations of every employee over the full period. Then, we look at the inter-plant ties for the 1995-2008 period because the network is already well developed after five years of edge construction. We argue that these personal acquaintances are important for local learning opportunities and consequently for regional growth. Indeed, the estimated panel Vector Autoregressive models provide the first systematic evidence for a central claim in economic geography: social network density has positive effect on regional productivity growth. The results are robust against removing the old and therefore weak ties from the network. Interestingly, the positive effect of density on growth was found in a segment of the co-worker network as well, in which plants have never been linked by labour mobility previously.
    Keywords: social network, homophily, probability of ties, labour mobility, regional productivity growth, panel vector autoregression
    JEL: D85 J24 J61 R11 R23
    Date: 2015–09
  3. By: Elul, Ronel (Federal Reserve Bank of Philadelphia); Tilson, Sebastian (Federal Reserve Bank of Philadelphia)
    Abstract: We use a matched credit bureau and mortgage data set to identify occupancy fraud in residential mortgage originations, that is, borrowers who misrepresented their occupancy status as owner occupants rather than residential real estate investors. In contrast to previous studies, our data set allows us to show that such fraud was broad based, appearing in the government-sponsored enterprise market and in loans held on bank portfolios as well. Mortgage borrowers who misrepresented their occupancy status performed worse than otherwise similar owner occupants and declared investors, defaulting at nearly twice the rate. In addition, these defaults are significantly more likely to be “strategic” in the sense that their bank card performance is better and utilization is lower.
    Keywords: Mortgages; Mortgage default; Consumer credit; Household finance; Misreporting; Fraud
    JEL: D12 R3
    Date: 2015–12–17
  4. By: Clifford, Robert (Federal Reserve Bank of Boston); Jackson, Osborne (Federal Reserve Bank of Boston)
    Abstract: This report examines the scope of homelessness in New England and the potential role of subsidized housing in alleviating homelessness in the region. The report finds that the number of sheltered homeless families in Massachusetts and Vermont is on the rise, driving an increase in measured homelessness in New England. The authors consider three theories for the cause of the increase: the interaction of national market forces and area-specific shelter policies, area-specific market forces, and challenges in accurately measuring the homeless population. The research also explores the extent to which increased affordable housing can decrease neighborhood homelessness in moderately poor areas, focusing on the Low-Income Housing Tax Credit (LIHTC) as a source of subsidized housing. The authors find that local increases in subsidized housing are likely to reduce neighborhood homelessness, especially in New England.
    Date: 2015–12–01
  5. By: Lee, Sanghoon (University of British Columbia); Lin, Jeffrey (Federal Reserve Bank of Philadelphia)
    Abstract: We present theory and evidence highlighting the role of natural amenities in neighborhood dynamics, suburbanization, and variation across cities in the persistence of the spatial distribution of income. Our model generates three predictions that we confirm using a novel database of consistent-boundary neighborhoods in U.S. metropolitan areas, 1880{2010, and spatial data for natural features such as coastlines and hills. First, persistent natural amenities anchor neighborhoods to high incomes over time. Second, naturally heterogeneous cities exhibit persistent spatial distributions of income. Third, downtown neighborhoods in coastal cities were less susceptible to the widespread decentralization of income in the mid-20th century and increased in income more quickly after 1980.
    Keywords: Suburbanization; Gentrification; Locational fundamentals; Multiple equilibria
    JEL: N90 O18 R23
    Date: 2015–12–15
  6. By: Kelly, Robert (Central Bank of Ireland); McCann, Fergal (Central Bank of Ireland)
    Abstract: The resolution of the long-term mortgage arrears (those in arrears greater than one year; LTMA) crisis represents one of the key policy challenges in Ireland today. In this Letter we highlight the range of economic and demographic characteristics associated with the experience of LTMA in Ireland. Our analysis suggests that unemployment shocks, changes in mortgage affordability, the accumulation of non-mortgage debt, higher originating loan-to-value ratios and weak housing equity positions all have an important explanatory role. We also outline repayment patterns among households at differing levels of mortgage arrears. It is shown that in 2014, over three quarters of those in LTMA had continued increases in their arrears balances. This contrasts with those in the early stages of arrears, where less than half of all borrowers had arrears increases.
    Date: 2015–12
  7. By: Xoaquín Fernández Leiceaga; Santiago Lago Peñas; Alberto Vaquero
    Abstract: Transport infrastructure investment is a cornerstone of growth-promoting strategies. However, in the case of Europe the relevant literature is increasingly failing to find a clear link between infrastructure investment and economic performance. This may be a consequence of overlooking the role of government institutions. This paper assesses the connection between regional quality of government and the returns of different types of road infrastructure in EU regions during the period between 1995 and 2009. The results unveil a strong influence of regional quality of government on the economic returns of transport infrastructure. In weak institutional contexts, investments in motorways – the preferred option by local governments – yield significantly lower returns than the more humble but possibly more efficient secondary road. Government institutions also affect the returns of transport maintenance investment.
    Keywords: Fiscal Federalism, decentralization, fiscal stability, intergovernmental relations, Spain.
    JEL: H70 H71 H72 H73 H74 H77
    Date: 2016–01
  8. By: Fuess, Roland; Zietz, Joachim
    Abstract: This study examines why monetary policy at the national level can have vastly different effects on appreciation rates of single family houses across metropolitan statistical areas (MSAs). The study employs Case/Shiller monthly house price index data for 19 MSAs from 1992:06 to 2014:12 and FHFA quarterly house price index data for 94 MSAs from 1992:3 to 2014:4. We model the importance of MSA-specific demand and supply characteristics through a set of interaction terms between these factors and monetary policy. The empirical analysis is cast in terms of a state-space approach with a stochastic trend component to absorb the impact of omitted variables. Robustness checks use panel data estimators with interaction terms. A lower federal funds rate is associated with home price run-ups in MSAs that are characterized by higher demand and tighter supply conditions.
    Keywords: House price inflation, demand and supply factors, federal funds rate, monetary policy, state-space models
    JEL: C21 C23 E50 R10
    Date: 2015–12
  9. By: Lavy, Victor (Department of Economics University of Warwick); Sand, Edith (Bank of Isreal)
    Abstract: In this paper, we estimate the effect of primary school teachers’ gender biases on boys’ and girls’ academic achievements during middle and high school and on the choice of advanced level courses in math and sciences during high school. For identification, we rely on the random assignments of teachers and students to classes in primary schools. Our results suggest that teachers’ biases favoring boys have an asymmetric effect by gender—positive effect on boys’ achievements and negative effect on girls’. Such gender biases also impact students’ enrollment in advanced level math courses in high school—boys positively and girls negatively. These results suggest that teachers’ biased behavior at early stage of schooling have long run implications for occupational choices and earnings at adulthood, because enrollment in advanced courses in math and science in high school is a prerequisite for post-secondary schooling in engineering, computer science and so on. This impact is heterogeneous, being larger for children from families where the father is more educated than the mother and larger on girls from low socioeconomic background.
    Date: 2015
  10. By: Zhao, Bo (Federal Reserve Bank of Boston)
    Abstract: Fiscal disparities occur when economic resources and public service needs are unevenly distributed across localities. There are two equity concerns associated with fiscal disparities. First, as Yinger (1986) shows, it is not considered fair to require two otherwise-identical households to pay a different amount of taxes for the same level of public services simply because they live in different towns. Second, fiscal disparities render some towns at a disadvantage in economic competition (Downes and Pogue 1992). These towns must impose a higher tax rate and/or provide a lower level of public services, making them less attractive to private businesses and residents. Using a cost-capacity gap framework and a newly assembled dataset of local financial records, this paper is the first study to quantify nonschool fiscal disparities across Connecticut municipalities. Municipal gap is defined as the difference between municipal cost and municipal capacity. A positive gap indicates greater need (measured by the cost to fund the common nonschool services) than capacity, while a negative gap indicates more capacity than need.
    Keywords: fiscal disparities; municipal gap; municipal cost; revenue-raising capacity; property tax; state grants
    JEL: H20 H70 H71 H72 H73 H77 H83
    Date: 2015–08–01
  11. By: Feldman , Maryann P. (Department of Public Policy, University of North Carolina at Chapel Hill, U.S.); Tavassoli , Sam (CIRCLE, Lund University)
    Abstract: Emerging industries have great potential for both entrepreneurship and regional transformation. The emergent earliest stage of the industry lifecycle is when there is the greatest potential and when local factors matter most however we typically can only identify new industries in retrospect. This chapter provides an overview of the transformative potential of emerging industries and considers the challenges associated with studying emerging industries in real time. The chapter considers the regional context for studying new industries and offers a set of regional factors that might promote the emergence of new industries.
    Keywords: emerging industries; geography of innovation; market-pull; science-push; local economic development
    JEL: N90 O18 O33 R12
    Date: 2015–12–30
  12. By: Diewert, W. Erwin; Shimizu, Chihiro
    Abstract: The paper fits a hedonic regression model to the sales of condominium units in Tokyo over the period 2000-2015. The problem is complicated by the need to decompose the selling price of a unit into a component that can be attributed to the structure area of the unit and another component that can be attributed to the unit’s share of land value. There is very little information on the value of condominium land and so this paper develops a methodology for reducing this knowledge gap. The paper extends the builder’s model which was developed in Eurostat (2013). Characteristics which prove to be important in explaining condominium prices are: the floor space area of the unit, the total land area of the building, the number of units in the building, the total number of stories in the building, the height of the sold unit, the age of the structure and the amount of excess land. The paper also derives an estimate for the annual geometric structure depreciation rate for condominiums in Tokyo.
    Keywords: Condominium property price indexes, System of National Accounts, Balance Sheets, methods of depreciation, land and structure price indexes, hedonic re
    JEL: C2 C23 C43 E31 R21
    Date: 2016–01–05
  13. By: Awaworyi Churchill, Sefa; Nuhu, Ahmed Salim
    Abstract: This study attempts to explain the effects of ethnic and linguistic diversity on educational attainment. We argue that cross-section differences in ethnic and linguistic fractionalization can explain a substantial part of the cross-country differences in educational attainment levels. Using a data on 86 countries, we uncover new evidence on the relationship between fractionalization and educational attainment. We find that fractionalization lower educational attainment. This finding is consistent across various measures of educational attainment, and is robust to several sensitivity checks. We explore several potential mechanisms which could explain the observed negative effects of ethnic and linguistic diversity including ethnic diversity’s effect on social capital, discrimination, public goods, conflicts, and institutional quality, among others.
    Keywords: ethnic diversity,fractionalization,educational attainment,schooling
    JEL: J15 O5 H52 I21
    Date: 2015–12
  14. By: OECD
    Abstract: In 2012, 15-year-old students spent over two hours on line each day, on average across OECD countries. The most common online activities among 15-year-olds were browsing the Internet for fun and participating in social networks, with over 70% of students doing one of these every day or almost every day. Students who spent more than six hours per day on line outside of school were more likely to feel lonely at school, arrive late and perform at lower levels in mathematics. On average across OECD countries, 7% of students spend this much time on line during a typical weekday.
    Date: 2016–01–12
  15. By: Kelly, Robert (Central Bank of Ireland); McCann, Fergal (Central Bank of Ireland)
    Abstract: The 2007-2008 financial crisis yielded a significant number of delinquent mortgage loans, which ordinarily would have faced foreclosure and repossession. However, given the negative externalities of repossession, policy response has shifted towards forbearance and mortgage modification, which has led to longer spells in default for delinquent mortgage holders. It is therefore imperative to move beyond binary models of default towards an understanding of the factors that drive the depth of default spells. Exploiting a highly detailed dataset on financially distressed households in Ireland in 2012 and 2013, we are able to identify the impact of a range of current household-level information, generally not available in loan-level studies of mortgage default, on the probability of entering early and deep states of mortgage default. Our results suggest that high loan-to-value ratios, consumer credit growth, shocks to mortgage affordability and unemployment should all trigger serious concerns among policy makers regarding subsequent stability in the mortgage market, with these measures all shown to have differentially large impacts on entry to deep, relative to early-stage arrears.
    Keywords: Mortgages, default, days past due, affordability.
    Date: 2015–11
  16. By: Gokan, Toshitaka
    Abstract: This paper proposes a general equilibrium model of a monocentric city based on Fujita and Krugman (1995). Two rates of transport costs per distance and for the same good are introduced. The model assumes that lower transport costs are available at a few points on a line. These lower costs represent new transport facilities, such as high-speed motorways and railways. Findings is that new transport facilities connecting the city and hinterlands strengthen the lock-in effects, which describes whether a city remains where it is forever after being created. Furthermore, the effect intensifies with better agricultural technologies and a larger population in the economy. The relationship between indirect utility and population size has an inverted U-shape, even if new transport facilities are used. However, the population size that maximizes indirect utility is smaller than that found in Fujita and Krugman (1995).
    Keywords: Econometric model, Transportation, Urban societies, Urban system, Monopolistic competition, Transport facilities
    JEL: F12 O14 R12
    Date: 2016–01
  17. By: Kenji Umetani (Cabinet Office, ESRI); Tadashi Yokoyama (Cabinet Office)
    Abstract: The mono-polar concentration of population in Tokyo has been intensifying steadily in Japan since the mid-1990s. This demographic movement stands in sharp contrast to the tri-polar (Tokyo, Osaka and Nagoya) demographic movement in the high growth era before the oil crisis of the early 1970s. Mono-polar in-migration reflects the change in industrial structure after the rapid yen appreciation and the two decades of stagnation caused by the bubble burst in an atmosphere of demographic aging and declining birth rate. One noteworthy recent feature of the population inflow into Tokyo is the increasing inflow of young females with post-secondary education, leading to even gloomier economic and social prospects in most outlying regions. This economic externality should be dealt with by means of well-designed policies which, benefitting from the experience of events several decades ago, avoid throttling the benefits of the market mechanism.
    Date: 2015–12
  18. By: Mathieu Bunel; Elisabeth Tovar
    Date: 2015
  19. By: Alex Trew (University of St Andrews)
    Abstract: Infrastructure development can affect the spatial distribution of economic activity and, by consequence, aggregate structural transformation and growth. The growth of trade and specialization of regions, in turn, affects the demand for infrastructure. This paper develops a model in which the evolution of the transport sector occurs alongside the growth in trade and output of agricultural and manufacturing firms. Simulation output captures aspects of the historical record of England and Wales over c.1710-1881. A number of counterfactuals demonstrate the role that the timing and spatial distribution of infrastructure development plays in determining the timing and pace of takeoff.
    Keywords: Industrial revolution, growth, transport, spatial development.
    JEL: H54 O11 O18 O33 N13 N93 R12
  20. By: Nirupama Pathak
    Abstract: The present investigation focuses on the study of problem solving ability and academic achievement of pupil teachers’ students. A survey was conducted to find out the relationship between problem solving and academic achievement of the pupil teachers of Jabalpur, Madhya Pradesh. Normative survey method used to collect data. The girls’ students studying in B.Ed. colleges constituted the population of this study. The pupil teacher students of H.P.M.M. Jabalpur, M.P. were selected as a sample for this study. The collected data has been studied and subjected to statistical analysis. The result reveals that relationship between problem solving ability and academic achievement is highly positive. There was significant difference was found between science and arts pupil teachers, no significant difference was found between arts- commerce, and science -commerce pupil teachers. Key words: problem solving ability, academic achievement, achievement, pupil teachers
    Date: 2015–09
  21. By: Michael Fritsch (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Sandra Kublina (School of Economics and Business Administration, Friedrich-Schiller-University Jena)
    Abstract: We investigate persistence and change of the levels of regional new business formation in West Germany over a period of thirty years. Our indicator is the position of a region in the national ranking. As indicated by previous studies, we generally find a rather high level of persistence and confirm the role of several sources of this persistence, namely, persistence in regional determinants of new business formation, distinct regional cultures of entrepreneurship, and path dependence in new business formation activity. There are, however, also a number of regions that have moved up or down in the national ranking by a considerable number of positions. We find that main factors that are related to such rank changes are R&D activities, industry diversity, and regional wage levels.
    Keywords: Entrepreneurship, new business formation, economic development, regional growth regimes
    JEL: L26 R11 O11
    Date: 2016–01–04
  22. By: Patterson, Christina (Massachusetts Institute of Technology); Sahin, Aysegul (Federal Reserve Bank of New York); Topa, Giorgio (Federal Reserve Bank of New York); Violante, Giovanni L. (New York University)
    Abstract: The UK experienced an unusually prolonged stagnation in labor productivity in the aftermath of the Great Recession. This paper analyzes the role of sectoral labor misallocation in accounting for this “productivity puzzle.” If jobseekers disproportionately search for jobs in sectors where productivity is relatively low, hires are concentrated in the wrong sectors and the post-recession recovery in aggregate productivity can be slow. Our calculations suggest that, quantified at the level of three-digit occupations, this mechanism can explain up to two-thirds of the deviations from trend-growth in UK labor productivity since 2007.
    Keywords: misallocation; productivity
    JEL: E24 E32 J24
    Date: 2016–01–01

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