nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2016‒02‒04
25 papers chosen by
Steve Ross
University of Connecticut

  1. Differential Peer Effects, Student Achievement, and Student Absenteeism: Evidence from a Large Scale Randomized Experiment By Ozkan Eren
  2. Regional Shocks, Migration and Homeownership By Florian Oswald
  3. Urban Immigrant Diversity and Inclusive Institutions By Abigail Cooke; Thomas Kemeny
  4. Can States Take Over and Turn Around School Districts? Evidence from Lawrence, Massachusetts By Joshua Goodman; Beth Schueler; David Deming
  5. Financialisation of built environments:A literature review By Eric Clark; Henrik Gutzon Larsen; Anders Lund Hansen
  6. REMS1: Adding Financial Frictions and a Housing Market to REMS By José E. Boscá; Javier Ferri
  7. The expansion of regional supermarket chains: Changing models of retailing and the implications for local supplier capabilities in South Africa, Botswana, Zambia, and Zimbabwe By Reena das Nair; Shingie Chisoro
  8. Dissecting the 2007-2009 Real Estate Market Bust: Systematic Pricing Correction or Just a Housing Fad? By Daniele Bianchi; Massimo Guidolin; Francesco Ravazzolo
  9. Breaking Out of Poverty Traps: Internal Migration and Interregional Convergence in Russia By Sergei Guriev; Elena Vakulenko
  10. Comparing Retirement Wealth Trajectories on Both Sides of the Pond By Richard Blundell; Rowena Crawford; Eric French; Gemma Tetlow
  11. No-Bubble Condition: Model-Free Tests in Housing Markets By Matteo Maggiori; Stefano Giglio; Johannes Stroebel
  12. On the sustainability of a monocentric city : lower transport costs from new transport facilities By Gokan, Toshitaka
  13. Spatial and temporal multidimensional poverty in Nigeria By Olu Ajakaiye; Afeikhena T. Jerome; Olanrewaju Olaniyan; Kristi Mahrt; Olufunke A. Alaba
  14. Urban-Suburban Migration in the United States, 1955-2000 By Todd K. Gardner
  15. The Rhode Island labor market in recovery: where is the skills gap? By Burke, Mary A.
  16. Measuring School Leaders' Effectiveness: Findings from a Multiyear Pilot of Pennsylvania's Framework for Leadership (Stated Briefly) By Moira McCullough; Stephen Lipscomb; Hanley Chiang; Brian Gill; Irina Cheban
  17. Geographical Concentration of Soviet Industry: A Comparative Analysis By Kofanov, D.; Mikhailova, T.; Shurygin, A.
  18. Essays on knowledge sourcing and technological capability : A knowledge structure perspective By Li, Zhengyu
  19. Does immigration crowd natives into or out of higher education? By Jackson, Osborne
  20. The Effect of Industrial Cluster Policy on Firm Performance in Ethiopia: Evidence from the Leather Footware Cluster By Getahun, Tigabu Degu
  21. The role of networks in firms' multi-characteristics competition and market-share inequality By Antonios Garas; Athanasios Lapatinas
  22. Endogenous Infrastructure Development and Spatial Takeoff By Alex Trew
  23. Noncognitive Development of First Graders and Their Cognitive Performance By Brun Irina; Ivanova Alina; Kardanova Elena; Orel Ekaterina
  24. Spatial search strategies of job seekers and the role of unemployment insurance By Elisa Guglielminetti; Rafael Lalive; Philippe Ruh; Etienne Wasmer
  25. How large do multi-region models need to be? By Florenz Plassmann; Andrew Feltenstein

  1. By: Ozkan Eren
    Abstract: Using data from a well-executed randomized experiment, we examine the effects of gender composition and peer achievement on high school students' outcomes in disadvantaged neighborhoods. Our results show that a higher proportion of female peers in the classroom improves girls' math test scores only in less advanced courses. For male students, the estimated gender peer effects are positive, but less precisely estimated. We also find no effect of average classroom achievement on female math test scores. Males, on the other hand, seem to benefit from a higher achieving classroom. We propose mechanisms relating to lower gender stereotype influences and gender-specific attitudes towards competition as potential expla- nations for our peer effects findings. Finally, it appears that a higher proportion of female students in the classroom decreases student absenteeism among male students without any impact on female attendance.
  2. By: Florian Oswald (University College of London [London] (UCL))
    Abstract: This paper estimates a lifecycle model of consumption, housing choice and migration in the presence of aggregate and regional shocks, using the Survey of Income and Program Participation (SIPP). Using the model I estimate the value of the migration option and the welfare impact of policies that may restrict mobility. The option to move is equivalent to 4.4% of lifetime consumption. I also find that, were the mortgage interest-rate deduction to be eliminated, the aggregate migration rate would increase only marginally by 0.1%. Following a general equilibrium correction, house prices are reduced by 5%, which results in a 1% increase in home ownership. In a new steady state the elimination of the deduction is equivalent to an increase of 2.4% of lifecycle consumption.
    Keywords: Model of consumption; Housing choice; Migration
    Date: 2015–06
  3. By: Abigail Cooke; Thomas Kemeny
    Abstract: Recent evidence suggests that rising immigrant diversity in cities offers economic benefits, including improved innovation, entrepreneurship and productivity. One potentially important but underexplored dimension of this relationship is how local institutional context shapes the benefits firms and workers receive from the diversity in their midst. Theory suggests that institutions can make it less costly for diverse workers to transact, thereby catalyzing the latent bene ts of heterogeneity. This paper tests the hypothesis that the effects of immigrant diversity on productivity will be stronger in locations featuring more “inclusive" institutions. It leverages comprehensive longitudinal linked employer-employee data for the U.S. and two distinct measures of inclusive institutions at the metropolitan area level: social capital and pro- or anti-immigrant ordinances. Findings confirm the importance of institutional context: in cities with low levels of inclusive institutions, the benefits of diversity are modest and in some cases statistically insignificant; in cities with high levels of inclusive institutions, the benefits of immigrant diversity are positive, significant, and substantial. Moreover, natives residing in cities that have enacted laws restricting immigrants enjoy no diversity spillovers whatsoever, while immigrants in these cities continue to receive a diversity bonus. These results confirm the economic significance of urban immigrant diversity, while suggesting the importance of local social and economic institutions.
    Date: 2016–01
  4. By: Joshua Goodman; Beth Schueler; David Deming
    Abstract: The Federal government has spent billions of dollars to support turnarounds of low-achieving schools, yet most evidence on the impact of such turnarounds comes from high-profile, exceptional settings and not from examples driven by state policy decisions at scale. In this paper, we study the impact of state takeover and district-level turnaround in Lawrence, Massachusetts. Takeover of the Lawrence Public School (LPS) district was driven by the state?s accountability system, which increases state control in response to chronic underperformance. We find that the first two years of the LPS turnaround produced large achievement gains in math and modest gains in reading. Our preferred estimates compare LPS to other low income school districts in a differences-in-differences framework, although the results are robust to a wide variety of specifications, including student fixed effects. While the LPS turnaround was a package of interventions that cannot be fully separated, we find evidence that intensive small-group instruction led to particularly large achievement gains for participating students.
    Date: 2016–01
  5. By: Eric Clark (Lund University, Department of Human Geography); Henrik Gutzon Larsen (Lund University, Department of Human Geography); Anders Lund Hansen (Lund University, Department of Human Geography)
    Abstract: This paper provides a review of research into financialisation of built environments, especially in relation to urban politics, social geographies and sustainability. Focus is limited here to the theoretical and conceptual substance of selected literature. Financialisation is conceptualised as a profoundly spatial process, forging social relations that form conditions for urban governance, social geographic change and urban sustainability. The paper frames financialisation of built environments as a process enmeshed with related processes of commodification, privatisation, neoliberalisation, and accumulation by dispossession, associated with the creation and appropriation of rent gaps. Land rent and rent gaps are highlighted as central to understanding financialisation of built environments. We then review research into relations between financialisation of built environments and urban governance, i.e. how financialisation impacts upon, while being facilitated or deterred by, urban politics. This sets the stage for reviewing research into relations between financialisation of built environments and observed patterns of change in the social geographies of cities, and research into the sustainability implications of financialisation of built environments. Conclusions reconsider the nature of the relationship between financialisation and urbanisation, and the challenges of bringing financial systems into the service of achieving social and natural sustainability.
    Keywords: financialisation, built environment, urban governance, land rent, sustainability
    JEL: D63 G19 O29 P16 Q01 R00 R58
    Date: 2015–09–01
  6. By: José E. Boscá; Javier Ferri
    Abstract: We introduce an update of REMS, the model used by the Spanish Ministries of Economy and Finance for ex-ante policy evaluation. We include two new features in the model: credit-constrained consumers, which are added to the existing optimizing consumers and liquidity-constrained (RoTs) consumers; and a market for housing. Credit-constrained consumers can borrow up to a limit defined by the expected value of their houses. Part of the real estate accumulated by patient households is offered to impatient and liquidity-contrained households as house to rent. Impatient households can decide between purchasing houses to occupy themselves or renting houses from patient households. Completely liquidity-constrained households only have access to rented houses. We illustrate how this housing market reacts to different shocks and we simulate the expected e¤ects of Spain's 2014 fiscal reform.
    Date: 2016–01
  7. By: Reena das Nair; Shingie Chisoro
    Abstract: Over the past two decades, southern African countries have experienced rapid growth in the number and spread of supermarkets. Several factors have been attributed to this growth, including increasing urbanization, increased per capita income, the rise of the middle class, economies of scale and scope, and transport economies. The format and location of supermarkets have also evolved over the years, moving away from serving the traditional highend affluent consumers in urban areas to successfully penetrating new markets in low-income rural communities, including through more efficient procurement and distribution systems. This spread into rural areas and the rapid proliferation of supermarkets generally has given rise to some important consequences for competitive rivalry between grocery retail outlets, as well as for local suppliers who want to participate in supermarket value chains in the southern African region.
    Keywords: supermarkets, southern Africa, regional development, strategy, suppliers, capabilities
    Date: 2015
  8. By: Daniele Bianchi; Massimo Guidolin; Francesco Ravazzolo
    Abstract: We propose a exible Bayesian model averaging method to estimate a factor pricing model characterized by structural uncertainty and instability in factor loadings and idiosyncratic risks. We use such a framework to investigate key differences in the pricing mechanism that applies to residential vs. non-residential real estate investment trusts (REITs). An analysis of cross-sectional mispricings reveals no evidence of a pure hous- ing/residential real estate bubble in ating between 1999 and 2007, to subsequently burst. In fact, all REITs sectors record increasing alphas during this period, and show important differences in the dynamic evolution of risk factor exposures. Keywords: I-CAPM, Mispricing, REIT, Model Uncertainty, Stochastic Breaks, Bayesian Econometrics JEL codes: G12, E44, C11, C58
    Date: 2016
  9. By: Sergei Guriev (Département d'économie); Elena Vakulenko (Higher School of Economics (HSE))
    Abstract: We study barriers to labor mobility using panel data on gross region-to-region migration flows in Russia in 1996–2010. Using both parametric and semiparametric methods and controlling for region-to-region pairwise fixed effects, we find a non-monotonic relationship between income and migration. In richer regions, higher incomes result in lower migration outflows. However, in the poorest regions, an increase in incomes results in higher emigration. This is consistent with the presence of geographical poverty traps: potential migrants want to leave the poor regions but cannot afford to move. We also show that economic growth and financial development have allowed most Russian regions to grow out of poverty traps bringing down interregional differentials of wages, incomes and unemployment rates.
    Keywords: Labor mobility; Poverty traps; Liquidity constraints
    JEL: J61 R23
    Date: 2015–08
  10. By: Richard Blundell (University College London and Institute for Fiscal Studies); Rowena Crawford (Institute for Fiscal Studies); Eric French (University College London and Institute for Fiscal Studies); Gemma Tetlow (University College London and Institute for Fiscal Studies)
    Abstract: We use comparable data from the U.S. and England to examine similarities and differences in the level and trajectories of assets among households age 70 and older. We find that in the U.S. assets on average decline gradually with age, while in England older households actually accumulate wealth. These differences appear to be driven largely, though not entirely, by housing wealth: During the period we consider, house price growth drove increases in housing wealth in England that more than offset the slow drawdown of nonhousing wealth. This suggests the illiquid nature of housing is likely to be an important factor in explaining wealth drawdown at older ages. We also consider the potential importance of bequest motives and savings to insure against the risk of medical and long-term care expenses.
    Date: 2015–09
  11. By: Matteo Maggiori; Stefano Giglio; Johannes Stroebel
    Abstract: We test for the existence of housing bubbles associated with a failure of the transversality condition that requires the present value of payments occurring infinitely far in the future to be zero. The most prominent such bubble is the classic rational bubble. We study housing markets in the U.K. and Singapore, where residential property ownership takes the form of either leaseholds or freeholds. Leaseholds are finite-maturity, pre-paid, and tradable ownership contracts with maturities often exceeding 700 years. Freeholds are infinite-maturity ownership contracts. The price difference between leaseholds with extremely-long maturities and freeholds reflects the present value of a claim to the freehold after leasehold expiry, and is thus a direct empirical measure of the transversality condition. We estimate this price difference, and find no evidence of failures of the transversality condition in housing markets in the U.K. and Singapore, even during periods when a sizeable bubble was regularly thought to be present.
  12. 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
  13. By: Olu Ajakaiye; Afeikhena T. Jerome; Olanrewaju Olaniyan; Kristi Mahrt; Olufunke A. Alaba
    Abstract: Nigeria has recorded impressive growth in the last decade, yet the impact of this growth on poverty reduction remains unclear. This paper appraises spatial and temporal nonmonetary multidimensional poverty in Nigeria using the first-order dominance approach. It examines five welfare indicators: education, water, sanitation, shelter, and energy. While the analysis is sensitive to indicator definitions, the overall results are robust and lend support to the view that poverty reduction has not kept pace with the rapid economic growth attained in the last decade. The analyses indicate that regional inequalities remain profound with huge disparities between the urban and rural sectors as well as between the far south and the rest of the country.
    Keywords: Nigeria, economic growth, poverty reduction, first-order dominance approach, multidimensional welfare
    Date: 2015
  14. By: Todd K. Gardner
    Abstract: This study uses census microdata from 1960 to 2010 to look at the rates of suburbanization in the 100 largest metro areas. Looking at the racial and ethnic composition of the population, and then further breaking down these groups by income, it’s clear that more affluent people were more likely to move to the suburbs. Also, the White non-Hispanic population has long been the most suburbanized group. A majority of the White population lived in suburbs by 1960 in the 100 largest metro areas, while most of the Black non-Hispanic population lived in urban core areas as late as 2000. The Hispanic and Asian populations went from majority urban to majority suburban during this period.
    Keywords: suburbanization, race, ethnicity
    Date: 2016–02
  15. By: Burke, Mary A. (Federal Reserve Bank of Boston)
    Abstract: There has been much anecdotal evidence claiming that Rhode Island's labor force is unable to supply the skills that the state's employers seek. The anecdotal evidence has given rise to the concern that labor market mismatch is holding back the state's economic recovery. Such a concern comes with particularly high stakes in the case of Rhode Island, which suffered the most severe drop in employment in New England during the Great Recession and has endured the region's highest unemployment rate during the recovery. This paper conducts a data-driven analysis of several indicators of potential labor market mismatch in Rhode Island in order to ascertain whether the state does indeed suffer from a skills gap that significantly restrains employment growth.
    JEL: J20 J69 R19
    Date: 2015–12–01
  16. By: Moira McCullough; Stephen Lipscomb; Hanley Chiang; Brian Gill; Irina Cheban
    Abstract: This study analyzes the score variation, internal consistency, score stability, and concurrent validity of the Framework for Leadership (FFL)—Pennsylvania’s tool for evaluating schoolleaders’ effectiveness—during its pilot implementation in 2012/13 and 2013/14.
    Keywords: educator performance evaluation, school leader evaluation or effectiveness, school leaders, assessment/instrument development, Pennsylvania
    JEL: I
    Date: 2016–01–21
  17. By: Kofanov, D. (Russian Presidential Academy of National Economy and Public Administration); Mikhailova, T. (Russian Presidential Academy of National Economy and Public Administration); Shurygin, A. (Russian Presidential Academy of National Economy and Public Administration)
    Abstract: In this paper we study the geographic concentration of industries in the Soviet Union. The distribution of economic activity in the geographical space of Russia - largely the result of long years of development of the Soviet system. Understand how and why different economic geography of Russia from the countries that have developed in a market economy, it is necessary to develop the right policy measures today. We look forward index of geographic concentration Dyurantona-Overman for manufacturing industries in the USSR in 1989 at the level of 2, 3 and 4-digit code, SIC. We then analyze the degree of geographical concentration of different industries and a comparative analysis with other countries. In general, the industrial sector in Russia / USSR weakly concentrated geographically. However, we conclude that the concentration of weak partly due to the geography of the country: the large distances between the centers of population and geographic dispersion of economic activity. However, the most significant difference from the late Soviet Union countries with a market economy - a weak concentration of high-tech industries, it is those who get the greatest benefit from the positive externalities of concentration.
    Keywords: industries, Soviet Union, geography
    Date: 2015–10–01
  18. By: Li, Zhengyu (Tilburg University, School of Economics and Management)
    Abstract: In today’s increasingly competitive and rapidly changing markets that depend heavily on innovation, firms are increasingly opt to use external knowledge sourcing strategies to complement their internal efforts in developing technological capabilities. While external knowledge sourcing strategy can bring substantial opportunities for new knowledge generation, it imposes huge challenges to the firms for successful integration of external knowledge, making appropriate execution of external knowledge sourcing strategies crucial. However, the literature and empirical evidence has not yet been able to offer a conclusive indication of what drives the performance variations of different firms in developing technological capabilities from sourcing knowledge externally. To address this under-explored question, this dissertation presents three empirical studies that examine the antecedents of the performance variations in developing technological capabilities through sourcing knowledge externally. By looking at firms’ external knowledge sourcing strategies in the three modes of governance with different levels of hierarchy (i.e. licensing, alliances, and acquisitions), the findings of this dissertation aim to improve our understanding of how external knowledge sourcing strategies can be better managed to develop technological capabilities.
    Date: 2016
  19. By: Jackson, Osborne (Federal Reserve Bank of Boston)
    Abstract: Over the past several decades, the United States has experienced some of its largest immigrant inflows since the Great Depression. This higher level of immigration has generated significant debate on the effects of such inflows on receiving markets and natives. Education market studies have found that inflows of immigrant students can displace some natives from enrollment. Meanwhile, labor market studies have primarily examined the impact of immigrant labor inflows on the wages of similarly and dissimilarly skilled natives, with mixed results. The lack of consensus in the wage studies has spurred a growing line of research on whether natives respond endogenously to immigrant worker inflows. Yet, it remains unexplored whether native responses in the higher education market also contribute to the absorption of immigrants into the labor market and the effects on equilibrium in both markets. In a unified framework of the education and labor markets this paper addresses whether skill level via college enrollment is another margin on which natives endogenously adjust to immigrant inflows of students and labor. This study differs from previous research by separately identifying native human capital accumulation responses to both immigrant labor and student inflows at the college margin, where such responses may be strongest due to the high school-college wage gap. The analysis also contributes to our understanding of how local markets respond to immigrant inflows.
    JEL: H75 J22 J23 J24 J61
    Date: 2015–10–01
  20. By: Getahun, Tigabu Degu
    Abstract: This paper empirically analyzes the productivity, profitability, innovation and network effects of a public policy promoting micro and small scale industrial clusters in Ethiopia. To this end, firm-level survey data was collected from randomly selected clustered leather shoe manufacturers that have directly benefited from the policy and those that do not, both before and after the cluster policy intervention. The results from econometric analysis suggests that the industrial cluster policy adversely impacts the productivity, profitability, growth, and innovation performance of the small and micro leather shoe manufacturing enterprises that moved to the government created clusters . The analysis of the transmission mechanism further reveals that the relocated cluster policy hampers the treated firms’ collaborative business and knowledge network and aggravates their growth impediments which includes lack of trust, high customer and supplier search and reach cost, lack of market information, imperfect contract enforcement, delays in the supply of raw materials and the lack of skilled labor. The time lag between policy implementation and its impacts may conceal the long-term impact of the cluster policy. The overwhelming majority of the representatives of treatment group firms also continue to believe that their buisness performance will improve over time as a result of their participation in the MSE cluster development program. This study is a pioneer to quantitatively evaluate the productivity, profitability, innovation and network effect of industrial cluster policy in Ethiopia.
    Keywords: Cluster Policy, Productivity, Profitability, Networks, Small and Micro Enterprises, Ethiopia, Institutional and Behavioral Economics, Production Economics, Research and Development/Tech Change/Emerging Technologies, Risk and Uncertainty, D02, D04, D25, D85, L11, L52, L67, O14,
    Date: 2016–01
  21. By: Antonios Garas; Athanasios Lapatinas
    Abstract: We develop a location analysis spatial model of firms' competition in multi-characteristics space, where consumers' opinions about the firms' products are distributed on multilayered networks. Firms do not compete on price but only on location upon the products' multi-characteristics space, and they aim to attract the maximum number of consumers. Boundedly rational consumers have distinct ideal points/tastes over the possible available firm locations but, crucially, they are affected by the opinions of their neighbors. Our central argument is that the consolidation of a dense underlying consumers' opinion network is the key for the firm to enlarge its market-share. Proposing a dynamic agent-based analysis on firms' location choice we characterize multi-dimensional product differentiation competition as adaptive learning by firms' managers and we argue that such a complex systems approach advances the analysis in alternative ways, beyond game-theoretic calculations.
    Date: 2016–01
  22. 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
  23. By: Brun Irina (National Research University Higher School of Economics); Ivanova Alina (National Research University Higher School of Economics); Kardanova Elena (National Research University Higher School of Economics); Orel Ekaterina (National Research University Higher School of Economics)
    Abstract: It is well known that performance, both cognitive and noncognitive, in primary school is very important for children’s future outcomes. In this study we attempt to classify patterns of cognitive, social, emotional and personal development based on data from first-graders beginning their schooling. We use complex iPIPS (international Performance Indicators in Primary Schools) data – a large-scale assessment of first-year pupils, which includes math and reading tasks along with noncognitive assessment – gathered from 1202 children from the Republic of Tatarstan. We describe 5 clusters of first-year pupils and give background information about family and preschool experience which may influence performance in each cluster.
    Keywords: iPIPS; noncognitive development; primary school; first-graders; large-scale assessment, cognitive development
    JEL: Z
    Date: 2016
  24. By: Elisa Guglielminetti (Département d'économie (ECON)); Rafael Lalive (University of Lausanne); Philippe Ruh (University of Zürich); Etienne Wasmer (Département d'économie)
    Abstract: Job search is a spatially oriented activity. Searching farther is costly, and working far away from home entails high costs, affecting job acceptance decisions. We build a simple theoretical framework where job seekers choose how much to search, how far to search, and what lowest wage they accept for a given commute distance. In this setup, unemployment insurance discourages broader job search through reducing the net gain from getting a job. Opposite forces encourage broader search, either through the re-entitlement effect or, under liquidity constraints, to finance costly spatial job search. We use a unique dataset on all workers entering unemployment in Austria between 1995 to 2004 to investigate these forces. We find that newly unemployed workers initially find relatively more frequently jobs in the same workplace as they used to be employed. As the unemployment spell gets longer, they both accept lower wages and progressively enlarge their radius of search, ending up with a job farther away from their previous workplace (but not necessarily farther away from their residence). Unemployment insurance reduces reservation wages at a given accepted commute distance, and encourages search outside the municipality of the previous job. Reducing potential benefit duration affects wages and commuting distance more strongly than changes in the benefit level.
    Keywords: Job search; Job seekers; Unemployment insurance
    Date: 2015–11
  25. By: Florenz Plassmann (Department of Economics, Binghamton University); Andrew Feltenstein (International Center for Public Policy. Andrew Young School of Policy Studies, Georgia State University)
    Abstract: Given the connectedness of most states with their neighbors, any economic analysis of changes in a state’s policy needs to account for the interdependence between states. We examine in how much detail one needs to model the factor and commodity flows between states, and how much, if anything, is lost in the aggregation of neighboring states into larger regions. We develop nine dynamic multi-region general equilibrium models of the United States, with different aggregations of states (a two-region model, a 7-region model, and a full 51-region model) and different assumptions regarding intermediate inputs. We examine the same policy change with these nine models, and find that all nine models suggest very similar economic effects of the policy change in the first year. Our overall conclusion is that the policy implications that one might draw from small and highly aggregate models are fairly robust.
    Date: 2015–11

This nep-ure issue is ©2016 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.