nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2016‒06‒14
thirty-six papers chosen by
Steve Ross
University of Connecticut

  1. Housing Policies in the United Kingdom, Switzerland, and the United States: Lessons Learned By Hilber , Christian A. L.; Schöni, Olivier
  2. The Determinants of Non-residential Real Estate Values with Special Reference to Local Environmental Goods By Sofia F. Franco; W. Bowman Cutter
  3. Do Superfund Sites Affect Local Property Values? Evidence from a Spatial Hedonic Approach By Kim, GwanSeon; Schieffer, Jack; Mark, Tyler
  4. Who benefits from public housing? By Eerola, Essi; Saarimaa, Tuukka
  5. Moving to a new job: the role of home equity, debt, and access to credit By Demyanyk, Yuliya; Hryshko, Dmytro; Luengo-Prado, Maria Jose; Sorensen, Bent E.
  6. Bubbles in US Regional House Prices: Evidence from House Price/Income Ratios at the State Level By Yang Hu; Les Oxley
  7. Subways and urban growth: evidence from earth By Marco Gonzalez-Navarro; Matthew A. Turner
  8. The Value of Private Schools: Evidence from Pakistan By Carneiro, Pedro; Das, Jishnu; Reis, Hugo
  9. It’s All Local? How Sub-State Policies Affect Western US Residential Solar Adoption By Wiggins, Seth
  10. Market Response to Flood Risk: A Matching Study of Farmland Values Using Boundary Discontinuities By Wang, Haoying
  11. School Quality and the Urban-Rural Migration of Firms By Marre, Alexander W.; Rupasingha, Anil
  12. Development in Southeast Asia’s lagging regions By Budy P Resosudarmo; Acram Latiph; Saran Sarntisart; Isra Sarntisart
  13. Regional importance of Mittelstand firms and innovation performance By Berlemann, Michael; Jahn, Vera
  14. Location, Search Costs and Youth Unemployment: Experimental Evidence from Transport Subsidies in Addis Ababa By Simon Franklin
  15. The Economic Impact of Developable Open Space on Housing Prices: A Case Study in the City of Corona, California By Yoo, James
  16. Estimating travel mode choice, including rail in regional area, based on a new family of regression models By Bouscasse, H.; Joly, I.; Peyhardi, J.
  17. Family Disadvantage and the Gender Gap in Behavioral and Educational Outcomes By David Autor; David Figlio; Krzysztof Karbownik; Jeffrey Roth; Melanie Wasserman
  18. Identifying the Effects of Place-based Policies – Causal Evidence from Germany By Eva Dettmann; Matthias Brachert; Mirko Titze
  19. Effects of the Size of Protected Areas on Return on Investment in the Presence of Spatial Spillovers By Thiel, Kristen; Cho, Seonghoon; Armsworth, Paul
  20. Discrete choice models: scale heterogeneity and why it matters By Davis, Katrina J; Burton, Michael; Kragt, Marit E
  21. Housing Market Response to 2012 Northern Italy Earthquake: The role of house quality and changing risk perception By Marco Modica; Roberto Zoboli; Fabrizio Meroni; Vera Pessina; Thea Squarcina; Mario Locati
  22. Social Ties and the Job Search of Recent Immigrants By Goel, Deepti; Lang, Kevin
  23. The Cultural Diffusion of the Fertility Transition: Evidence from Internal Migration in 19th Century France By Daudin, Guillaume; Franck, Raphaël; Rapoport, Hillel
  24. Buy Locally? Big-Box Stores and Time-Inconsistent Preferences By Novak, Lindsey
  25. Entrepreneurship Capital and Regional Productivity Revisited By Massón-Guerra, José Luis; Ortín-Ángel, Pedro
  26. Market structure and liquidity in the U.S. Treasury and agency mortgage-backed security (MBS) markets: Mortgage Bankers Association National Secondary Market Conference and Expo, New York City, May 2016 By Wuerffel, Nathaniel
  27. Homophily and Transitivity in Dynamic Network Formation By Bryan S. Graham
  28. Single versus Multiple Randomization in Matching Mechanisms By André Schmelzer
  29. A Spatial Diffusion Model with Common Factors and an Application to Cigarette Consumption By Carlo Ciccarelli; J. Paul Elhorst
  31. Approaches to Making Federal Highway Spending More Productive By Congressional Budget Office
  32. Does technological progress magnify regional disparities? By Tabuchi, Takatoshi; Thisse, Jacques François; Zhu, Xiwei
  33. Estimating Immigrant Earnings Profiles when Migrations are Temporary By Christian Dustmann; Joseph-Simon Görlach
  35. Commuting Time and Sex Ratios in the US By Gimenez-Nadal, J. Ignacio; Molina, José Alberto; Velilla, Jorge
  36. Asset bubbles and efficiency in a generalized two-sector model By Stefano Bosi; Cuong Le Van; Ngoc-Sang Pham

  1. By: Hilber , Christian A. L. (Asian Development Bank Institute); Schöni, Olivier (Asian Development Bank Institute)
    Abstract: We provide an analysis of the housing market and current housing policies in three developed countries: the United Kingdom (UK), Switzerland, and the United States (US). We focus on these three countries mainly due to the marked differences in their institutional settings. The UK is characterized by fiscal centralization and an extraordinarily rigid planning system. The consequences of this setting, which make housing supply extremely unresponsive to changes in house prices, are a high degree of urban containment, a severe housing affordability crisis, and a housing shortage, particularly for the young. The key UK policy, Help-to-Buy, which focuses on stimulating housing demand, fails to address the affordability crisis, because increasing demand only pushes up house prices further without expanding housing supply. Fiscal decentralization and a lax zoning system, both encouraging residential development and an extraordinarily low homeownership rate explain why Switzerland’s main political concerns are sprawl and rent stabilization. The country’s key policies aim to tackle these two concerns but they themselves have some important unintended consequences. The US is characterized by fiscal federalism and an enormous variation in the tightness of land use restrictiveness across metropolitan areas. The key policy concern across the country is homeownership attainment and the key policy to tackle this issue is the Mortgage Interest Deduction (MID). This policy backfires in prosperous and tightly land use regulated metropolitan areas—“superstar cities”—because in these places the policy-induced demand increase mainly pushes up house prices. The MID only increases homeownership attainment of higher-income households in metropolitan areas with lax land use regulation. The net effect of the policy on homeownership attainment across the country is essentially zero. We conclude that the assessment of housing policies crucially depends on the fiscal and regulatory environment in local housing markets. Policies that stimulate housing demand such as the MID or Help-to-Buy are doomed to fail in markets with tight regulation or otherwise tight supply.
    Keywords: Housing policy; Help-to-Buy; housing affordability; fiscal decentralization; urban containment
    JEL: H20 H31 H70 R21 R28 R31 R38 R51 R52
    Date: 2016–05–11
  2. By: Sofia F. Franco; W. Bowman Cutter
    Abstract: This paper presents the results of an empirical study of the determinants of non-residential real estate values in Los Angeles County. The data base consists of 13, 370 property transactions from 1996 to 2005. Separate spatial econometric models are developed for industrial, commercial, retail and office properties. The study focus on the impact on property values of local amenities. Our analytical results provide insights on how amenities may affect non-residential properties values and how the impact may differ across property types. Our empirical results offer evidence that explicitly modeling spatial dependence is necessary for hedonic non-residential property models where there is interest in local amenities. We also show that it is also important to account for the temporal dimension since ignoring it can lead to misinterpretation of the real measure of spatial dependence over time. Moreover, we find that in general amenities that are jointly valuable to firms and household, such as parks or air quality have either weak or non-robust effects on nonresidential values. However, the fact that the joint amenities coastal access and crime appear to have stable correlations across specifications would be consistent with a higher firm than household valuation. In contrast, those amenities that are likely only valued by firms, such as transportation access and proximity to concentrations of skilled workers have robust and significant correlations with non-residential values. JEL codes: R52, H23
    Keywords: Non-residential property values, Local environmental amenities, Spatial econometrics
    Date: 2016
  3. By: Kim, GwanSeon; Schieffer, Jack; Mark, Tyler
    Abstract: The presence of Superfund sites can have substantial impacts on local property values. Previous studies using the traditional hedonic price model typically fail to account for spatial dependence or autocorrelation in residential housing. Jefferson County, Kentucky is home to Louisville, the largest city in the state. Seven different Superfund sites are located within or just outside the county border. This study shows that the usage of traditional hedonic pricing model leads to inefficient estimates compared to a spatial error hedonic model. This study also investigates sites in two different phases of the cleanup process, suggesting that median housing value is lower with proximity to deleted Superfund sites, but is not significantly affected by sites classified as final. Finally, the implications of multiple Superfund sites located with five miles of the block group centroid are investigated. This study finds that housing value is not significantly affected by additional Superfund sites.
    Keywords: Superfund site, hedonic price model, spatial error model, Environmental Economics and Policy, Land Economics/Use, Research Methods/ Statistical Methods, Resource /Energy Economics and Policy, Q51, Q53, R11,
    Date: 2016
  4. By: Eerola, Essi; Saarimaa, Tuukka
    Abstract: ​This paper studies how much public housing generates rent savings for the tenants, how these savings are distributed among the tenants, and whether the tenants reside in better quality neighborhoods than similar low-income private rental tenants. Our rent savings estimates are based on a hedonic regression and detailed data on the private and public rental housing units from the city of Helsinki. We estimate that the total subsidy to public housing tenants is considerable and comparable in size to the housing allowance, the main tenant-based housing program. We also find that the subsidy is less targeted towards low-income households than the housing allowance. Regarding neighborhood quality, we find that public housing tenants live in lower quality neighborhoods than similar households living in private rental housing. This result suggests that public housing is not better than the housing allowance in delivering better neighborhood quality to low-income households.
    Keywords: hedonic regression, housing policy, public housing
    JEL: H22 R21 R23
    Date: 2015–12–17
  5. By: Demyanyk, Yuliya (Federal Reserve Bank of Cleveland); Hryshko, Dmytro (University of Alberta); Luengo-Prado, Maria Jose (Federal Reserve Bank of Boston); Sorensen, Bent E. (University of Houston)
    Abstract: The severe decline in house prices during and after the Great Recession may have hampered adjustment in U.S. labor markets by limiting mobility of unemployed workers. Mobility will suffer if unemployed workers are reluctant to leave homes that, with debt exceeding value, cannot be disposed of without injecting cash or defaulting—a pattern referred to as "housing lock-in." If such reluctance keeps workers from moving from depressed areas to areas with available jobs, the Beveridge curve, which depicts the relationship between vacancies and joblessness, may shift outward. To examine whether this has been the case in the United States in recent years, the authors use individual-level credit reports merged with loan-level mortgage data to estimate how mobility relates to home equity when labor markets are weak or strong, and they develop and calibrate a dynamic quantitative model of consumption, housing, employment, and mobility that replicates the data well.
    JEL: E21 J61 R23
    Date: 2016–01–25
  6. By: Yang Hu (University of Waikato); Les Oxley (University of Waikato)
    Abstract: We investigate the presence of bubbles in the US house price-income ratio at the state level by applying the right-tailed unit root test of Phillips, Shi and Yu (2015, PSY) to data from January 1975 to December 2014. Based on a model specification with an intercept, we can identify ‘collapse’ episodes, ‘collapse and recovery’ episodes in addition to bubbles. The absence of an intercept in the null leads to identification of only potential bubbles. We find evidence of bubbles in several states in the 1980s (such as California, Hawaii, Massachusetts and New York), which coincides with some existing studies that investigate housing bubbles or booms and busts using a range of alternative approaches. Our results show the existence of a housing bubble that originates in the early 2000s and collapses in the mid-2000s in more than 20 States and the DC. We conclude that this housing bubble was localized and not a national phenomenon and that the bubbles of the 2000s were more widespread than the 1980s. We also found that the exclusion of an intercept in the unit root null hypothesis will affect the asymptotic theory and date-stamping outcomes for the PSY approach which translates empirically to evidence of ‘no exuberance’ in several of the states' house prices which otherwise would have suggested bubbles.
    Keywords: bubbles; generalized sup ADF test; US regional house prices; house price-income ratio
    JEL: C59 R19 R39
    Date: 2016–05–24
  7. By: Marco Gonzalez-Navarro; Matthew A. Turner
    Abstract: We investigate the relationship between the extent of a city’s subway network, its population and its spatial configuration. To accomplish this investigation, for the 632 largest cities in the world, we construct panel data describing the extent of each of the 138 subway systems in these cities, their population, and measures of centralization calculated from lights at night data. These data indicate that large cities are more likely to have subways, but that subways have an economically insignificant effect on urban population growth. Consistent with economic theory and with other studies of the effects of transportation improvements on cities, our data also indicate that subways cause cities to be more decentralized. For a subset of subway cities we also observe panel data describing subway and bus ridership. We find that a 10% increase in subway extent causes about a 6% increase in subway ridership and has no effect on bus ridership. Consistent with the available literature describing the effect of roads on cities, our results are consistent with subways having a larger effect on the configuration of cities than on their sizes, and with subways having a larger effect on discretionary than commute travel.
    Keywords: subways; public transit; urban growth; urban decentralization
    JEL: R14 J01
    Date: 2016–04
  8. By: Carneiro, Pedro (University College London); Das, Jishnu (World Bank); Reis, Hugo (Banco de Portugal)
    Abstract: Using unique data from Pakistan we estimate a model of demand for differentiated products in 112 rural education markets with significant choice among public and private schools. Our model accounts for the endogeneity of school fees and the characteristics of students attending the school. As expected, central determinants of school choice are the distance to school, school fees, and the characteristics of peers. Families are willing to pay on average between 75% and 115% of the average annual private school fee for a 500 meter reduction in distance. In contrast, price elasticities are low: -0.5 for girls and -0.2 for boys. Both distance and price elasticities are consistent with other estimates in the literature, but at odds with a belief among policy makers that school fees deter enrollment and participation in private schooling. Using the estimates from the demand model we show that the existence of a low fee private school market is of great value for households in our sample, reaching about 25% to 100% of monthly per capita income for those choosing private schools. A voucher policy that reduces the fees of private schools to $0 (from an average annual fee of $13) increases private school enrollment by 7.5 percentage points for girls and 4.2 percentage points for boys. Our demand estimates and policy simulations, which account for key challenges specific to the schooling market, help situate ongoing debate around private schools within a larger framework of consumer choice and welfare.
    Keywords: education, school choice, Pakistan, characteristics model
    JEL: I20 I21
    Date: 2016–05
  9. By: Wiggins, Seth
    Abstract: Abstract: This paper adds to the literature by investigating whether municipal, county, and utility policies drive residential solar photovoltaic (PV) adoption. While previous studies have investigated the effects of state policies, none have do so while including policies at the sub-state level. I employ spatial econometric techniques, which recently have been used to empirically account for the peer effects and spatial clustering that have been found in residential markets. Results from the largest residential solar market in the US suggest that after controlling for solar resource, environmental preference, and other demographic information, the local policies are an important driver in the residential solar PV market: the average solar policy stimulates a 6.0-7.9% percent increase in installed residential capacity. Further, the residential market exhibits a moderate amount of spatial autocorrelation.
    Keywords: Residential solar PV adoption, renewable energy production, spatial econometrics, Resource /Energy Economics and Policy,
    Date: 2016
  10. By: Wang, Haoying
    Abstract: This paper contributes to the literature of flood risk capitalization and farmland valuation by taking the advantage of boundary discontinuities around flood zone to control for unobserved heterogeneities in estimating flood risk premium using hedonic regression. With a model controlling for building structures attached to farmland, distance to city center, flood exposure, farmland acreage, and municipality related time-invariant fixed effects, a spatial difference-in-differences framework based on boundary discontinuities is proposed. The proposed approach finds qualitatively different results than a conventional hedonic price model with municipality fixed effects. On average, in the study region (Lancaster County of Pennsylvania), the conventional hedonic price model suggests that there is a 6.66% (or $868.76/acre, in 2015 USD) value reduction due to potential flood risk in the 100-year (1% annual chance of flooding) FEMA (Federal Emergency Management Agency) flood zone. The proposed spatial difference-in-differences model, however, finds that the impact on farmland values due to the potential flood risk is insignificant with the same data. This suggests that estimating flood risk premium using a conventional hedonic price model directly may suffer from serious biases due to unobserved spatial heterogeneities. The proposed spatial difference-in-differences approach has an advantage of controlling for unobserved heterogeneities that are continuously distributed across the boundary of floodplain.
    Keywords: Flood Risk, Farmland Value, Agricultural Production, Development Pressure, Boundary Discontinuity, Susquehanna River Basin, Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Crop Production/Industries, Environmental Economics and Policy, Farm Management, Land Economics/Use, Research Methods/ Statistical Methods, Risk and Uncertainty,
    Date: 2016–05–25
  11. By: Marre, Alexander W.; Rupasingha, Anil
    Abstract: This paper uses a Poisson regression model to estimate the determinants of firm relocation from urban areas to rural areas between 2009 and 2012, including controls for land and labor costs, taxes, market size, agglomeration effects, natural amenities, but with a focus on measures of school quality. To the best of our knowledge, this is the first study of firm relocation between rural and urban areas within the United States and the only study to estimate the impacts of school quality on firm relocation behavior. Preliminary results from these models suggest that lower high school dropout rates and smaller class sizes may increase the expected count of firms relocating from urban to rural areas.
    Keywords: rural development, firm location, education and human capital, Community/Rural/Urban Development, Labor and Human Capital,
    Date: 2016–05–25
  12. By: Budy P Resosudarmo; Acram Latiph; Saran Sarntisart; Isra Sarntisart
    Abstract: This paper focuses on the three lagging Southeast Asia’s regions, namely the three Southern border provinces of Thailand, Mindanao in the Philippines and Papua in Indonesia. It aims to analyze and identify successful national and regional policies in these lagging regions. In particular, it will assess and compare the effectiveness of implementing higher fiscal transfers, local empowerment policies as well as regional autonomy strategies in these regions. The general conclusion of this paper is that providing a large amount of development funding and granting autonomous authority for these lagging regions is most likely required to enable these regions keep up with the development of other areas in their countries. Appropriate affirmative action policies are then needed to help solve the more detailed problems, such as urban-rural development and the gaps between the local and immigrant communities.
    Keywords: Development economics, lagging regions, regional autonomy, and fiscal policy
    JEL: O21 O23 O38 R58
    Date: 2016
  13. By: Berlemann, Michael; Jahn, Vera
    Abstract: Despite of the deeply rooted belief of politicians from all over the world in the important role of Mittelstand firms, there has been surprisingly little empirical research on this issue, yet. This article contributes to the literature by studying whether the relative regional importance of Mittelstand firms has an effect on regional innovation performance. Using a cross section of German NUTS-3-regions, a significantly positive relation between the relative importance of owner-managed SMEs and patent applications is identified. This finding is highly robust when controlling for spatial correlations as they often occur in highly disaggregated regional analyses.
    Keywords: Innovation,Mittelstand firms,Owner-management,SMEs,Germany
    JEL: O31 C21 D23
    Date: 2015
  14. By: Simon Franklin
    Abstract: Do high search costs affect the labour market outcomes of job seekers living far away from jobs? I randomly assign transport subsidies to unemployed youth in urban Ethiopia. Treated respondents increase job search intensity, and are more likely to find good employment. Subsidies also reduce participation in temporary work during job search. I explain these results with a dynamic model of job search, in which cash constraints cause workers to give up search too early. The predictions of the model closely match the trajectory of treatment effects over time, which I estimate using a weekly phone call survey.
    Keywords: job search, spatial mismatch, unemployment, cash constraints, urban, transpor
    JEL: J64 C93 J61 O18
    Date: 2016–05
  15. By: Yoo, James
    Keywords: Land Economics/Use, Public Economics,
    Date: 2016–05
  16. By: Bouscasse, H.; Joly, I.; Peyhardi, J.
    Abstract: In this paper, we model mode choice with the new specification of generalized linear models proposed by Peyardi et al. (2015). In logit models used by economists, the link function can be decomposed into the reference ratio of probabilities and a cumulative distribution function (cdf). Alternative cdfs (Student, Cauchy, Gumbel, Gompertz, Laplace, Normal) can be used. These cdfs differ in their symmetry (symetric or asymetric distributions) and in their tails (heavy or thin tails), each allowing a different distribution of behaviors. We test the statistic and economic implications of changing the cdf. First, we investigate the goodness-of-fit indicators (AIC, BIC, Mc-Fadden R2). Then, we compare estimated parameters in terms of sign and significativity. And finally, we look at behavioural outputs such as value of time and demand elasticities. We use a recent stated preferences survey conducted by the author in the Rhône-Alpes Région (France). Its specificity is to specifically address the question of mode choice (rail, coach and car) in a regional context. Attributes include travel time, cost and comfort. We also investigate the cross effect of travel time and comfort. Comparisons between cdfs are made on the basis of three models, including only attributes variables or only individual variables or both. Our results show that the different cdfs provide quite similar results. But, in our estimations, the logistic cdf never ranks among the best options. In terms of significance and sign of coefficients, parameters' estimation are globally the same even if some special features can be noticed. Looking at time equivalence of comfort, we notice that in the model without individual variables, the cdf has a major influence on outputs. In particular, the Student cdf provides very consistent results while some other cdfs (e.g. Gompertz, Logistic, Normal) are extreme.
    JEL: C18 C52 R40
    Date: 2016
  17. By: David Autor; David Figlio; Krzysztof Karbownik; Jeffrey Roth; Melanie Wasserman
    Abstract: Using birth certificates matched to schooling records for Florida children born 1992 - 2002, we assess whether family disadvantage disproportionately impedes the pre-market development of boys. We find that, relative to their sisters, boys born to disadvantaged families have higher rates of disciplinary problems, lower achievement scores, and fewer high-school completions. Evidence supports that this is a causal effect of the post-natal environment; family disadvantage is unrelated to the gender gap in neonatal health. We conclude that the gender gap among black children is larger than among white children in substantial part because black children are raised in more disadvantaged families.
    JEL: I24 J12 J13 J16
    Date: 2016–05
  18. By: Eva Dettmann; Matthias Brachert; Mirko Titze
    Abstract: The German government provides discretionary investment grants to structurally weak regions to reduce regional disparities. We use a regression discontinuity design that exploits an exogenous discrete jump in the probability of receiving investment grants to identify the causal effects of the investment grant on regional outcomes. We find positive effects for regional gross value-added and productivity growth, but no effects for employment and gross wage growth.
    Keywords: evaluation, industrial policy, regression discontinuity design
    JEL: A11 D61 H20 Z00
    Date: 2016–05
  19. By: Thiel, Kristen; Cho, Seonghoon; Armsworth, Paul
    Abstract: Conservation return on investment (ROI), for all spatial scales, varies according to a wide range of characteristics. One feature that makes conservation ROI at the parcel level different from larger scale ROI is the impact of parcel size variation on ecological and economic effectiveness. Protected area size maintains an important role in both the benefit and cost associated with conservation. However, few studies have explicitly focused on the role of protected area size on conservation ROI specifically at the parcel level. Therefore, conservation ROI has been limited in its effectiveness in prioritizing parcels for conservation. The objective of our research is to examine how protected area size influences a parcel’s ecological and economic effectiveness through conservation ROI. This objective is accomplished by analyzing the parcel-level acquisition cost and the conservation benefit of protected areas acquired by a conservation organization, The Nature Conservancy (TNC). We develop an empirical model to examine how differences in protected area size influence conservation benefit, and how differences in the conservation benefit subsequently alter conservation cost. By assessing the sequential relationship in a spatial econometric modeling framework, we first examine the consequence of the size variation on conservation ROI and then we calculate and rank the ROI for each protected area with and without consideration of spatial spillovers of conservation benefit and acquisition cost. We found that (1) protected areas acquired by TNC create a more connected habitat, thereby improving species protection and mobility in the existing protected area network that exists prior to the TNC acquisition, and subsequently, such improvement is a major impetus to determine acquisition cost, (2) the increase in effective mesh size on a dollar invested to acquire a parcel is greater for smaller parcels than larger parcels, implying that the overall efficiency of protected areas that sums up the ecological and economic efficiencies is higher in protecting smaller areas relative to larger areas, and (3) the inclusion of spillovers of both conservation benefit and cost in the decision making tool of ROI scoring provides information as to which parcels’ locations affect conservation benefit and cost in their neighboring parcels and to what degrees.
    Keywords: Return on Investment, protected area size, spatial spillover, protected area, Environmental Economics and Policy, Land Economics/Use,
    Date: 2016
  20. By: Davis, Katrina J; Burton, Michael; Kragt, Marit E
    Abstract: Models to analyse discrete choice data that account for heterogeneity in error variance (scale) across respondents are increasingly common, e.g. heteroscedastic conditional logit or scale adjusted latent class models. In this paper we do not question the need to allow for scale heterogeneity. Rather, we examine the interpretation of results from these models. We provide five empirical examples using discrete choice experiments, analysed using conditional logit, heteroscedastic conditional logit, or scale adjusted latent class models. We show that analysts may incorrectly conclude that preferences are consistent across respondents even if they are not, or that classes of respondents may have (in)significant preferences for some or all attributes of the experiment, when they do not. We recommend that future studies employing scale heterogeneity models explicitly state scale factors for all samples, choice contexts, and/or latent scale classes, and report rescaled preference parameters for each of these groups.
    Keywords: Discrete choice experiments, Heteroscedastic conditional logit models, Scale adjusted latent class models, Interpretation of preferences, Best-practice reporting, Research Methods/ Statistical Methods, C10, C18, C51, Q51,
    Date: 2016–05–14
  21. By: Marco Modica (IRCrES-CNR, Milano, Italy.); Roberto Zoboli (IRCrES-CNR, Milano, Italy; Catholic University of Sacred Heart, Milano, Italy.); Fabrizio Meroni (INGV, Milano, Italy); Vera Pessina (INGV, Milano, Italy); Thea Squarcina (INGV, Milano, Italy); Mario Locati (INGV, Milano, Italy)
    Abstract: This paper examines the housing market response to Northern Italy earthquake in May 2012. Available literature provides evidence of a drop in the average price of houses after a disaster mainly due to i) underestimation by households of disaster risk in area where its occurrence is low or ii) overreaction because of a higher risk perception triggered by the unforeseen extreme event. Here, we provide evidence that overreaction can play a significant role. We use the Northern Italy earthquake as an experiment that permits to estimate the response of housing value to the extreme event by means of a diff-in-diff models. Differently from other papers, we directly carry out the assessment of the damage earthquake scenario, by using macroseismic methods to evaluate the physical damage level of the Northern Italy earthquake. In this way we are able to compare different damage scenarios and providing information on subjective perception of risk. Moreover, to our knowledge, this is the first work providing evidence that the quality of the houses in relation to the ‘resistance to the tremor’ might also play a relevant role for subjective risk assessment.
    Keywords: Earthquake risk; Housing market; Risk perception
    JEL: R21 R32 Q52
    Date: 2016–04
  22. By: Goel, Deepti (Delhi School of Economics); Lang, Kevin (Boston University)
    Abstract: In this paper we highlight a specific mechanism through which social networks help in job search. We characterize the strength of a network by its likelihood of providing a job offer. Using a theoretical model we show that the wage differential in jobs found using networks versus those found using formal channels, decreases as the network becomes stronger. We verify this result for recent immigrants to Canada for whom a strong network is captured by the presence of a 'close tie.' Furthermore, structural estimates confirm that the presence of a close tie operates by increasing the likelihood of generating a job offer from the network rather than by altering the wage distribution from which an offer is drawn.
    Keywords: job search, migration, networks
    JEL: J3
    Date: 2016–05
  23. By: Daudin, Guillaume (Université Paris-Dauphine); Franck, Raphaël (Bar-Ilan University); Rapoport, Hillel (Paris School of Economics)
    Abstract: France experienced the demographic transition before richer and more educated countries. This paper offers a novel explanation for this puzzle that emphasizes the diffusion of culture and information through internal migration. It tests how migration affected fertility by building a decennial bilateral migration matrix between French regions for 1861-1911. The identification strategy uses exogenous variation in transportation costs resulting from the construction of railways. The results suggest the convergence towards low birth rates can be explained by the diffusion of low-fertility norms by migrants, especially by migrants to and from Paris.
    Keywords: fertility, France, demographic transition, migration
    JEL: J13 N33 O15
    Date: 2016–05
  24. By: Novak, Lindsey
    Abstract: The widespread closure of Mom-and-Pop shops, or small, locally owned stores, in the United States and elsewhere is a well-recognized phenomenon. These closures are generally met with dissatisfaction from the local community. These stores, however, often close due to a lack of patronage on the part of the same consumers who are upset by their closure. This behavior and subsequent disappointment are puzzling. I show that this phenomenon can be explained using a hyperbolic discounting, or time-inconsistency, framework. I develop a theoretical model to show that time-inconsistent consumers are less likely to patronize local businesses than time-consistent consumers. The sophistication effect, however, makes consumers more likely to shop at the local store than if they were naive. Further, I show that local stores are more likely to close in a community with a larger proportion of naive time-inconsistent consumers and that these closures cause a loss in welfare.
    Keywords: Consumer Behavior, Hyperbolic Discounting, Agricultural and Food Policy, Consumer/Household Economics, Institutional and Behavioral Economics, D03, D11, R22,
    Date: 2016
  25. By: Massón-Guerra, José Luis; Ortín-Ángel, Pedro
    Abstract: Entrepreneurship capital has been considered in the literature to be a public good, so it will positively affect the total factor productivity of the firms in a certain region. There is evidence confirming a positive relationship between entrepreneurship capital measures and regional production. This paper argues that this evidence could also be explained by the presence of decreasing returns to scale in firms’ production technology. So previous evidence may be mixing both effects: returns to scale and public goods. This paper provides a simple methodological benchmark for distinguishing between and measuring both effects. The analysis conducted using a sample of 52 Spanish provinces for eleven years confirms the presence of decreasing returns to scale. In our data, previous interpretations of the evidence overestimate the effect of regional entrepreneurship capital as a public good on the economy.
    Keywords: Entrepreneurship Capital, Regional Productivity, Scale Economies.
    JEL: L26 O4 O40 R11
    Date: 2016–04–01
  26. By: Wuerffel, Nathaniel (Federal Reserve Bank of New York)
    Abstract: Remarks at the Mortgage Bankers Association National Secondary Market Conference and Expo, New York City.
    Keywords: Fixed income market liquidity; MBS markets; structural change; market evolution; Treasury Market Practices Group (TMPG); flash rally; trading; price efficiency; automated markets; bid-ask spreads; electronic trading; automated trading; liquidity illusion; phantom liquidity; public sector ownership
    Date: 2016–05–17
  27. By: Bryan S. Graham
    Abstract: In social and economic networks linked agents often share additional links in common. There are two competing explanations for this phenomenon. First, agents may have a structural taste for transitive links -- the returns to linking may be higher if two agents share links in common. Second, agents may assortatively match on unobserved attributes, a process called homophily. I study parameter identifiability in a simple model of dynamic network formation with both effects. Agents form, maintain, and sever links over time in order to maximize utility. The return to linking may be higher if agents share friends in common. A pair-specific utility component allows for arbitrary homophily on time-invariant agent attributes. I derive conditions under which it is possible to detect the presence of a taste for transitivity in the presence of assortative matching on unobservables. I leave the joint distribution of the initial network and the pair-specific utility component, a very high dimensional object, unrestricted. The analysis is of the `fixed effects' type. The identification result is constructive, suggesting an analog estimator, whose single large network properties I characterize.
    JEL: C1 C14 C23 C25 D85
    Date: 2016–04
  28. By: André Schmelzer (Max Planck Institute for Research on Collective Goods)
    Abstract: This paper experimentally studies an essential institutional feature of matching markets: Randomization of allocation priorities. I compare single and multiple randomization in the student assignment problem with ties. The Gale-Shapley deferred acceptance algorithm is employed after indifferences in school priorities are resolved by either random procedure. The main result is that a significant fraction of individuals prefers multiple to single randomization, although both are equivalent in expectation. Multiple randomization is perceived to be fairer. One theoretical explanation is the failure to disregard compound lotteries. These results show that random procedures are not inherently neutral with respect to preferences and fairness perceptions.
    Keywords: market design, school choice, mechanism design, experiment, deferred acceptance algorithm, randomization, tie-breaking
    JEL: C78 C91 D78 D81
    Date: 2016–05
  29. By: Carlo Ciccarelli (DEF & CEIS,University of Rome Tor Vergata); J. Paul Elhorst (University of Groningen)
    Abstract: This paper adopts a dynamic spatial panel data model with common factors to explain the non-stationary diffusion process of cigarette consumption across 69 Italian provinces over the period 1877-1913. The Pesaran (2015) CD-test and the exponent a-test of Bailey et al. (2015) are used to show that both weak and strong cross-sectional dependence are important drivers of the propagation of cigarette demand over this period. Stability tests on the coefficients and the CD-test on the residuals of the model are used to verify whether the data and both forms of cross-sectional dependence are modeled adequately. Cigarettes are found to be a normal good with an income elasticity of 0.4 and a price elasticity -0.4 in the long term. The price elasticity can be decomposed into a direct effect of -0.54 in the own region and a spillover effect to other regions of 0.15. This positive spillover effect is in line with previous spatial econometric studies which investigated cigarette demand in the U.S. states over a more recent period.
    Keywords: diffusion, non-stationarity, spatial dependence, common factors, cigarette demand
    JEL: C21 C23 N33 N93 R22
    Date: 2016–05–31
    Date: 2016
  31. By: Congressional Budget Office
    Abstract: Federal spending on highways does not correspond very well with how the roads are used. CBO examines three approaches lawmakers could consider to make highway spending more productive.
    JEL: H41 H54 H76 R41 R42 R48
    Date: 2016–02–11
  32. By: Tabuchi, Takatoshi; Thisse, Jacques François; Zhu, Xiwei
    Abstract: We study how technological progress in manufacturing and transportation to-gether with migration costs interact to shape the space-economy. Rising labor productivity in the manufacturing sector fosters the agglomeration of activities, whereas falling transport costs associated with technological and organizational in-novations fosters their dispersion. Since these two forces have been at work for a long time, the final outcome must depend on how drops in the costs of producing and trading goods interact with the various costs borne by migrants. Finally, when labor is heterogeneous, the most efficient workers of the less productive region are the first to move to the more productive region.
    Keywords: Economic geography, Labor productivity, Manufacturing industries, Transportation, New economic geography, Technological progress, Migration costs, Labor heterogeneity
    JEL: J61 R12
    Date: 2016–05
  33. By: Christian Dustmann (Centre for Research and Analysis of Migration (CReAM) University College London (UCL)); Joseph-Simon Görlach (Centre for Research and Analysis of Migration (CReAM) University College London (UCL))
    Abstract: The assumption that all migrations are permanent, which pervaded the early microdata-based research on immigrant career profiles, is not supported by the empirical evidence. Rather, many – if not most – migrations appear to be temporary. In this paper, therefore, we illustrate the estimation challenges when migrations are temporary. As in an overwhelming share of the selective out-migration literature, our basic structure assumes that the process that determines out-migration is unrelated to other choices that affect wage growth, such as human capital investment or labour supply decisions, which greatly simplifies the analysis. When the choice of whether and when to out-migrate also affects decisions that determine wage growth, the problem becomes inherently dynamic and requires a more structural approach to estimation, which we briefly discuss.
    Keywords: immigration, return migration, assimilation, earnings profile, selection
    JEL: F22 J15 J31 J61 O15
    Date: 2016–05
    Date: 2016
  35. By: Gimenez-Nadal, J. Ignacio (University of Zaragoza); Molina, José Alberto (University of Zaragoza); Velilla, Jorge (University of Zaragoza)
    Abstract: In this paper, we analyze the relationship between potential worker supply, measured through sex ratios, and commuting times in the United States. Using the American Time Use Survey 2003-2014, we analyze the relationship between commuting times and sex ratios by state and age, and show that the proportion of males to females is negatively related to the commuting times of both male and female workers. Furthermore, this result applies to both private and public sector employees, but does not apply to the self-employed. To the extent that employers compensate their workers for their commutes, our results are important for employers. Given the negative effects of commuting on wellbeing and health, our results imply that individuals living in areas with higher sex ratios may have comparatively better health and well-being outcomes than workers living in areas with lower sex ratios.
    Keywords: commuting time, sex ratio, ATUS, gender gap, United States
    JEL: C21 J22 R41
    Date: 2016–05
  36. By: Stefano Bosi (EPEE - Centre d'Etudes des Politiques Economiques - Université d'Evry-Val d'Essonne); Cuong Le Van (IPAG BUSINESS SCHOOL - IPAG BUSINESS SCHOOL PARIS, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Ngoc-Sang Pham (LEM - Lille - Economie et Management - Université de Lille, Sciences et Technologies - Fédération Universitaire et Polytechnique de Lille - Université de Lille, Sciences Humaines et Sociales - CNRS - Centre National de la Recherche Scientifique, EPEE - Centre d'Etudes des Politiques Economiques - Université d'Evry-Val d'Essonne)
    Abstract: We consider a multi-sector infinite-horizon general equilibrium model. Asset supply is endogenous. The issues of equilibrium existence, efficiency, and bubble emergence are addressed. We show how different assets give rise to very different rational bubbles. We also point out that efficient bubbly equilibria may exist.
    Keywords: infinite-horizon,general equilibrium,aggregate good bubble,capital good bubble,efficiency
    Date: 2016–03

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