|
on Urban and Real Estate Economics |
| By: | Jan Eeckhout (UCL and Barcelona GSE-UPF-ICREA); Nezih Guner (CEMFI, Centro de Estudios Monetarios y Financieros) |
| Abstract: | We analyze the role of optimal income taxation across different local labor markets. Should labor in large cities be taxed differently than in small cities? We find that a planner who needs to raise a given level of revenue and is constrained by free mobility of labor across cities does not choose equal taxes for cities of different sizes. The optimal tax schedule is location specific and tax differences between large and small cities depends on the level of government spending, the concentration of housing wealth and the strength of agglomeration economies. Our estimates for the US imply higher optimal marginal rates in big cities than in small cities. Under the current Federal Income tax code with progressive taxes, marginal rates are already higher in big cities which have higher wages, but the optimal difference we estimate is lower than what is currently observed. Simulating the US economy under the optimal tax schedule, there are large effects on population mobility: the fraction of population in the 5 largest cities grows by 7.6% with 3.4% of the country-wide population moving to bigger cities. The welfare gains however are smaller. This is due to the fact that much of the output gains are spent on the increased costs of housing construction in bigger cities. Aggregate goods consumption goes up by 1.51% while aggregate housing consumption goes down by 1.70%. |
| Keywords: | Misallocation, taxation, population mobility, city size, general equilibrium. |
| JEL: | H21 J61 R12 R13 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:cmf:wpaper:wp2017_1705&r=ure |
| By: | David J. Madden |
| Abstract: | This article examines conflicts over neighborhood renaming and the politics of place. Toponymy, or the practice of place naming, is central to the constitution of place, and neighborhood renaming is a pervasive urban strategy. But despite its prevalence, the role of neighborhood toponymic conflict in processes of urban restructuring has not been given sustained engagement from urban scholars. This article uses archival and ethnographic data from an area in Brooklyn, New York to argue that contemporary neighborhood renaming facilitates uneven local development. Real estate developers and residents of expensive private housing use toponymy to legitimize their privileged positions, while public housing residents experience the same toponymic change as a form of symbolic displacement. Conflicts surrounding neighborhood renaming should therefore be seen as a symbolic dimension to struggles over resources, property, identity, and belonging in urban space. |
| Keywords: | neighborhood; toponymy; gentrification; displacement; public housing |
| JEL: | Q15 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:69568&r=ure |
| By: | Gaetano Lisi (Centro di Analisi Economica CREAtività e Motivazioni) |
| Abstract: | Housing costs can damage labour market outcomes and increase unemployment. Also, an important and related research stream claims that higher homeownership rates are associated with fewer new businesses. Using a search-matching model, this paper investigates the relation between homeownership and entrepreneurship by distinguishing two channels through which homeownership affects the creation of enterprises and jobs. The first channel looks at the job search intensity of homeowners, while the second considers the link between the benefit of being a homeowner and the productivity of a new enterprise. The key result of this paper is that the intrinsic preference for homeownership plays a key role in the establishment of new small businesses, while in general homeownership does not encourage the development of existing enterprises. |
| Keywords: | entrepreneurship; homeownership; job creation; new firms; small businesses. |
| JEL: | J63 J64 R21 M13 L26 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:ivi:wpasad:2017-01&r=ure |
| By: | Pablo D. Fajgelbaum; Edouard Schaal |
| Abstract: | We develop a framework to study optimal transport networks in general equilibrium spatial models. We model a general neoclassical economy with multiple goods and factors in which arbitrarily many locations are arranged on a graph. Goods must be shipped through linked locations, and transport costs depend on congestion and on the infrastructure in each link, giving rise to an optimal transport problem in general equilibrium. The framework nests neoclassical trade models, such as Armington or Hecksher-Ohlin, and allows for labor mobility. The globally optimal transport network is the solution to a social planner’s problem of building infrastructure in each link. We provide conditions such that this problem is globally convex, guaranteeing its numerical tractability. We also study and implement cases with increasing returns to transport technologies in which global convexity fails. We match the model to data on actual road networks and economic activity at high spatial resolution across 25 European countries, and then compute the optimal expansion and reallocation of current roads within each country. We find larger gains from road expansion and larger losses from misallocation of current roads in lower-income countries. The optimal expansion of current road networks reduces regional inequalities. |
| JEL: | F11 O18 R13 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23200&r=ure |
| By: | Jan Rouwendal (VU Amsterdam, The Netherlands); Mark van Duijn (University of Groningen, The Netherlands) |
| Abstract: | House price indexes summarize the development of all house prices in a single number, while actual price movements often differ among market segments. We develop a methodology for measuring house prices as a flexible function of housing services – a one-dimensional quality measure – and apply it to test for the common assumption of identical price movements in all parts of the housing market. Our approach is based on a generalization of the familiar (constant unit price) Muth model to a situation of in which the unit price of housing services may depend on the quality level. We apply the method to a rich set of transaction data referring to Amsterdam in the period 1985-2013. We estimate an indicator of housing services based only on the ranking of house prices in postcode areas during periods of three months and compare the results to conventional hedonic price equations that embody the assumption of a unit price for housing services that does not depend on quality. We develop a test for a constant price per unit of housing services and reject it on the basis of price differences occurring over time as well as over space. |
| Keywords: | housing price; housing quality; Muth model; affordability |
| JEL: | R31 R21 D40 |
| Date: | 2017–02–27 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20170028&r=ure |
| By: | Marcel Fafchamps; Di Mo |
| Abstract: | We conduct a large scale RCT to investigate peer effects in computer assisted learning (CAL). Identification of peer effects relies on three levels of randomization. It is already known that CAL improves math test scores in Chinese rural schools. We find that paired treatment improves the beneficial effects of treatment for poor performers when they are paired with high performers. We test whether CAL treatment reduces the dispersion in math scores relative to controls, and we find statistically significant evidence that it does. We also demonstrate that the beneficial effects of CAL could potentially be strengthened, both in terms of average effect and in terms of reduced dispersion, if weak students are systematically paired with strong students during treatment. To our knowledge, this is the first time that a school intervention has been identified in which peer effects unambiguously help weak students catch up with the rest of the class without imposing any learning cost on other students. |
| JEL: | I24 I25 O15 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23195&r=ure |
| By: | Matthew E. Kahn |
| Abstract: | Public finance theories of the median voter’s preferences and local public sector rent extraction posit that liberal cities and high amenity cities will feature a larger, better paid local public sector. Compensating differentials theory predicts that real wages will be lower in beautiful states and localities. Using both Federal and California city level administrative micro data, I study public sector compensation across space. At the Federal level, California workers are only paid 9% more than observationally identical workers in Alabama. Given the high California home prices, such workers are paying for the California amenities. Within California, beach cities hire more workers but pay them less in real terms. Liberal cities both pay public sector workers more and employ more of them. Liberal cities have much larger per-capita pension liabilities. |
| JEL: | H50 H7 H75 R23 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23201&r=ure |
| By: | Christophe André (Economics Department, Organisation for Economic Co-operation and Development (OECD), France); Nikolaos Antonakakis (Webster Vienna Private University, Department of Business and Management, Austria, and University of Portsmouth, Economics and Finance Subject Group, UK); Rangan Gupta (Department of Economics, University of Pretoria, Pretoria, South Africa); Mulatu F. Zerihun (Tshwane University of Technology, Pretoria, South Africa) |
| Abstract: | This paper investigates asymmetry in nominal and real housing price series from 31 advanced and emerging economies using the nonparametric Triples test (Randles et al., 1980), which allows identifying different types of asymmetries in economic cycles. The data sample starts in the 1970s for most of the advanced economies, but is generally shorter for the emerging economies. Both nominal and inflation-adjusted series are examined to allow distinguishing asymmetries in real housing price cycles from those related to nominal rigidities. We find that nominal prices reach peaks faster than troughs (positive steepness asymmetry) in more than half of the advanced economies, suggesting the presence of nominal rigidities. Weaker evidence of asymmetry is found among the emerging economies. Regarding real housing prices, our main finding is that peaks are higher than troughs are deep (positive deepness asymmetry) in half of the advanced economies, suggesting the presence of price overshooting during booms. Again, evidence is less clear for the emerging economies. Overall, asymmetries are found in many economies, both for nominal and real housing prices, which calls for considering potential non-linearity when analysing, modelling and forecasting housing prices. |
| Keywords: | Asymmetry, Housing Prices, OECD, non-OECD, Triples Test |
| JEL: | C12 R31 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201711&r=ure |
| By: | Rothenberg, Alexander D.; Bazzi, Samuel; Nataraj, Shanthi; Chari, Amalavoyal V. |
| Abstract: | Throughout the developing world, many countries have created special economic zones to attract investment and spur industrial growth. In some cases, these zones are designed to promote development in poorer regions with limited market access and lower quality infrastructure, an example of a "big push" development strategy. In this paper, we study the effects of Indonesia's Integrated Economic Development Zone (KAPET) program. This program provided substantial tax-breaks for firms that locate in certain districts in the Outer Islands of Indonesia, a country with large regional differences in per-capita income and a history of policies to promote inclusive growth. We find that along many dimensions, KAPET districts experienced no better development outcomes, and in some cases fared even worse, than their non-treated counterparts. If anything, the strongest finding is that firms in KAPET districts paid lower taxes, but these tax reductions neither encouraged greater firm entry, increased migration, nor raised local measures of output or welfare. Overall, the KAPET program does not appear to have achieved the intended outcome of promoting growth in lagging regions. While there are many possible reasons that the KAPET program failed, our findings suggest caution in spending scarce resources to subsidize development in lagging regions. |
| JEL: | R12 R32 O14 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:ran:wpaper:1183&r=ure |
| By: | Piopiunik, Marc; Bietenbeck, Jan; Wiederhold, Simon |
| Abstract: | Student performance in Sub-Saharan Africa is tragically low. We study the importance of teacher subject knowledge for student performance in this region using unique international assessment data for sixth-grade students and their teachers. To circumvent bias due to unobserved student heterogeneity, we exploit variation within students across math and reading. We find that teacher subject knowledge has a modest impact on student performance on average. However, this effect is substantially larger for students with access to textbooks, which indicates important complementarities between teacher knowledge and school resources. Results are robust to adding teacher fixed effects and not driven by sorting. |
| JEL: | I21 J24 O15 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145562&r=ure |
| By: | Rabitsch, Katrin; Punzi, Maria Teresa |
| Abstract: | We propose a model of a risky mortgage-lending market in which we take explicit account of heterogeneity in household borrowing conditions, by introducing two borrower types: one with a low loan-to-value (LTV) ratio, one with a high LTV ratio, calibrated to U.S. data. We use such framework to study a deleveraging shock, modeled as an increase in housing investment risk, that falls more strongly on, and produces a larger contraction in credit for high-LTV type borrowers, as in the data. We find that this deleveraging experience produces significant aggregate effects on output and consumption, and that the contractionary effects are orders of magnitudes higher in a model version that takes account of borrower heterogeneity, compared to a more standard model version with a representative borrower. |
| Keywords: | Borrowing Constraints, Loan-to-Value ratio, Heterogeneity, Financial Amplification |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wus005:5429&r=ure |
| By: | Vance, Colin; Frondel, Manuel |
| Abstract: | To mitigate information asymmetry problems with respect to the thermal quality of houses, many countries have introduced Energy Performance Certificates (EPCs). Using big data on real estate advertisements that cover large parts of the German housing market, this paper empirically investigates the consequences of a shift from a voluntary to a mandatory quality disclosure regime on the offer prices of houses. Motivated by a stylized theoretical model, we test the following key hypothesis: Prices for houses whose owners would not voluntarily disclose their house’s energy consumption in real estate advertisements should decrease upon a shift to a mandatory disclosure scheme. Employing an instrumental variable approach to cope with the endogeneity of disclosure decisions, our analysis demonstrates the relative advantage of mandatory over voluntary disclosure rules. |
| JEL: | D82 L15 Q58 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145815&r=ure |
| By: | Hensvik, Lena (IFAU - Institute for Evaluation of Labour Market and Education Policy); Müller, Dagmar (IFAU, Uppsala university and UCLS); Nordström Skans, Oskar (Uppsala university, IFAU, UCLS and IZA) |
| Abstract: | Using Swedish economy-wide data spanning across two deep recessions, we examine the relationship between labor market conditions and the role of social contacts in matching labor market entrants to employing firms. We use class-plant fixed-effects models to isolate the role of social contacts from paid work during high-school. One third of post-graduation matches are formed at establishments where youths worked during their studies. Furthermore, graduates are much more likely to match with sites to which adult coworkers from these jobs have relocated. These patterns are strikingly counter-cyclical. Contacts are much more important for job matching in deep recessions than in good times, suggesting that informal contacts and social networks are crucial determinants of matching patterns in bad times. |
| Keywords: | job matching; social Contacts; business cycle; young workers |
| JEL: | J01 |
| Date: | 2017–02–23 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2017_002&r=ure |
| By: | Maria Teresa Punzi (Department of Economics, Vienna University of Economics and Business); Katrin Rabitsch (Department of Economics, Vienna University of Economics and Business) |
| Abstract: | We propose a model of a risky mortgage-lending market in which we take explicit account of heterogeneity in household borrowing conditions, by introducing two borrower types: one with a low loan-to-value (LTV) ratio, one with a high LTV ratio, calibrated to U.S. data. We use such framework to study a deleveraging shock, modeled as an increase in housing investment risk, that falls more strongly on, and produces a larger contraction in credit for high-LTV type borrowers, as in the data. We find that this deleveraging experience produces significant aggregate effects on output and consumption, and that the contractionary effects are orders of magnitudes higher in a model version that takes account of borrower heterogeneity, compared to a more standard model version with a representative borrower. |
| Keywords: | Borrowing Constraints, Loan-to-Value ratio, Heterogeneity, Financial Amplification |
| JEL: | E23 E32 E44 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp241&r=ure |
| By: | Breidenbach, Philipp |
| Abstract: | This paper analyzes whether the expansion of regional airports in Germany caused positive spillover effects on the surrounding economies, exploiting the deregulation of the European aviation market as a quasi-experiment. Such potential spillovers are often used as an argument for the substantial annual subsidies to airports. Previous evaluations often suffer from the problem of reverse causality, since Investment decisions are based on the economic conditions of the region. By contrast, the aviation deregulation under the Single European Market-initiative provides an exogenous incentive for investing in the expansion of existing regional airports. A difference in- differences approach is used to estimate the causal effects of this expansion on regional growth. The results are sobering, though, as there is no evidence for any positive spillover effects. |
| JEL: | R51 R42 H54 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145699&r=ure |
| By: | Timothy Bond; Kevin Mumford |
| Abstract: | We estimate the effect of exposure to teacher pay-for-performance programs on adult outcomes. We construct a comprehensive data set of schools which have implemented teacher performance pay programs across the United States since 1986, and use our data to calculate the fraction of students in each grade in each state who are affected by a teacher performance pay program in a given year. We then calculate the expected years of exposure for each birth state-grade cohort in the American Community Survey. Cohorts with more exposure earn lower wages as adults. This negative effect is concentrated on women and high school graduates with no significant effect for men. We find possible positive effects for high school drop outs. |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:pur:prukra:1289&r=ure |
| By: | Tsvetkova, Alexandra; Partridge, Mark |
| Abstract: | economic growth and overall regional socioeconomic wellbeing. Entrepreneurship is particularly important for economic health of rural and remote areas. The recent shale boom brought growth to many communities creating new jobs; however, it is unclear how these effects are distributed across self-employed and wage and salary segments of local economies. The resource curse literature suggests that a booming energy sector may crowd out entrepreneurship. Given the self-reinforcing nature of local self-employment and entrepreneurship in general, such a negative impact of expanding energy sector, if present, is likely to suppress future growth prospects in regions that experience the shale revolution. Using SUR and IV approaches and a differencing strategy, this paper estimates the effects of the growth in oil and gas extraction industry on self-employment growth in metropolitan and rural US counties during the 2001-2013 period. The results suggest that after three years, oil and gas sector expansion tends to crowd out self-employment. In contrast, energy sector expansion promotes wage and salary employment growth in nonmetro counties but has crowding out effects in metro counties. Overall, we find that the expanding energy sector suppresses self-employment, especially in rural communities, in line with one mechanism of the resource curse. |
| Keywords: | Entrepreneurship; Oil and Gas Extraction; economic development; regional economics |
| JEL: | L26 O1 O13 P25 |
| Date: | 2017–02–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:77058&r=ure |
| By: | Joan Monras (CEMFI, Centro de Estudios Monetarios y Financieros) |
| Abstract: | This paper introduces a spatial equilibrium model that relates earnings, employment, and internal migration responses to minimum wage increases. Population moves to or away from regions that increase minimum wages depending on the labor demand elasticity and on the financing of unemployment benefits. The empirical evidence shows that increases in minimum wages lead to increases in average wages and decreases in employment among the low-skilled. The labor demand elasticity is estimated to be above 1, in the model a necessary condition for the migration responses observed in the data. Low-skilled workers tend to leave the regions that increase minimum wages. |
| Keywords: | Minimum wages, spatial equilibrium, internal migration. |
| JEL: | J08 J23 J38 J61 R12 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:cmf:wpaper:wp2016_1615&r=ure |
| By: | Renner, Laura; Meierrieks, Daniel |
| Abstract: | This contribution investigates the relationship between economic freedom and international migration. We argue that higher levels of economic freedom in the source countries of migration may discourage migration by generating more economic security, providing more economic opportunities and stimulating overall economic activity. Using a panel dataset on migration from 91 developing and emerging to the 20 most attractive OECD destination countries for the 1980-2010 period, we find that more economic freedom at home discourages high-skilled migration but does not matter to low-skilled migration. The negative association between economic freedom and skilled emigration also holds when we estimate dynamic-panel models that allow for endogeneity in the economic freedom-migration nexus. Our findings thus suggest that high-skilled individuals are especially responsive to the economic incentives arising from higher levels of economic freedom. |
| JEL: | F22 J61 J60 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145546&r=ure |
| By: | Kekezi, Orsa (Jönköping International Business School (JIBS)); Mellander, Charlotta (Jönköping International Business School (JIBS)) |
| Abstract: | Urbanization and new digital technologies have significantly altered the news media industry. One major change is the disappearance of local editorial offices in many regions. This paper examines if there is a relation between access to local media in terms of editorial offices and journalists, and the likelihood of the public consuming local news. The study builds on fine level data for Sweden in 2006 and in 2013, allowing for a comparison of trends. Our results suggest that the existence of an editorial office in the municipality is not significantly related to the consumption of local newspapers but that accessibility to employed journalists who live in the municipality is. |
| Keywords: | urbanization; digitization; editorial offices; journalist location; local media access; media consumption |
| JEL: | O33 R22 R23 |
| Date: | 2017–02–23 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0447&r=ure |
| By: | Ahlin, Lina (CIRCLE); Andersson, Martin (Department of Industrial Economics); Thulin, Per (KTH Royal Institute of Technology) |
| Abstract: | Sorting of high-ability workers is a main source of urban-rural disparities in economic outcomes. Less is known about when such human capital sorting occurs and who it involves. Using data on 15 cohorts of university graduates in Sweden, we demonstrate significant sorting to urban regions on high school grades and education levels of parents, i.e. two attributes typically associated with latent abilities that are valued in the labor market. A large part of this sorting occurs already in the decision of where to study, because top universities are predominantly located in urban regions. Estimates from a selection model show that even after controlling for sorting prior to labor market entry, the ‘best and brightest’ are still more likely to start working in urban regions, and are also more likely to remain there over long time periods. We conclude that a) urban regions are true magnets for high-ability graduates, and that b) studies of human capital sorting need to account for selection processes to and from universities, because neglecting mobility prior to labor market entry is likely to lead to underestimation of the extent of sorting to urban regions. |
| Keywords: | Human capital; University graduates; Spatial sorting; Migration; Labor mobility; Ability; Geography of talent; Spatial selection |
| JEL: | I23 J24 J61 R12 |
| Date: | 2017–02–23 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1155&r=ure |
| By: | Kara, Alper; Marqués-Ibáñez, David; Ongena, Steven |
| Abstract: | Banks are usually better informed on the loans they originate than other financial intermediaries. As a result, securitized loans might be of lower credit quality than otherwise similar non-securitized loans. We assess the effect of securitization activity on loans’ relative credit quality employing a uniquely detailed dataset from the euro-denominated syndicated loan market. We find that, at issuance, banks do not seem to select and securitize loans of lower credit quality. Following securitization, however, the credit quality of borrowers whose loans are securitized deteriorates by more than those in the control group. We find tentative evidence suggesting that poorer performance by securitized loans might be linked to banks’ reduced monitoring incentives. From our findings it follows that current iniciatives on risk retention by the originator, and more detailed loan-by-loan information on loan credit quality would be useful to reap out the benefits of securitization. JEL Classification: G21, G28 |
| Keywords: | credit risk, European market, securitization |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20172009&r=ure |
| By: | Shai Bernstein; Emanuele Colonnelli; Xavier Giroud; Benjamin Iverson |
| Abstract: | How do different bankruptcy approaches a affect the local economy? Using U.S. Census microdata at the establishment level, we explore the spillover effects of reorganization and liquidation on geographically proximate firms. We exploit the random assignment of bankruptcy judges as a source of exogenous variation in the probability of liquidation. We find that within a five year period, employment declines substantially in the immediate neighborhood of the liquidated establishments, relative to reorganized establishments. Most of the decline is due to lower growth of existing establishments and, to a lesser extent, reduced entry into the area. The spillover effects are highly localized and concentrate in the non-tradable and service sectors, particularly when the bankrupt firm operates in the same sector. These results suggest that liquidation leads to a reduction in consumer traffic to the local area and to a decline in knowledge spillovers between firms. The evidence is inconsistent with the notion that liquidation leads to creative destruction, as the removal of bankrupt businesses does not lead to increased entry nor the revitalization of the area. |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:17-16&r=ure |
| By: | MORI Tomoya |
| Abstract: | This paper investigates the evolution of the Japanese economy between 1980 and 2010 from the viewpoint of population and industrial structure of cities. With the rural-to-urban transformation settling by the 1970s, Japan experienced the second stage of urbanization through the integration of nearby cities. This led, on average, to a disproportionate 24% population growth of a set of core cities. In the meantime, cities experienced substantial churning of industrial composition: on average, 35% of the three-digit manufacturing industries present in a city in 1980 had left by 2010, while on average, 30% of industries present in a city in 2010 were absent in the same city in 1980. Remarkably, these substantial relocations of population and industries among cities took place while preserving a simple yet rigid relationship between the size and industrial composition of cities characterized by the roughly constant elasticity between the number and average size of cities in which an industry was present. This paper discusses the policy implications of this persistent regularity and the possible underlying mechanisms. |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:17013&r=ure |
| By: | Baskaran, Thushyanthan; Feld, Lars P.; Necker, Sarah |
| Abstract: | Most countries pay substantial intergovernmental transfers to poor regions with the aim of achieving regional convergence. Consequently, transfers should have a positive effect on economic growth. However, it is equally possible that transfers perpetuate under-development. This paper studies empirically the effect of intergovernmental transfers on economic growth with a panel of West German states over the period 1975-2005. The findings suggest that transfers do not foster economic growth, presumably because the recipients use them to subsidize declining industries. |
| Keywords: | intergovernmental transfers,economic growth,fiscal federalism |
| JEL: | H70 H73 H77 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:aluord:1701&r=ure |
| By: | Ochsner, Christian; Roesel, Felix |
| Abstract: | We show that migrating extremists shape political landscapes toward their ideology in the long run. We exploit the unexpected division of the state of Upper Austria into a US and a Soviet occupation zone after WWII. Zoning prompts large-scale Nazi migration to US occupied regions. Regions that witnessed a Nazi influx exhibit significantly higher voting shares for the right-wing Freedom Party of Austria (FPÖ) throughout the entire post-WWII period, but not before WWII. We can exclude other channels that may have affected post-war elections, including differences in US and Soviet denazification and occupation policies, bomb attacks, Volksdeutsche refugees and suppression by other political parties. We show that extremism is transmitted through family ties and local party branches. We find that the surnames of FPÖ local election candidates in 2015 in the former US zone are more prevalent in 1942 phonebook data (Reichstelefonbuch) of the former Soviet zone compared to other parties. |
| JEL: | R23 D72 N94 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145632&r=ure |
| By: | Miriam Hortas-Rico; Miguel Gómez-Antonio |
| Abstract: | This paper analyzes the extent to which local land supply is the result of strategic interaction among local governments. In a setting of limited tax instruments to raise revenues and interjurisdictional competition for mobile residents, municipal authorities are provided with the economic incentives to convert land from rural to urban uses, hence promoting urban growth. Using data on Spanish municipalities from 2003 to 2011, we report evidence in support of this hypothesis. The results suggest that local incumbents do not make policy decisions in isolation: reaction functions arise because the mobile tax base reacts to the regulatory measures that modify land uses in the municipality, leading to an inneficient excess of land devoted to urban development. |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdaeee:eee2017-05&r=ure |
| By: | David Michael Rietzke; Alexander Matros |
| Abstract: | We develop a model of contests on networks. Each player is "connected" to a set of contests, and exerts a single effort to increase the probability of winning each contest to which she is connected. We characterize equilibria under both the Tullock and all-pay auction contest success functions (CSFs), and show that many well-known results from the contest literature can be obtained by varying the structure of the network. We also obtain a new exclusion result: We show that, under both CSFs, equilibrium total effort may be higher when one player is excluded from the network. This finding contrasts the existing literature, which limits findings of this sort to the all-pay auction CSF. Our framework has a broad range of applications, including research and development, advertising, and research funding. |
| Keywords: | Network Games, Contests, Bipartite Graph, Tullock Contest, All-pay Auction |
| JEL: | C72 D70 D85 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:lan:wpaper:156630581&r=ure |
| By: | Reena das Nair; Shingie Chisoro |
| Abstract: | This paper explores the effect of the spread of supermarkets on the participation of suppliers in supermarket value chains in Botswana and South Africa. Using secondary data and in-depth interviews with key players in the value chain, the paper evaluates the buyer power of supermarkets evidenced in the negotiation of trading terms. It further assesses the capabilities and investments required by suppliers to access shelf space and remain competitive. Finally, the paper looks at the role of supermarkets and governments in developing local supplier capabilities and the importance of harmonizing policies across borders. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2017-26&r=ure |
| By: | Emanuele Bracco; Colin Peter Green; Maria De Paola; Vincenzo Scoppa |
| Abstract: | Immigration has increasingly taken centre-stage in the political landscape. Part of this has been rise in far-right, anti-immigration parties in a range of countries. Existing evidence suggests that the presence of immigrants has a substantial effect on the political views of the electorate, generating an advantage to these parties with anti-immigration or nationalist platforms. This paper explores a closely related issue but overlooked issue: how immigrant behavior is influenced by these parties. We focus on immigrant location decisions in Northern Italy which has seen the rise of the anti-immigration party Lega Nord. We construct a dataset of mayoral elections in Italy for the years 2002-2014, and calculate the effect of electing a mayor belonging to, or supported by Lega Nord. To identify this relationship we focus on mayors who have been elected with narrow margins of victory in a Regression Discontinuity framework. The election of Lega Nord mayor discourages immigrants from moving into the municipality. |
| Keywords: | Immigration, Geographical Mobility, Voting Behavior, Political economy, Regression Discontinuity Design |
| JEL: | J15 J61 D72 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:lan:wpaper:156985061&r=ure |
| By: | Boockmann, Bernhard; Nielen, Sebastian |
| Abstract: | In the German school and vocational education systems, there is a wide range of support measures during school-to-work transition. We analyze a novel program providing mentoring to low-achieving school leavers as a bridge between different stages and different institutional systems in secondary and post-secondary education. Using high-quality survey and administrative data and propensity score matching, we find some positive effects on the probability of transiting into the dual vocational education system in the intermediate run. Higher program intensity leads to larger treatment effects. Contrary to the goals of the program, however, there is only weak evidence that it accelerates transitions into vocational training immediately after leaving school. |
| JEL: | J24 I21 I28 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145770&r=ure |
| By: | Diego Puga (CEMFI and CEPR) |
| Abstract: | This paper explores the changing distribution of firms and workers across cities. Cities have become increasingly specialized by function rather than sector, with business services, management and innovation concentrating in large urban areas and manufacturing dispersing across smaller cities instead. Big cities attract more educated workers, but the main factor distinguishing big cities is not so much who goes there but what happens to them as a result: locating in a big city allows firms to become more productive and workers to increase their earnings. And yet, as cities have become more different, they have also become more interdependent with important life-cycle patterns emerging. Many new firms and products start up in big diverse cities but eventually relocate, making up space for the next generation of new firms and products. Workers are often willing to pay the higher living cost of bigger cities not just to get higher wages today, but in the hope of learning and acquiring skills that, depending on their own characteristics and luck, they may exploit there or somewhere else. |
| Keywords: | cities, heterogeneity |
| JEL: | R14 |
| Date: | 2017–02–21 |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:418&r=ure |
| By: | Kukharskyy, Bohdan; Seiffert, Sebastian |
| Abstract: | This paper provides a county-level investigation of the root causes of gun violence in the U.S. To guide our empirical analysis, we develop a simple theoretical model which suggests that firearm-related offenses in a given county increase with the number of illegal guns and decrease with social capital and police intensity. Using detailed panel data from the Federal Bureau of Investigation for the period 1986-2014, we find empirical evidence for the causal effects of illegal guns, social capital, and police intensity consistent with our theoretical predictions. Based on our analysis, we derive a range of policy recommendations. |
| Keywords: | gun violence,illegal guns,social capital,police intensity |
| JEL: | K14 K42 J22 I18 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuewef:94&r=ure |
| By: | Danson, Michael; Todeva, Emanuela |
| Abstract: | This conceptual paper contributes to the discussion on the role of regional government and regional triple helix constellations driving economic development and growth within regional boundaries. We investigate the impact of regionalism and subsidiarity on regional triple helix constellations and the questions of governmentality, governance and institutional development at regional level. We put emphasis on the fact that the position of regional authorities in the structure of government and policy boundaries are best implemented at a regional level (the principles of regionalism and subsidiarity), and that localised policy practices represent a more precise view on the government-industry-university interactions (the principle of governmentality). We look at the regional triple helix context as a prerequisite for stakeholder engagement, enhancing innovation capabilities and entrepreneurial behaviour. The paper identifies the drivers behind regional competitiveness and economic development, and investigates the positive externalities from strong triple helix constellations, as well as the impact of government support and institutionalised cooperation on value creation and value capture at the level of the locale. The paper offers a stylized model (Fig. 1) of the conditions for value creation and value capture and offers a critical overview of the debates around the rationale for regional governments. Examples are drawn from Scotland, England and some comparable parts of Europe. |
| Keywords: | regional development agencies; triple helix; regional governance; public policy; regional economic development |
| JEL: | H7 L0 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:76780&r=ure |
| By: | Simeth, Markus (Universidad Carlos III de Madrid (UC3M)); Mohammadi, Ali (Royal Institute of Technology (KTH), Centre of Excellence for Science and Innovation Studies (CESIS) & Swedish House of finance) |
| Abstract: | Prior research shows that firms can increase their innovation performance by leveraging external sources of knowledge. However, insights related to potential drawbacks of open collaborative approaches for innovation remain scarce. In this paper, we investigate the relationship between R&D collaboration and the departure of skilled employees. Highly qualified scientists and engineers who interact with external partners in the context of R&D collaborations may increase their outside options, resulting in higher rates of employee mobility to other firms and employee entrepreneurship. We analyze our research question using data from the Swedish edition of the Community Innovation (CIS) survey combined with employer-employee register data. Our econometric analysis suggests that a stronger use of research collaborations by firms leads to an increasing number of employee departures. Moreover, we detect heterogeneity for this relationship with respect to the types of employee exits and different collaboration partners. |
| Keywords: | R&D employees; Open Innovation; R&D Collaboration; Employee mobility; Employee Entrepreneurship |
| JEL: | J62 O32 |
| Date: | 2017–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0449&r=ure |
| By: | Spyros Arvanitis (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Florian Seliger (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Martin Wörter (KOF Swiss Economic Institute, ETH Zurich, Switzerland) |
| Abstract: | We propose a new patent-based measure of knowledge spillovers that calculates technological proximity based on firms that were identified via patent backward citations links. We argue that this measure has a couple of advantages as compared to the 'standard' measure proposed by Jaffe: First, it reflects spillovers from both domestic and foreign technologically 'relevant' firms, second, it is more precise because it only takes into account knowledge relations with technologically 'relevant' firms. Our empirical results indeed show that the measure performs better than the standard measure in an innovation model. We find - for a representative sample of Swiss firms - that knowledge spillovers measured in this way have a positive and significant impact on innovation success. However, the knowledge spillovers appear to be localized: Spillovers from geographically distant areas such as the USA and Japan matter less than spillovers from near destinations such as Europe and particularly Switzerland itself. Moreover, the spillover effect on innovation performance decreases with increasing number of competitors on the main product market so that this effect would appear only in niche markets or oligopolistic market structures. However, an additional effect of competition can only be detected for more radical innovation success. |
| Keywords: | Knowledge Spillovers, Innovation Success, Knowledge Capital, Patent Citations, Competition |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:kof:wpskof:16-414&r=ure |
| By: | Jesse Kalinowski (Quinnipiac University); Stephen L. Ross (University of Connecticut); Matthew B. Ross (Ohio State University) |
| Abstract: | Several prominent applications of the Veil of Darkness (VOD) test, where solar variation is used to identify racial profiling in traffic stops, have found reverse discrimination in cities widely purported to disproportionately target minorities. We develop a theoretical model of traffic enforcement and demonstrate that the VOD test for racial profiling cannot distinguish between discrimination and reverse discrimination. In our model, this problem arises because motorists rationally alter their driving behavior when faced with discriminatory policing. For groups that face discrimination, our model implies that motorists who previously did not speed choose to speed in darkness, when demography cannot be observed, thus creating the possibility that the share of stopped minority motorists increases in darkness. We develop a follow-up test for identifying the direction of differential treatment by examining the speed distribution of motorists across daylight and darkness. Using data on traffic stops in Massachusetts made by State and Local Police, we reject the VOD test for equal treatment and demonstrate that driving speeds of stopped African-Americans are higher in darkness consistent with discrimination. |
| Keywords: | Police, Crime, Discrimination, Racial Profiling, Disparate Treatment, Traffic Stops |
| JEL: | H1 I3 J7 K14 K42 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2017-03&r=ure |
| By: | Pietro Lanzini (Dept. of Management, Università Ca' Foscari Venice); Andrea Stocchetti (Dept. of Management, Università Ca' Foscari Venice) |
| Abstract: | In this paper we highlight the evolution of both the conceptual basis and the methodological approaches for the sustainability assessment of transport and urban mobility. Through the review of key contributions in the field we highlight the significant shift in perspective that has occurred over the ast two decades, characterized by a series of changes in the development of urban mobility patterns. erspectives, goals and strategies evolved to the point that they represent an actual shift in the paradigm, i.e. a change in the points of reference for conceiving an urban mobility system. The theoretical oundations for the evaluation of sustainability impacts have changed accordingly, flanking the emphasis on the environmental impact with an increasing attention to the social and economic impacts. Although ragmented, the literature on urban mobility principles and development provides useful insights on the rationale behind the above mentioned shift in the paradigm. We review such literature outlining the major traits of the studies regarding sustainable mobility that emerged over time. Second, we focus on the two ain perspectives (that we label principles oriented and planning oriented) that shaped the way sustainable urban mobility is conceived today. |
| Keywords: | Sustainable mobility, urban sustainable mobility, sustainability assessment, sustainable transport. |
| JEL: | M48 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:vnm:wpdman:135&r=ure |
| By: | Lemmermann, Dominique; Riphahn, Regina |
| Abstract: | We investigate the causal effect of youths' age at immigration on subsequent educational attainment in the destination country. To identify the causal effect we compare the educational attainment of siblings at age 21, exploiting the fact that they typically migrate at different ages within a given family. We consider several education outcomes conditional on family fixed effects. We take advantage of long running and detailed data from the German Socio-Economic Panel, which entails an oversample of immigrants and provides information on language skills. We find significant effects of age at migration on educational attainment and a critical age of migration around age 6. We find that the educational attainment of female immigrants responds more strongly to a high age at immigration than that of males. We can exclude that the causal effect is determined only by language abilities. |
| JEL: | I21 J61 C21 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145882&r=ure |
| By: | Stefania Borelli (Sapienza University of Rome); Giuseppe De Arcangelis (Sapienza University of Rome); Majlinda Joxhe (CREA, Université du Luxembourg) |
| Abstract: | This paper assesses the effect of the immigration on the production structure in a selection of European countries in 2001-2009 with a task-based approach. The inflow of immigrants represents an increase in the relative supply of manual-physical (or simple) tasks, hence favoring simple-task intensive sectors. We use a new OECD dataset, PIAAC, to calculate the index of simple-task intensity at the country-industry level. The analysis confirms that the increase in migration stocks caused a positive impact on the value added of sectors that use more intensively simple tasks. These effects are more intense when considering countries as Italy and Spain characterized by a recent, rapid and intense inflow of migrants. Endogeneity issues are discussed and instruments based on a gravity approach are used in estimation. |
| Keywords: | Rybczynski Effect, International Migration, PIAAC, Gravity Equation |
| JEL: | F22 C25 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:luc:wpaper:17-02&r=ure |
| By: | Florian Seliger (KOF Swiss Economic Institute, ETH Zurich, Switzerland) |
| Abstract: | This paper studies determinants of knowledge flows as measured with patent forward citations that occur between 'input' and 'output sector-countries'. We look at the impact of absorptive capacity of a focal sector-country, knowledge spillovers and technological distance between sector-countries on further knowledge flows. For this purpose, we develop a knowledge flow matrix similar to input-output tables in trade where patent citations capture knowledge flows that go from the input sector-country to the output sector-country. We estimate a gravity model with variables that capture technological distance and knowledge that comes from either inside the input output pair or from external spillover sources. Our results indicate that knowledge accumulated in the output sector-country and - in some cases - external spillovers are key in generating further knowledge flows that go to the output sector-country. A distinction between high-tech and low-tech sector-countries shows that spillovers are more useful for the generation of knowledge flows if the input sector-country is low-tech. Low-tech sector-countries benefit from both high-tech knowledge from the output sector-country and external knowledge from the technological frontier. In contrast, knowledge flows based on high-tech sector-countries cannot benefit from low-tech sector-countries and only to a very limited extent from other high-tech sources. Technological distance between sector-countries has a negative impact on further knowledge flows so that only technologically proximate sector-countries are more likely to generate knowledge flows. |
| Keywords: | Knowledge flows, Patent citations, Spillovers, Absorptive capacity, Gravity model |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:kof:wpskof:16-415&r=ure |
| By: | Florida, Richard (University of Toronto & New York University); Mellander, Charlotta (Jönköping University & Centre of Excellence for Science and Innovation Studies (CESIS)) |
| Abstract: | Over the past decade or so, there has been increasing concern over rising inequality and the growth of the 1 percent of super-rich people who sit atop the global economy. While studies have charted the super-rich by industry and nation, there is very little research on their location by city or metro area. Our research uses detailed data from Forbes (2015) on the world’s billionaires to test a series of hypotheses about the location of the super-rich across the world’s cities and metro areas. We find that the super-rich are concentrated in a small number of metros around the world and that their location is primarily related to the size of metros: Large metros offer more people bigger markets, more diversified industries and more opportunity that help produce and attract billionaires. The location of the super-rich is more modestly associated with living standards (measured as economic output per capita) and less so with the presence of finance and tech industries, and city competitiveness. Their location is not related to quality of life, which is somewhat surprising in light of the level of mobility the super-rich enjoy, as well as research that finds that affluent and talented people are attracted to higher quality, higher amenity places. |
| Keywords: | Super-rich; billionaires; 1 percent; geography; size; quality of life; competitiveness; spatial division of labor |
| JEL: | O15 R12 |
| Date: | 2017–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0448&r=ure |
| By: | Leonidas K. Cheliotis |
| Abstract: | Focusing on the treatment irregular migrants have received in Greece since the early 1990s, this article seeks to advance critical scholarship on how European countries have responded to migration from impoverished or otherwise disadvantaged parts of the globe over recent decades. The article first draws attention to ways in which purportedly exclusionary approaches to irregular migration control may be imperfect by design, insofar as restrictions are imposed on outflows to secure an exploitable workforce that serves important labour market needs and, by extension, dominant political interests in the ‘host’ state. Moving on to address the precise ways in which labour exploitation of irregular migrants is brought into effect, the article demonstrates how seemingly unrelated state policies and practices regarding matters of migration, welfare, employment and criminal justice, as well as certain manifestations of anti-migrant violence by non-state actors, may act in combination with one another to this end. |
| JEL: | N0 |
| Date: | 2017–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:65189&r=ure |
| By: | Heinrich C. Bofinger |
| Abstract: | Sub-Saharan Africa’s air transport, though low in overall volume when compared to other regions in the world, has experienced significant growth in the last decade, both in international and domestic traffic. The sector, in part because of its relatively small size, still faces the challenges of high concentration in services and lack of competition, with only a few dominant airlines providing international services within the continent. In addition, Africa faces challenges in safety oversight, as well as having many smaller non-viable state-owned carriers |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2017-36&r=ure |
| By: | Schüwer, Ulrich; Gropp, Reint; Noth, Felix |
| Abstract: | Why do some banks react to deregulation by expanding geographically while others do not? This paper examines this question using exogenous variation in locally non-diversifiable risk that banks face in their home state. As a measure of locally non-diversifiable risk we use data on damages arising from natural disasters in the U.S. Combining this data with information on the staggered deregulation in the 90s, we find that banks facing such risks expand significantly more into other states after deregulation than banks that do not face such risks. Only large banks are able to take advantage of deregulation, small banks are not. Finally, banks that do expand, do not necessarily seek to reduce their exposure to risk when expanding. |
| JEL: | G21 G28 G20 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145885&r=ure |
| By: | Dauth, Christine (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]) |
| Abstract: | "I analyze the effects of further training subsidies for low-skilled employees on individual labor market outcomes in Germany for the period from 2007 to 2012. Using detailed administrative data, I exploit cross-regional variation in the conditional policy styles of local employment agencies and use this fuzzy discontinuity as an instrument for program participation. I find that subsidies significantly increase cumulative employment duration and earnings for the subgroup of compliers. These gains are particularly pronounced for workers who are women, younger than 35 years old, non-German citizens and participated before the economic crisis of 2009." (Author's abstract, IAB-Doku) ((en)) |
| Keywords: | Weiterbildung, Teilnehmer, Niedrigqualifizierte, Arbeitsmarktchancen, Weiterbildungsförderung, regionale Disparität, Einkommenseffekte |
| JEL: | J18 J24 J31 I21 |
| Date: | 2017–02–27 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabdpa:201707&r=ure |
| By: | Ana Gouveia (GPEARI - Research and Economic Policy Division); Sílvia Santos; Marli Fernandes |
| Abstract: | There is a large branch of literature providing empirical evidence on the positive effects of agglomeration economies on productivity. However, for policy makers it is important to understand the role of agglomeration economies at a more micro level, disentangling the effects across industries, firm-level characteristics and time. The present survey reviews this literature, outlining the econometric approaches and methodological challenges. In general, results show that the magnitude of agglomeration economies differ substantially across industries and point to the presence of non-linear effects, also depending on the industry and product life cycles. The channels through which these effects operate may also differ – resulting from specialization externalities (within industries in the same region) and/or urbanisation externalities (across industries in the same region). Overall, the evidence reviewed in this survey highlights the need for policy makers to follow tailor-made approaches and to complement existing evidence with national level studies, maximizing potential productivity gains. |
| Keywords: | Agglomeration economies, Specialization externalities, Urbanization externalities, Productivity |
| JEL: | R1 O3 L6 D24 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:mde:wpaper:0067&r=ure |
| By: | Lisa CHAUVET (IRD DIAL); Marin FERRY (FERDI) |
| Abstract: | This paper investigates the relationship between taxation and firm performance in developing countries. Taking firm-level data from the World Bank Enterprise Surveys (WBES) and tax data from the Government Revenue Dataset (ICTD/UNU-WIDER), our results suggest that tax revenue benefits to firm growth in developing countries, especially in low-income countries and lower-middle income countries. These findings are robust to the inclusion of alternative covariates and specifications, and do not appear to be sample dependent. We also provide evidence that the positive effect of taxation on firm growth falls significantly when corruption is too pervasive, and when the origin of tax revenue origin reduces government accountability. Lastly, our paper finds that the positive effect of domestic revenue on firm performance could channel through the financing of public infrastructures vital to firms operating in lower-income countries. |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:fdi:wpaper:3509&r=ure |
| By: | Titze, Mirko; Dettmann, Eva; Brachert, Matthias |
| Abstract: | The German government provides discretionary investment grants to structural weak regions to allow them to overcome disadvantages. The legislatives of the European Union (EU) however restrict the number of supported regions: The share of population in assisted regions is not allowed to exceed an arbitrarily defined threshold. We use a regression-discontinuity design that exploits a discrete jump in the probability to receive investment grants. Thus, we identify causal effects of the investment grant treatment on area level economic outcomes. We find positive effects for regional gross value added and productivity growth but no effects for employment and gross wages growth. |
| JEL: | Z00 A11 D61 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145735&r=ure |