nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2017‒03‒12
forty-six papers chosen by
Steve Ross
University of Connecticut

  1. Varieties of housing finance in historical perspective: The impact of mortgage finance systems on urban structures and homeownership By Blackwell, Timothy; Kohl, Sebastian
  2. Religious Pluralism and the Transmission of Religious Values through Education By Cohen-Zada, Danny; Elder, Todd E.
  3. The effect of house prices on household borrowing: a new approach By Cloyne, James; Huber, Kilian; Ilzetzki, Ethan; Kleven, Henrik
  4. City Size, Distance and Formal Employment By Eduardo Lora; Neave O'Clery
  5. Local taxation, land use regulation, and land use: A survey of the evidence By Hansjörg Blöchliger; Christian Hilber; Olivier Schöni; Maximilian von Ehrlich
  6. Firms' Internal Networks and Local Economic Shocks By Giroud, Xavier; Mueller, Holger M
  7. Social Networks and Peer Effects at Works By Julie Beugnot; Bernard Fortin; Guy Lacroix; Marie Claire Villeval
  8. The political economy of transportation investment By Giacomo A. M. Ponzetto
  9. The Effect of School Entrance Age on Educational Outcomes: Evidence Using Multiple Cutoff Dates and Exact Date of Birth By Attar, Itay; Cohen-Zada, Danny
  10. Housing booms and busts and local fiscal policy By Albert Solé-Ollé; Elisabet Viladecans-Marsal
  11. The Political Economy of Teacher Management in Decentralized Indonesia By Andrew Rosser; Mohamad Fahmi
  12. Understanding intra-regional transport: Competition in road transportation between Malawi, Mozambique, South Africa, Zambia, and Zimbabwe By Thando Vilakazi; Anthea Paelo
  13. Larrikin youth: can education cut crime? By Tony Beatton; Michael P. Kidd; Stephen Machin; Dipa Sarkar
  14. Leveling up? An inter-neighborhood experiment on parochialism and the efficiency of multi-level public goods provision By Gallier, Carlo; Goeschl, Timo; Kesternich, Martin; Lohse, Johannes; Reif, Christiane; Römer, Daniel
  15. Promotion Incentives in the Public Sector: Evidence from Chinese Schools By Karachiwalla, Naureen; Park, Albert
  16. Migration, communities-on-the-move and international innovation networks: An empirical analysis of Spanish regions By D'Ambrosio, Anna; Montresor, Sandro; Parrilli, Mario Davide; Quatraro, Francesco
  17. Let's stay in touch - Evidence on the role of social learning in local tax interactions By Blesse, Sebastian; Martin, Thorsten
  18. The Territorial Fiscal Gap in Colombia By Jaime Bonet-Morón; Jhorland Ayala-García
  19. Explaining the Prevalence, Scaling and Variance of Urban Phenomena By Andres Gomez-Lievano; Oscar Patterson-Loomba; Ricardo Hausmann
  20. Network Structure and Naive Sequential Learning By Krishna Dasaratha; Kevin He
  21. Gender and Peer Effects in Social Networks By Beugnot, Julie; Fortin, Bernard; Lacroix, Guy; Villeval, Marie Claire
  22. Peer Effects and Risk-Taking Among Entrepreneurs: Lab-in-the-Field Evidence By Steeve Marchand; Maria Adelaida Lopera
  23. Exploring the Structure and Performance of Petroleum Retail Outlets in Pakistan By Omer Siddique; Ahmed Waqar Qasim; Hafiz Hanzla Jalil
  24. Network Effects in Bus Transit: Evidence from Barcelona’s Nova Xarxa By Badia, Hugo; Argote-Cabanero , Juan; Daganzo, Carlos F.
  25. Do Migrants Lower Workplace Wages? By Michael White; Alex Bryson
  26. Tracking and the Intergenerational Transmission of Education: Evidence from a Natural Experiment By Lange, Simon; von Werder, Marten
  27. The Path to Labor Formality: Urban Agglomeration and the Emergence of Complex Industries By Andres Gomez-Lievano; Eduardo Lora; Neave O'Clery
  28. The Productivity Impact of Business Mobility: International Evidence By Piva, Mariacristina; Tani, Massimiliano; Vivarelli, Marco
  29. The firm location race – Regulating incentive packages given to firms by local and regional governments By Hanke, Philip; Philip, Hanke; Klaus, Heine
  30. Exploring the Trade–Urbanization Nexus in Developing Economies: Evidence and Implications By Zhang, Yuan; Wan, Guanghua
  31. Welcome Home in a Crisis: Effects of Return Migration on the Non-migrants' Wages and Employment By Ljubica Nedelkoska; Ricardo Hausmann
  32. In brief... What can be done to help low-achieving teenagers? By Dominique Goux; Marc Gurgand; Eric Maurin
  33. The Macroeconomic Effects of Government Asset Purchases: Evidence from Postwar US Housing Credit Policy By Fieldhouse, Andrew; Mertens, Karel; Ravn, Morten O
  34. Job Changes and Interregional Migration of Graduates By Haußen, Tina; Haussen, Tina
  35. Jati, local public goods and village governence: private actions and public outcomes By Raghbendra Jha; Hari K. Nagarajan; Anirudh Tagat
  36. New regional identities in a global world By Bailly, Antoine
  37. The Territorial Fiscal Gap in Colombia By Jaime Bonet-Morón; Jhorland Ayala-García
  38. Apprentice poaching in regional labor markets By Stockinger, Bastian; Zwick, Thomas
  39. Kids, Streets, and Activities By Alexandra A. Bochaver; Anna N. Korzun; Katerina N. Polivanova
  40. Institutions vs. Social Interactions in Driving Economic Convergence: Evidence from Colombia By Michele Coscia; Timothy Cheston
  41. Girls Helping Girls: The Impact of Female Peers on Grades and Educational Choices By Schone, Pal; von Simson, Kristine; Strom, Marte
  42. Domestic transport costs, Canada, and the Panama Canal By Camilo Umana Dajud
  43. Real estate prices and corporate investment: theory and evidence of heterogeneous effects across firms By Fougère, Denis; Lecat, Rémy; Ray, Simon
  44. On Asymmetric Migration Patterns from Developing Countries By Acharyya, Rajat; Kar, Saibal
  45. Superstar houses and the American mortgage frenzy By Clement Bellet
  46. The determinants of coagglomeration: Evidence from functional employment patterns By Behrens, Kristian; Guillain, Rachel

  1. By: Blackwell, Timothy; Kohl, Sebastian
    Abstract: In this paper, we argue that the complexion of housing finance systems in OECD countries, both now and historically, has a significant bearing on a number of core housing-related indicators, including housing form, tenure composition, and urban development. Existing literature in the fields of housing studies and comparative political economy, however, has often neglected the historical dynamics of housing finance, while contemporaneously, financial historians have focused almost exclusively on company and not mortgage finance. We identify four different "ideal types" of housing finance systems that developed in mature capitalist economies when organized housing finance institutions began to emerge throughout the long nineteenth century: informal person-to-person lending and state lending as solutions outside specialized banking circuits, and deposit-based and bond-based institutions as banking solutions. We adapt Alexander Gerschenkron's theory of economic backwardness in order to explain the temporal-spatial emergence of these distinct types. We draw a path-dependent conclusion, noting that the more countries developed bond-based mortgage banks in the nineteenth century, the more they tended towards multi-story building structure, low homeownership rates and lower securitization levels in the twentieth century. A collection of unique historical city and country data supports these findings.
    Keywords: housing finance,homeownership,building form,urbanization,Gerschenkron,path dependence,financial history,mortgage banks,building societies,buildings and loans,Hausfinanz,Wohneigentum,Bauform,Urbanisierung,Gerschenkron,Pfadabhängigkeit,Finanzgeschichte,Hypothekenbanken,Bausparkassen
    Date: 2017
  2. By: Cohen-Zada, Danny (Ben Gurion University); Elder, Todd E. (Michigan State University)
    Abstract: We analyze the role of formal religious education in the intergenerational transmission of religious values. We first develop a model of school choice in which the demand for religious schooling is driven partly by the desire of parents to limit their children's exposure to the influences of competing religions. The model predicts that when a religious group's share of the local population grows, the fraction of that group's members whose children attend religious schools declines. In addition, it shows that if the motivation to preserve religious identity is sufficiently strong, the fraction of all children that attend a given denomination's school is an inverse u-shaped function of the denomination's market share. Finally, the model implies that the overall demand for religious schooling is an increasing function of both the local religiosity rate and the level of religious pluralism, as measured by a Herfindahl Index. Using both U.S. county-level data and individual data from ECLS-K and NELS:88, we find evidence strongly consistent with all of the model's predictions. Our findings also illustrate that failing to control for the local religiosity rate, as is common in previous studies, may lead a researcher to erroneously conclude that religious pluralism has a negative effect on participation.
    Keywords: cultural transmission, school choice, religious pluralism, religious identity
    JEL: I21 Z12
    Date: 2017–02
  3. By: Cloyne, James (UC Davis); Huber, Kilian (London school of Economics); Ilzetzki, Ethan (London School of Economics); Kleven, Henrik (London School of Economics)
    Abstract: We investigate the effect of house prices on household borrowing using administrative mortgage data from the United Kingdom and a new empirical approach. The data contain household-level information on house prices and borrowing in a panel of homeowners, who refinance at regular and quasi-exogenous intervals. The data and setting allow us to develop an empirical approach that exploits house price variation coming from idiosyncratic and exogenous timing of refinance events around the Great Recession. We present two main results. First, there is a clear and robust effect of house prices on borrowing, but the responsiveness is smaller than recent US estimates. Second, the effect of house prices on borrowing can be explained largely by collateral effects. We study the collateral channel in two ways: through a multivariate heterogeneity analysis of proxies for collateral and wealth effects, and through a test that exploits interest rate notches that depend on housing collateral.
    Keywords: House prices; household borrowing; collateral channel
    JEL: D14 E21 E32 E43 E51 G21
    Date: 2017–02–24
  4. By: Eduardo Lora (Center for International Development at Harvard University); Neave O'Clery (Center for International Development at Harvard University)
    Abstract: Cities thrive through the diversity of their occupants because the availability of complementary skills enables firms in the formal sector to grow, delivering increasingly sophisticated products and services. The appearance of new industries is path dependent in that new economic activities build on existing strengths, leading cities to both diversify and specialize in distinct areas. Hence, the location of necessary capabilities, and in particular the distance between firms and people with the skills they need, is key to the success of urban agglomerations. Using data for Colombia, this paper assesses the extent to which cities benefit from skills and capabilities available in their surrounding catchment areas. Without assuming a prioria a definition for cities, we sequentially agglomerate the 96 urban municipalities larger than 50,000 people based on commuting time. We show that a level of agglomeration equivalent to between 45 and 75 minutes of commuting time, corresponding to between 62 and 43 cities, maximizes the impact that the availability of skills has on the ability of agglomerations to generate formal employment. Smaller urban municipalities stand to gain more in the process of agglomeration. A range of policy implications are discussed.
    Date: 2016–10
  5. By: Hansjörg Blöchliger (OECD); Christian Hilber (London School of Economics); Olivier Schöni (University of Bern); Maximilian von Ehrlich (University of Bern)
    Abstract: This paper surveys the theoretical and empirical research on the relationship between local taxation, land use regulation and land use patterns. The findings can be summarized as follows: 1) In more fiscally decentralized settings, sub-national land use regulation and fiscal policies encourage urban sprawl. In contrast, in more centralized settings, restrictive urban containment policies and a lack of local fiscal incentives for land development tend to generate housing shortages. 2) Certain fiscal instruments affect the type and composition of land development, e.g. the share of residential versus commercial development. Removing local fiscal incentives for certain property types reduces the amount of land allocated for that type and increases its price. 3) In more decentralized settings, local land use policies aimed at containing or modifying urban growth are ineffective since mobile individuals can circumvent local restrictions by sorting into nearby jurisdictions that offer the preferred combination of land consumption and public services. 4) Expanding transportation networks enables households and firms to move to suburban areas, prompting the central city population to shrink and encouraging sprawl, particularly near major highways. 5) In fiscally decentralized settings, sub-urbanization is associated with a growing political power of homeowners. Homeowners tend to get fiscal zoning policies enacted – mainly via minimum lot size restrictions – that selectively attract well-off local taxpayers. Fiscal zoning thus imposes barriers to local development and raises property values, while at the same time facilitating sprawl. Overall, fiscal policy and land use regulation strongly interact, and governments must align those policies carefully to achieve land-use objectives effectively. Fiscalité locale, réglementation d’urbanisme et occupation des sols : Étude empirique Ce document étudie les travaux de recherche théoriques et empiriques consacrés aux relations entre fiscalité locale, réglementation d’urbanisme et modes d’occupation des sols. Les résultats peuvent être résumés comme suit : 1) Dans les pays qui pratiquent la décentralisation budgétaire, la réglementation d’urbanisme et les politiques budgétaires au niveau infranational encouragent l’étalement urbain. À l’inverse, dans les pays plus centralisés, des politiques restrictives de maîtrise de l’étalement des villes et le manque d’incitations budgétaires locales en faveur de l’aménagement du territoire ont tendance à entraîner une pénurie de logements. 2) Certains instruments budgétaires influent sur le type et la composition de l’aménagement du territoire, par exemple l’importance de la construction de logements par rapport à celle de bâtiments à usage commercial. La suppression des incitations budgétaires locales en faveur de certains types de biens réduit la surface des sols qui leur sont affectés et augmente leurs prix. 3) Dans les pays à structure plus décentralisée, les politiques locales d’occupation des sols visant à limiter ou à modifier la croissance urbaine sont inefficaces car les individus mobiles peuvent contourner les restrictions locales en s’établissant dans les juridictions voisines qui offrent l’équilibre recherché entre occupation des sols et services publics. 4) Le développement des réseaux de transport permet aux ménages et aux entreprises de s’établir en zones périphériques, ce qui accélère la désertification des centres villes et favorise l’étalement urbain, surtout le long des routes à grande circulation. 5) Dans les pays où la gestion budgétaire est décentralisée, le développement des banlieues est associé au pouvoir politique croissant des propriétaires fonciers. Ceux-ci font généralement pression pour que des mesures d’urbanisme obéissant à des considérations budgétaires soient prises – essentiellement en fixant une taille minimale des lots – qui favorisent les contribuables plus aisés. Aussi, les décisions d’urbanisme qui répondent à des objectifs budgétaires freinent le développement local et augmentent la valeur des biens, tout en favorisant l’étalement urbain. Globalement, la politique budgétaire et la réglementation d’urbanisme sont étroitement liées, et les pouvoirs publics doivent harmoniser ces politiques pour atteindre efficacement les objectifs d’occupation des sols.
    Keywords: fiscal competition, fiscal instruments, land use patterns, land use regulations, sprawl, urban density
    JEL: H2 H3 H4 H7 R3 R4 R5
    Date: 2017–03–07
  6. By: Giroud, Xavier; Mueller, Holger M
    Abstract: This paper shows that firms spread the adverse impacts of local employment shocks across regions through their internal networks of establishments. Linking confidential micro data at the establishment level from the U.S. Census Bureau's Longitudinal Business Database to ZIP code-level variation in house price changes during the Great Recession, we find that local establishment-level employment responds strongly to employment shocks in other regions in which the firm has establishments. Consistent with theory, the elasticity of establishment-level employment with respect to shocks in other regions is increasing with firms' financial constraints. Moreover, establishments belonging to more expansive firm networks exhibit smaller employment elasticities with respect to their own local shocks. To account for the impacts of general equilibrium adjustments, we examine aggregate employment at the county level. Similar to what we found at the establishment level, we obtain large elasticities of county-level employment with respect to employment shocks in other counties linked through firms' internal networks. Overall, our results suggest that firms play an important role in the provision of regional risk sharing and the propagation of local employment shocks across different U.S. regions.
    Date: 2017–02
  7. By: Julie Beugnot (CRESE EA3190, Univ. Bourgogne Franche-Comté, F-25000 Besançon, France); Bernard Fortin (Department of economics, Université Laval, CRREP and CIRANO, Canada); Guy Lacroix (Department of economics, Université Laval, CRREP, IZA and CIRANO, Canada); Marie Claire Villeval (Univ Lyon, CNRS, GATE L-SE UMR 5824, F-69130 Ecully, France; IZA, Bonn, Germany)
    Abstract: This paper extends the standard work effort model by allowing workers to interact through networks. We investigate experimentally whether peer performances and peer contextual effects influence individual performances. Two types of network are considered. Participants in Recursive networks are paired with participants who played previously in isolation. In Simultaneous networks, participants interact in real-time along an undirected line. Mean peer effects are identified in both cases. Individual performances increase with peer performances in the recursive network. In the simultaneous network, endogenous peer effects vary according to gender : they are large for men but not statistically different from zero for women.
    Keywords: Peer effects, social networks, work effort, piece rate, experiment
    JEL: C91 J16 J24 J31 M52
    Date: 2017
  8. By: Giacomo A. M. Ponzetto
    Abstract: Will politics lead to over-building or under-building of transportation projects? In this paper, we develop a model of infrastructure policy in which politicians overdo things that have hidden costs and underperform tasks whose costs voters readily perceive. Consequently, national funding of transportation leads to overspending, since voters more readily perceive the upside of new projects than the future taxes that will be paid for distant highways. Yet when local voters are well-informed, the highly salient nuisances of local construction, including land taking and noise, lead to under-building. This framework explains the decline of urban mega-projects in the US (Altshuler and Luberoff 2003) as the result of increasingly educated and organized urban voters. Our framework also predicts more per capita transportation spending in low-density and less educated areas, which seems to be empirically correct.
    Keywords: Infrastructure, Political economy, Transportation investment, Nuisance mitigation, Elections, Imperfect information
    JEL: D72 D82 H54 H76 R42 R53
    Date: 2017–01
  9. By: Attar, Itay (Ben Gurion University); Cohen-Zada, Danny (Ben Gurion University)
    Abstract: Using Israeli data, we estimate the effect of school entrance age (SEA) on student outcomes. Unlike much of the recent literature, our identification strategy strictly satisfies the monotonicity assumption required for interpreting our estimates as the local average treatment effect (LATE), and also separates the effect of SEA from date of birth effects. We find that delaying school entry by one year increases fifth grade test scores in Hebrew by 0.34 standard deviations and in math by 0.19. Interestingly, while the advantage in Hebrew slightly decreases in eighth grade, in math it almost doubles. We also show that by failing to control for date of birth fixed effects we would have erroneously concluded that the SEA effect on math test scores decreases slightly from fifth grade to eight grade while it actually substantially increases.
    Keywords: school entrance age, student outcomes, date of birth
    JEL: I21 J24
    Date: 2017–02
  10. By: Albert Solé-Ollé (Universitat de Barcelona & IEB); Elisabet Viladecans-Marsal (Universitat de Barcelona & IEB & CEPR)
    Abstract: This paper examines how local governments adjust their spending, savings and taxes in response to a temporary revenue windfall generated by a housing boom and how they cope with the inevitable shortfall that appears during the bust. We focus on Spanish local governments given the intensity of the last housing boom-bust experienced there and the large share of construction-related revenues they obtain. We find, first, that just a small share of the boom windfall was saved, with revenues being used primarily to increase spending (above all, current spending) and (to a lesser extent) cut taxes. Second, we find that the failure to save during the boom is higher in places with less informed voters and more contested elections. Third, we also examine what happens during the bust, and find that these governments had to cut abruptly their spending (above all, capital), raise taxes, and allow deficits to grow. Finally, in places wit less informed voters and more contested elections local governments had more trouble in adjusting during the bust, and they tend to rely more on spending cuts than on tax increases.
    Keywords: Tax volatility, forward-looking behavior, policy myopia
    JEL: E62 H72 R5
    Date: 2017
  11. By: Andrew Rosser (University of Adelaide); Mohamad Fahmi (Department of Economics, Padjadjaran University)
    Abstract: Indonesia faces serious challenges in the number, cost, quality, and distribution of teachers. This paper examines the role of political economy factors in producing these challenges and shaping eforts to resolve them. It argues that the challenges have their origins in the way in which political and bureaucratic elites have for decades used the school system to accumulate resources, distribute patronage, mobilize political support, and exercise political control. This orientation has meant that teacher numbers, quality, and distribution have been managed to maximize fows of rents and votes from schools to the elite, lubricate patronage and political networks, and ensure that elites maintain politi- cal control rather than maximize educational performance and equity. The fall of the New Order, the authoritarian and centralized regime that ruled Indonesia from 1965 to 1998, led to eforts to change this situation, but these have had little impact so far. The paper concludes by assessing what can be done by proponents of teacher management reform in this context to promote better outcomes.
    Keywords: political economy, education, teachers, teacher management, Indonesia
    JEL: D73 H75 I28 P16
    Date: 2016–12
  12. By: Thando Vilakazi; Anthea Paelo
    Abstract: Efficient transport links are critical to enhancing the integration of markets in Southern Africa. This paper assesses the structure of markets, competition, and prices and costs of road transportation between urban hubs in Malawi, Mozambique, South Africa, Zambia, and Zimbabwe. Key findings are that certain routes, such as that between Lusaka and Johannesburg, have become more competitive over time and relative to benchmarks due to the availability of loads in each direction, improved efficiencies, and greater competitive rivalry between trucking firms from different countries. However, border delays and control of access to loads by large brokers continue to negatively affect competition and efficiency.
    Date: 2017
  13. By: Tony Beatton; Michael P. Kidd; Stephen Machin; Dipa Sarkar
    Abstract: If young people spend longer in school, are they less likely to commit crimes? Stephen Machin and international collaborators examine the impact on youth crime of an educational reform in Australia that raised the minimum school leaving age.
    Keywords: youth crime, schooling, Australia, Earning or Learning
    JEL: I2 K42
    Date: 2017–03
  14. By: Gallier, Carlo; Goeschl, Timo; Kesternich, Martin; Lohse, Johannes; Reif, Christiane; Römer, Daniel
    Abstract: Many public goods can be provided at different spatial levels. Evidence from social identity theory and in-group favoritism raises the possibility that where higher-level provision is more efficient, subjects' narrow concern for local outcomes (parochialism) could harm efficiency. Building on the experimental paradigm of multi-level public good games and the 'neighborhood attachment' concept, we conduct an artefactual field experiment with 600 participants in a setting conducive to parochial behavior. In an inter-neighborhood intra-region design, subjects allocate an endowment between a personal account, a local, and a regional public good account. The between-subjects design varies across two dimensions: One informs subjects that the smaller local group consists of members from their own neighborhood ('neighbors'). The other varies the relative productivity at the two public goods provision levels. We find evidence for parochialism, but contrary to our hypothesis, parochialism does not interfere with efficiency: The average subject responds to a change in relative productivities at the local and regional level in the same way, whether aware of their neighbors' presence in the small group or not. The results even hold for subjects with above-median neighborhood attachment and subjects primed on neighborhood attachment.
    Keywords: social identity,parochialism,multi-level public goods,artefactual field experiment
    JEL: C9 D7 H4
    Date: 2017
  15. By: Karachiwalla, Naureen (IFPRI, International Food Policy Research Institute); Park, Albert (Hong Kong University of Science & Technology)
    Abstract: We provide evidence that promotion incentives influence the effort of public employees by studying China's system of promotions for teachers. Predictions from a tournament model of promotion are tested using retrospective panel data on primary and middle school teachers. Consistent with theory, high wage increases for promotion are associated with better performance, teachers increase effort in years leading up to promotion eligibility, and reduce effort if they are repeatedly passed over for promotion. Evaluation scores are positively associated with teacher time use and with student test scores, diminishing concerns that evaluations are manipulated.
    Keywords: teacher incentives, promotions, China
    JEL: J31 J33 J45 M51
    Date: 2017–02
  16. By: D'Ambrosio, Anna; Montresor, Sandro; Parrilli, Mario Davide; Quatraro, Francesco (University of Turin)
    Abstract: This paper investigates the impact of migration on innovation networks between regions and foreign countries. We posit that immigrants (emigrants) act as a transnational knowledge bridge between the host (home) regions and their origin (destination) countries, reinforcing their networking in innovation and facilitating their co-inventorship. We argue that the social capital of both the hosting and the moving communities reinforces such a bridging role, along with the already recognised effect of language commonality and migrants’ human capital. By combining patent data with national data on residents and electors abroad, we apply a gravity model to the co-inventorship between Spanish provinces (NUTS3 regions) and a number of foreign countries, in different periods of the last decade. Both immigrants and emigrants are found to affect this kind of innovation networking. The social capital of both the moving and the hosting communities actually moderate this impact in a positive way. The effect of migration is stronger for more skilled migrants and with respect to non-Spanish speaking countries, pointing to a language-bridging role of migrants. Overall, individual and community aspects combine in accounting for the impact of migration on international innovation networks.
    Date: 2017–01
  17. By: Blesse, Sebastian; Martin, Thorsten
    Abstract: This paper exploits detailed information on local political and socioeconomic networks and a reform of local fiscal equalization in North Rhine-Westphalia (NRW) to identify the role of learning in local tax rate interactions. Using this policy change in spatial lag IV regressions, we find that institutions like counties and jointly used administrations yield significant positive tax interactions whereas geographical neighbors do not react to each other. Common local media trigger tax policy interactions as well. Short-lived reform effects support our findings that social learning within certain networks intensifies tax rate interactions via coordination of local decision makers.
    JEL: H20 H71 H77
    Date: 2016
  18. By: Jaime Bonet-Morón; Jhorland Ayala-García
    Abstract: This paper presents an estimation of expenditure needs and fiscal capacity of Colombia’s municipalities and departments in 2014. We use standard per capita norms to estimate the spending needs and data envelopment analysis for the local fiscal capacity. The results show that: (i) there are high horizontal fiscal disparities in Colombia, with greater incidence in municipalities than in departments; (ii) these disparities favor more developed territories; and (iii) there is evidence of a centerperiphery pattern in the horizontal fiscal disparities, causing central regions of the country to have a lower imbalance between expenditure needs and fiscal capacity. An equalization transfers system is an option for public policy to eliminate these disparities.
    Keywords: horizontal fiscal disparities, fiscal capacity, fiscal needs, dataenvelopment analysis
    JEL: H71 H73 H77 R12
    Date: 2017–03–03
  19. By: Andres Gomez-Lievano (Center for International Development at Harvard University); Oscar Patterson-Loomba (Harvard T.H. Chan School of Public Health); Ricardo Hausmann (Center for International Development at Harvard University)
    Abstract: The prevalence of many urban phenomena changes systematically with population size. We propose a theory that unifies models of economic complexity, and cultural evolution to derive urban scaling. The theory accounts for the difference in scaling exponents and average prevalence across phenomena, as well as the difference in the variance within phenomena across cities of similar size. The central ideas are that a number of necessary complementary factors must be simultaneously present for a phenomenon to occur, and that the diversity of factors is logarithmically related to population size. The model reveals that phenomena that require more factors will be less prevalent, scale more superlinearly and show larger variance across cities of similar size. The theory applies to data on education, employment, innovation, disease and crime, and it entails the ability to predict the prevalence of a phenomenon across cities, given information about the prevalence in a single city.
    Date: 2016–12
  20. By: Krishna Dasaratha; Kevin He
    Abstract: We study a model of sequential learning with naive agents on a network. The key behavioral assumption is that agents wrongly believe their predecessors act based on only private information, so that correlation between observed actions is ignored. We provide a simple linear formula characterizing agents' actions in terms of paths in the network and use this formula to determine when society learns correctly in the long-run. Because early agents are disproportionately influential, standard network structures can lead to herding on incorrect beliefs. The probability of mislearning increases when link densities are higher and when networks are more integrated. When actions can only communicate limited information, segregated networks often lead to persistent disagreement between groups.
    Date: 2017–02
  21. By: Beugnot, Julie (Université de Franche Comté); Fortin, Bernard (Université Laval); Lacroix, Guy (Université Laval); Villeval, Marie Claire (CNRS, GATE)
    Abstract: We investigate whether peer effects at work differ by gender and whether the gender difference in peer effects – if any – depends on work organization, precisely the structure of social networks. We develop a social network model with gender heterogeneity that we test by means of a real-effort laboratory experiment. We compare sequential networks in which information on peers flows exclusively downward (from peers to the worker) and simultaneous networks where it disseminates bi-directionally along an undirected line (from peers to the worker and from the worker to peers). We identify strong gender differences in peer effects, as males' effort increases with peers' performance in both types of network, whereas females behave conditionally. While they are influenced by peers in sequential networks, females disregard their peers' performance when information flows in both directions. We reject that the difference between networks is driven by having one's performance observed by others or by the presence of peers in the same session in simultaneous networks. We interpret the gender difference in terms of perception of a higher competitiveness of the environment in simultaneous than in sequential networks because of the bi-directional flow of information.
    Keywords: gender, peer effects, social networks, work effort, experiment
    JEL: C91 J16 J24 J31 M52
    Date: 2017–02
  22. By: Steeve Marchand; Maria Adelaida Lopera
    Abstract: We study how social interactions influence entrepreneurs' attitudes toward risk. We conduct two risk-taking experiments within workshops organized for young Ugandan entrepreneurs. Between the two experiments, the entrepreneurs participate in a networking activity where they build relationships and discuss with each other. We collect detailed data on peer network formation and on participants' choices before and after the networking activity. Our design implicitly controls for homophily effects (i.e. the tendency of individuals to develop relationships with people who have similar characteristics). We find that risk aversion is affected by social conformity. Participants tend to become more (less) risk averse in the second experiment if the peers they discuss with are on average more (less) risk averse in the first experiment. This suggests that social interactions play a role in shaping risk preferences.
    Keywords: preference, risk aversion, entrepreneur, social norms
    JEL: D03 D81 M13 Z13
    Date: 2017
  23. By: Omer Siddique (Pakistan Institute of Development Economics, Islamabad); Ahmed Waqar Qasim (Pakistan Institute of Development Economics, Islamabad); Hafiz Hanzla Jalil (Pakistan Institute of Development Economics, Islamabad)
    Abstract: Retail petroleum business is an important sector of any economy, but the analysis of its structure and performance has hitherto been missing in Pakistan. This paper is first such attempt using primary survey data for Pakistan. The results obtained from the petrol pumps included in our sample indicate that the petrol pumps make handsome profits. The petrol pumps in urban regions as well as those on highways have higher sales and earn higher gross profits, indicating that location of a petrol pump LV DQLPSRUWDQW GHWHUPLQDQW RI D SHWURO SXPS¶V sales performance. Another locational variable that is statistically significant in contributing to higher sales and gross profits is the distance of the petrol pump from the nearest petrol pump. Size is one of the most important variables having a positive impact on the total sale volumes and gross profits of petrol pumps. As far as spatial differentiation is concerned, there is a non-linear relationship between the performance of the petrol pumps and the distance from their competitors.
    Keywords: Production, Cost, Retail Business, Firm Location
    JEL: D24 L81 R30
    Date: 2016
  24. By: Badia, Hugo; Argote-Cabanero , Juan; Daganzo, Carlos F.
    Abstract: This paper shows that improving the structure of a bus transit network to facilitate transfers can boost and shape its demand. The idea is illustrated with data from the Nova Xarxa in Barcelona. Deployed in phases, the Nova Xarxa is shown to be attracting more demand than the network it replaces. The paper further shows that this growth is underpinned by transfers -- at the end of 2015, the percentage of trips that involved a transfer was approximately 26%, and it reached a maximum of 57% for line V7. The paper shows these numbers should increase considerably (to 44% and 66%, respectively) once the Nova Xarxa is completed in 2018. This should be compared with the percent of transfers in other existing bus systems, which ranges from 1.3% to 16%.
    Keywords: Engineering, Public transport, Bus system, Bus network design, Transfer-based network, Network effect
    Date: 2016–12–01
  25. By: Michael White (Policy Studies Institute, University of Westminster); Alex Bryson (University College London, National Institute of Social and Economic Research and Institute for the Study of Labor)
    Abstract: Using nationally representative workplace data for Britain we identify the partial correlation between workplace wages and the percentage of migrants employed at a workplace. We find wages are lower in workplaces employing a higher percentage of migrants, but only when those migrants are non-EEA migrants. However, the effects are no longer apparent when we condition on the ethnic complexion of employees at the workplace. Instead, the wage penalty is attached to the percentage of non-white employees, a finding that is consistent with employer discrimination on grounds of race, or lower worker bargaining power when employees are ethnically diverse.
    Keywords: Migrants; Migration; Ethnicity; Race; Wages, Earnings; Low pay; Discrimination
    JEL: J31 J61 J71
    Date: 2017–02–15
  26. By: Lange, Simon; von Werder, Marten
    Abstract: Proponents of tracking argue that the creation of more homogeneous classes increases efficiency while opponents fear that tracking aggravates initial differences between students. We estimate the effects on the intergenerational transmission of education of a reform that delayed tracking by two years in one of Germany’s federal states. While the reform had no effect on educational outcomes on average, it increased educational attainment among individuals with uneducated parents and decreased attainment among individuals with educated parents. The reform thus lowered the gradient between parental education and own education. The effect is driven entirely by changes in the gradient for males.
    JEL: I21 I24 I28
    Date: 2016
  27. By: Andres Gomez-Lievano (Center for International Development at Harvard University); Eduardo Lora (Center for International Development at Harvard University); Neave O'Clery (Center for International Development at Harvard University)
    Abstract: Labor informality, associated with low productivity and lack of access to social security services, dogs developing countries around the world. Rates of labor (in)formality, however, vary widely within countries. This paper presents a new stylized fact, namely the systematic positive relationship between the rate of labor formality and the working age population in cities. We hypothesize that this phenomenon occurs through the emergence of complex economic activities: as cities become larger, labor is allocated into increasingly complex industries as firms combine complementary capabilities derived from a more diverse pool of workers. Using data from Colombia, we use a network-based model to show that the technological proximity (derived from worker transitions between industry pairs) of current industries in a city to potential new complex industries governs the growth of the formal sector in the city. The mechanism proposed has robust strong predictive power, and fares better than alternative explanations of (in)formality.
    JEL: B5 D8 J2 J4 O1 R1
    Date: 2016–10
  28. By: Piva, Mariacristina; Tani, Massimiliano; Vivarelli, Marco
    Abstract: The aim of this paper is to investigate the productivity impact of business visits, relative to traditional drivers of productivity enhancement, namely capital formation and R&D. To carry out the analysis, we combine unique and novel data on business visits sourced from the U.S. National Business Travel Association with OECD data on R&D and capital formation. The resulting unbalanced panel covers on average 16 sectors per year in 10 countries during the period 1998-2011 (2,262 observations). Our results suggest that mobility through business visits is an effective mechanism to improve productivity. The estimated effect is about half as large as investing in R&D, supporting viewing business visits as a form of long-term investment rather than pure consumption expenditure. In a nutshell, our outcomes support the need to recognize the private and social value of business mobility.
    Keywords: Business visits,labour mobility,knowledge,R&D,productivity
    JEL: O33
    Date: 2017
  29. By: Hanke, Philip; Philip, Hanke; Klaus, Heine
    Abstract: This paper analyzes the competition between jurisdictions for the relocation of firms and its implications for the various national and international subsidy control regimes (state aid control). We model the attraction of firms to jurisdictions through subsidies as a race with continuous investment over time, where local governments exert inefficiently high efforts, which increase with the number of competitors and their respective spending. This setting makes the case for better investment and subsidy controls by higher-level governments while emphasizing structural problems of implementation at the same time.
    JEL: H71 K21 L50
    Date: 2016
  30. By: Zhang, Yuan (Asian Development Bank Institute); Wan, Guanghua (Asian Development Bank Institute)
    Abstract: Developing countries have seen a rapid rise in population urbanization in the past decades. At the same time, they have participated actively in the process of globalization. However, possible interlinks between population urbanization and trade openness in developing economies have been ignored by present literature. We propose a simple framework explaining the cereals trade–population urbanization nexus, showing how cereals supply constrains population urbanization and how international trade can change this constraint. Then, we present historical evidence, empirical tests, and case studies from the People’s Republic of China, and India further highlighting the critical role of cereals trade in population urbanization in developing economies. Policy suggestions that may help developing countries achieve more inclusive and sustainable urban development are discussed in the final section of this paper.
    Keywords: trade; urbanization; trade-urbanization nexus; trade openness; cereals trade; population; developing economies; urban development
    JEL: O18 Q17 R11
    Date: 2017–01–12
  31. By: Ljubica Nedelkoska (Center for International Development at Harvard University); Ricardo Hausmann (Center for International Development at Harvard University)
    Abstract: Albanian migrants in Greece were particularly affected by the Greek crisis, which spurred a wave of return migration that increased Albania’s labor force by 5% between 2011 and 2014 alone. We study how this return migration affected the employment chances and earnings of Albanians who never migrated. We find positive effects on the wages of low-skilled non-migrants and overall positive effects on employment. The gains partially offset the sharp drop in remittances in the observed period. The employment gains are concentrated in the agricultural sector, where most return migrants engage in self-employment and entrepreneurship. Businesses run by return migrants seem to pull Albanians from non-participation, self-employment and subsistence agriculture into commercial agriculture.
    JEL: J21 J23 J24 J31 J61
    Date: 2017–01
  32. By: Dominique Goux; Marc Gurgand; Eric Maurin
    Abstract: Young people who drop out of school are far more likely to experience unemployment and poverty than their peers. Experimental research by Eric Maurin and colleagues in deprived neighbourhoods of Paris shows the effectiveness of low-cost interventions that clarify educational options for low-achievers and dramatically reduce the number of dropouts.
    Keywords: education objectives, education choices
    Date: 2017–03
  33. By: Fieldhouse, Andrew; Mertens, Karel; Ravn, Morten O
    Abstract: We document the portfolio activity of federal housing agencies and provide evidence on its impact on mortgage markets and the economy. Through a narrative analysis, we identify historical policy changes leading to expansions or contractions in agency mortgage holdings. Based on those regulatory events that we classify as unrelated to short-run cyclical or credit market shocks, we find that an increase in mortgage purchases by the agencies boosts mortgage lending and lowers mortgage rates. Agency purchases influence prices in other asset markets and stimulate residential investment. Using information in GSE stock prices to construct an alternative instrument for agency purchasing activity yields very similar results as our benchmark narrative identification approach.
    Keywords: credit policy; GSEs; monetary policy; mortgage credit; residential investment
    JEL: E44 E52 G28 N22 R38
    Date: 2017–02
  34. By: Haußen, Tina; Haussen, Tina
    Abstract: We empirically analyze job changes and related location choices for graduates in Germany and its determinants. Using a longitudinal, representative survey-based dataset, we not only observe the transition of graduates to the labor market but also every subsequent job change within five years after graduation. Contrary to what is often assumed in the literature, our findings show that around 75% of the graduates have more than one job within our observation period and for a non-negligible share of them, job changes are related to interregional migration. Whereas job changes mostly depend on the field of study and previous employment conditions, migration is predominantly affected by previous migration paths and regional characteristics.
    JEL: J61 R11 I23
    Date: 2016
  35. By: Raghbendra Jha; Hari K. Nagarajan; Anirudh Tagat
    Abstract: This paper purports to understand whether voting along narrow parochial lines in socially and ethnically fragmented societies has measurable gains. Using data from rural India, we establish that identity based voting, driven by membership in social and informal networks, will lead to enhanced participation in welfare programs, which in turn leads to increased consumption growth. We also show that reducing agency costs does not necessarily remove the need for identity-based voting, and that such voting behaviour is a means for engaging in capture of public and private benefits by these groups. Some policy recommendations are also advanced.
    Keywords: economic development; voting behavior; decentralization; parochial politics
    JEL: D71 D72 H41 O12
    Date: 2017
  36. By: Bailly, Antoine
    Abstract: Regional movements are emerging in Europe, often to promote historical, cultural or economic regions. Are we going to have a new regional Europe with 60 regions instead of 27 nation-states?
    Keywords: regions,regional geography,centralisation,federation,confederation
    JEL: R11
    Date: 2017
  37. By: Jaime Bonet-Morón; Jhorland Ayala-García (Banco de la República)
    Abstract: This paper presents an estimation of expenditure needs and fiscal capacity of Colombia’s municipalities and departments in 2014. We use standard per capita norms to estimate the spending needs and data envelopment analysis for the local fiscal capacity. The results show that: (i) there are high horizontal fiscal disparities in Colombia, with greater incidence in municipalities than in departments; (ii) these disparities favor more developed territories; and (iii) there is evidence of a centerperiphery pattern in the horizontal fiscal disparities, causing central regions of the country to have a lower imbalance between expenditure needs and fiscal capacity. An equalization transfers system is an option for public policy to eliminate these disparities. Classification JEL:H71, H73, H77, R12
    Keywords: horizontal fiscal disparities, fiscal capacity, fiscal needs, data envelopment analysis
    Date: 2017–03
  38. By: Stockinger, Bastian; Zwick, Thomas
    Abstract: A number of studies have found that firms provide less training if they are located in regions with strong labor market competition. This finding is usually interpreted as evidence of a higher risk of poaching in these regions. Yet, there is no direct evidence that regional competition is positively correlated with poaching. Building on a recently established approach to ex-post identify poaching of apprenticeship completers, our paper is the first to directly investigate the correlation between regional labor market competition and poaching. Using German adminis-trative data, we find that competition indeed increases training establishments' probability of becoming poaching victims. However, poaching victims do not change their apprenticeship training activity in reaction to past poaching. Instead, our findings indicate that the lower training activity in competitive regions can be attributed to lower retention rates, a less adverse selection, and lower labor and hiring costs of apprenticeship completers hired from rivals.
    Keywords: poaching,firm-sponsored training,apprenticeship,regional labor markets,labor market competition
    JEL: J24 M51 M53 R23
    Date: 2017
  39. By: Alexandra A. Bochaver (National Research University Higher School of Economics); Anna N. Korzun (National Research University Higher School of Economics); Katerina N. Polivanova (National Research University Higher School of Economics)
    Abstract: Street activities are recognized as playing significant role in children and teenage socialization. However, the socialization mechanism of street activities is gradually changing. Active play and street gangs remain in past, as most parents today acknowledge. The present article investigates the forms of street leisure activities of Russian kids and teenagers born in different decades of late XX and early XXI centuries. The research is based on the answers of 251 participants to the two developed thematic questionnaires. Content-analysis of the answers allows to identify five principal categories of street leisure activities, namely: games, communication, exploratory activities, risk behaviors, and cultural activities. The article describes the main components of each of the categories and analyses their representation in both adult and teenage samples’ leisure time. The results allow to manifest the relation between children's leisure activities dynamics and their social environment, as regards increased social insecurity and uncertainty, urbanization rates, overpopulation, etc. The research also investigates the areas of street leisure activities, level of parental control, as well as types of rules and regulations set by parents regarding their children’s travel and leisure. The future research suggestions given the results are made.
    Keywords: childhood, adolescence, street leisure activity, leisure, street, urban environment
    JEL: Z
    Date: 2016
  40. By: Michele Coscia (Center for International Development at Harvard University); Timothy Cheston (Center for International Development at Harvard University)
    Abstract: Are regions poor because they have bad institutions or are they poor because they are disconnected from the social channels through which technology diffuses? This paper tests institutional and technological theories of economic convergence by looking at income convergence across Colombian municipalities. We use formal employment and wage data to estimate growth of income per capita at the municipal level. In Colombia, municipalities are organized into 32 departamentos or states. We use cellphone metadata to cluster municipalities into 32 communication clusters, defined as a set of municipalities that are densely connected through phone calls. We show that these two forms of grouping municipalities are very different. We study the effect on municipal income growth of the characteristics of both the state and the communication cluster to which the municipality belongs. We find that belonging to a richer communication cluster accelerates convergence, while belonging to a richer state does not. This result is robust to controlling for state fixed effects when studying the impact of communication clusters and vice versa. The results point to the importance of social interactions rather than formal institutions in the growth process.
    Date: 2017–02
  41. By: Schone, Pal (Institute for Social Research, Oslo); von Simson, Kristine (Institute for Social Research, Oslo); Strom, Marte (Institute for Social Research, Oslo)
    Abstract: We use idiosyncratic variation in gender composition across cohorts within Norwegian lower-secondary schools to analyze the impact of female peers on students' grades and choices of STEM subjects. We find that more female peers in lower secondary increases girls' probability of choosing STEM-courses in upper secondary, and the effect on choices is larger than the effect on grades. Survey evidence suggests that a potential mechanism is an improved classroom environment. Boys' performance is negatively affected by more female peers. They also start upper secondary later and more often choose vocational studies.
    Keywords: gender, education, peer effects
    JEL: I21 J16
    Date: 2017–02
  42. By: Camilo Umana Dajud
    Abstract: By reducing transport costs infrastructure can impact wages, the distribution of population and welfare among other important variables. In this paper I exploit a natural experiment provided by the opening of the Panama Canal and intercoastal cargo routes connecting the west and east coasts of Canada through the canal to examine the causal impact of a reduction of domestic trade costs. The particular characteristics of this setting allow me to estimate the causal impact without recurring to instrumental variable strategies. The estimates are also not confounded with the Keynesian effect of building new infrastructure since no infrastructure was actually setup in Canada. Using least cost path routes along the Canadian transport grid I determine treated municipalities. The paper documents the positive impact of the reduction of transport costs on population and the value of real property but a negative impact on nominal wages. I then use a simplified version of an economic geography model with perfect mobility of workers to compute domestic trade shares between Canadian municipalities and productivities at the municipal level. I use these empirical results and the model, to quantify general equilibrium changes in wages, population and trade shares triggered by the reduction in domestic transport costs. Finally, I show that the opening of intercoastal shipping routes had a large positive welfare effect across Canadian municipalities.
    Keywords: Trade Costs;Infrastructure;Panama Canal;Canada;Welfare effects
    JEL: O18 R12 R42
    Date: 2017–02
  43. By: Fougère, Denis; Lecat, Rémy; Ray, Simon
    Abstract: In this paper, we investigate the effect of real estate prices on productive investment. We build a simple theoretical framework of firms' investment with credit rationing and real estate collateral. We show that real estate prices affect firms' borrowing capacities through two channels. An increase in real estate prices raises the value of the firms' pledgeable assets and mitigates the agency problem characterizing the creditor-entrepreneur relationship. It simultaneously cuts the expected profit due to the increase in the cost of inputs. While the literature only focuses on the first channel, the identification of the second channel allows for heterogeneous effects of real estate prices on investment across firms. We test our theoretical predictions using a large French database. We do find heterogeneous effects of real estate prices on productive investment depending on the position of the firms in the sectoral distributions of real estate holdings. Our preferred estimates indicate that a 10% increase in real estate prices causes a 1% decrease in the investment rate of firms in the first decile of the distribution but a 6% increase in the investment rate of firms belonging to the last decile.
    Keywords: Collateral channel; Financial constraints; Firms' investment; Real estate prices
    JEL: D22 G30 O52 R30
    Date: 2017–02
  44. By: Acharyya, Rajat; Kar, Saibal
    Abstract: This paper shows that trade and emigration of skilled workers from a poor country is complementary but that between trade and emigration of unskilled workers is a substitute. The asymmetric effect of more openness to trade on the local wages seems to be crucial in driving such results. The asymmetric changes in skilled and unskilled wages generate counterintuitive outcomes regardless of the policy shock that triggers such wage effect. One of the more compelling outcomes is rise in wage inequality as influenced by asymmetric emigration patterns.
    Keywords: Trade,emigration,skilled labour,specific factor,remittances,tax
    JEL: F22 J64 O15
    Date: 2017
  45. By: Clement Bellet
    Abstract: Clement Bellet shows how visible wealth inequality fuelled the US mortgage boom that preceded the financial crisis.
    Keywords: inequality, social preferences, subjective well-being, housing, household debt
    JEL: D01 D03 I30 R20
    Date: 2017–03
  46. By: Behrens, Kristian; Guillain, Rachel
    Abstract: Locations differ horizontally in the industry mix they host and vertically in the value-chain functions they perform. Since industry pairs should coagglomerate the functions that interact intensively across industries, analyzing horizontal and vertical patterns can improve our understanding of agglomeration mechanisms. We find that different functions within the same industry pairs display substantially different coagglomeration patterns. While production coagglomerates at longer distances, management and research coagglomerates at short distances. These patterns are consistent with our findings that buyer-supplier links and local labor pools are important for production, whereas they matter less for management and research that rely on shared knowledge. Our results provide support for agglomeration theories and show that extant estimates of average effects based on total employment mask substantial heterogeneity.
    Keywords: agglomeration mechanisms; coagglomeration; Duranton-Overman index; functional specialization
    JEL: L60 R12
    Date: 2017–02

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