nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2017‒03‒26
forty papers chosen by
Steve Ross
University of Connecticut

  1. School Accountability and Residential Location Patterns: Evaluating the Unintended Consequences of No Child Left Behind By Keren Mertens Horn
  2. Government quality and the economic returns of transport infrastructure investment in European regions By Riccardo Crescenzi; Marco Di Cataldo; Andrés Rodríguez-Pose
  3. Does promoting homeownership always damage labour market performances? By Julie Beugnot; Guy Lacroix; Olivier Charlot
  4. Has Falling Crime Invited Gentrification? By Ingrid Gould Ellen; Keren Mertens Horn; Davin Reed
  5. An Agent-Based Simulation of Urban Passenger Mobility and Related Policies. The Case Study of an Italian Small City By Maggi,Elena; Vallino,Elena
  6. Agent Based modeling of Housing Asset Bubble: A Simple Utility Function Based Investigation By Kausik Gangopadhyay; Kousik Guhathakurta
  7. Macroeconomic Effects of Rental Housing Regulations: The Case of Germany in 1950-2015 By Konstantin A. Kholodilin; Julien Licheron
  8. Does the Strength of Incentives Matter for Elected Officials? A Look at Tax Collectors By Sutirtha Bagchi
  9. Evaluating alternative monthly house price measures for New Zealand By Jed Armstrong; Ashley Dunstan; Tobias Irrcher
  10. A Multi-Criteria Analysis (MCA) for the territorial reorganization of the school network in a Tuscan inland area By Sabrina Iommi; Donatella Marinari
  11. Regional Business Cycle and Growth Features of Japan By Masaru Inaba; Keisuke Otsu
  12. Flows associated with travel-to-work patterns in Metropolitan regions By Luis Cruz; Eduardo Barata; João-Pedro Ferreira; Luis Cruz; Pedro Ramos
  13. Adopting a Cleaner Technology: The Effect of Driving Restrictions on Fleet Turnover By Hernán Barahona; Francisco Gallego; Jeanne Juan-Pablo Montero
  14. Does Differential Treatment Translate to Differential Outcomes for Minority Borrowers? Evidence from Matching a Field Experiment to Loan-Level Data By Martin, Hal; Hanson, Andrew; Hawley, Zackary
  15. The spatial evolution of the Italian motorcycle industry (1893-1993): KlepperÕs heritage theory revisited By Andrea Morrison; Ron Boschma
  16. Traffic Safety in Korea: Understanding the Vulnerability of Elderly Pedestrians By Martin W. Adler; Rudiger Ahrend
  17. Agency Conflicts in Residential Mortgage Securitization: What Does the Empirical Literature Tell Us? By Frame, W. Scott
  18. The Effect of Class Size Reduction on Bullying, Violent Behavior, and Truancy (Japanese) By NAKAMURO Makiko
  19. Wealth Effects and the Consumption of Italian Households in the Great Recession By R. Bottazzi; S. Trucchi; M. Wakefield
  20. How Immigrants Helped EU Labor Markets to Adjust during the Great Recession By Kahanec, Martin; Guzi, Martin
  21. Heterogeneous agglomeration By Giulia Faggio; Olmo Silva; William C. Strange
  22. Grenoble–GIANT Territorial Innovation Models By Laurent Scaringella; Jean-Jacques Chanaron
  23. Regional Business Cycle and Growth Features of Japan By Masaru Inaba; Keisuke Otsu
  24. Estimating Headquarter Service as Input and Output and Evaluating its Effect on Prefectural GDP and Productivity (Japanese) By ARAI Sonoe; YoungGak KIM
  25. Formation of Automotive Manufacturing Clusters in Thailand By Ikuo Kuroiwa; Kriengkrai Techakanont
  26. Entrepreneurship policies and the development of regional innovation systems: theory, policy and practice By Helen Lawton Smith
  27. Exposing corruption: Can electoral competition discipline politicians? By Afridi, Farzana; Dhillon, Amrita; Solan, Eilon
  28. Innovation and Regional Specialisation in Latin America By Belen Barroeta; Javier Gomez Prieto; Jonatan Paton; Manuel Palazuelos Martinez; Marcelino Cabrera Giraldez
  29. Home purchases, downpayments and savings By Kelly, Jane; Lydon, Reamonn
  30. Designing performance-based incentives for innovation intermediaries: Evidence from regional innovation poles By Margherita Russo; Annalisa Caloffi; Federica Rossi; Riccardo Righi
  31. How Does Reducing Years of Compulsory Schooling Affect Education and Labor Market Outcomes in a Developing Country? By Ahmed Elsayed; Olivier Marie
  32. Homophily and the Persistence of Disagreement By Melguizo, Isabel
  33. A Better Flight Path: How Ottawa can Cash In on Airports and Benefit Travellers By Steven Robins
  34. Academic Inventors: Collaboration and Proximity with Industry By Riccardo Crescenzi; Andrea Filippetti; Simona Iammarino
  35. How Concerned Should We Be About Differing Fundraising Capabilities and School Results? The Toronto District School Board Example By David Johnson; Huijie Guo
  36. Effects of Insurance Incentives on Road Safety: Evidence from a Natural Experiment in China By Dionne, Georges; Liu, Ying
  37. Identifying early warning indicators for real estate-related banking crises By Stijn Ferrari; Mara Pirovano; Wanda Cornacchia
  38. Mobility of Highly Skilled Retirees from Japan to the Republic of Korea and Taiwan By Byeongwoo KANG; Yukihito Sato; Yasushi UEKI
  39. What do we know about teachers’ selection and professional development in high-performing countries? By OECD
  40. A Novel Approach to Estimating the Demand Value of Road Safety By Christoph M. Rheinberger; Felix Schläpfer; Michael Lobsiger

  1. By: Keren Mertens Horn
    Abstract: The 2002 to 2015 No Child Left Behind (NCLB) Act is often considered the most significant federal intervention into education in the United States since 1965 with the passage of the Elementary and Secondary Education Act. There is growing evidence that holding schools accountable is leading to some improved educational outcomes for students. There is in contrast very little work examining whether these sweeping reforms have unintended consequences for the communities which these schools are serving. As school attendance, particularly at the elementary school level, is closely tied to one’s residence, placing sanctions on a school could have negative repercussions for neighborhoods if it provides new information on school failure. In contrast, if these sanctions also bring new resources, including financial resources or school choice, they could spark additional demand within a neighborhood. Through the use of restricted access census data, which includes local housing values, rents and individual residential choices in combination with the use of a boundary discontinuity identification strategy, this paper seeks to examine how failure to meet Adequate Yearly Progress (AYP), the key enforcement mechanism of NCLB, is shaping local housing markets and residential choices in five diverse urban school districts: New York, Los Angeles, Philadelphia, Detroit and Tucson.
    Date: 2017–01
  2. By: Riccardo Crescenzi; Marco Di Cataldo; Andrés Rodríguez-Pose
    Abstract: Transport infrastructure investment is a cornerstone of growth-promoting strategies. However, the link between infrastructure investment and economic performance remains unclear. This may be a consequence of overlooking the role of government institutions. This paper assesses the connection between regional quality of government and the returns of different types of road infrastructure in the regions of the European Union. The results unveil the influence of regional quality of government on the economic returns of transport infrastructure. In weak institutional contexts, investment in motorways – the preferred option by governments – yields significantly lower returns than the more humble secondary roads. Government institutions also affect the returns of transport maintenance investment.
    Keywords: transport infrastructure; public capital investment; economic growth; institutions; government quality; institutions; regions; Europe
    JEL: O4 R11 R40 R58
    Date: 2016–09
  3. By: Julie Beugnot (Université Bourgogne Franche-Comté, CRESE); Guy Lacroix (Université Laval, CRREP, CIRANO); Olivier Charlot (Université de Cergy Ponthoise, THEMA)
    Abstract: In this paper we analyze the link between homeownership and various aggregate and individual labour market outcomes. Our aim is to investigate the likely consequences of public policies that promote homeownership. To this end, we develop a circular firm-worker matching model with Nash wage bargaining and free market entry. Homeowners are assumed to be less mobile than tenants due to higher mobility costs mainly induced by housing market frictions. Through extensive numerical simulations, we show that: (1) Higher homeownership rates need not lead to higher unemployment rates, contrary to the so-called Oswald’s hypothesis, but depends crucially on the importance of mobility costs mainly driven by housing market regulation; (2) while increased homeownership may prove harmful to some macroeconomic labour market indicators, it is always beneficial to individuals’ labour market performances.
    Keywords: Stochastic job matching, Homeownership, Unemployment, Mobility
    JEL: H31 J61 J64 R23
    Date: 2017–03
  4. By: Ingrid Gould Ellen; Keren Mertens Horn; Davin Reed
    Abstract: Over the past two decades, crime has fallen dramatically in cities in the United States. We explore whether, in the face of falling central city crime rates, households with more resources and options were more likely to move into central cities overall and more particularly into low income and/or majority minority central city neighborhoods. We use confidential, geocoded versions of the 1990 and 2000 Decennial Census and the 2010, 2011, and 2012 American Community Survey to track moves to different neighborhoods in 244 Core Based Statistical Areas (CBSAs) and their largest central cities. Our dataset includes over four million household moves across the three time periods. We focus on three household types typically considered gentrifiers: high-income, college-educated, and white households. We find that declines in city crime are associated with increases in the probability that highincome and college-educated households choose to move into central city neighborhoods, including low-income and majority minority central city neighborhoods. Moreover, we find little evidence that households with lower incomes and without college degrees are more likely to move to cities when violent crime falls. These results hold during the 1990s as well as the 2000s and for the 100 largest metropolitan areas, where crime declines were greatest. There is weaker evidence that white households are disproportionately drawn to cities as crime falls in the 100 largest metropolitan areas from 2000 to 2010.
    Keywords: crime, gentrification, neighborhood choice
    JEL: R23 R21 R11
    Date: 2017–01
  5. By: Maggi,Elena; Vallino,Elena (University of Turin)
    Abstract: In this paper we present an agent-based model which reproduces transport choices of a sample of 5,000 citizens of the city of Varese (Northern Italy) and the corresponding PM emissions of their daily commutes. The aim of the model is testing the impact of public policies willing to foster commuting choices with lower PM emissions. Our model, taking inspiration from other existing works, considers the commuters‘ decisions on the transport mode to be used. A set of preferences, one for each transport mode - private car, bicycle, public transport - is assigned to every agent. Throughout the process, agents decide about the means for commuting on the basis of the relative price of the different means of transport, of the social influence and of the intensity of the policies applied. The initial distribution of preferences for each transport mode are inspired to empirical data on Varese commuters. Results suggest that preference-based policies are more effective if compared to price-based ones. However, the application of a mix of different policies seems to give the best outputs: the same amount of resources in terms of policy intensity produce much better results if they are allocated at the same time to two policies, then to one only.
    Date: 2017–03
  6. By: Kausik Gangopadhyay (Indian Institute of Management, Kozhikode); Kousik Guhathakurta (Indian Institute of Management, Kozhikode)
    Abstract: The housing asset bubble and mortgage crisis of 2007-08 in the US market poses a challenge to understanding of market and hypotheses related to market efficiency. The contribution of our paper is bifold. First, we present a survey of the existing literature which explains the housing asset bubble. We have emphasized on agent based modeling approaches in this context. The second part of the paper frames an economic model to demonstrate the power of irrational “exuberance hypothesis”, a term coined by Robert J Shiller. Using a felicity function based framework, this shows that the power of irrational expectation in bringing about an artificial and unintended boost in demand for investment of housing asset.
  7. By: Konstantin A. Kholodilin; Julien Licheron
    Abstract: Despite rather skeptical attitude of the economists toward the state intervention in the housing markets, the policy makers and general public typically are supporting it. As a result, in many European countries, since World War I the rent and eviction controls as well as social housing policies remain an important element of the government economic policies. Nevertheless, the macroeconomic effects of such regulations are largely unknown. In this paper, we evaluate the effects of government rental market regulations on real house prices, price-to-rent, and price- to-income ratios, real rents, and new housing construction in Germany in 1950_2015. The regulations are measured by the indices developed by the authors based on a thorough analysis of the legal acts issued mostly by the central government but also by the regional authorities between 1914 and 2015.
    Keywords: Housing market, government regulations, Germany, housing prices and rents, new residential construction
    JEL: C22 O18 R38
    Date: 2017
  8. By: Sutirtha Bagchi (Department of Economics, Villanova School of Business, Villanova University)
    Abstract: In Pennsylvania local property taxes are collected by elected officials, known as tax collectors, whose compensation varies widely in both structure and level across municipalities. This paper analyses the existence of a pay-performance relationship for these officials. Using data on the percentage of real estate taxes that are actually collected at the municipal level, the paper finds that as the compensation tax collectors receive goes up, they collect more in taxes. This relationship is however true only for collectors who are compensated on a commission basis and not for collectors compensated on the basis of a flat salary. The paper also finds no relationship between the share of votes received by the tax collector and the percentage of property taxes collected during the previous term. This observation may account for the lack of a positive relationship between pay and performance for collectors compensated on the basis of a salary.
    Keywords: Tax Collectors; Politician Salary; Productivity; Pay for Performance
    JEL: H70 J45 J33 D72 M52
    Date: 2017–03
  9. By: Jed Armstrong; Ashley Dunstan; Tobias Irrcher (Reserve Bank of New Zealand)
    Abstract: This paper outlines the production of monthly house price indices (HPIs) for New Zealand produced using data from the Real Estate Institute of New Zealand (REINZ) using three alternative methodologies. The database provided by REINZ is a rich unit-record sales dataset with information on price, location, valuation, and property characteristics (such as the number of bedrooms and the floor area). We use this data to produce HPIs based on three well-established and widely adopted methodologies: 1) sales-price to appraisal ratio (SPAR); 2) hedonic regression; and 3) repeat sales. All three methods are found to produce credible-looking indices, which match the turning points and well-established cyclical properties of New Zealand’s existing house price statistics. As a benchmarking exercise, the three candidate indices are evaluated alongside a simple median and a stratified median index. Applying a range of criteria to assess index performance, we find that all three alternative candidate methodologies out-perform the simple median and the stratified median methodologies, with the SPAR method performing best.
    Date: 2017–02
  10. By: Sabrina Iommi (Istituto Regionale per la Programmazione Economica della Toscana); Donatella Marinari (Istituto Regionale per la Programmazione Economica della Toscana)
    Abstract: A number of reasons arising from the need to reduce public spending are increasingly calling for a rationalization of the territorial distribution of public services. As far as the reorganization of the school network is concerned, this process is usually handled in an empirical way, through the opposition between public decision makers, who suggest to make dimensional thresholds (normally “adjusted” in the case of lower density areas) more binding, and local communities, which vigorously defend the status quo, generally resulting from past decisions taken on the basis of context-related characteristics that are very different from a financial, as well as a demographic and technological viewpoint. The present paper draws on data relating to the localization of education supply and demand in an inland area of Tuscany, so as to test the use of multi-criteria techniques and provide a more rational and transparent foundation to the debate on the spatial reorganization of public services. The present contribution is instrumental in furthering the studies in the IRPET research area addressing inland territories.
    Keywords: education, models for the localization of public services,Multi-Criteria Analysis
  11. By: Masaru Inaba; Keisuke Otsu
    Abstract: We study the features of regional business cycles and growth in Japan. We fi nd evidence of unconditional convergence over the 1955- 2008 period. For the 1975-2008 period, we fi nd evidence of conver- gence conditional on TFP gap, population growth, private investment rate and TFP growth. We also nd that the consumption-output correlation puzzle exists, which implies that the idiosyncratic income shocks are not shared among prefectures and regions. Our analysis implies that frictions in fi nancial markets are responsible for the low consumption risk-sharing among prefectures.
    Date: 2017–03
  12. By: Luis Cruz; Eduardo Barata; João-Pedro Ferreira; Luis Cruz; Pedro Ramos
    Abstract: Metropolitan areas involve intense interactions with neighboring regions. The industries and households located in a metropolitan region import various products to satisfy their input needs for intermediate or final consumption and export many of their production to other regions or abroad. The high intensity of commuting flows between these neighboring regions is another important characteristic of dense urban areas, like the metropolitan ones, with important consequences on both the regions where people live and where people work. Accordingly, the study of commuting requires the analysis of the economic (and other) interdependencies within a given geographical area. The Multi-Regional Input-Output (MRIO) modelling framework allows for the analysis of inter industrial and inter regional spill overs. But, there is a gap on modelling regarding the incorporation of flows associated with commuting, either in terms of the travel-to-work journey (by private or public transports), or in terms of corresponding differences in shopping and expenditures made in the region where people work and in the region where they live, as well as regarding the housing market and corresponding rents. Indeed, commuting activities in metropolitan areas have been ‘often-ignored’ in regional and urban economic studies. Accordingly, the main aim of this article is to present a proposal for the creation of a “Commuting Satellite Account”, as well as a discussion on the corresponding incorporation into a MRIO framework, in order to allow for an improved (regional and national) impact assessment of changes in urban forms and commuting patterns. This is supported with an illustrative example, considering the case of the Lisbon metropolitan area (a Portuguese NUT II region, divided in two region NUT III areas: Great Lisbon – which includes the Lisbon municipality - and Peninsula de Setubal).Two main steps are followed to accomplish the goals of this research: the derivation of the Multi-Regional data framework, with details on how the interdependencies between economic agents in the regions considered are integrated in the MRIO model; and the proposal for the design and compilation of a “Satellite Account” for Commuting. The application of the proposed modelling framework to the illustrative case of the Lisbon metropolitan area departs from the MULTI2C - multi-sectorial and multi-regional - approach, a general flexible procedure, developed by a group of researchers from the University of Coimbra, Portugal, that allows for the adoption of different geographic configurations. The basis of the MULTI2C model is the Portuguese 2010 “National Supply and Use Table” (with a disaggregation level of 431 products and 125 industries), complemented with the 2011 Population Census. MULTI2C uses non-survey methods to regionalize IO tables (for the 30 Portuguese NUTS III) and takes advantage of the very detailed set of information provided by the Portuguese National and Regional Accounts, combining it with several other detailed statistical sources (beyond Population Census, also Households Expenditure Survey, Agricultural Census, National Forest Survey). Further, the method used to determine each industry structure of primary products, by region, uses very detailed information from the Social Security database. The adoption of the geographical configuration suitable to model the Lisbon metropolitan area requires the consideration of a tri-regional model (Great Lisbon, Peninsula de Setubal, and the ‘Rest of the Country’). The method to derive this tri-regional model involves two steps. Firstly, splitting the country into “region A” (the Great Lisbon Metropolitan Area) and the “Rest of the Country”. Then, region A is split into A1 (Great Lisbon) and A2 (Peninsula de Setubal), such that A1 and A2 exhaust A. Then, the recommendations in SEC-2010 for the design and compilation of “Satellite Accounts2 are followed for the implementation of the proposed extension of the ‘standard’ MRIO framework to incorporate the specificities of commuting. For this there is the need to explore supplementary information that allows for the consideration of three main features associated with commuting: firstly, commuters and non-commuters have different consumption patterns (e.g. the share of expenditure in fuel, cars, insurance); secondly, each industry’s income distribution between different types of households (commuters, non-commuters and landlords) differs from region to region; and, finally, there are important relations between economic agents, their movements in space, and the renting activities. Firstly, the estimation of the distinctive household’s consumption patterns – between commuters and non-commuters – is based on data from the Households Expenditure Survey and uses econometric methods to identify what are the most relevant products associated with commuting activities. Secondly, as different industries have different commuters ‘attractiveness’, the share of income distributed among the region where the industry is located and the other regions is estimated, based on the 2011 Census. Finally, taking into account information from the Household Regional Accounts, renting activities are treated as a monetary flow between firms and households, in order to estimate the regional distribution of the total rents paid/received by firms/households.The estimated inter-regional database makes clear the existence, in the Great Lisbon region, of a large deficit in terms of international trade compensated by a large surplus in terms of inter-regional trade. Otherwise, the Peninsula de Setubal region presents deficits both in terms of international and inter-regional trade. These deficits are very likely offset in its “balance of payments” by the income inflows associated with the commuting phenomenon. Concerning each of the industries, net exports from the Great Lisbon region are associated mainly with the wholesale trade activities, financial services, passenger air transport and the manufacture and provision of gas. Many of these net exports can be explained by the location of many of the Portuguese firm’s headquarters in the municipality of Lisbon. In terms of population and commuting activities, the Lisbon municipality has been losing population, while the number of inhabitants living in the surrounding areas has largely increased. This trend has contributed to the extended increase of the commuting phenomenon. Indeed, this metropolitan area is the Portuguese region where the commuting activities are more significant, with approximately 1.250.000 workers (almost a quarter of the Portuguese workers) and more than 540.000 daily travelling between municipalities in order to work. Among these commuters, more than 110.000 travel between the two NUT III regions (Great Lisbon and Peninsula de Setubal) and 40.000 workers have their residence in the “Rest of the Country”. The modelling framework used made possible to confirm that different industries have different commuters ‘attractiveness’ and reveals that the share’s distribution of the workers residence influences the distribution of induced effects in the three regions considered. With such data, the wages and income earned by employed and self-employed workers can then be distributed among the regions, taking into account these industries’ asymmetries. These results also influence the share of household’s consumption regarding non-commuters and commuters in each one of the three regions considered. Indeed, preliminary results reveal that household’s living near the most relevant employment centers spend more in housing rents and local services and less in fuel and other commuting related products (e.g. cars, maintenance, tolls, and insurance). Further, almost half of the income directly distributed to households that live in the Peninsula de Setubal are directly distributed by firms located in the Great Lisbon region. This fact highlights the existence of important spill-over effects associated with income distribution. Finally, having estimated the origin-destiny matrices for the renting activities flows, per region, it is possible to better describe the impact of changes in the prices of house renting or in the demand for housing that occurs in a specific urban region. The final aim of this research is to apply the “commuting satellite account” in the MRIO framework, in order to assess the multidimensional impacts of (hypothetical or real) major changes in the structure of economic activities and of households/industries location. E.g., one possible application (which is part of our research agenda) regards the assessment of the impacts of commuting patterns’ changes in metropolitan areas assuming scenarios, such as: the maintenance of the trend on residential location’s movements from the center to the periphery; or, in contrast, cases in which inhabitants return (from the suburbs) to the Central Business District. Further, this framework can be applied simultaneously with other satellite accounts, allowing for the consideration of a modeling framework that integrates the three fundamental dimensions of sustainability: economic, social and environmental.
    Keywords: Portugal (specifically the Lisbon Metropolitan area), Regional modeling, Modeling: new developments
    Date: 2015–07–01
  13. By: Hernán Barahona; Francisco Gallego; Jeanne Juan-Pablo Montero
    Abstract: Driving restrictions —limits on car use based on the last digit of a car’s license plate— are increasingly popular forms of pollution and congestion control, notwithstanding the literature has shown they typically result in more pollution by moving the fleet composition toward higher emitting vehicles. We study a design feature present in some restriction programs but much overlooked in the literature: that cleaner cars be exempted from the restriction. Based on evidence from Santiago- Chile’s 1992 program, we find this exemption feature to have a large impact on fleet composition toward cleaner vehicles. We also develop and calibrate for Santiago a vertical differentiation model of the car market to show that driving restrictions that make optimal use of these exemptions can be way more effective in the fight against local air pollution than alternative instruments such as scrappage subsidies and gasoline taxes.
    Date: 2016
  14. By: Martin, Hal (Federal Reserve Bank of Cleveland); Hanson, Andrew (Department of Economics College of Business Administration Marquette University); Hawley, Zackary (Texas Christian University)
    Abstract: This paper provides evidence on the relationship between differential treatment of minority borrowers and their mortgage market outcomes. Using data from a field experiment that identifies differential treatment matched to real borrower transactions in the Home Mortgage Disclosure Act (HMDA) data, we estimate difference-in-difference models between African American and white borrowers across lending institutions that display varying degrees of differential treatment. Our results show that African Americans are more likely to be in a high-cost (subprime) loan when borrowing from lenders that are more responsive to them in the field experiment. We also show that net measures of differential treatment are not related to the probability of African American borrowers having a high-cost loan. Our results suggest that differential outcomes are related to within-institution factors, not just across-institution factors like institutional access, as previous studies find.
    Keywords: discrimination; mortgage lending; loan outcomes;
    JEL: G2 J15
    Date: 2017–03–22
  15. By: Andrea Morrison; Ron Boschma
    Abstract: This paper investigates the spatial evolution of the Italian motor cycle industry during the period 1893-1993. We find support for both the heritage theory of Klepper and the agglomeration thesis of Marshall. Indeed, being a spinoff company or an experienced firm enhanced the survival rates, but we also found a positive effect of being located in the Motor Valley cluster in Emilia Romagna. Interestingly, this beneficial effect of a cluster could not be found outside the Emilia Romagna region. This might indicate the importance of a favourable local institutional environment, as propagated by the Emilian district literature.
    Keywords: spinoff dynamics, agglomeration economies, clusters, industrial districts, Emilian model, evolutionary economic geography
    JEL: B15 B52 O18 R11
    Date: 2017–03
  16. By: Martin W. Adler (Free University Amsterdam); Rudiger Ahrend (OECD)
    Abstract: Pedestrians are vulnerable in traffic, with frequently reported injuries and fatalities. These risks are believed to be correlated with socio-economic attributes such as age, income or education levels. For Korea, it is shown that elderly pedestrians have a higher mortality risk than other road users. On a municipal level, risk factors are high car ownership, an aging population and low population density; factors associated with rural areas. Some tentative evidence also points to financially stronger municipalities having better traffic safety, which could reflect a larger capacity to maintain roads and implement road safety measures.
    Keywords: accident, ageing population, elderly, inclusiveness, Korea, pedestrian, regional, Traffic safety
    JEL: C25 H76 R41
    Date: 2017–03–27
  17. By: Frame, W. Scott (Federal Reserve Bank of Atlanta)
    Abstract: The agency conflicts inherent in securitization are viewed by many as having been a key contributor to the recent financial crisis, despite the presence of various legal and economic constructs to mitigate them. A review of recent empirical research for the U.S. home mortgage market suggests that securitization itself may not have been a problem, but rather the origination and distribution of observably riskier loans. Low-documentation mortgages, for which asymmetric information problems are acute, performed especially poorly during the crisis. Securitized low-documentation mortgages performed better when included in deals where security issuers were affiliated with lenders or had significant reputational capital at stake and investors priced the risk of low-documentation loans via larger required equity tranches and/or higher security yields.
    Keywords: mortgages; banks; securitization; financial crisis
    JEL: G01 G21 G23 G28
    Date: 2017–03–01
  18. By: NAKAMURO Makiko
    Abstract: The "class size reduction" in compulsory education is becoming controversial in Japan with a sharp decrease in the number of school-aged children and under strong pressure to reduce fiscal deficits. The literature investigated the causal effect of the class size reduction on student achievements, while the policy circle has been interested in whether or not class size reduction helps mitigate the growing problems at school, such as bullying, violent behavior, and truancy. This paper thus empirically examines whether class size matters in reducing bullying, violent behavior, and truancy by using discontinuous changes in class size under the Japanese public compulsory education system. Using a unique school-level micro dataset provided by anonymous local governments in the Kanto metropolitan areas, our result show that class size reduction affects bullying in primary education, while there is no evidence that class size affects violent behavior and truancy in primary and secondary education.
    Date: 2017–03
  19. By: R. Bottazzi; S. Trucchi; M. Wakefield
    Abstract: We estimate marginal propensities to consume from wealth shocks for Italian households in the early part of the Great Recession. Large asset price shocks in 2008 underpin an IV estimator. A euro fall in risky financial wealth resulted in cuts in annual total (non‐durable) consumption of 8.5‐ 9 (5.5‐5.7) cents. There is evidence of effects on food spending. Responses of total and nondurable spending to changes in housing wealth are 0.2 to 0.3 cents/euro. Point estimates of the effect of the financial wealth shock are larger if the youngest and/or oldest households are excluded. Results indicate that responses to the wealth shock were stronger for those who became pessimistic about the stock market, and for those owners of risky assets who also held mortgage debt. Counterfactuals indicate financial wealth effects were important (relative to other factors) for consumption falls in Italy in 2007/08.
    JEL: D12 D91
    Date: 2017–03
  20. By: Kahanec, Martin; Guzi, Martin
    Abstract: The economic literature starting with Borjas (2001) suggests that immigrants are more flexible than natives in responding to changing sectoral, occupational, and spatial shortages in the labor market. In this paper, we study the relative responsiveness to labor shortages by immigrants from various origins, skills and tenure in the country vis-à-vis the natives, and how it varied over the business cycle during the Great Recession. We show that immigrants in general have responded to changing labor shortages across EU member states, occupations and sectors more fluidly than natives. This effect is especially significant for low-skilled immigrants from the new member states or with the medium number of years since immigration, as well as with high-skilled immigrants with relatively few (1-5) or many (11+) years since migration. The relative responsiveness of some immigrant groups declined during the crisis years (those from Europe outside the EU or with eleven or more years since migration), whereas other groups of immigrants became particularly fluid during the Great Recession, such as those from new member states. Our results suggest immigrants may play an important role in labor adjustment during times of asymmetric economic shocks, and support the case for well-designed immigration policy and free movement of workers within the EU. The paper provides new insights into the functioning of the European Single Market and the roles various immigrant groups play for its stabilization through labor adjustment during times of uneven economic development across sectors, occupations, and countries.
    Keywords: immigrant worker,labor supply,skilled migration,labor shortage,wage regression,Great Recession
    JEL: J24 J61 J68
    Date: 2017
  21. By: Giulia Faggio; Olmo Silva; William C. Strange
    Abstract: Many prior treatments of agglomeration explicitly or implicitly assume that all industries agglomerate for the same reasons, with the traditional Marshallian (1890) factors of input sharing, labor pooling, and knowledge spillovers affecting all industries similarly. An important instance of this approach is the extrapolation from one key sector to the larger economy, such as the drawing of very general lessons about agglomeration from the specific case of the Silicon Valley. Another is the pooling of data to examine common tendencies in agglomeration even across very different industries. This paper uses UK establishment-level data on coagglomeration to document substantial heterogeneity across industries in the microfoundations of agglomeration economies. The analysis shows that the Marshallian factors interact with the organizational and adaptive aspects of agglomeration discussed by Chinitz (1961), Vernon (1960), and Jacobs (1969). Our findings highlight the importance of treating Marshall’s microfoundations of agglomeration as complements to the analysis of Jacobs and others, rather than as alternatives.
    JEL: C1 R14 J01
    Date: 2016–03–23
  22. By: Laurent Scaringella (ESC Rennes School of Business - ESC Rennes School of Business); Jean-Jacques Chanaron (CNRS (French National Center for Scientific Research) - UCBL - Université Claude Bernard Lyon 1, GEM - Grenoble Ecole de Management - Grenoble École de Management (GEM))
    Abstract: Over the past decades, the EU heavily invested in Research Infrastructures (RI). What are the expected returns of such investments? In the present article we address the question of returns on public funds/public infrastructures. We consider the role of RI and universities from an economic, social, and entrepreneurial perspective from various Territorial Innovation Models (TIMs): Italian industrial districts, innovative milieus, regional innovation systems, new industrial spaces, and regional clusters. We conducted our empirical study on Grenoble Isère Alpes Nanotechnologies (GIANT), which is composed of large scientific instruments, universities, and engineering and management schools. Our microeconomic methodology measured the socioeconomic and entrepreneurial effects of GIANT with respect to budget, employment, and spin-off generation. We contribute to the existing body of knowledge on TIMs by comparing the long-term investments to the generation of wealth, the creation of employment, and the development of start-ups; adding new insights to the debate opposing positive and negative impacts empirical studies; and offering recommendations for the use of public resources. In our discussion, we compare the GIANT model as a very localized RI-university club to the Grenoble model as localized cluster.
    Keywords: Return on investment,Socioeconomic impact,Start-up,University,Research infrastructure,Territorial Innovation Models
    Date: 2016–05–26
  23. By: Masaru Inaba; Keisuke Otsu
    Abstract: We study the features of regional business cycles and growth in Japan. We find evidence of unconditional convergence over the 1955-2008 period. For the 1975-2008 period, we find evidence of convergence conditional on TFP gap, population growth, private investment rate and TFP growth. We also find that the consumption-output correlation puzzle exists, which implies that the idiosyncratic income shocks are not shared among prefectures and regions. Our analysis implies that frictions in financial markets are responsible for the low consumption risk-sharing among prefectures.
    Keywords: Japanese Economy; Regional Convergence; Regional Business Cycle Synchronization
    JEL: E01 E32 O47
    Date: 2017–03
  24. By: ARAI Sonoe; YoungGak KIM
    Abstract: The current System of National Accounts (SNA) shows a huge inconsistency (26 trillion yen) between national and prefectural accounts in terms of gross domestic product (GDP) estimates. One of the main reasons for this discrepancy is the difference in concept and treatment of the headquarter (HQ) functions of firms. The current prefectural accounts of 46 prefectures excluding Tokyo do not treat HQ as a special unit generating a unique value-added "HQ service." Accordingly, HQ service is not accounted as an intermediate input in each producing establishment in the prefectures. On the contrary, Tokyo, which has many HQs in the area, estimates its original "Tokyo Input-Output Table" treating HQ service as an independent product term. Against this background, this research estimates HQ service as a value-added generated by HQs locating in each prefecture and HQ service as an intermediate input used by establishments spanning multiple prefectures, and analyzes the impact of the new method on the estimates of prefectural GDP and productivity gap among prefectures. By estimating prefectural GDP utilizing a new input-output (IO) table, we find that, in principle, the gross output of prefectures with more producing establishments are overestimated compared with those of other prefectures with more HQs. This research contributes to the literature by suggesting new and more consistent estimation methods of prefectural accounts for greater accuracy. We hope this analysis provide a basic insight to the further discussion on the effect of centralization and decentralization of HQs on the local economy, which is one of the hottest topics of regional revitalization.
    Date: 2017–03
  25. By: Ikuo Kuroiwa (Institute of Developing Economies Japan External Trade Organization(IDE-JETRO)); Kriengkrai Techakanont (Thammasat University, Thailand)
    Abstract: The development of the local supplier base and the formation of industrial clusters are important for industries, especially the automotive industry. This study focuses on local supplier development and the formation of automotive clusters in Thailand. Using the Thailand Automotive Industry Directory 2014, the study investigates the type of parts produced by the respective suppliers, as well as the geographical distribution of suppliers in the automotive clusters. The study finds that the number of firms producing each type of parts is different, depending on the ownership structure. Also, the location of automotive establishments has changed over time, reflecting the changes in location advantages of the respective regions as well as government policy.
    Keywords: Automotive industry, industrial cluster, Location of firms
    JEL: L62 O53 R12
    Date: 2017–02
  26. By: Helen Lawton Smith (Birkbeck, University of London. Oxfordshire Economic Observatory, Oxford University)
    Date: 2017–02
  27. By: Afridi, Farzana (Economics and Planning Unit, Indian Statistical Institute, Delhi and IZA, Bonn); Dhillon, Amrita (Department of Political Economy, Kings College, London, and CAGE, University of Warwick.); Solan, Eilon (School of Mathematical Sciences, Tel Aviv University)
    Abstract: In developing countries with weak institutions, there is implicitly a large reliance on elections to instil norms of accountability and reduce corruption. In this paper we show that electoral discipline may be ineffective in reducing corruption when political competition is too high or too low. We first build a simple game theoretic model to capture the effect of electoral competition on corruption. We show that in equilibrium, corruption has a U-shaped relationship with electoral competition. If the election is safe for the incumbent (low competition) or if it is extremely fragile (high competition) then corruption is higher, and for intermediate levels of competition, corruption is lower. We also predict that when there are different types of corruption, then incumbents increase corruption in the components that voters care less about regardless of competition. We test the model’s predictions using data gathered on audit findings of leakages from a large public program in Indian villages belonging to the state of Andhra Pradesh during 2006-10 and on elections to the village council headship in 2006. Our results largely confirm the theoretical results that competition has a non-linear effect on corruption, and that the impact of electoral competition varies by whether theft is from the public or private component of the service delivery. Overall, our results suggest that over-reliance on elections to discipline politicians is misplaced.
    Keywords: Corruption, Electoral Competition, Audit, Social Acountability. JEL Classification: D72, D82, H75, O43, C72
    Date: 2016
  28. By: Belen Barroeta; Javier Gomez Prieto (European Commission - JRC); Jonatan Paton; Manuel Palazuelos Martinez (European Commission - JRC); Marcelino Cabrera Giraldez (European Commission - JRC)
    Abstract: The Smart Specialisation concept, currently implemented in the European Union, is being widely considered by several countries and regions of Latin-America. The interest towards this approach, highly based on the enhancement of regional innovation capacities, is motivating territorial dialogues, participatory processes and collective vision related to the innovation perspectives of Latin-American regions. This article highlights how policy makers of Mexico, Brazil, Colombia, Peru, Chile and Argentina are considering the smart specialisation concept as an inspirational driver of regional innovation and specialisation. Understanding the socio-economic and contextual differences between EU and Latin-America, this working paper does not seek to elaborate value judgements on the way in which smart specialisation is being (or should be) adapted beyond the EU. Instead, the analysis seeks to emphasise the common tendencies of the concept implementation as a way to frame cooperation between regions of the EU and Latin-America.
    Keywords: Smart Specialisation, Regional Innovation, Cooperation, European Union, Latin America
    Date: 2017–03
  29. By: Kelly, Jane (Central Bank of Ireland); Lydon, Reamonn (Central Bank of Ireland)
    Abstract: In 2016, the typical Irish home-buyer had a downpayment of 20% of the house price – for First-Time Buyers (FTBs), the figure is closer to 15%. The median downpayment for a non-Dublin FTB in 2016 was e25,000, well below earlier peaks. For Dublin FTBs, however, downpayments have been rising steadily since 2012, reaching €50,000 (median) in 2016. Comparing Irish FTB Deposit-to-Value ratios (DTVs) with those in other European countries for the period pre-dating the Loan-to-Value (LTV) rules (2008-14), Ireland was towards the lower-end of the range – typically between 10 and 20% for most countries. The latest figures for 2016 suggest that Ireland may be moving more in-line with other countries, although maximum LTV rules are becoming increasingly common across Europe and may be impacting upon such patterns.
    Date: 2017–02
  30. By: Margherita Russo (University of Modena and Reggio Emilia); Annalisa Caloffi (University of Padua); Federica Rossi (Birkbeck College, University of London); Riccardo Righi (University of Modena and Reggio Emilia)
    Date: 2016–11
  31. By: Ahmed Elsayed (Institute for the Study of Labor (IZA)); Olivier Marie
    Abstract: At the end of the 1980’s, Egypt introduced a policy change to its pre-university education system where the years of primary education decreased from six to five, reducing the overall years of compulsory education from nine to eight. Using data from the Egypt Labor Market Panel Survey (ELMPS) in 2006 and 2012, we study the effect of this educational reform on several education and labor market outcomes. We find that the policy had positive effects on educational outcomes as it significantly increased the probability of finishing compulsory education and raised the overall years of education. However, the policy significantly postponed the age of entering the labor market, increased the time between completing education and getting the first job, and reduced the probability of the first job being paid. The effects of the policy on both education and labor market outcomes were more pronounced for males than for females.
    Date: 2015–09
  32. By: Melguizo, Isabel
    Abstract: We study a dynamic model of attitude formation in which individuals average others' attitudes to develop their own. We assume that individuals exhibit homophily in sociodemographic exogenous attributes, that is, the attention they pay to each other is based on whether they possess similar attributes. We also assume that individuals exhibit homophily in attitudes, at the group level. Specifically, attributes that are salient, that is, that exhibit a substantial difference in attitudes between the groups of individuals possessing and lacking them, deserve high attention. Since we allow attention to evolve over time we prove that when there is, initially, a unique most salient attribute, it deserves growing attention overtime in detriment of the remaining ones. As a result, individuals eventually interact only with others similar to them across this attribute and disagreement persists. It materializes in two groups of thinking defined according to this attribute.
    Keywords: disagreement, homophily, average-based updating
    JEL: D83 D85 Z13
    Date: 2017–01
  33. By: Steven Robins
    Keywords: Public Investments and Infrastructure
    JEL: E6 L3 R4
  34. By: Riccardo Crescenzi (London School of Economics and Political Science); Andrea Filippetti (National Research Council, Italy. London School of Economics and Political Science. Birkbeck College, University of London, UK); Simona Iammarino (London School of Economics and Political Science)
    Date: 2016–02
  35. By: David Johnson; Huijie Guo
    Keywords: Education, Skills and Labour Market
    JEL: I2
  36. By: Dionne, Georges (HEC Montreal, Canada Research Chair in Risk Management); Liu, Ying (Shandong University)
    Abstract: We investigate the incentive effects of insurance experience rating on road safety by evaluating the claim frequency following a regulatory reform introduced in a pilot city of China. Our contribution to the growing literature on moral hazard is to offer a neat identification of a causal effect of experience rating on road safety by employing the differences-in-differences methodology in the framework of a natural experiment. The pre-treatment placebo test corroborates the assumption that the pilot city and the control city share the same pre-reform time trends in claims. We find that basing insurance pricing on traffic violations reduces claim frequency significantly. These results are robust to the inclusion of vehicle controls, alternative definitions of claim frequency, two placebo experiment tests, and several robustness checks. The effects of basing pricing on past claims are not significant.
    Keywords: Insurance incentives; experience rating; road safety; natural experiment; China; traffic violation; past claim; moral hazard.
    JEL: C33 C35 D81 D82 G22 R41
    Date: 2017–03–15
  37. By: Stijn Ferrari; Mara Pirovano; Wanda Cornacchia
    Abstract: This Occasional Paper presents a formal statistical evaluation of potential early warning indicators for real estate-related banking crises. Relying on data on real estate-related banking crises for 25 EU countries, a signalling approach is applied in both a non-parametric and a parametric (discrete choice) setting. Such an analysis evaluates the predictive power of potential early warning indicators on the basis of the trade-off between correctly predicting upcoming crisis events and issuing false alarms. The results in this paper provide an analytical underpinning for decision-making based on guided discretion with regard to the activation of macro-prudential instruments targeted to the real estate sector. After the publication of the ESRB Handbook and the Occasional Paper on the countercyclical capital buffer, it represents a next step in the ESRB’s work on the operationalisation of macroprudential policy in the banking sector. This Occasional Paper highlights the important role of both real estate price variables and credit developments in predicting real estate-related banking crises. The results indicate that, in addition to cyclical developments in these variables, it is crucial to monitor the structural dimension of real estate prices and credit. In multivariate settings macroeconomic and market variables such as the inflation rate and short-term interest rates may add to the early warning performance of these variables. Overall, the findings indicate that combining multiple variables improves early warning signalling performance compared with assessing each indicator separately, both in the non-parametric and the parametric approach. Combinations of the abovementioned indicators lead to lower probabilities of missing crises while at the same time not issuing too many false alarms. In addition to EU level, they also perform relatively well at individual country level. Even though the best performing indicators have relatively good signalling abilities at the individual country level, national authorities are encouraged to perform their own complementary analyses in abroader framework of systemic risk detection, which augments potential early warning indicators and methods with other relevant inputs and expert judgement. JEL Classification: G21, G18, E58
    Keywords: early warning indicators, real estate, banking crises
    Date: 2015–08
  38. By: Byeongwoo KANG (Institute of Innovation Research, Hitotsubashi University); Yukihito Sato (Inter-disciplinary Studies Center, Institute of Developing Economies (IDE-JETRO)); Yasushi UEKI (Economic Research Institute for ASEAN and East Asia (ERIA))
    Abstract: Attracting highly skilled workers is a major element in the economic development of many countries, especially developing ones. However, workers generally move from developing countries to developed ones. Historical evidence indicates that Korean and Taiwanese firms scout for highly skilled (retired or soon-to-retire) Japanese workers to accrue, and catch up on, knowledge. Therefore, this paper investigates how these firms scout for highly skilled Japanese workers. Aiming to produce evidence rather than testing hypotheses, this paper gives practical information on firms in developing countries in attracting highly skilled workers to drive future growth. In addition, this paper provides insights into the international mobility of highly skilled workers from a developed country to developing countries, which has not been examined in the previous literature.
    Keywords: Highly skilled, Mobility, Japan, Republic of Korea, Taiwan
    JEL: F22 J61 O15
    Date: 2017–02
  39. By: OECD
    Abstract: High-performing countries use various mechanisms to select the best candidates to the teaching profession. In Finland, Hong-Kong (China), Macao (China) and Chinese Taipei, students who wish to enter teacher-training programmes must pass a competitive entry examination. In Japan, teaching graduates must pass a competitive examination to start teaching and in Singapore, they must complete a probation period. These requirements, however, are also found among some low-performing countries suggesting that early selection, while important, is not enough to ensure a highly qualified teaching force. Across OECD countries, the proportion of fully certified teachers has a positive, albeit modest association with student performance in PISA. In countries that performed above the OECD average in science, at least 80% of the students are in schools that invite specialists to conduct teacher training or organise in-service workshops for teachers or where teachers cooperate with each other. This is higher, on average, than what is observed among other countries.
    Date: 2017–03–21
  40. By: Christoph M. Rheinberger (European Chemicals Agency (ECHA)); Felix Schläpfer (Kalaidos University of Applied Sciences); Michael Lobsiger (B,S,S. Economic Consultants Ltd.)
    Abstract: We estimate the demand value of road safety improvements in Switzerland from survey data using a novel elicitation approach. Individuals’ responses to questions about how much public spending on road safety should be increased are combined with observations of income, tax rate, and road usage to estimate the economic value of a statistical accident avoided. Information obtained from a risk-risk tradeoff elicitation allows us to distinguish willingness-to-pay values for various degrees of accident severity. Our most comprehensive estimate of the value of a statistical accident avoided amounts to CHF 11.0 million ($11.6 million); the corresponding value per statistical life is close to CHF 4.2 million ($4.5 million). We explore the sensitivity of these estimates to anchoring and other framing effects and find that the popularity of specific road safety programs is influenced by both the availability of different choice options and the provision of partisan cues expressing political endorsement or opposition.
    Keywords: Road Safety, Value of Life, Public Goods
    JEL: H41 I38 J17
    Date: 2017–03

This nep-ure issue is ©2017 by Steve Ross. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.