nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2017‒05‒07
thirty-six papers chosen by
Steve Ross
University of Connecticut

  1. Exuberance in the U.K. Regional Housing Markets By Alisa Yevgenyevna Yusupova; Efthymios Pavlidis; Ivan Paya; David Alan Peel
  2. Estimating the Gains from New Rail Transit Investment: A Machine Learning Tree Approach By Seungwoo Chin; Matthew E. Kahn; Hyungsik Roger Moon
  3. Scaling evidence of the homothetic nature of cities By R\'emi Lemoy; Geoffrey Caruso
  4. Secondary School Teacher Effects on Student Achievement in Australian Schools By Chris Ryan
  5. Where Is the Consumer Center of St. Petersburg? By Konstantin A. Kholodilin; Irina Krylova; Darya Kryutchenko
  6. Evolving Walkability of Major Cities in the People’s Republic of China By Fan, Peilei; Wan, Guanghua; Xu, Lihua; Park, Hogeun; Xie, Yaowen; Liu, Yong; Yue, Wenze; Chen, Jiquan
  7. Cities, Towns, and Poverty: Migration Equilibrium and Income Distribution in a Todaro-type Model with Multiple Destinations By Christiaensen, Luc; De Weerdt, Joachim; Kanbur, Ravi
  8. Migration of Bulgarian Population – Characteristics and Relations to the Regional Socio-economic Disparities By Mintchev, Vesselin; Shopov, Georgi; Kaltchev, Iordan; Boshnakov, Venelin
  9. Do Friendship Networks Improve Female Education? By Hahn, Youjin; Islam, Asadul; Patacchini, Eleonora; Zenou, Yves
  10. Housing, the ‘Great Income Tax Experiment’, and the intergenerational consequences of the lease Abstract: This paper provides an analysis of how the New Zealand tax system may be affecting residential property markets. Like most OECD countries, New Zealand does not tax the imputed rent or capital gains from owner-occupied housing. Unlike most OECD countries, since 1989 New Zealand has taxed income placed in retirement savings funds on an income basis, rather than an expenditure basis. The result is likely to be the most distortionary tax policy towards housing in the OECD. Since 1989, these tax distortions have provided incentives that should have lead to significant increases in house prices and the average size of new dwellings, should have reduced owner-occupier rates, and should have led to a worsening of the overseas net asset position. The tax settings are likely to be regressive, and are not intergenerationally neutral, as they impose significant costs on current and future generations of young New Zealanders (and new migrants). Since it does not appear to be politically palatable to tax capital gains or imputed rent, to reduce the distortionary consequences of the tax system on housing markets New Zealand may wish to reconsider how it taxes retirement savings accounts by adopting the standard OECD approach. By Andrew Coleman
  11. Sun, Regulation and Local Social Networks By Antoine Bonleu
  12. An assessment of the Maltese housing market By William Gatt; Owen Grech
  13. The Right to Buy public housing in Britain: a welfare analysis By Richard Disney; Guannan Luo
  14. Immigration and the macroeconomy: some new empirical evidence By Francesco Furlanetto; Ørjan Robstad
  15. Urbanizing with Equity Consideration By Wan, Guanghua; Luo, Zhi; Zhang, Xun
  16. Does Early Child Care Attendance Influence Children's Cognitive and Non-Cognitive Skill Development? By Kühnle, Daniel; Oberfichtner, Michael
  17. Liveable city from an economic perspective By Antonescu, Daniela
  18. The spatial autocorrelation problem in spatial interaction modelling: a comparison of two common solutions By Griffith, Daniel A.; Fischer, Manfred M.; LeSage, James P.
  19. Urban Productivity in the Developing World By Edward L. Glaeser; Wentao Xiong
  20. How savings can lower economic growth levels: the U.S. case By De Koning, Kees
  21. Innovation policy for economic resilience: The case of Sweden By Asheim, Bjørn; Moodysson, Jerker
  22. Defining PPP Opportunities in the Road Sector of Ukraine By Cherevykov, Yevhen
  23. New Findings on the Fiscal Impact of Immigration in the United States By Orrenius, Pia M.
  24. Property price misalignment with fundamentals in Malta By Brian Micallef
  25. Amenities and the Social Structure of Cities By Carl Gaigné; Hans R.A. Koster; Fabien Moizeau; Jacques-François Thisse
  26. Railroads, Technology Adoption, and Modern Economic Development: Evidence from Japan By Junichi Yamasaki
  27. Using your ties to get a worse job? The differential effects of social networks on quality of employment: Evidence from Colombia By Deguilhem, Thibaud; Berrou, Jean-Philippe; Combarnous, François
  28. BOOK REVIEW : The Asian Mediterranean: Port Cities and Trading Networks in China, Japan and Southeast Asia, 13th – 21st Century by Francois Gipouloux By Chan, Jia Hao
  29. Geographical Dispersion of Consumer Search Behavior By Hakan Yilmazkuday
  30. Integrated Order Picking and Vehicle Routing with Due Dates By Daniel Schubert; André Scholz; Gerhard Wäscher
  31. E-participation – a Key Factor in Developing Smart Cities By Vrabie, Catalin I.; Tirziu, Andreea-Maria
  32. Do new teachers feel prepared for teaching? By OECD
  33. Information heterogeneity, housing dynamics and the business cycle By Guo, Zi-Yi
  34. Maghreb Rural-Urban Migration: The Movement to Morocco’s Towns By Jamal Bouoiyour; Amal Miftah; Christophe Muller
  35. Spatial Competition, Innovation and Institutions: The Industrial Revolution and the Great Divergence By Desmet, Klaus; Greif, Avner; Parente, Stephen L.
  36. On Peer Effects: Contagion of Pro- and Anti-Social Behavior and the Role of Social Cohesion By Eugen Dimant

  1. By: Alisa Yevgenyevna Yusupova; Efthymios Pavlidis; Ivan Paya; David Alan Peel
    Abstract: We combine the estimation of a structural model with inference based on recently developed recursive unit root tests to analyse the behaviour of regional real estate markets in the U.K. over the last four decades. We find two episodes, the late 1980s and the early and mid-2000s, when all regional house prices experienced explosive dynamics above and beyond factors such as housing supply relative to demographics, income, regional spillovers and credit availability. This is the first econometric analysis to provide evidence that would endorse the view that ‘bubbles’, with a particular spatial pattern, are a feature of UK regional housing markets.
    Keywords: Regional house prices, Structural housing model, Cointegration, Generalised supremum ADF, Speculative bubbles
    JEL: C22 G12 R30 R31
    Date: 2017
  2. By: Seungwoo Chin; Matthew E. Kahn; Hyungsik Roger Moon
    Abstract: Urban rail transit investments are expensive and irreversible. Since people differ with respect to their demand for trips, their value of time, and the types of real estate they live in, such projects are likely to offer heterogeneous benefits to residents of a city. Using the opening of a major new subway in Seoul, we contrast hedonic estimates based on multivariate hedonic methods with a machine learning approach that allows us to estimate these heterogeneous effects. While a majority of the "treated" apartment types appreciate in value, other types decline in value. We explore potential mechanisms. We also cross-validate our estimates by studying what types of new housing units developers build in the treated areas close to the new train lines.
    JEL: R21 R4
    Date: 2017–04
  3. By: R\'emi Lemoy; Geoffrey Caruso
    Abstract: In this paper we analyse the profile of land use and population density with respect to the distance to the city centre for the European city. In addition to providing the radial population density and soil-sealing profiles for a large set of cities, we demonstrate a remarkable constancy of the profiles across city size. Our analysis combines the GMES/Copernicus Urban Atlas 2006 land use database at 5m resolution for 300 European cities with more than 100.000 inhabitants and the Geostat population grid at 1km resolution. Population is allocated proportionally to surface and weighted by soil sealing and density classes of the Urban Atlas. We analyse the profile of each artificial land use and population with distance to the town hall. In line with earlier literature, we confirm the strong monocentricity of the European city and the negative exponential curve for population density. Moreover, we find that land use curves, in particular the share of housing and roads, scale along the two horizontal dimensions with the square root of city population, while population curves scale in three dimensions with the cubic root of city population. In short, European cities of different sizes are homothetic in terms of land use and population density. While earlier literature documented the scaling of average densities (total surface and population) with city size, we document the scaling of the whole radial distance profile with city size, thus liaising intra-urban radial analysis and systems of cities. In addition to providing a new empirical view of the European city, our scaling offers a set of practical and coherent definitions of a city, independent of its population, from which we can re-question urban scaling laws and Zipf's law for cities.
    Date: 2017–04
  4. By: Chris Ryan (Melbourne Institute of Applied Economic and Social Research, the University of Melbourne)
    Abstract: This study finds that approaching 10% of the variation in high school student achievement is explained by teacher effects in Australia. It uses data from the 2011 Trends in Mathematics and Science Study (TIMSS) sample of Australian Year 8 students to estimate achievement in mathematics and science with student fixed effects, calculating teacher effects as part of this estimation. Like results in other studies, these teacher effects do not appear to be strongly related to observed teacher characteristics, despite attempts to account for the composition of the classes teachers face. Nor are the teacher effects related to self-assessments of how well prepared teachers view themselves as being able to teach the content of the TIMSS tests.
    Keywords: Teacher effects, teacher characteristics, class composition
    JEL: I21
    Date: 2017–05
  5. By: Konstantin A. Kholodilin; Irina Krylova; Darya Kryutchenko
    Abstract: In an urban economy, the distribution of people and real estate prices depends on the location of the central business district of a city. As distance from the city center increases, both prices and population density diminish, for travel costs increase in terms of time and money. As manufacturing gradually leaves the cities, the importance of consumer amenities as attractors of population to the urban areas increases. The role of a business center is being replaced by the consumer center. In this paper, we identify the location of the consumer center of St. Petersburg - the second largest city in Russia and its former capital. For this purpose using the data from open sources in the Internet regarding the location of many different types of urban amenities, the indices of their spatial density are computed. Using the weights based on coefficients of spatial variation and survey-based weights, the individual indices are aggregated to two general centrality indices. Their unique maxima correspond to the city center of St. Petersburg, which is located on Nevsky prospekt, between Fontanka river and Liteinyi prospekt.
    Keywords: St. Petersburg, urban amenities, consumer city center, kernel density estimation
    JEL: R14 R15 C43
    Date: 2017
  6. By: Fan, Peilei (Asian Development Bank Institute); Wan, Guanghua (Asian Development Bank Institute); Xu, Lihua (Asian Development Bank Institute); Park, Hogeun (Asian Development Bank Institute); Xie, Yaowen (Asian Development Bank Institute); Liu, Yong (Asian Development Bank Institute); Yue, Wenze (Asian Development Bank Institute); Chen, Jiquan (Asian Development Bank Institute)
    Abstract: Walkability is an important element for assessing urban sustainability. As the People’s Republic of China (PRC) rapidly urbanizes, there are increased concerns that more of its cities have become less walkable. We aim to develop a composite walkability index to evaluate the spatiotemporal evolution of the walkability of PRC cities. We developed a comprehensive walkability index that integrates five aspects of the urban built environment: dwelling density, street connectivity, land-use mix, access to public transit, and elevation variation. Using Shanghai, Hangzhou, Chongqing, and Lanzhou as cases, we evaluated the spatiotemporal patterns and changes of walkability in the context of rapid urban expansion. All four cities expanded their urban land from 1990 to 2010, but that there was a higher expansion rate in 2000–2010 than in 1990–2000. For inner cities, Shanghai had the highest average walkability index, whereas Lanzhou held the lowest. In 2000–2010, however, the inner cities of Hangzhou, Chongqing, and Lanzhou and the entire cities of Shanghai and Chongqing increased their walkability index, whereas the inner city of Shanghai had decreased walkability. Furthermore, while inner cities of Shanghai and Hangzhou experienced decreased or stable walkability, inner cities of Lanzhou and Chongqing enjoyed moderate to high increases in walkability. The spatiotemporal changes in walkability seem to be directly associated with governmental policies at both central and local levels. The walkability index method can be widely implemented for any urban landscape because of its comprehensiveness, simplicity, and flexibility.
    Keywords: urban planning; urban development; urban landscape; Shanghai; Hangzhou; Chongqing; Lanzhou; walkability index; dwelling density; street connectivity; land-use mix; public transit; elevation
    JEL: O18
    Date: 2017–01–25
  7. By: Christiaensen, Luc; De Weerdt, Joachim; Kanbur, Ravi
    Abstract: Should public investment be targeted to big cities or to small towns, if the objective is to minimize national poverty? To answer this policy question we extend the basic Todaro-type model of rural-urban migration to the case of migration from rural areas to two potential destinations, secondary town and big city. We first derive conditions under which a poverty gradient from rural to town to city will exist as an equilibrium phenomenon. We then address the policy question and show how the answer depends on the migration response, where the poverty line lies relative to incomes in the three locations, and at times also the poverty index itself. In particular, we develop sufficient statistics for the policy decisions based on these income parameters and illustrate the empirical remit of the model with long running panel data from Kagera, Tanzania. Further, we show that the structure of the sufficient statistics is maintained in the case where the model is generalized to introduce heterogeneous workers and jobs. Overall, the findings confirm that, given migration responses, national poverty outcomes are not immune to whether urban employment generation takes place in the towns or the city.
    Keywords: Equilibrium Income Distribution.; Migration Equilibrium; Poverty Gradient; Poverty Reduction; Secondary Towns versus Big Cities; Todaro Model
    JEL: I3 J61 O18 O41
    Date: 2017–04
  8. By: Mintchev, Vesselin; Shopov, Georgi; Kaltchev, Iordan; Boshnakov, Venelin
    Abstract: The paper suggests a short overview of migration processes in Bulgaria since the start of its democratization and transition to market economy. The socio-demographic structure of both potential and return migrants is evaluated empirically using a large sample data for 2013 representative for Bulgarian population aged 18-65. On the basis of a ranking of Bulgarian regions and districts by an integral score of their socio-economic development (involving a set of development indicators) a range of regional disparities are revealed in respect of migration potential, return migration, and remittances allocation and utilization. The rich empirical evidence suggests that Bulgarian migration policies should emphasize substantially on the issues of regional disbalances in order to offset the evaluated distortions.
    Keywords: Migration, Regional disparities, Remittances
    JEL: F22 F24 R12
    Date: 2016–07–15
  9. By: Hahn, Youjin (Monash University); Islam, Asadul (Monash University); Patacchini, Eleonora (Cornell University); Zenou, Yves (Monash University)
    Abstract: We randomly assign more than 6,000 students from 150 primary schools in Bangladesh to work on math assignments in one of three settings: individually, in groups with random schoolmates, or in groups with friends. The groups consist of four people and are balanced by average cognitive ability and ability distribution. While the achievement of male students is not affected by the group assignment, low-ability females assigned to groups outperform low-ability females working individually. The treatment is particularly effective when low-ability females study with friends. To rule out sorting effects, we show that random groups with identical compositions to those of friendship groups do not produce similar effects. Our study thus documents that placing students into study groups with their friends may improve learning, especially for low-ability females.
    Keywords: social interactions, education, gender, learning, friendship
    JEL: I25 J16 O12
    Date: 2017–03
  10. By: Andrew Coleman (Motu Economic and Public Policy Research)
    Keywords: tax policy, expenditure taxes, house construction, land prices, retirement savings, intergenerational transfers, New Zealand economy
    JEL: H20 H22 H24 I38 R28 R38
    Date: 2017–05
  11. By: Antoine Bonleu (Aix-Marseille Univ. (Aix-Marseille School of Economics), CNRS, EHESS and Centrale Marseille)
    Abstract: The aim of this paper is to explain over-regulation and local social capital as barriers to immigration. The interest of social networks is that conflict resolution is independent of the law. Hence, if local individuals develop local social capital and regulation, foreigners without social networks are disadvantaged and can less easily migrate. We develop a two-country search-theoretic model where we endogenize the choice of procedural formalism (PF) and the network size. This model features two different equilibria: a Mediterranean equilibrium with PF and dense local social network and a Scandinavian and Anglo-Saxon equilibrium without PF and local social networks.
    Keywords: housing market regulation, local social capital, mobility, climate amenities, social networks
    JEL: R38
    Date: 2017–04
  12. By: William Gatt (Central Bank of Malta); Owen Grech (Central Bank of Malta)
    Abstract: Few macroeconomic variables generate as much interest and debate as house prices. Households, firms and policymakers alike watch house prices closely. In recent years, house prices in Malta have risen considerably, nearly doubling between 2000 and 2015, although with a significant degree of variability. This has led to growing concerns about the possible existence of a housing bubble.
    JEL: C22 C32 C53 E32 E44 R21 R38
  13. By: Richard Disney (Institute for Fiscal Studies and University of Sussex); Guannan Luo (Institute for Fiscal Studies and City University of Hong Kong)
    Abstract: We investigate the impact on social welfare of the United Kingdom (UK) policy introduced in 1980 by which public housing tenants (council housing in UK parlance) had the right to purchase their houses at heavily discounted prices. This was known as the Right to Buy (RTB) policy. Although this internationally-unique policy was the largest source of public privatization revenue in the UK and raised home ownership as a share of housing tenure by around 15%, the policy has been little analyzed by economists. We investigate the equilibrium housing policy of the public authority in terms of quality and quantity of publicly-provided housing both in the absence and presence of a RTB policy. We find that RTB can improve the aggregate welfare of low-income households only if the council housing quality is sufficiently low such that middle-wealth households have no incentive to exercise RTB. We also explore the welfare effects of various adjustments to the policy, in particular (i) reduce discounts on RTB sales; (ii) loosen restrictions on resale; (iii) return the proceeds from RTB sales to local authorities to construct new public properties; and (iv) replace RTB with rent subsidies in cash.
    Keywords: housing policy; Right to Buy; social welfare
    JEL: I38 R38
    Date: 2016–11–14
  14. By: Francesco Furlanetto (Norges Bank and Banco de España); Ørjan Robstad (Norges Bank)
    Abstract: We propose a new VAR identification scheme that enables us to disentangle immigration shocks from other macroeconomic shocks. Identification is achieved by imposing sign restrictions on Norwegian data over the period 1990Q1 - 2014Q2. The availability of a quarterly series for net immigration is crucial to achieving identification. Notably, immigration is an endogenous variable in the model and can respond to the state of the economy. We find that domestic labour supply shocks and immigration shocks are well identified and are the dominant drivers of immigration dynamics. An exogenous immigration shock lowers unemployment (even among native workers), has a small positive effect on prices and on public finances, no impact on house prices and household credit, and a negative effect on productivity.
    Keywords: labour supply shocks, immigration shocks, job-related immigration, identifi cation, VAR
    JEL: C11 C32 E32
    Date: 2017–04
  15. By: Wan, Guanghua (Asian Development Bank Institute); Luo, Zhi (Asian Development Bank Institute); Zhang, Xun (Asian Development Bank Institute)
    Abstract: Research has not yet been undertaken on the optimal level of urbanization, notwithstanding the pioneering work of Au and Henderson (2006) on optimal urban concentration. We develop two-sector general equilibrium models of urbanization, with and without equity consideration, respectively. It is shown that considering equity will result in a higher level of urbanization than otherwise, when urban inequality is sufficiently small or migration costs are sufficiently large. Such a theoretical prediction is confirmed by empirical modeling results using panel data from People’s Republic of China (PRC). Provincial governments that paid attention to the inequality issue are found to have higher urbanization levels than those that did not. Finally, we explore possible equity consideration-to-urbanization transmission channels, and empirically establish that equity consideration in PRC (e.g., government initiatives towards combating rural poverty or the urban-rural gap) is positively correlated with road density, which helps reduce migration costs, and with bank lending to the manufacturing sector, which helps enhance the pulling force of migration. Thus, policy makers in the developing world should reverse their prevailing anti-urbanization attitudes and practices that tend to slow down urbanization or restrict rural-to-urban migration.
    Keywords: urbanization; income inequality; Social welfare function; Optimization
    JEL: D63 E61 O18
    Date: 2017–01–20
  16. By: Kühnle, Daniel (University of Erlangen-Nuremberg); Oberfichtner, Michael (University of Erlangen-Nuremberg)
    Abstract: While recent studies mostly find that attending child care earlier improves the skills of children from low socio-economic and non-native backgrounds in the short-run, it remains unclear whether such positive effects persist. We identify the short- and medium-run effects of early child care attendance in Germany using a fuzzy discontinuity in child care starting age between December and January. This discontinuity arises as children typically start formal child care in the summer of the calendar year in which they turn three. Combining rich survey and administrative data, we follow one cohort from age five to 15 and examine standardised cognitive test scores, non-cognitive skill measures, and school track choice. We find no evidence that starting child care earlier affects children's outcomes in the short- or medium-run. Our precise estimates rule out large effects for children whose parents have a strong preference for sending them to early child care.
    Keywords: child care, child development, skill formation, cognitive skills, non-cognitive skills, fuzzy regression discontinuity
    JEL: J13 I21 I38
    Date: 2017–03
  17. By: Antonescu, Daniela
    Abstract: The purpose of this article is to provide an overall image of what a liveable city is. Starting from the theoretical aspects presented in the first part of this work, and ending up with the practical ones, an attempt was made to provide an answer to the following question: why are some cities more attractive than others and what criteria should be fulfilled in order for the life of a city’s inhabitants to be considered qualitative, and that city to be deemed liveable. For a city to be liveable, it is bound to fulfil several conditions, the most important ones being related to economy, environment, infrastructure (healthcare, transport, education etc.), and also to aesthetics & culture, ambient, ways of spending leisure time, safety of life, vicinity etc. Albeit there is no generally accepted concept of Liveable City, a series of methodologies recognised globally provide an assessment of this very aspect (many of them sharing the same elements). In this article, by means of the Liveability indices, cities are classified into several categories. The cities listed in one category are shown to be present in almost all the other categories, on positions that are similar. Hence, the city of Tokyo can be found in five out of six categories proposed by the international organisations which elaborated such methodologies, along with the City of London (in four out of six categories) and with New York City (in four out of six categories) etc. In Romania, the cities that might be classified as liveable are: Bucharest, Cluj-Napoca, Timisoara, Brasov, Constanța and Sibiu. The Capital City of Romania, i.e. Bucharest, is ranked the 28th in a List of European Capital Cities, being outranked by Cities like Sofia, Lisbon or Budapest, which means it still does not fulfil many of the criteria for a liveable city.
    Keywords: liveability, sustainable development, liveable city, urban economy
    JEL: R1 R10 R11 R2 R28 R5 R51
    Date: 2017–04–07
  18. By: Griffith, Daniel A.; Fischer, Manfred M.; LeSage, James P.
    Abstract: Spatial interaction models of the gravity type are widely used to describe origin-destination flows. They draw attention to three types of variables to explain variation in spatial interactions across geographic space: variables that characterize the origin region of interaction, variables that characterize the destination region of interaction, and variables that measure the separation between origin and destination regions. A violation of standard minimal assumptions for least squares estimation may be associated with two problems: spatial autocorrelation within the residuals, and spatial autocorrelation within explanatory variables. This paper compares a spatial econometric solution with the spatial statistical Moran eigenvector spatial filtering solution to accounting for spatial autocorrelation within model residuals. An example using patent citation data that capture knowledge flows across 257 European regions serves to illustrate the application of the two approaches.
    Keywords: Origin-destination flows, Spatial dependence in origin-destination flows, Spatial econometrics, Spatial filtering, Patent citation flows
    JEL: C31 R15
    Date: 2016
  19. By: Edward L. Glaeser; Wentao Xiong
    Abstract: Africa is urbanizing rapidly, and this creates both opportunities and challenges. Labor productivity appears to be much higher in developing-world cities than in rural areas, and historically urbanization is strongly correlated with economic growth. Education seems to be a strong complement to urbanization, and entrepreneurial human capital correlates strongly with urban success. Immigrants provide a natural source of entrepreneurship, both in the U.S. and in Africa, which suggests that making African cities more livable can generate economic benefits by attracting talent. Reducing the negative externalities of urban life requires a combination of infrastructure, incentives, and institutions. Appropriate institutions can mean independent public authorities, public-private partnerships, and non-profit entities depending on the setting.
    JEL: L26 O18 R00
    Date: 2017–03
  20. By: De Koning, Kees
    Abstract: Why is it that the rich seem to get richer over time and the poor cannot keep up with them? This is not only the situation in the U.S. but also in countries like the U.K., Germany, France and Italy. Wealth distribution is even more unequal than income distribution. For instance, in the U.S. according to the U.S Census Bureau , median net worth increased between 2000 and 2011 for households in the top two quintiles of the net worth distribution (the wealthiest 40 percent), while declining for those in the lower three quintiles (the bottom 60 percent). The result was a widening wealth gap between those at the top and those in the middle and bottom of the net worth distribution. The Census Bureau’s Distribution of Household Wealth in the U.S.: 2000 to 2011, states that the median household net worth decreased by $5,124 for households in the first (bottom) net worth quintile and increased by $61,379 (or 10.8 percent) for those in the highest (top) quintile. Median net worth of households in the highest quintile was 39.8 times higher than the second lowest quintile in 2000, and it rose to 86.8 times higher in 2011. Could there be a link between debt levels, especially of the long-term variety of home mortgages, and wealth inequality levels? From the 116.8 million U.S. households in 2008, 73.6 million had a mortgage in that year, or 63% of all households. 33.3% of the 73.6 million households faced foreclosure proceedings against them during the period 2005-2015. The bottom 40% of all households owned less than 0.1% of all U.S. wealth, the top 1% owned 35.5% and the top 20% owned 87% of all assets. In servicing mortgage debt, households on a lower income level have only their income to fall back on, while the wealthier households, can -if needed- service debt from accumulated assets. This difference between households has major implications for the economic consequences of excessive lending practices. In a paper: “How the U.S. financial crisis could have been averted” , this author analyses a link between income and mortgage debt and the consequences of ignoring such income link. The consequence is that mortgagors experience a depreciation of the U.S. dollar in the event house prices rise faster than income levels, thereby impairing their future income capacity to spend on other goods and services.
    Keywords: U.S wealth and income inequality, mortgage debt,household nominal incomes, average house price rises, depreciation in dollar values, national mortgage bank, early warning system
    JEL: E21 E3 E30 E32 E4 E44 E5 E58
    Date: 2017–04–26
  21. By: Asheim, Bjørn (CIRCLE, Lund University); Moodysson, Jerker (Jönköping International Business School, Jönköping University)
    Abstract: This paper provides an overview of the Swedish innovation system and the main strategies for Swedish innovation policy, with specific focus on VINNOVA’s place-based support to specialised areas integrating competences from different sectors in society. The overview reveals a recent shift from place-based specialisation to thematic areas underpinned by a societal challenge driven logic to policy intervention. The analysis indicates that a strong focus on R&D and science-driven innovation serves as a barrier for successful transition, and that the recent shift implies a greater need for policy coordination across different fields and scales. This makes agencies like VINNOVA less autonomous with regard to design as well as implementation of innovation policy and points to the need for reaching a balance between demand-oriented and supply-led strategies in which place-specific context matters and innovation policy must be attuned to and embedded in the particularities of the regional and national economies it aims to target. Linking smart specialisation strategies (S3), EU’s overall industrial and innovation policy for regional diversification and restructuring, with VINNOVAs new system innovation policy approach would be one way of doing this.
    Keywords: Innovation system; innovation policy; Sweden
    JEL: O25 O31 O52
    Date: 2017–04–27
  22. By: Cherevykov, Yevhen
    Abstract: The road sector is one of strategic segments of Ukrainian economy and public roads are considerable part of Ukrainian infrastructure potential. Many governments have been using PPP concerning highways and other fixed assets. Despite the successful development of the PPP/concession on construction and operation of motorway roads, the failures still happen. The inefficient project is those being prepared for a long period and still being unimplemented. The main obstacles and prerequisites for the PPP in the road sector in Ukraine are explored in this publication
    Keywords: PPP, concession, road sector, tolls, availability payment,institutional environment
    JEL: H44 M21 R42
    Date: 2017–04–05
  23. By: Orrenius, Pia M. (Federal Reserve Bank of Dallas)
    Abstract: The National Academies of Sciences, Engineering, and Medicine (2016) report on the economic and fiscal effects of immigration included the first set of comprehensive fiscal impacts published in twenty years. The estimates highlight the pivotal role of the public goods assumption. If immigrants are assigned the average cost of public goods, such as national defense and interest on the debt, then immigration’s fiscal impact is negative in both the short and long run. If, instead, immigrants are assigned the marginal cost of public goods, then the long-run fiscal impact is positive and the short-run effect is negative but very small (less negative than that of natives). Highly educated immigrants confer large positive fiscal impacts, contributing far more in taxes than they consume in public benefits. To the extent that immigrants impose net costs, these are concentrated at the state and local level and are largely due to the costs of public schooling.
    Keywords: Immigration; fiscal impact; public goods
    JEL: H50 H72 J15
    Date: 2017–04–01
  24. By: Brian Micallef (Central Bank of Malta)
    Abstract: This paper computes an aggregate ‘misalignment’ index using a multiple indicator approach to identify under or over-valuation of house prices in Malta based on fundamentals. A total of 5 indicators are used that capture demand, supply and banking system factors: the house price-to-RPI ratio, the price-to-income ratio, price-to-construction costs ratio, dwelling investment-to-GDP ratio and the loan-to-income ratio. These indicators enter the index in ‘gap’ form, that is, as a deviation from their trends or long-run averages. The weights are derived using principal component analysis. Based on the Central Bank of Malta house price index, the misalignment indicator shows a period of overvaluation in house prices that peaked in 2006-2007. This disequilibrium started to be corrected following the decline in house prices, reaching a trough in 2013. Starting in 2014, however, the index started to recover such that, by end-2015, house prices were broadly in equilibrium.
    JEL: E32 E37 C01 C22
    Date: 2016
  25. By: Carl Gaigné (INRA, UMR1302, SMART-LERECO Rennes (France) and CREATE, Laval University, Quebec (Canada)); Hans R.A. Koster (Department of Spatial Economics, Vrije Universiteit Amsterdam (The Netherlands)); Fabien Moizeau (Université de Rennes 1, CREM UMR CNRS 6211, Condorcet Center and Institut Universitaire de France); Jacques-François Thisse (CORE-UCL (Belgium), NRU Higher School of Economics (Russia) and CEPR)
    Abstract: We develop a new model of a "featureful" city in which locations are differentiated by two attributes, that is, the distance to employment centers and the accessibility to given amenities, and we show how heterogeneous households in income are sorted out across the urban space. Under Stone-Geary preferences, the spatial income distribution is governed by a location-quality index which reflects the interaction between the amenity and commuting cost functions. The residential equilibrium typically involves the spatial separation of households sharing similar incomes. Using data on Dutch cities, we show that there is a causal relationship between the amenity level and consumer income, suggesting that richer households sort themselves into high amenity locations. We do not find strong evidence that employment accessibility leads to income segregation, suggesting that the standard monocentric city model without amenities is a poor predictor of the social structure of cities.
    Keywords: social stratification, income, amenities, commuting
    JEL: R14 R23 R53 Z13
    Date: 2017–04
  26. By: Junichi Yamasaki
    Abstract: Railroad access can accelerate the technological progress in the industrial sector and therefore induce structural change and urbanization, the two common features of modern economic growth. I examine this particular mechanism in the context of Japanese railroad network expansion and modern economic growth in the late 19th century and early 20th centuries. By digitizing a novel data set that measures the use of steam engines at the factory level, allowing me to directly observe the diffusion of steam power, I analyze the effect of railroad access on the adoption of steam power. To overcome the endogeneity prob- lem, I determine the cost-minimizing path between destinations, and use this to construct an instrument for railroad access. I find that railroad access led to an increased adoption of steam power by factories, which in turn reallocated labor from the agricultural to the industrial sector, thereby inducing structural change. Railroad network also broke mean reversion in population growth, eventually leading to urban- ization. My results support the view that railroad network construction was key to the modern economic growth in pre-First World War Japan.
    Date: 2017–04
  27. By: Deguilhem, Thibaud; Berrou, Jean-Philippe; Combarnous, François
    Abstract: This article examines the effect of social networks through the use of family, friends or relatives ties on quality of employment (QoE). Drawing from the socioeconomic literature on social networks and labor market, we propose an original and multidimensional measure of QoE, and a fruitful estimation approach of the effect of social networks on QoE that allows to deal with complex inter-groups heterogeneity. Using the Great Integrated Houshold Survey (GIHS) and a sample on Bogota's workers in 2013, we find evidence proving that the use of ties has high negative effects on QoE index for those who are in the lower quality of employment range. Likewise, the use of social networks has very low negative effects on QoE index for individuals who are in the better quality of employment range. Complemented by focus groups interviews, these empirical results raise questions about the difference prevailing in relational practices between necessity networks for precarious workers and opportunity networks for protected workers.
    Keywords: Social networks, Quality of employment, Finite Mixture Regression Model, Colombia
    JEL: J42 L14 O54 Z13
    Date: 2017–04
  28. By: Chan, Jia Hao
    Abstract: This is a book review for François Gipouloux's The Asian Mediterranean: port cities and trading networks in China, Japan and South Asia, 13th-21st century.
    Keywords: Book review
    JEL: Y3
    Date: 2017–03
  29. By: Hakan Yilmazkuday (Department of Economics, Florida International University)
    Abstract: This paper investigates whether consumer search behavior differs across zip codes within the U.S.. As an application, daily gasoline price data covering virtually all gas stations within the U.S. are employed to estimate the distribution of search costs in each zip code. The results show that there are significant differences across zip codes regarding the expected number of searches achieved before consumers purchase gasoline. In order to have a systematic explanation, such differences are further connected to geographic, demographic and economic conditions of the zip codes in a secondary analysis. The corresponding results imply several strategies for gas stations in order to maximize profits/markups; suggestions follow for policy makers and regulators to reduce redistributive effects of information barriers across locations.
    Keywords: Consumer Search, Price Dispersion, Retail Gasoline
    JEL: D12 D83 L81
    Date: 2017–04
  30. By: Daniel Schubert (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg); André Scholz (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg); Gerhard Wäscher (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)
    Abstract: Supermarkets typically order their goods from a centrally located distribution center (warehouse). Each order that the warehouse receives is characterized by the requested items, the location of the respective supermarket and a due date by which the items have to be delivered. For processing an order, a human operator (order picker) retrieves the requested items from their storage locations in the warehouse first. The items are then available for shipment and loaded on the vehicle which performs the tour including the respective location of the supermarket. Whether and to which extent a due date is violated (tardiness) depends on the composition of the tours, the corresponding routes and the start dates of the tours (vehicle routing subproblem). The start date of a tour, however, is also affected by the assignment of orders to pickers and the sequence according to which the orders are processed by the pickers (order picking subproblem). Although both subproblems are closely interconnected, they have not been considered simultaneously in the literature so far. In this paper, an iterated local search algorithm is designed for the simultaneous solution of the subproblems. By means of extensive numerical experiments, it is shown that the proposed approach is able to generate high-quality solutions even for large instances. Furthermore, the economic benefits of an integrated solution are investigated. Problem classes are identified, where the sequential solution of the subproblems leads to acceptable results, and it is pointed out in which cases an integrated solution is inevitable.
    Keywords: Vehicle Routing, Order Picking, Parallel Machine Scheduling, Iterated Local Search
    Date: 2017–04
  31. By: Vrabie, Catalin I.; Tirziu, Andreea-Maria
    Abstract: A main feature of smart cities is the use of ICT in all aspects of city life. In this regard, eparticipation is a core element in the process of developing communities “ruled” by socially inclusive governance. Objectives: This paper aims to present a framework on how e-participation can be inclusive and how it might bring citizens closer to the idea of living in a smart city, by giving European reality examples regarding this concept. Prior Work: It shows the literature that concentrates on e-participation, focusing on citizens’ needs and requirements. Approach: The main methods employed for this research were some case studies on European examples of e-participation. Results: This type of participatory relationship is starting to transform all public institutions, changing their culture – from one control-based to one performancecentered. ICT is starting to play an important role in smart cities’ evolution and it brings an improvement in the government-citizens relationship. Value: We have identified that although technology is a main eparticipation element, there should also be considered the capability and willingness of citizens and public institutions to collaborate, not only by electronic means, but also through traditional ways of participating in the process of taking decisions.
    Keywords: e-participation; smart cities; inclusive relationship; public sector; technological development
    JEL: R00
    Date: 2016
  32. By: OECD
    Abstract: Across TALIS 2013 countries and economies, new teachers with a maximum of three years’ work experience comprise, on average, 10% of the total teacher population. New teachers are more likely to feel prepared in the content of their subject field(s), rather than the pedagogy or classroom practice of their subject field(s). However, the levels of their perceived preparedness were lower than experienced teachers in all three domains. In nearly two-thirds of TALIS 2013 countries and economies, the largest difference in reported preparedness between new and experienced teachers was in classroom practice of the subject field(s) they teach, followed by the pedagogy of the subject field(s) they teach.
    Date: 2017–05–09
  33. By: Guo, Zi-Yi
    Abstract: Empirical evidence shows that house prices are highly volatile and closely correlated with the business cycle, and the fact is at odds with the evidence that rental prices are relatively stable and almost uncorrelated with the business cycle. To explain the fact, we introduce information heterogeneity into a standard dynamic stochastic general equilibrium (DSGE) model with financial frictions. Agents are endowed with heterogeneous shocks, and rationally extract information from market activities. Since agents are confused by changes in average private signals about future fundamentals, the model generates an amplified effect of technology shocks on house prices, which accounts for the disconnect between house prices and the discounted sum of future rents. In addition, the model provides insights for the lead-lag relationship between residential and nonresidential investment over the business cycle. The solution method developed in this paper can be applied in other DSGE models with heterogeneous information.
    Keywords: heterogeneous information,DSGE model,housing market
    JEL: C63 E22 E32
    Date: 2017
  34. By: Jamal Bouoiyour (University of Pau); Amal Miftah; Christophe Muller
    Abstract: Using data from national-level households survey, this study seeks to fill a gap in the migration literature by analyzing the determinant of rural migration in the case of Morocco. In contrast to the evidence in the international migration literature, our results support the negative selection into internal migration. Specifically, the probability of being a household without migrants decreases with educational level of the household and asset holdings compared to non-migrant households. This suggests that rural migration can benefit home communities and family members left behind by increasing household income and thus easing liquidity constraints, thereby promoting investment in physical and human capital. These results are in line with that related to the propensity to remit and the amount remitted that seemingly decrease with the individual level of education of household.
    Date: 2017–10–04
  35. By: Desmet, Klaus; Greif, Avner; Parente, Stephen L.
    Abstract: Why do some countries industrialize much earlier than others? One widely-accepted answer is that markets need to be large enough for producers to find it profitable to bear the fixed cost of introducing modern technologies. This insight, however, has limited explanatory power, as illustrated by England having industrialized nearly two centuries before China. This paper argues that a market-size-only theory is insufficient because it ignores that many of the modern technologies associated with the Industrial Revolution were fiercely resisted by skilled craftsmen who expected a reduction in earnings. Once we take into account the incentives to resist by factor suppliers' organizations such as craft guilds, we theoretically show that industrialization no longer depends on market size, but on the degree of spatial competition between the guilds' jurisdictions. We substantiate the relevance of our theory for the timing of industrialization in England and China (i) by providing historical and empirical evidence on the relation between spatial competition, craft guilds and innovation, and (ii) by showing that a model of our theory calibrated to historical data on spatial competition correctly predicts the timing of industrialization in both countries. The theory can therefore account for both the Industrial Revolution and the Great Divergence.
    Keywords: adoption of technology; craft guilds; endogenous institutions; Great Divergence; industrial revolution; innovation; inter-city competition; market size; spatial competition
    JEL: N10 O11 O14 O31 O43
    Date: 2017–04
  36. By: Eugen Dimant (University of Pennsylvania & Harvard University)
    Abstract: Little is known about the underlying mechanisms of behavioral contagion, in particular with respect to differences in contagion of pro- versus anti-social behavior. Our principal contribution is the use of a novel experimental approach that enables us to analyze the contagion of behavior under varied levels of social distance to peers and differences in contagion of pro- and anti-social behavior. Anti-social behavior is found to be more contagious and social distance particularly drives the contagion of anti-social but not prosocial behavior. The results yield policy implications with regards to designing effective nudges and interventions to facilitate (reduce) pro- (anti-)social behavior, in both social and work environments.
    Keywords: Anti-Social Behavior, Behavioral Contagion, Charitable Giving, Peer Effects
    Date: 2017–06

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