nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2017‒07‒09
25 papers chosen by
Steve Ross
University of Connecticut

  1. In Search of a Spatial Equilibrium in the Developing World By Gollin, Douglas; Kirchberger, Martina; Lagakos, David
  2. Determinants of Urban Sprawl: A Panel Data Approach By Joseph DeSalvo; Qing Su
  3. Monetary policy transmission and trade-offs in the United States: Old and new By Boris Hofmann; Gert Peersman
  4. Heterogeneous effects of pupil-to-teacher ratio policies - A look at class size reduction and teacher aide By Simone Balestra; Uschi Backes-Gellner
  5. Identifying rent pressures in your neighbourhood: a new model of Irish regional rent indicators By Lawless, Martina; McQuinn, Kieran; Walsh, John A.
  6. The Provision of Local Public Goods in Proportional Representation Electoral Systems with Closed and Open Party Lists. By Raul A. Ponce-Rodriguez; Charles R. Hankla; Jorge Martinez-Vazquez; Eunice Heredia-Ortiz
  7. New Evidence on State Fiscal Multipliers: Implications for State Policies By Timothy J. Bartik
  8. Does Class Size Affect Student 'Grit'? Evidence from a Randomised Experiment in Early Grades By Jana Gross; Simone Balestra; Uschi Backes-Gellner
  9. The Consequences of Educational Voucher Reform in Chile By Richard J. Murnane; Marcus R. Waldman; John B. Willett; Maria Soledad Bos; Emiliana Vegas
  10. Dynamic Responses to Labor Demand Shocks: Evidence from the Financial Industry in Delaware By Russell Weinstein
  11. Consumer Mistakes and Advertising : The Case of Mortgage Refinancing By Grundl, Serafin J.; Kim, You Suk
  12. In brief...Road to recovery? Economic benefits of new infrastructure By Stephen Gibbons; Teemu Lyytikäinen; Henry Overman; Rosa Sanchis-Guarner
  13. Research, knowledge transfer and innovation: the effect of Italian universities’ efficiency on the local economic development 2006-2012 By Tommaso Agasisti; Cristian Barra; Roberto Zotti
  14. The Horror of Urban Development in India – Identifying The Real Issues By Morris, Sebastian
  15. The Difficult School-to-Work Transition of High School Dropouts: Evidence from a field experiment By Cahuc, Pierre; Carcillo, Stéphane; Minea, Andreea
  16. Political Institutions and Federalism: A “Strong” Decentralization Theorem By Raul A. Ponce-Rodriguez; Charles R. Hankla; Jorge Martinez-Vazquez; Eunice Heredia-Ortiz
  17. Smart Specialization policy in the EU: Relatedness, Knowledge Complexity and Regional Diversification By Pierre-Alexandre Balland; Ron Boschma; Joan Crespo; David L. Rigby
  18. Airports and economic performance in China By Stephen Gibbons; Wenjie Wu
  19. Media visibility and social tolerance: Evidence from USA By Ralsmark, Hilda
  20. New firms’ bankruptcy: does local banking market matter? By Giuseppe Arcuri; Maurizio La Rocca; Nadine Levratto
  21. The measurement of housing preferences in the Analytic Hierarchy Process By Gawlik, Remigiusz
  22. Spatial Analysis of Emissions in Sweden By George Marbuah; Franklin Amuakwa-Mensah
  23. SFour Decades of Study on Growth Disparities across Regions in France: Achievements and Prospects By Michel Hau
  24. Clearing the Fog: The Predictive Power of Weather for Employment Reports and their Asset Price Responses By Wilson, Daniel J.
  25. Racial Gaps in Labor Market Outcomes in the Last Four Decades and over the Business Cycle By Tomaz Cajner; Tyler Radler; David Ratner; Ivan Vidangos

  1. By: Gollin, Douglas; Kirchberger, Martina; Lagakos, David
    Abstract: In most developing countries, there is a large gap in income per head between urban and rural areas. One appealing interpretation of this gap is that it reflects a spatial equilibrium, in which the higher incomes of urban areas are offset by lower non-monetary amenities. In this paper, we draw on new high-resolution evidence to document how amenities vary across space within twenty developing countries. We focus on measures of health, housing quality, crime and pollution. These vary substantially across space, and they can be carefully measured with highly comparable data. We find that in almost all countries, and for almost all measures, amenities are constant or increasing in population density. In addition, net internal migration flows are directed toward denser areas in every country. These findings are hard to reconcile with a spatial equilibrium. Instead, they suggest that developing countries are undergoing a reallocation of workers to densely populated areas, which offer higher living standards on average.
    Keywords: amenities; Development; disamenities; living standards; migration; spatial equilibrium
    JEL: O11 O15 O18 R12
    Date: 2017–06
  2. By: Joseph DeSalvo (Department of Economics, University of South Florida); Qing Su (Department of Marketing, Economics and Sports Business, Northern Kentucky University)
    Abstract: This paper applies fixed effects (within-groups) and between-groups estimations to panel data to test hypotheses of the monocentric urban model with urbanized area data for the period 1990–2010. The paper examines the impact of population, household income, transportation cost, and land rent at the urban fringe on urbanized area spatial size. The fixed effects regression finds that a 1- percent increase in population and a 1- percent decrease in travel cost causes an urbanized area to expand by 1.087 percent and 0.127 percent, respectively. The impact of household income is non-linear. The regression results from the between-groups estimation indicate that geographic and political factors help explain the spatial size differences across urbanized areas. The spatial size of an urbanized area is larger with a higher percentage of the urban fringe overlying aquifers, a higher percentage of local revenues from intergovernmental transfers, a higher percentage of urban fringe incorporated in 1980, and a lower elevation range in the urban fringe.
    Keywords: urban spatial expansion; panel data, within-groups estimation, between-groups estimation
    JEL: R10
    Date: 2017–06
  3. By: Boris Hofmann; Gert Peersman
    Abstract: This study shows that, in the United States, the effects of monetary policy on credit and housing markets have become considerably stronger relative to the impact on GDP since the mid-1980s, while the effects on inflation have become weaker. Macroeconomic stabilization through monetary policy may therefore have become associated with greater fluctuations in credit and housing markets, whereas stabilizing credit and house prices may have become less costly in terms of macroeconomic volatility. These changes in the aggregate impact of monetary policy can be explained by several important changes in the monetary transmission mechanism and in the composition of macroeconomic and credit aggregates. In particular, the stronger impact of monetary policy on credit is driven by a much higher responsiveness of mortgage credit and a larger share of mortgages in total credit since the 1980s.
    Keywords: Monetary policy trade-offs, monetary transmission mechanism, inflation, credit, house prices
    JEL: E52
    Date: 2017–06
  4. By: Simone Balestra (University of St. Gallen); Uschi Backes-Gellner (University of Zurich)
    Abstract: This paper investigates the effect of two pupil-to-teacher ratio policies on test scores for children with different achievement levels. Using data from a large randomized experiment in early childhood, we estimate unconditional quantile treatment effects of small class and teacher aide, as compared to regular classes. For the small class intervention, results show that pupils in the middle of the achievement distribution profit the most from being assigned to a smaller class, whereas pupils at the bottom or at the top of the achievement distribution experience almost no gain in test scores. For the teacher aide intervention, the analysis reveals positive and significant effects for students at the bottom of the achievement distribution, an effect stronger for boys and disadvantaged pupils. The findings suggest that the average effects reported in traditional empirical studies on pupil-to-teacher ratio interventions provide an incomplete characterization of the impact on the achievement distribution, thus constituting a weak guide for policymakers.
    Keywords: class size, teacher aide, unconditional quantile regression, kindergarten
    JEL: C21 I21 J13
    Date: 2017–04
  5. By: Lawless, Martina; McQuinn, Kieran; Walsh, John A.
    Abstract: Since 2013, researchers in the Economic and Social Research Institute (ESRI) have compiled a hedonic rental index for the Residential Tenancies Board (RTB). The indicator estimates a standardised rental index on a national, Dublin and outside of Dublin basis based on the 950,000 rental properties registered with the RTB. The provision in late 2016 of detailed geographical identifiers has enabled an alternative series of indicators to be estimated. In particular, hedonic rental indicators for 137 local electoral areas (LEAs) are now available on a quarterly basis from 2007 quarter 3 to 2016 quarter 4. By providing a more accurate assessment of regional trends in rental supply and demand, the indicators should enable a more precise implementation of policies in the rental market. They should also serve as a proxy for measuring underlying economic activity in these regions on an ongoing basis.
    Date: 2017–07
  6. By: Raul A. Ponce-Rodriguez (Department of Economics, Universidad Autónoma de Ciudad Juárez); Charles R. Hankla (Department of Political Science, Georgia State University); Jorge Martinez-Vazquez (Department of Economics, Andrew Young School of Policy Studies, Georgia State University); Eunice Heredia-Ortiz (Development Alternatives Inc., DAI)
    Abstract: In this paper we find that the institutional set up of proportional representation systems matters for the welfare properties related with the ideal structure of government providing local public goods. In particular, we study the role of party centralization vs party decentralization in the provision of local public goods. In this paper, we show that the provision of local public goods with inter-regional spillovers by a system of local governments (welfare) dominates the fiscally centralized provision in economies with a proportional representation electoral system and closed party lists. We call this outcome the strong decentralization theorem. For this type of economies, the conventional decentralization theorem (originally identified by Oates 1972) is also satisfied. For economies with a proportional representation and open party lists systems the strong decentralization theorem is satisfied only when party centralization (i.e., the ability of party leaders to nominate candidates in the party’s lists) plays a dominant role in determining the policy platforms of candidates. However, if there is party decentralization (parties lack the ability to influence policy through the nomination process in the party’s list) the strong decentralization theorem is not satisfied. Lastly, the conventional decentralization theorem is satisfied in economies with proportional representation electoral systems and open party lists in both type of party systems: centralized and decentralized.
    Date: 2017–06
  7. By: Timothy J. Bartik (W.E. Upjohn Institute for Employment Research)
    Abstract: When state and local governments engage in balanced budget changes in taxes and spending, what fiscal multiplier effects do such policies have on creating local jobs? Traditionally, the view has been that possible job-creation effects of such state and local "demand-side” policies are smaller, second-order effects. Such effects might be worthwhile to take into consideration when a state or local government balances its budget during a recession, but the effects were believed to be of modest magnitude, and not of major importance for more general state and local public policies. However, recent estimates of fiscal multiplier effects of state and local spending and tax policies suggest much larger demand-side effects of such policies on local jobs. These fiscal multiplier effects are large enough to suggest relatively low costs per job created of some tax and spending policy combinations, sufficient to alter the net benefits of many public policies. In particular, this recent research suggests that policies that use tax increases on the top 10 percent of the income distribution to finance either public spending expansions or tax relief for the bottom 90 percent of the income distribution may offer some job creation benefits that are large enough to alter state and local policy decisions. Furthermore, the cost per job created of state business tax incentive policies or business tax cuts may be significantly altered after taking into account the opportunity costs of financing such policies by cutting public spending or raising taxes on the bottom 90 percent.
    Keywords: job creation, fiscal multipliers, state and local taxation, state and local expenditures, local labor demand, income distribution, business tax incentives, state and local business taxes
    JEL: H71 H72 J23 R12
    Date: 2017–07
  8. By: Jana Gross (ETH Zurich); Simone Balestra (University of St. Gallen); Uschi Backes-Gellner (University of Zurich)
    Abstract: The increasing recognition of non-cognitive skills has led many researchers to investigate how educational practices enhance these skills. In this paper, we focus on the non-cognitive skill known as 'grit', and we study the relation between class size and grit in early grades. Using data from follow-up surveys of Project STAR, we show that fourth-grade pupils who experienced small classes during early grades are 0.12 standard deviations higher in grit than their peers in regular classes. Sub-sample analysis reveals that particularly boys and non-white pupils increase their grit in smaller classes. We also show that grit matters, because half of the effect of smaller classes on test scores entirely operates through grit.
    Keywords: class size, grit, non-cognitive skills
    JEL: C20 C36 I21
    Date: 2017–06
  9. By: Richard J. Murnane; Marcus R. Waldman; John B. Willett; Maria Soledad Bos; Emiliana Vegas
    Abstract: In an effort to boost student achievement and reduce income-based gaps, the Chilean government passed the Preferential School Subsidy Law (SEP) in 2008, which altered the nation’s 27-year-old universal school-voucher system dramatically. Implementation of SEP increased the value of the school voucher by 50 percent for “Priority students”, primarily those whose family incomes fell within the bottom 40 percent of the national distribution. To be eligible to accept the higher-valued vouchers from these students, schools were required to waive fees for Priority students and to participate in an accountability system. Using national data on the mathematics achievement of 1,631,841 Chilean 4th-grade students who attended one of 8,588 schools during the year 2005 through 2012, we address two research questions (RQs): 1. Did student test scores increase and income-based score gaps become smaller during the five years after the passage of SEP? 2. Did SEP contribute to increases in student test scores and, if so, through what mechanisms? We addressed these RQs by fitting a sequence of multi-level interrupted time-series regression models, supplemented by other descriptive analyses. We found that: 1. On average, student test scores increased markedly and income-based gaps in those scores declined by one-third in the five years after the passage of SEP. 2. The combination of increased support of schools and accountability was the critical mechanism through which the implementation of SEP increased student scores, especially in schools serving high concentrations of low-income students. Migration of low-income students from public schools to private voucher schools played a small role. We interpret these findings as more supportive of improved student performance than other recent research on the Chilean policy reform.
    JEL: I22 I24 I25
    Date: 2017–06
  10. By: Russell Weinstein (Rensselaer Polytechnic Institute)
    Abstract: This paper analyzes an important shock to local labor demand in the financial services sector: firm relocation to Delaware following a Supreme Court ruling and state legislation in the 1908s. Using synthetic controls and bordering states, I find significant effects on employment growth, the unemployment rate, and participation in the first decade. Employment spillovers to the nontradable sector and migration appear larger than estimates from shocks to the tradable sector. Effects persist for 10 to 20 years after Delaware loses its original policy-induced advantage. The shift towards a low unemployment sector explains this persistence, rather than direct productivity effects or agglomeration.
    Keywords: Labor demand shocks, regulatory competition, migration, local labor markets
    JEL: R10 J20 G20
    Date: 2017–05
  11. By: Grundl, Serafin J.; Kim, You Suk
    Abstract: Does advertising help consumers to find the products they need or push them to buy products they don't need? In this paper, we study the effects of advertising on consumer mistakes and quantify the resulting effect on consumer welfare in the market for mortgage refinancing. Mortgage borrowers frequently make costly refinancing mistakes by either refinancing when they should wait, or by waiting when they should refinance. We assemble a novel data set that combines a borrower's exposure to direct mail refinance advertising and their subsequent refinancing decisions. Even though on average borrowers would lose approximately $500 by refinancing, the average monthly exposure of 0.23 refinancing advertisements reduces the expected net present value of mortgage payments on average by $13, because borrowers who should refinance are targeted by advertisers and more responsive to advertising. A counterfactual advertising policy that redirects all advertising to borrowers who should refinance would increase the gain in borrower welfare to $45.
    Keywords: Advertising; Mistakes; Mortgage; Refinancing
    JEL: D14 G21 M37
    Date: 2017–06–27
  12. By: Stephen Gibbons; Teemu Lyytikäinen; Henry Overman; Rosa Sanchis-Guarner
    Abstract: New investment in roads can produce economic benefits, even in mature infrastructure networks like the UK's, according to research by Henry Overman and colleagues. At the same time, they argue, improved evaluation of new UK road schemes is badly needed. New investment in transport infrastructure is seen as a key plank of a modern industrial strategy, and is central to many local economic growth strategies. This study looks at the impact of UK road investment on jobs.
    Keywords: productivity, employment, accessibility
    JEL: D24 O18 R12
    Date: 2017–07
  13. By: Tommaso Agasisti (Politecnico di Milano School of Management); Cristian Barra (Università di Salerno); Roberto Zotti (Università di Salerno)
    Abstract: In this paper, we test whether there is a link between the performance of universities and the local economic development of the territory where they operate. The performance of academic institutions is measured through an efficiency concept, estimated by means of an innovative Stochastic Frontier Analysis (SFA), and considering indicators of teaching, research and ‘third mission’ as outputs. A system generalized method-of-moments (Sys- GMM) dynamic panel estimator, instrumented with time lags and differences is estimated over the period from 2006 to 2012 to solve the potential endogeneity of the explanatory variables. Our findings reveal that the presence of efficient universities fosters local economic development, and that knowledge spillovers occur between areas through the geographical proximity to the efficient universities.
    Keywords: Higher education; knowledge spillovers; local economic development; efficiency of universities
    JEL: I21 E01
  14. By: Morris, Sebastian
    Abstract: The horror of India’s urban spaces cannot be understood without recognizing the core errors in planning and in the approach of infrastructural development. These stem mainly from the low FSI’s that are used, the lack of any recognition of central place needs of different economic activities, the lack of even a modicum of integration of transport planning with layout planning (the so called “Master Plans”), an” architects’ approach” to urban design, and most importantly to the organization mess-up that the urban local bodies are. Unless these change the large sums of money that would be spent would actually result in much subtraction of social and public value.
    Date: 2017–06–30
  15. By: Cahuc, Pierre; Carcillo, Stéphane; Minea, Andreea
    Abstract: This paper investigates the effects of the labor market experience of high school dropouts four years after leaving school by sending fictitious resumes to real job postings in France. Compared to those who have stayed unemployed since leaving school, the callback rate is not raised for those with employment experience, whether it is subsidized or non-subsidized, in the market or non-market sector, if there is no training accompanied by skill certification. In particular, we find no stigma effect associated with subsidized or non-market sector work experience. Moreover, training accompanied by skill certification improves youth prospects only when the local unemployment rate is sufficiently low, which occurs in one fifth of the commuting zones only.
    Keywords: Job subsidies; Training; youth unemployment
    JEL: J60 J68
    Date: 2017–06
  16. By: Raul A. Ponce-Rodriguez (Department of Economics, Universidad Autónoma de Ciudad Juárez); Charles R. Hankla (Department of Political Science, Georgia State University); Jorge Martinez-Vazquez (Department of Economics, Andrew Young School of Policy Studies, Georgia State University); Eunice Heredia-Ortiz (Development Alternatives Inc., DAI)
    Abstract: In this article, we investigate how differences in the political institutions necessary for implementing decentralization reform may affect the efficiency and welfare properties of decentralization itself. We incorporate insights from political science and economics into a rigorous and formal extension of the influential “decentralization theorem” first developed by Oates in 1972. In our analysis, we go beyond Oates by producing a strong decentralization theorem that identifies the political conditions under which democratic decentralization dominates centralization even in the presence of interjurisdictional spillovers. More specifically, we find that beneficial outcomes for public service delivery will obtain when democratic decentralization (i.e. the creation of popularly elected sub-national governments) is combined with party centralization (i.e. the power of national party leaders to nominate candidates for sub-national office). We also find that the participation rules of primaries, whether closed or open, have important implications for the expected gains from decentralization. Most notably, we find that, when primaries are closed, even Oates’ conventional decentralization theorem does not hold. In summary, our theory shows that political institutions matter considerably in determining the welfare gains of decentralization outcomes.
    Date: 2017–06
  17. By: Pierre-Alexandre Balland; Ron Boschma; Joan Crespo; David L. Rigby
    Abstract: Smart specialization has become a hallmark of the EUÕs Cohesion Policy. Envisaged as a bottom-up initiative identifying local knowledge cores and associated competitive advantages, the operationalization of smart specialization has been rather limited, as a coherent set of analytical tools to guide the policy directives remains elusive. To tackle the weak underpinning of smart specialization policy, we propose a policy framework around the concepts of relatedness and knowledge complexity. We use EPO patent data to provide evidence on how EU regions develop new technologies in the period 1990-2009. We find that diversifying into more complex technologies is highly attractive but difficult for EU regions to accomplish. Regions can overcome this diversification dilemma by developing new complex technologies that build on local related capabilities. We use these findings to construct a policy framework for smart specialization that highlights the potential risks and rewards for regions of adopting competing diversification strategies. We show how potential costs of alternative strategies in regions may be assessed by making use of the relatedness concept, and how potential benefits of various smart specialization strategies can be derived from estimates of the complexity of technologies. A series of case-studies of different types of regions illustrate the utility of this policy framework. Length:
    JEL: O25 O38 R11
    Date: 2017–07
  18. By: Stephen Gibbons; Wenjie Wu
    Abstract: China's airport construction policy has been successful in boosting manufacturing output, according to research by Stephen Gibbons and Wenjie Wu. Their study also finds that productivity impacts have been greater for private firms in areas with relatively high population and low educational achievement. The researchers address the question of whether opening new airports and expanding airport capacity stimulate economic growth, particularly in developing countries. The evidence they find on the positive impact of airport infrastructure in China suggests that reduced travel times and improved domestic market access help to boost industrial productivity.
    Keywords: airports, infrastructure, productivity, China
    JEL: H54 O21 P25 R41
    Date: 2017–07
  19. By: Ralsmark, Hilda (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: I study the impact of media visibility of people of colour on the rate of hate crimes motivated by race or ethnicity in the United States. To do so, I construct a novel measure of state-level media visibility of people of colour between 2007 and 2013. Comparing state-level variation in the hate crime rate with a measure of the one-year lagged state-level variation in media visibility, I find that an increase in media visibility reduces the number of hate crimes. The effect is not larger in states that used to be pro-slavery, but larger in states that are more prone to spontaneous emotional outbursts of hate. The result, which is robust to several checks, is in the line with the argument that "visibility matters."
    Keywords: Media; Information and knowledge; Economics of minorities; Crime
    JEL: D83 J15 K42 L82
    Date: 2017–07
  20. By: Giuseppe Arcuri; Maurizio La Rocca; Nadine Levratto
    Abstract: This paper investigates the role of local context, with regard to the effect of local financial development and banking concentration, on a new firm’s probability of bankruptcy. Our empirical setting is based on the Logit Multilevel Model that better allows the treatment of data referring to different levels of aggregation (firm and local variables) applied to new firms located in Italian provinces. We find that a higher level of financial development in a province decreases the likelihood of a new firm’s bankruptcy. This result is robust considering a 2SLS regression in which we use instruments for the local financial development and for the concentration of bank branches. In addition, our estimations suggest that the effect of local financial development and bank concentration is shaped by size. Local financial development is particularly significant for small start-ups, which traditionally suffer from great difficulty in accessing credit, whereas local banking concentration reduces the probability of bankruptcy for large, new firms.
    Keywords: Probability of bankruptcy, new firms, multilevel model, local banking structure
    JEL: C26 C30 M13 R11
    Date: 2017
  21. By: Gawlik, Remigiusz
    Abstract: The paper focuses on adaptation of the AHP method to elicit housing preferences on the rental market. To assess the applicability of AHP method for residential market analyses, a survey was conducted on a group of students from Cracow University of Economics, Poland. The students were asked to evaluate the importance of particular criteria when selecting an apartment. We identified the major methodological difficulties of utilization of AHP method in applied research on preferences and decision-making on the housing market. Potential solutions to mentioned limitations were also presented.
    Keywords: housing preferences, rental market, Analytic Hierarchy Process, decision-making, student rentals
    JEL: D81 R21
    Date: 2016–01
  22. By: George Marbuah (Department of Economics, Swedish University of Agricultural Sciences); Franklin Amuakwa-Mensah (Department of Economics, Swedish University of Agricultural Sciences)
    Abstract: This paper contributes to an emerging literature on the environmental Kuznets curve (EKC) relationship between pollution and income at the local level by analyzing emissions of carbon dioxide (CO2), sulfur dioxide (SO2), nitrogen oxides (NOX), carbon monoxide (CO), particulate matter (PM2.5 and PM10) and total suspended particulate (TSP). We conduct several spatial statistical and econometric tests to account for spatial dependence between 290 Swedish municipalities on the selected emissions. Results highlight evidence that the pollution and income relationship is significantly characterized by spatial interaction effects. That is, municipality per capita emissions are strongly influenced by emissions trajectories in neighbouring municipalities. Implications of our findings on policy are discussed.
    Keywords: Environmental Kuznets curve, Spatial econometric analysis, Emissions, Sweden,
    JEL: Q53 Q55 R12
    Date: 2017–06
  23. By: Michel Hau (University of Strasbourg)
    Date: 2017
  24. By: Wilson, Daniel J. (Federal Reserve Bank of San Francisco)
    Abstract: This paper exploits vast granular data – with over one million county-month observations – to estimate a dynamic panel data model of weather’s local employment effects. The fitted county model is then aggregated and used to generate in-sample and rolling out-of-sample (“nowcast”) estimates of the weather effect on national monthly employment. These nowcasts, which use only employment and weather data available prior to a given employment report, are significantly predictive not only of the surprise component of employment reports but also of stock and bond market returns on the days of employment reports.
    JEL: G17 J21 Q52 R11
    Date: 2017–06–14
  25. By: Tomaz Cajner; Tyler Radler; David Ratner; Ivan Vidangos
    Abstract: We examine racial disparities in key labor market outcomes for men and women over the past four decades, with a special emphasis on their evolution over the business cycle. Blacks have substantially higher and more cyclical unemployment rates than whites, and observable characteristics can explain very little of this differential, which is importantly driven by a comparatively higher risk of job loss. In contrast, the Hispanic-white unemployment rate gap is comparatively small and is largely explained by lower educational attainment of (mostly foreign-born) Hispanics. Regarding labor force participation, the remarkably low participation rate of black men is largely unexplained by observables, is mostly driven by high labor force exit rates from employment, and has shown little improvement over the last 40 years. Furthermore, even among those who work, blacks and Hispanics are more likely than whites to work part-time schedules despite wanting to work additional hour s, and the racial gaps in this involuntary part-time employment are large even after controlling for observable characteristics. Our findings also suggest that the robust recovery of the labor market in the last few years has contributed significantly to reducing the gaps that had widened dramatically as a result of the Great Recession; however, the disparities remain substantial.
    Keywords: Business Cycle ; Discrimination ; Inequality ; Labor Force Participation ; Racial Disparities ; Unemployment
    JEL: J00 J15 J16 J64 J7
    Date: 2017–06–30

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