nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2017‒07‒23
47 papers chosen by
Steve Ross
University of Connecticut

  1. The clash of rural-urban migrants and real estate investors on Phnom Penh's housing market: Prospects for garment workers By Buttmann, Vera
  2. Following Your Job By Martijn Smit
  3. Long-Term Trends in Private School Enrollments by Family Income By Richard J. Murnane; Sean F. Reardon
  4. Measuring Social Connectedness By Bailey, Michael; Cao, Ruiqing; Kuchler, Theresa; Ströbel, Johannes; Wong, Arlene
  5. Industrial Clusters, Organized Crime and Productivity Growth in Italian SMEs By Ganau, Roberto; Rodríguez-Pose, Andrés
  6. Additional Career Assistance and Educational Outcomes for Students in Lower Track Secondary Schools By Bernd Fitzenberger; Stefanie Licklederer
  7. The Impact of Schooling Intensity on Student Learning: Evidence from a Quasi-Experiment By Andrietti, Vincenzo; Su, Xuejuan
  8. Concurrent Elections and Political Accountability: Evidence from Italian Local Elections. By Bracco, Emanuele; Revelli, Federico
  9. Macroprudential Measures and Irish Mortgage Lending: An Overview of Lending in 2016 By Kinghan, Christina; Lyons, Paul; McCarthy, Yvonne; O'Toole, Conor
  10. Do Government Subsidies to Low-income Individuals Affect Interstate Migration? Evidence from the Massachusetts Health Care Reform By James Alm; Ali Enami
  11. Juvenile Punishment, High School Graduation and Adult Crime: Evidence from Idiosyncratic Judge Harshness By Ozkan Eren; Naci Mocan
  12. The Impact of Immigration on Wage Dynamics: Evidence from the Algerian Independence War By Anthony Edo
  13. Boosting taxes for boasting about houses: Status concerns in the housing market By Schünemann, Johannes; Trimborn, Timo
  14. Skill-Biased Technical Change and Regional Convergence By Elisa Giannone
  15. Unified Enrollment in School Choice: How to Improve Student Assignment in Chicago By Battal Dogan; Bumin Yenmez
  16. Industrial Clusters, Organized Crime and Productivity Growth in Italian SMEs By Roberto Ganau; AndrŽs Rodr’guez-Pose
  17. Making the House a Home: The Stimulative Effect of Home Purchases on Consumption and Investment By Efraim Benmelech; Adam Guren; Brian T. Melzer
  18. The Labor Market Effects of Refugee Waves: Reconciling Conflicting Results By Michael A. Clemens; Jennifer Hunt
  19. Forecasting the U.S. Real House Price Index By Vasilios Plakandaras; Rangan Gupta; Periklis Gogas; Theophilos Papadimitriou
  20. Towards an East German wage curve - NUTS boundaries, labour market regions and unemployment spillovers By Reinhold Kosfeld; Christian Dreger
  21. Human capital and urban growth in Italy, 1981-2001 By Francesco Giffoni; Matteo Gomellini; Dario Pellegrino
  22. Unrelated knowledge combinations: Unexplored potential for regional industrial path development By Grillitsch, Markus; Asheim, Bjorn; Trippl, Michaela
  23. Pensions and Late-Career Teacher Retention By Dongwoo Kim; Cory Koedel; Shawn Ni; Michael Podgursky; Weiwei Wu
  24. Entrepreneurial Skills in Thick and Thin Markets By Artz, Georgeanne M.; Guo, Zizhen; Orazem, Peter F.
  25. Macroprudential policy and household wealth inequality By Jean-Francois Carpantier; Javier Olivera; Philippe Van Kerm
  26. Incorporating spatial price adjustments in U.S. public policy analysis By John A. Bishop; Jonathan M. Lee; Lester A. Zeager
  27. Educational Investment Responses to Economic Opportunity: Evidence from Indian Road Construction By Adukia, Anjali; Asher, Samuel; Novosad, Paul
  28. The consequences of public employment: evidence from Italian municipalities By Marta Auricchio; Emanuele Ciani; Alberto Dalmazzo; Guido de Blasio
  29. Date-stamping US housing market explosivity By Balcilar, Mehmet; Katzke, Nico; Gupta, Rangan
  30. A mechanism design approach to the Tiebout hypothesis By Philippe Jehiel; Laurent Lamy
  31. So close yet so unequal: Spatial inequality in American cities By ANDREOLI Francesco; PELUSO Eugenio
  32. The First 2,000 Days and Child Skills: Evidence from a Randomized Experiment of Home Visiting By Orla Doyle
  33. How much of a problem is bullying at school? By OECD
  34. From few to many: product differentiation in the Italian mortgage market By Silvia Del Prete; Cristina Demma; Paola Rossi
  35. Changes in the regulation and control of mortgage markets and access to owner-occupation among younger households By Christine Whitehead; Peter Williams
  36. Spatial dependence in the growth process and implications for convergence rate: Evidence on Vietnamese provinces By Esiyok, Bulent; Ugur, Mehmet
  37. The Growth of U.S. Science and Technology Parks: Does Proximity to a University Matter? By Kelsi, Hobbs; Albert, Link; John, Scott
  38. Estimating Equilibrium Effects of Job Search Assistance By Pieter Gautier
  39. The role of migration-specific and migration-relevant policies in migrant decision-making in transit By Kuschminder, Katie; Koser, Khalid
  40. Regional analysis of sanitation performance in India By Bose, Debasree; Dutta, Arijita
  41. Regional inequality in decentralized countries: a multi-country analysis using LIS By Javier Martín-Román; Luis Ayala; Juan Vicente
  42. Spatial effects in the bid price setting strategies of the wholesale electricity markets: The case of Colombia By John J. García; Jesús López-Rodríguez; Jhonny Moncada-Mesa
  43. "Endogenizing Government's Objectives in Tax Competition with Capital Ownership" By Keisuke Kawachi; Hikaru Ogawa; Taiki Susa
  44. Winning Competitive Grants For Regional Development in Albania: The Role of Local Leaders By Elvina Merkaj; Riccardo Lucchetti; Fabio Fiorillo
  45. Transparency, quality of institutions and performance in the Italian Municipalities By Emma Galli; Ilde Rizzo; Carla Scaglioni
  46. Labor Market Effects of Urban Riots:an experimental assessment By Emmanuel Duguet; David Gray; Yannick L'Horty; Loïc du Parquet; Pascale Petit
  47. Consequences of culture and diversity for governmental redistribution By Gründler, Klaus; Köllner, Sebastian

  1. By: Buttmann, Vera
    Abstract: Housing markets of large cities around the world, particularly in so-called developing and emerging countries, are currently experiencing a clash: On the one hand, large numbers of labour migrants arrive from rural areas and need cheap rental housing. On the other hand, international real estate investment, particularly in the upper market segment, is strong. The resulting mismatch of housing demand and supply increases segregation, marginalises the vulnerable and leads to massive urban development problems. Phnom Penh illustrates this particularly well: Along with Cambodia's rapid globalisation in the last decades, hundreds of thousands of migrants, particularly garment workers, have moved to the capital. Housing for them is insufficient both in terms of supply and quality, though, because Phnom Penh's entrepreneurial mode of governance also attracts many investors, who focus on more profitable and prestigious real estate projects, often linked to speculation. These push land values up and push cheap rental housing further and further outside the city. This study carries out an indepth analysis of the prospects for rural-urban migrant workers on Phnom Penh's investor-driven housing market by firstly outlining both migration and real estate investment trends and by secondly examining the case of garment workers' housing. To complement the scarce literature on the topic, field research and expert interviews have been conducted. From these, an assessment of the status quo, of stakeholders' approaches to it and finally, proposals for action are derived.
    Keywords: housing,real estate investment,entrepreneurial city,urbanisation,ruralurban migration,migrant workers,garment industry
    JEL: F63 F66 L67 R21 R23 R28 R31 R38
    Date: 2017
  2. By: Martijn Smit
    Abstract: Evolutionary economic geography has awoken an interest in the question how regions can attract new human capital. One method is to attract migration firms, who will bring (part of) their existing employees. These people can then attract or generate new jobs (Hoogstra, van Dijk, & Florax, 2005). In this paper, we study the mobility of employees when their firm decides to move: do they stick with their employer or not? And if they do, do they commute or not? Finally, we link the decision to commute longer distances to the availability of a company car. We use microdata on individual firms and employees to test whether employees choose to follow their firm to another region. We control for personal and job characteristics. We find that having a company car is not correlated with the decision to stay with or to leave the current firm, but those who have one are less likely to move house, as long as the employee has a wage in the top quartile, or lives in the urban areas of the Randstad with their stressed housing market. Employees who already experienced long commutes before their employer moved are not influenced by the presence of a company car. Length:
    JEL: J61 R23
    Date: 2017–07
  3. By: Richard J. Murnane; Sean F. Reardon
    Abstract: We use data from multiple national surveys to describe trends in private elementary school enrollment by family income from 1968-2013. We note several important trends. First, the private school enrollment rate of middle-income families declined substantially over the last five decades, while that of high-income families remained quite stable. Second, there are notable differences in private school enrollment trends by race/ethnicity, urbanicity, and region of the country. Although racial/ethnic differences in private school enrollment are largely explained by income differences, the urban/suburban and regional differences in private school enrollment patterns are large even among families with similar incomes. In particular, the 90-50 income percentile difference in private school enrollment rates in 2013 is more than three times as large in cities as in the suburbs, and these gaps are larger in the South and West than in the Northeast and Midwest. Factors contributing to these patterns may include trends in income inequality, private school costs and availability, and the perceived relative quality of local schooling options.
    JEL: I21 I24
    Date: 2017–07
  4. By: Bailey, Michael; Cao, Ruiqing; Kuchler, Theresa; Ströbel, Johannes; Wong, Arlene
    Abstract: We introduce a new measure of social connectedness between U.S. county-pairs, as well as between U.S. counties and foreign countries. Our measure, which we call the 'Social Connectedness Index' (SCI), is based on the number of friendship links on Facebook, the world's largest online social networking service. Within the U.S., social connectedness is strongly decreasing in geographic distance between counties: for the population of the average county, 62.8% of friends live within 100 miles. The populations of counties with more geographically dispersed social networks are generally richer, more educated, and have a higher life expectancy. Region-pairs that are more socially connected have higher trade flows, even after controlling for geographic distance and the similarity of regions along other economic and demographic measures. Higher social connectedness is also associated with more cross-county migration and patent citations. Social connectedness between U.S. counties and foreign countries is correlated with past migration patterns, with social connectedness decaying in the time since the primary migration wave from that country. Trade with foreign countries is also strongly related to social connectedness. These results suggest that the SCI captures an important role of social networks in facilitating both economic and social interactions. Our findings also highlight the potential for the SCI to mitigate the measurement challenges that pervade empirical research on the role of social interactions across the social sciences.
    Keywords: Diffusion of Information; homophily; Measurement; migration; Patent Citations; Social Networks; Trade
    JEL: D8 F1 J6 L14 O33 R23
    Date: 2017–07
  5. By: Ganau, Roberto; Rodríguez-Pose, Andrés
    Abstract: We examine whether organized crime affects firms' performance (defined using Total Factor Productivity growth) both directly and indirectly, by downsizing the positive externalities arising from the geographic concentration of (intra- and inter-industry) market-related firms. The analysis uses a large sample of Italian small- and medium-sized manufacturing firms over the period 2010-2013. The results highlight the negative direct effects of organized crime on firms' productivity growth. Any positive effect derived from industrial clustering is thoroughly debilitated by a strong presence of organized crime, and the negative moderation effect of organized crime on productivity growth is greater for smaller than for larger firms.
    Keywords: Total Factor Productivity; Organized crime; Industrial clustering; Externalities; Italy
    JEL: D24 L25 R11 R12
    Date: 2017–07
  6. By: Bernd Fitzenberger (Humboldt-University Berlin, IZA, CESifo, IFS, ROA, ZEW); Stefanie Licklederer (University of Freiburg)
    Abstract: Based on local policy variation, this paper estimates the causal effect of additional career assistance on educational outcomes for students in Lower Track Secondary Schools in Germany. We find mostly insignificant effects of the treatment on average outcomes, which mask quite heterogeneous effects. For those students, who are taking extra coursework to continue education, the grade point average is unaffected and the likelihood of completing a Middle Track Secondary School degree falls. In contrast, educational outcomes improve for students who do not take extra coursework. Hence, the treatment causes a reversal of educational plans after graduation.
    Keywords: lower track secondary schools, career guidance, educational upgrading
    JEL: I20 J24
    Date: 2017–07
  7. By: Andrietti, Vincenzo (University of Chieti-Pescara); Su, Xuejuan (University of Alberta, Department of Economics)
    Abstract: This paper uses data from a quasi-natural policy experiment in Germany to examine the impact of schooling intensity on student achievement. The policy experiment, which we call the G8 reform, compresses secondary schooling for academic-track students from nine to eight years. At the same time, it keeps the amount of academic content required for graduation fixed, resulting in an increase in schooling intensity per school year. Using German extension of the PISA data, we find that the increased schooling intensity associated with the reform improves student test scores on average, but there is significant heterogeneity across students depending on their characteristics.
    Keywords: schooling intensity; instruction hours; student achievement; heterogeneity
    JEL: D04 I21 I28
    Date: 2017–07–10
  8. By: Bracco, Emanuele; Revelli, Federico (University of Turin)
    Abstract: This paper analyses the effects of holding concurrent elections in multi-tiered government structures on turnout decision and voting behaviour, based on municipal and provincial electoral data from Italy during the 2000s. When the less-salient provincial elections are held concurrently with the highly salient municipal elections, we observe three main effects: (1) turnout increases significantly by almost ten percentage points; (2) issues that are specific of the more salient (mayoral) contest affect the less salient (provincial) contest, with mayors' fiscal decisions impacting on the vote share of provincial incumbents; (3) issues that are specific to the less salient (provincial) contest stop affecting provincial elections outcomes. These findings shed light on how voters acquire information on incumbent politicians, and proves that the effectiveness of an election as an accountability tool may be hindered by the concurrence with higher-stakes elections.
    Date: 2017–05
  9. By: Kinghan, Christina (Central Bank of Ireland); Lyons, Paul (Central Bank of Ireland); McCarthy, Yvonne (Central Bank of Ireland); O'Toole, Conor
    Abstract: This Economic Letter provides an overview of residential mortgage lending in Ireland in 2016 for the five credit institutions reporting loan-level data to the Central Bank of Ireland as part of their compliance with loan-to-value (LTV) and loan-to-income (LTI) macroprudential Regulations. A total of €5.7 billion of mortgage lending was originated by these banks in 2016. The majority of new lending was for the purchase of primary dwelling homes (PDHs); within this group, first-time buyers (FTBs) accounted for 51 per cent of new lending and second and subsequent borrowers (SSBs) for the remaining 49 per cent. The average LTV and LTI ratios of FTBs and SSBs in-scope of the Regulations in 2016 were similar to those observed in 2015. Across the five institutions, 12 per cent of the value of PDH lending exceeded the LTV limit and 13 per cent exceeded the LTI limit for that group. We observe differences in the characteristics of borrowers with and without an allowance to exceed the limits of the Regulations. Specifically, a larger share of SSBs, couples, higher income and Dublin-based borrowers presented among the PDH group with an LTV allowance, relative to those without; SSBs accounted for 61 per cent of that group. In contrast, a larger share of FTBs, single persons, lower income and Dublin-based borrowers presented among the PDH group with an LTI allowance; 70 per cent of that group were FTBs. We find that approximately 66 per cent of FTBs and SSBs in 2016 originated a mortgage with an LTV that was below their regulatory limit. Among FTBs with an allowance to exceed the LTV limit set by the Regulations, the majority had an LTV at or below 90 per cent. This pattern is also evident among SSBs with an allowance to exceed the regulatory LTV limit.
    Date: 2017–05
  10. By: James Alm (Department of Economics, Tulane University); Ali Enami (Department of Economics, Tulane University)
    Abstract: Following the passage of the Patient Protection and Affordable Care Act (ACA) of 2010, many – but not all – states decided to expand their Medicaid program in line with provisions of the new law. Will low-income individuals respond to the incentives of living in a state with better health subsidies by relocating to the state? This paper addresses this question by examining the population growth rate of low-income individuals in Massachusetts following the Massachusetts Health Care Reform (MHCR) of 2006. Like the ACA, the MHCR expanded the Medicaid program, and also provided subsidized health insurance for low-income individuals. Using difference-in-differences and triple-differences models and Internal Revenue Service tax return data, we show that the reform did not have a global effect on the movement of low-income individuals across all cities in Massachusetts. However, we also show that the reform did have a local (or border) effect on the movement into border cities of the state, an effect that is relatively large for cities very close to the border but disappears quickly once the distance to border goes beyond 15 miles.
    Keywords: Massachusetts health care reform, interstate migration, Medicaid expansion, subsidized health insurance, border analysis
    JEL: H24 I13 J11
    Date: 2017–07
  11. By: Ozkan Eren; Naci Mocan
    Abstract: This paper contributes to the debate on the impact of juvenile punishment on adult criminal recidivism and high school completion. We link the universe of case files of those who were convicted of a crime as a juvenile between 1996 and 2012 in a southern U.S. state to the public school administrative records and to adult criminal records. The detail of the data allows us to utilize information on the exact types of crimes committed, as well as the type and duration of punishment imposed, both as a juvenile and as an adult. We exploit random assignment of cases to judges and use idiosyncratic judge stringency in imprisonment to estimate the causal effect of incarceration on adult crime and on high school completion. Incarceration has a detrimental impact on high school completion for earlier cohorts, but it has no impact on later cohorts, arguably because of the school reform implemented in the state in the late 1990s. We find that incarceration as a juvenile has no impact on future violent crime, but it lowers the propensity to commit property crime. Juvenile incarceration increases the propensity of being convicted for a drug offense in adulthood, but this effect is largely driven by time spent in prison as a juvenile. Specifically, juvenile incarceration has no statistically significant impact on adult drug offenses if time spent in prison is less than the median, but longer incarceration increases adult drug conviction, arguably because longer prison stays intensify emotional stress, leading to drug use.
    JEL: I2 K40
    Date: 2017–07
  12. By: Anthony Edo
    Abstract: This paper investigates the dynamics of wage adjustment to an exogenous increase in labor supply by exploiting the sudden and unexpected inflow of repatriates to France created by the independence of Algeria in 1962. I track the impact of this particular supply shift on the average wage of pre-existing native workers across French regions in 1962, 1968 and 1976. I find that regional wages decline between 1962 and 1968, before returning to their pre-shock level 15 years after. While regional wages recovered, this particular supply shock had persistent distributional effects. By increasing the relative supply of high educated workers, the inflow of repatriates contributed to the reduction of wage inequality between high and low educated native workers over the whole period considered (1962-1976).
    Keywords: Labor Supply Shock,;Wages;Immigration;Natural Experiment.
    JEL: F22 J21 J61
    Date: 2017–07
  13. By: Schünemann, Johannes; Trimborn, Timo
    Abstract: There is empirical evidence that households use residential houses as status goods. Their visibility qualifies them as an excellent signaling device of the relative income and wealth position, in contrast to less visible financial assets. To this end we introduce a residential housing sector and status concerns for housing into a neoclassical framework. In the model, households derive utility from the absolute amount of housing and from comparing their stock of housing to a reference stock, which is composed of the current or past level of housing of their peers. We analyze how status concerns affect household behavior and find that they increase housing demand and labor supply. Furthermore, we find that status concerns exert a negative externality and elevate housing to inefficiently high levels. We derive a (state contingent) optimal tax that establishes the first-best allocation along the transition path and at the steady state. Calibrating the model to the US we quantify the optimal tax on residential housing to 1.8%. Introducing the optimal tax entails a considerable welfare gain of 0.29% measured in consumption equivalents.
    Keywords: Status Concerns,Residential Housing,Optimal Taxation
    JEL: E03 O10 D10 H21 R31
    Date: 2017
  14. By: Elisa Giannone (University of Chicago)
    Abstract: Poorer US cities were catching up with richer ones at an annual rate of roughly 1.4% between 1940 and 1980. However, wage convergence across US cities went from 1.4% a year between 1940 and 1980 to 0% a year between 1980 and 2010. This paper quantifies the contributions of skill-biased technical change (SBTC) and agglomeration economies to the end of cross-cities wage convergence within the US between 1980 and 2010. I develop and estimate a dynamic spatial equilibrium model that looks at the causes of the decline in spatial wage convergence. The model choice is motivated by novel empirical regularities regarding the evolution of the skill premium and migration patterns over time and across space. The model successfully matches the quantitative features of the decline in US regional wage convergence, as well as other stylized facts on US economic growth. Moreover, the model also reproduces the convergence and the divergence in the skill ratio across US cities and other features on quantities, such as the secular decline in within US migration after 1980. Finally, the counterfactual analysis suggests that SBTC explains the approximately the 80% of the decline of regional convergence between 1980 and 2010 among high skill workers.
    Date: 2017
  15. By: Battal Dogan; Bumin Yenmez
    Abstract: The Chicago Board of Education is implementing a centralized clearinghouse to assign students to schools for 2018-19 admissions. In this clearinghouse, each student can simultaneously be admitted to a selective and a nonselective school. We study this divided enrollment system and show that an alternative unified enrollment system, which assigns each student to only one school, is better for all students. We also examine systems with two stages of admissions, which has also been considered in Chicago, and establish conditions under which the unified enrollment system is better than the divided enrollment system.
    Keywords: Market design, school choice, unified enrollment
    JEL: C72 C78 I21
    Date: 2017–07
  16. By: Roberto Ganau; AndrŽs Rodr’guez-Pose
    Abstract: We examine whether organized crime affects firms' performance (defined using Total Factor Productivity growth) both directly and indirectly, by downsizing the positive externalities arising from the geographic concentration of (intra- and inter-industry) market-related firms. The analysis uses a large sample of Italian small- and medium-sized manufacturing firms over the period 2010-2013. The results highlight the negative direct effects of organized crime on firms' productivity growth. Any positive effect derived from industrial clustering is thoroughly debilitated by a strong presence of organized crime, and the negative moderation effect of organized crime on productivity growth is greater for smaller than for larger firms. Length:
    JEL: J61 R23
    Date: 2017–07
  17. By: Efraim Benmelech; Adam Guren; Brian T. Melzer
    Abstract: We introduce and quantify a new channel through which the housing market affects household spending: the home purchase channel. Using an event-study design with data from the Consumer Expenditure Survey, we show that households spend on average $3,700 more in the months before and the first year following a home purchase. This spending is concentrated in the home-related durables and home improvements sectors, which are complementary to the purchase of the house. Expenditures on nondurables and durables unrelated to the home remain unchanged or decrease modestly. We estimate that the home purchase channel played a substantial role in the Great Recession, accounting for one-third of the decline in home-related durables spending and a fifth of the decline in home maintenance and investment spending from 2005 to 2010, together totaling $14.3 billion annually.
    JEL: E21 E32 G01 G12 R11 R2 R21
    Date: 2017–07
  18. By: Michael A. Clemens; Jennifer Hunt
    Abstract: An influential strand of research has tested for the effects of immigration on natives' wages and employment using exogenous refugee supply shocks as natural experiments. Several studies have reached conflicting conclusions about the effects of noted refugee waves such as the Mariel Boatlift in Miami and post-Soviet refugees to Israel. We show that conflicting findings on the effects of the Mariel Boatlift can be explained by a large difference in the pre- and post-Boatlift racial composition in subsamples of the Current Population Survey extracts. This compositional change is specific to Miami, unrelated to the Boatlift, and arises from selecting small subsamples of workers. We also show that conflicting findings on the labor market effects of other important refugee waves are caused by spurious correlation between the instrument and the endogenous variable introduced by applying a common divisor to both. As a whole, the evidence from refugee waves reinforces the existing consensus that the impact of immigration on average native-born workers is small, and fails to substantiate claims of large detrimental impacts on workers with less than high school.
    Keywords: refugees, immigration, instrumental variables
    JEL: J61 O15 R23
    Date: 2017–07
  19. By: Vasilios Plakandaras; Rangan Gupta; Periklis Gogas; Theophilos Papadimitriou
    Abstract: The 2006 sudden and immense downturn in U.S. House Prices sparked the 2007 global financial crisis and revived the interest about forecasting such imminent threats for economic stability. In this paper we propose a novel hybrid forecasting methodology that combines the Ensemble Empirical Mode Decomposition (EEMD) from the field of signal processing with the Support Vector Regression (SVR) methodology that originates from machine learning. We test the forecasting ability of the proposed model against a Random Walk (RW) model, a Bayesian Autoregressive and a Bayesian Vector Autoregressive model. The proposed methodology outperforms all the competing models with half the error of the RW model with and without drift in out-of-sample forecasting. Finally, we argue that this new methodology can be used as an early warning system for forecasting sudden house prices drops with direct policy implications.
    Date: 2017–07
  20. By: Reinhold Kosfeld (University of Kassel); Christian Dreger (German Institute of Economic Research (DIW Berlin) and European University Viadrina Frankfurt (Oder))
    Abstract: The relevance of spatial effects in the wage curve can be rationalized by the model of monopsonistic competition in regional labour markets. However, distortions in extracting the regional unemployment effects arise in standard regional (i.e. NUTS) classifications as they fail to adequately capture spatial processes. In addition, the nonstationarity of wages and unemployment is often ignored. Both issues are particularly important in high unemployment regimes like East Germany where a wage curve is difficult to establish. In this paper, labour market regions defined by economic criteria are used to examine the existence of an East German wage curve. Due to the nonstationarity of spatial data, a global panel cointegration approach is adopted. By specifying a spatial error correction model (SpECM), equilibrium adjustments are investigated in time and space. The analysis gives evidence on a locally but not a spatially cointegrated wage curve for East Germany.
    Keywords: Wage curve, labour market regions, global cointegration, spatial error-correction model
    JEL: J30 J60 C33 R15
    Date: 2017
  21. By: Francesco Giffoni (CSIL); Matteo Gomellini (Bank of Italy); Dario Pellegrino (Bank of Italy)
    Abstract: This paper analyses the contribution of human capital, measured using the share of residents holding a college degree, to urban growth, gauged by the growth in employment, between 1981 and 2001. According to our estimates, starting with a ten per cent higher share of college-educated residents was associated with a higher growth in employment in the 0.5-2.2 per cent range. These results hold when considering both the municipal and the local labour market (LLM) levels, and they are robust to a wide set of urban characteristics. Our findings are confirmed using a measure of education dating back to 1931 as an instrument for human capital. Furthermore, we exploit a spatial localization model with human capital premiums to disentangle the estimated effect into two components related to productivity and life quality respectively. We find that productivity contributed to more than 60 per cent of the effect of human capital on urban growth at municipal level, and to over 90 per cent at the wider LLM level.
    Keywords: urban growth, human capital
    JEL: R11 N94 J24
    Date: 2017–07
  22. By: Grillitsch, Markus (KEG, Lund University); Asheim, Bjorn (University of Stavanger); Trippl, Michaela (University of Vienna)
    Abstract: The paper engages in a critical discussion of the related variety – regional branching argument and foregrounds a more differentiated perspective on regional industrial path development. It contributes by i) sharpening the definition of key concepts, namely specialisation and diversity, related and unrelated variety, ii) discussing their relevance in local and non-local spaces, iii) scrutinizing related variety as source for regional branching, and iv) developing a conceptual framework capturing the opportunity space for regional structural change that unveils the relevance of path upgrading, path importation, path branching, path diversification, and new path creation as different forms of new path development.
    Keywords: industrial path development; economic diversification; regional structural change; specialisation and diversity; related and unrelated variety; knowledge base combinations
    JEL: B52 O10 R10 R58
    Date: 2017–07–10
  23. By: Dongwoo Kim (University of Missouri); Cory Koedel (University of Missouri); Shawn Ni (University of Missouri); Michael Podgursky (University of Missouri); Weiwei Wu (University of Missouri)
    Abstract: Public school teachers retire much earlier than comparable professionals. Pension rule changes affecting new teachers can be used to close this gap in the long run, but any effects will not be observed for decades and the implications for workforce quality are unclear. This paper considers targeted incentive policies designed to retain experienced high-need teachers, of retirement age, as instruments to extend current teachers’ careers. We use structural estimates from a dynamic retirement model to simulate the workforce effects of targeted late-career salary bonuses and deferred retirement (DROP) plans using administrative data from Missouri. The simulations suggest that such programs can be cost-effective, partly because long-term pension savings offset a portion of up front program costs. More generally, we demonstrate the utility of using structural retirement models to analyze fiscal and workforce effects of changes to public sector pension plans, since the effects of pension reforms cumulate over many years.
    Keywords: public pensions, retirement, worker retention, teacher retention
    JEL: J26 I28
    Date: 2016–07
  24. By: Artz, Georgeanne M.; Guo, Zizhen; Orazem, Peter F.
    Abstract: Firm profitability is affected by location-specific factors such as agglomeration economies, infrastructure, or proximity to consumers or key producers. Location-specific profits are also influenced by the idiosyncratic match between the entrepreneur and the community. Using data on the universe of all new firm entrants in North Carolina and Iowa between 1992–2011, this study shows how observed location-specific factors affect the probability of new firm entry. We then show that the unobserved factors that influence new firm entry increase the probability of firm survival, demonstrating that these unobserved idiosyncratic factors influence firm profitability and are not just unproductive entrepreneurial preferences for the location.These unobserved factors are interpretable as match capital between the entrepreneur and the location. Shift-share analysis demonstrates that the match capital varies systematically across urban locations, meaning that the match capital can be incorporated into property values in densely populated markets. However, the match capital varies disproportionately within and not between rural markets, meaning that match capital in thin markets is primarily due to a unique match between the entrepreneur and the rural location. These results suggest that it will be easier to transfer firm profitability in the case of a firm sale in dense urban markets than in thin rural markets.
    Date: 2017–07–07
  25. By: Jean-Francois Carpantier (University of Aix-Marseille); Javier Olivera (Luxembourg Institute of Socio-Economic Research); Philippe Van Kerm (Luxembourg Institute of Socio-Economic Research and University of Luxembourg)
    Abstract: Macroprudential policies, such as caps on loan-to-value (LTV) ratios, have become part of the policy paradigm in emerging markets and advanced countries alike. Given that housing is the most important asset in household portfolios, relaxing or tightening access to mortgages may affect the distribution of household wealth in the country. In a stylised model we show that the final level of wealth inequality depends on the size of the LTV ratio, housing prices, credit cost and the strength of a bequest motive; ultimately with no unequivocal effect of LTV ratios on wealth inequality. These trade-offs are illustrated with estimations of ``Gini Recentered Inuence Function'' regressions on household survey data from 12 eurozone countries that participated in the first wave of the Household Finance and Consumption Survey (HFCS). The results show that, among the households with active mortgages, high LTV ratios at the time of acquisition are related to high contributions to wealth inequality today, while house price increases are negatively related to inequality contributions. A proxy for the strength of bequest motives tends to be negatively related with wealth inequality, but credit cost does not show a significant link to the distribution of wealth.
    Keywords: Household Finance, Macroprudential policy, Inequality, LTV ratio, Wealth distribution.
    JEL: D31 E5 E21 G21
    Date: 2017–06
  26. By: John A. Bishop (Department of Economics East Carolina University, Greenville, NC 27858, USA); Jonathan M. Lee (Department of Economics East Carolina University, Greenville, NC 27858, USA); Lester A. Zeager (Department of Economics East Carolina University, Greenville, NC 27858, USA)
    Abstract: The U.S. Bureau of Economic Analysis has recently released regional price parities (RPPs) for the 325 Standard Metropolitan Statistical Areas and the 50 state nonmetropolitan areas. We consider the effects of RPP adjustments on four public policy issues: poverty rates, family income inequality, tax progressivity, and metropolitan-size premiums. We demonstrate that RPP adjustments strongly affect the spatial distribution of U.S. poverty, have an equalizing effect on income inequality (equivalent to a $1,500 cash transfer to each U.S. family), and also increase effective federal tax progressivity by more than 25 percent. Income premiums for the major metropolitan areas largely disappear after adjusting for spatial prices and controlling for the characteristics of family heads. Metro-size premiums also depend on whether we adjust incomes by the overall RPPs or a narrower housing-price index (as in earlier research). We conjecture that other public policy findings are sensitive to adjustments for spatial price differences.
    Keywords: regional price parities, poverty, inequality, tax progressivity, metro-size premiums.
    JEL: D31 H23 I32 R32
    Date: 2017–05
  27. By: Adukia, Anjali; Asher, Samuel; Novosad, Paul
    Abstract: The rural poor in developing countries, once economically isolated, are increasingly being connected to regional markets. Whether these new connections crowd out or encourage educational investment is a central question. We examine the impacts on educational choices of 115,000 new roads built under India's flagship road construction program. We find that children stay in school longer and perform better on standardized exams. Treatment heterogeneity supports the predictions of a standard human capital investment model: enrollment increases are largest where nearby labor markets offer the highest returns to education and lowest where they imply high opportunity costs of schooling.
    Keywords: Education; Roads; India; Human capital; labor demand shocks; infrastructure; development
    JEL: I25 J24 O18
    Date: 2017–01
  28. By: Marta Auricchio (Bank of Italy); Emanuele Ciani (Bank of Italy); Alberto Dalmazzo (University of Siena); Guido de Blasio (Bank of Italy)
    Abstract: We investigate the consequences of public employment on local economies. We start by presenting a spatial-equilibrium framework, to highlight that the housing market is an important channel through which a variation in public employment affects private employment. We then provide empirical evidence from Italian municipalities, focusing on the strong contraction in the public sector workforce that occurred between the last two Censuses (2001-2011). We use an IV identification strategy that exploits the fact that variations in local public employment were strongly influenced by central government decisions, with little reference to the economic conditions of the municipalities. Our results suggest that exogenous contractions in public employment lead to an increase of private jobs, and that competition in the housing market seems to be a relevant explanation for this finding.
    Keywords: local labor markets, public employment
    JEL: J45 J60 R12
    Date: 2017–07
  29. By: Balcilar, Mehmet; Katzke, Nico; Gupta, Rangan
    Abstract: In this paper, the authors set out to date-stamp periods of US housing price explosivity for the period 1830-2013. They make use of several robust techniques that allow them to identify such periods by determining when prices start to exhibit explosivity with respect to its past behaviour and when it recedes to long term stable prices. The first technique used is the Generalized sup ADF (GSADF) test procedure developed by Phillips, Shi, and Yu (Testing for Multiple Bubbles: Historical Episodes of Exuberance and Collapse in the S&P 500, 2013), which allows the recursive identification of multiple periods of price explosivity. The second approach makes use of Robinson's (Efficient Test of Nonstationary Hypotheses, 1994) test statistic, comparing the null of a unit root process against the alternative of speced orders of fractional integration. The analysis date-stamps several periods of US house price explosivity, allowing us to contextualize its historic relevance.
    Keywords: GSADF,bubble,structural breaks,Random Walk,explosivity,recursive process
    JEL: C22 G15 G14
    Date: 2017
  30. By: Philippe Jehiel (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Laurent Lamy (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We revisit the Tiebout hypothesis in a world in which agents may learn extra information as to how they value the various local public goods once located, and jurisdictions are free to commit to whatever mechanism to attract citizens. It is shown in quasi-linear environments that efficiency can be achieved as a competitive equilibrium when jurisdictions seek to maximize local revenues but not necessarily when they seek to maximize local welfare. Interpretations and limitations of the result are discussed.
    Keywords: mechanism design,competing mechanisms,endogenous entry,Tiebout hypothesis,local public goods
    Date: 2017–07
  31. By: ANDREOLI Francesco; PELUSO Eugenio
    Abstract: Rich income data and a new methodology are employed to investigate patterns and consequences of spatial inequality in American cities over the last 35 years. New Gini-type indices, which assess spatial inequality using individual neighborhoods of variable size as primitives, uncover from the data robust evidence of growing income inequality within the neighborhood. The welfare implications of this trend are investigated through reduced-form models, addressing potential bias due to sorting across and within cities. An exogenous increase of the income mix in the neighborhood is found to yield a signi cant drop in intergenerational mobility gains for young people.
    Keywords: Neighborhood inequality; Gini; individual neighborhood; geostatistics; census; ACS; causal neighborhood effects; life expectancy; divided city; mixed city
    JEL: C21 D33 D63 I23 J22 R23
    Date: 2017–07
  32. By: Orla Doyle (University College Dublin)
    Abstract: Using a randomized experiment, this study investigates the impact of sustained investment in parenting, from pregnancy until age five, in the context of extensive welfare provision. Providing the Preparing for Life program, incorporating home visiting, group parenting, and baby massage, to disadvantaged Irish families raises children’s cognitive and socio-emotional/behavioral scores by two-thirds and one-quarter of a standard deviation respectively by school entry. There are few differential effects by gender and stronger gains for firstborns. The results also suggest that socioeconomic gaps in children’s skills are narrowed. Analyses account for small sample size, differential attrition, multiple testing, contamination, and performance bias.
    Keywords: early childhood intervention, cognitive skills, socio-emotional skills, behavioral skills, randomized controlled trial, multiple-hypothesis testing, permutation testing, inverse probability weighting
    JEL: C93 D13 I26 J13
    Date: 2017–07
  33. By: OECD
    Abstract: For the first time, the 2015 round of PISA collected data on students’ exposure to bullying. These data show that bullying is widespread. On average across OECD countries, around 11% of students reported that they are frequently (at least a few times per month) made fun of, 8% reported that they are frequently the object of nasty rumours in school, and 7% reported that they are frequently left out of things. Being bullied can negatively affect academic achievement because it influences students’ capacity to focus on academic tasks. Schools where the incidence of bullying is high by international standards (more than 10% of students are frequently bullied) score 47 points lower in science, on average, than schools where bullying is less frequent (schools where less than 5% of students are frequently bullied). These relationships suggest that bullying can both stem from and may exacerbate students’ disengagement with school and underperformance.
    Date: 2017–07–18
  34. By: Silvia Del Prete (Bank of Italy); Cristina Demma (Bank of Italy); Paola Rossi (Bank of Italy)
    Abstract: Nowadays Italian borrowers can choose among a variety of mortgage contracts. Using a special Bank of Italy survey on 400 Italian banks over the period 2006-2013, we analyse the supply of ‘non-conventional’ mortgages (loan-to-value ratio greater than 80 per cent, duration longer than 30 years or with a flexible maturity). We build a synthetic indicator measuring the degree of differentiation of mortgages across banks to examine how local market competition and bank-specific characteristics have influenced this process. Our findings – potentially influenced also by customer preferences we cannot control for – suggest that larger, less risky banks and those that have adopted scoring systems are more likely to offer non-conventional mortgages. Moreover, banks operating in more competitive markets and in markets where other banks offer non-conventional loans tend to diversify their supply more. Most of these indications are confirmed by analysing the quantities actually granted. These results suggest that the structure of the local markets does matter and that there could be a non-price competition effect among banks in providing differentiated mortgage contracts.
    Keywords: Households’ mortgages, financial crisis, bank heterogeneity
    JEL: G21 G01 D12 D14
    Date: 2017–06
  35. By: Christine Whitehead; Peter Williams
    Abstract: This paper looks at the issue of access to home ownership for younger people in OECD countries, from the point of view of changes in mortgage market regulation and control. It sets out the factors determining the demand for and supply of mortgages, particularly for first time buyers and it provides a review of the relevant literature and comparative data. The paper provides an overview of regulatory change since 2008 for over 20 countries. The paper also includes case studies of a subset of countries with mature mortgage markets that are known to face relevant issues and for which data are more readily available: Canada, Denmark, the United Kingdom and the United States.
    Keywords: financial regulation, insecure employment, Mortgage markets, owner-occupation, younger households
    JEL: E5 G21 J3 R31 R38
    Date: 2017–07–18
  36. By: Esiyok, Bulent; Ugur, Mehmet
    Abstract: Existing studies on Vietnamese provinces (e.g., Anwar and Nguyen, 2010) tend to assume that province-specific growth is independent of that in its neighbours. However, many studies analysing regional economic growth in China, Brazil and Mexico report the existence of spatial spill-over effects. This paper investigates whether this is the case for 60 Vietnamese provinces for the time-period 1999-2010, using a system-GMM estimator and a Solow growth model augmented with human and physical capital and spatial lag covariates. We report that spatial dependence is a significant determinant of growth and conditional convergence in Vietnamese provinces. We also demonstrate that the rate of convergence decreases as the distance between neighbouring provinces increases. Given these findings, we recommend testing for spatial dependence in growth models for Vietnam and beyond to avoid omitted variable bias and inform evidence-based regional policies that take account of spatial externalities.
    Keywords: Economic growth; spatial dependence; regional convergence, GMM
    JEL: C1 C18 C5 C51 O4 O47
    Date: 2017–06–15
  37. By: Kelsi, Hobbs (University of North Carolina at Greensboro, Department of Economics); Albert, Link (University of North Carolina at Greensboro, Department of Economics); John, Scott (Dartmouth College)
    Abstract: In this paper, we present a generalized model of U.S. university science and technology parks, and we identify covariates that might serve as target variables not only to perpetuate the growth of existing parks but also to provide information for those nations, regions, and universities starting new parks. Relevant covariates are the distance between the park and the university and if the park was founded during the information and communications technology (ICT) revolution (post-2000).
    Keywords: science park; technology park; geographic location; ICT
    JEL: O32 O51 R11 R12
    Date: 2017–07–11
  38. By: Pieter Gautier (VU University Amsterdam)
    Abstract: Identifying policy-relevant treatment effects from randomized experiments requires no spillovers between participants and nonparticipants (SUTVA) or variation in treatment levels. We find that SUTVA is violated for a Danish activation program for unemployed workers. Using a difference-in-difference model we show that the nonparticipants in the experiment regions find jobs slower after the introduction of the activation program (relative to workers in other regions). We then estimate an equilibrium search model. This model shows that a large-scale roll out of the activation program decreases welfare, while a standard partial microeconometric cost-benefit analysis concludes the opposite.
    Date: 2017
  39. By: Kuschminder, Katie (UNU-MERIT, Maastricht University, and European University Institute); Koser, Khalid (UNU-MERIT, and Maastricht University)
    Abstract: This paper examines the role of migration-specific and migration-relevant policies in migrant decision-making factors for onwards migration or stay in Greece and Turkey. In this paper we distinguish migration-specific policies from migration-relevant policies in transit and destination countries, and in each case distinguish favourable policies from adverse policies. We test this categorisation through an original survey of 1,056 migrants in Greece and Turkey from Afghanistan, Iran, Iraq, Pakistan and Syria collected in 2015. The results indicate that, in transit countries, the policies that most strongly influence migrants' decision-making are adverse migration-specific and migration-relevant policies. By contrast, in destination countries favourable migration-specific policies appear to be more important than migration-relevant policies there in determining the choice of destination.
    Keywords: migration policies, transit migration, irregular migration, Greece, Turkey
    JEL: D01 F22 F66 O15
    Date: 2017–05–10
  40. By: Bose, Debasree (Department of Economics, University of Calcutta); Dutta, Arijita (Department of Economics, University of Calcutta)
    Abstract: India bears a disproportionate burden of open defecation in spite of investing more and more funds and ushering in several institutional efforts including the Swachh Bharat Mission in the recent past. A large share of rural households still lack basic sanitation facilities in India and members practice open defecation. Thia study endeavours to examine the existing anomaly between meagre sanitation productivity and enhanced resource allocation in rural sanitation in India. The study attempts to develop an instrument to monitor the differential regional performances across India.
    Keywords: Performance Index, Efficiency, Equity, Equality, Swachh Bharat Mission, SDG, Sustainable Development Goals.
    JEL: I15 I18 Q01 Q59 R10 O18
    Date: 2017–06–07
  41. By: Javier Martín-Román; Luis Ayala; Juan Vicente
    Abstract: The aim of this paper is to analyze the regional disparities of six decentralized countries using LIS microdata. In order to determine the extent of the territorial variable in the explanation of income inequality, we carry out two complementary analyses. On the one hand, we perform the classical decomposition by population subgroups of different inequality measures. On the other hand, we implement a semiparametric decomposition analysis based on the method proposed by DiNardo, Fortin and Lemieux.
    Keywords: income inequality,regional inequality,subgroup decomposition,semiparametric decomposition
    JEL: D31 D33 R23
    Date: 2017–05
  42. By: John J. García; Jesús López-Rodríguez; Jhonny Moncada-Mesa
    Abstract: Weather conditions in Colombia vary greatly throughout the territory and therefore the location of electricity generating plants plays a key role in their bid pricing strategies. To account for these location-specific pricing strategies this paper estimates a Spatial Durbin Model (SDM) with monthly data gathered from the 17th largest hydraulic electricity generating plants of Colombia on bid prices, generation, energy inputs and positive reconciliation over the period January 2005-August 2015 and controlling also for the system marginal prices and the economy cycle. The paper reports three main results. First, firms ? bid prices are negatively affected by the energy inputs of the rivals, second they are unaffected by positive reconciliation payments to the rivals and third they are negatively affected by the generation amounts of the rivals. One potential policy recommendation of these results is the need to implement balancing markets to signal more efficiently the pricing strategies in these markets.
    Keywords: Bid Price, wholesale electricity market, Spatial Durbin, Colombia
    JEL: C23 D43 L25
    Date: 2017–03–03
  43. By: Keisuke Kawachi (Faculty of Humanities, Law and Economics, Mie University); Hikaru Ogawa (Graduate School of Economics and Graduate School of Public Pol- icy, University of Tokyo); Taiki Susa (College of Business Administration and Information Science, Chubu University)
    Abstract: In this paper, we extend the standard approach of horizontal tax competition by endogenizing the policy objectives that governments pursue. Following the literature on strategic delegation games, we consider a preplay stage, where jurisdictions commit themselves to act as Leviathan or as benevolent agents. We show that the sub-game perfect equilibria (SPEs) correspond to the three cases of tax competition between (i) the Leviathan and the benevolent government, (ii) both Leviathans, and (iii) both benevolent governments, depending on the form of capital ownership. The results provide grounds for the assumption of government objective made in literature, and explain why some governments behave as Leviathans, while others as benevolent agents in international tax competition.
    Date: 2017–07
  44. By: Elvina Merkaj (Universita' Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali); Riccardo Lucchetti (Universita' Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali); Fabio Fiorillo (Universita' Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali)
    Abstract: In post-socialist countries, regional development and decentralization has been a fast process accompanied by strong deregulation and significant institutional changes. Despite the reforms in Albania, local government units (LGUs) are often significantly underfunded, understaffed and depend heavily on grants from the central government. The focus of this study is the Regional Development Fund (RDF), a competitive investment fund which finances LGUs investments. We aim to analyze the factors influencing the LGU access to RDF funds, based on a survey with LGU leaders. Political affiliation of the LGU leader, networking and the knowledge the LGU leader about the RDF procedure are important factors affecting access to RDF funds. Interestingly, however, the factors that correlate with the number of applications are different from those that explain the success rate of those applications. Our findings call for a further institutionalization of the process in order to reduce the (informal) personal and political affiliation based influences in the RDF competition.
    Keywords: Local government funds; political manipulation; network; leadership; Albania
    JEL: H77 P48 P26
    Date: 2017–07
  45. By: Emma Galli; Ilde Rizzo; Carla Scaglioni
    Abstract: In this paper, we aim at evaluating from an economic perspective the recent Italian legislation on transparency to investigate whether the potentialities of transparency as a tool to improve performance and integrity are fully exploited. We first construct a synthetic indicator (CTI) consisting of two sub-indicators, CTI Integrity and CTI Performance, which are able to describe in numerical terms the overall degree of transparency of Italian public administrations as well as the two different aspects of the public activity’s transparency. Then, using as a sample of Italian municipalities, we address the question whether there is a relation between the fulfillment of transparency obligations and both the institutional quality and the performance of the public administration activity. Our preliminary results suggest that our transparency indicators show a satisfactory correlation with widely used measures of the quality of institutions as well as with the official data on municipalities public spending performance. Key Words: Transparency, quality of institutions, local governments, accountability, performance.
    JEL: K2 K4 H3 H7
    Date: 2017–06
  46. By: Emmanuel Duguet; David Gray; Yannick L'Horty; Loïc du Parquet; Pascale Petit
    Date: 2017
  47. By: Gründler, Klaus; Köllner, Sebastian
    Abstract: We empirically study the effects of culture and diversity on government redistribution based on a large sample of countries. To disentangle culture from institutions, our analysis employs regional instruments as well as data on the prevalence of the pathogen Toxoplasma Gondii, linguistic differences, and the frequency of blood types. Redistribution is higher in countries with (1) loose family ties and individualistic attitudes, (2) high prevalence of trust and tolerance, (3) low acceptance of unequally distributed power and obedience, and (4) a prevalent belief that success is the result of luck and connections. Apart from their direct effects, these traits also exert indirect impact by influencing the transmission of inequality to redistribution. Finally, we show that redistribution and diversity in terms of culture, ethnic groups, and religion stand in a non-linear relationship, where moderate levels of diversity impede redistribution and higher levels offset the generally negative effect.
    Keywords: Culture,Redistribution,Diversity
    JEL: I38 Z1 D72 D31
    Date: 2017

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