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on Urban and Real Estate Economics |
| By: | Essi Eerola; Tuukka Saarimaa |
| Abstract: | This paper analyzes the relative merits of large place- and tenant-based housing programs in Finland in terms of housing affordability and neighborhood quality. Using hedonic regression methods and household micro data, we find that rent savings to public housing tenants are less targeted towards low-income households than housing allowance. In addition, low-income public housing tenants live in poorer, less educated and lower quality neighborhoods than similar low-income households in private rental housing. This suggests that place-based programs may lead to more segregation than tenant-based alternatives even when neighborhood mixing is an explicit aim of the program, as in Finland. |
| Keywords: | hedonic regression, housing allowance, place-based policy, public housing |
| JEL: | H22 R21 R23 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6674&r=ure |
| By: | Konstantin Büchel; Maximilian von Ehrlich |
| Abstract: | Social interactions are considered pivotal to agglomeration economies. We explore a unique dataset on mobile phone calls to examine how distance and population density shape the structure of social interactions. Exploiting an exogenous change in travel times, we show that distance is highly detrimental to interpersonal exchange. Despite distance-related costs, we find no evidence that urban residents benefit from larger networks when spatial sorting is accounted for. Higher density rather generates a more efficient network in terms of matching and clustering. These differences in network structure capitalize into land prices, corroborating the hypothesis that agglomeration economies operate via network efficiency. |
| Keywords: | social interactions, agglomeration externalities, network analysis, spatial sorting |
| JEL: | R10 R23 D83 D85 Z13 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6568&r=ure |
| By: | Robert Lehmann; Wolfgang Nagl |
| Abstract: | This paper investigates the main determinants of the regional representation of foreign employees in Germany. Since migration determinants are not necessarily the same for workers of different nationalities, we explain spatial patterns not only for total foreign employment but also for the 35 most important migration countries to Germany. Based on a total census for all 402 districts in Germany, we find a large heterogeneity in migration determinants between nationalities. We identify three groups of countries for which labor market and economic conditions, amenities or cultural factors are more important. Geographical distance plays a major role in location decisions, a finding that is especially pronounced for workers from countries neighboring Germany. |
| Keywords: | foreign employment, migration determinants, distance, spatial models |
| JEL: | F22 J21 J61 O15 R12 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6356&r=ure |
| By: | Brian J. Asquith; Judith K. Hellerstein; Mark J. Kutzbach; David Neumark |
| Abstract: | We explore the links between social capital and labor market networks at the neighborhood level. We harness rich data taken from multiple sources, including matched employer-employee data with which we measure the strength of labor market networks, data on behavior such as voting patterns that have previously been tied to social capital, and new data – not previously used in the study of social capital – on the number and location of non-profits at the neighborhood level. We use a machine learning algorithm to identify potential social capital measures that best predict neighborhood-level variation in labor market networks. We find evidence suggesting that smaller and less centralized schools, and schools with fewer poor students, foster social capital that builds labor market networks, as does a larger Republican vote share. The presence of establishments in a number of non-profit oriented industries are identified as predictive of strong labor market networks, likely because they either provide public goods or facilitate social contacts. These industries include, for example, churches and other religious institutions, schools, country clubs, and amateur or recreational sports teams or clubs. |
| JEL: | J01 J64 R23 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23959&r=ure |
| By: | Matthias Kehrig; Nicolas L. Ziebarth |
| Abstract: | We find that oil supply shocks decrease average real wages, particularly skilled wages, and increase wage dispersion across regions, particularly unskilled wage dispersion. In a model with spatial energy intensity differences and nontradables, labor demand shifts, while explaining the response of average wages to oil supply shocks, have counterfactual implications for the response of wage dispersion. Only an additional response in labor supply can explain this latter fact highlighting the importance of general equilibrium effects in a spatial context. We provide additional empirical evidence of regionally directed worker reallocation and housing prices consistent with our spatial model. Finally, we show that a calibrated version of our model can quantitatively match the estimated effects of oil supply shocks. |
| Keywords: | wage dispersion, labor reallocation, skill heterogeneity, oil prices |
| JEL: | E24 J24 J31 J61 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6408&r=ure |
| By: | David Schwegman (Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244) |
| Abstract: | As of 2017, no federal law protected Gay, Lesbian, Bisexual, Transgender, and Queer (LGBTQ) individuals from housing discrimination. However, 22 U.S. states and over 200 municipalities have passed laws prohibiting housing discrimination based on sexual orientation. In this paper, I present the results of a randomized pair-email correspondence audit of 6,490 property owners in 94 U.S. cities. I provide a nationally-representative estimate of the level of discrimination same-sex couples experience when inquiring about rental housing. I find that same-sex male couples, especially Black same-sex male couples, are less likely to receive a response to inquiries about rental units. Same-sex female couples receive preferential treatment compared to heterosexual couples. I then examine how state and local anti-discrimination laws covary with rates of housing discrimination against same-sex couples. Compare to localities without any housing protections, I find that response rates covary positively with statelevel protections but negatively with local-level protections. I conclude by testing several hypotheses about the causes of this discrimination. This preliminary evidence suggests that property owners are willfully discriminating against same-sex male couples. |
| Keywords: | LGBTQ Discrimination, Same-Sex Households, Housing Audits, State and Local Laws, Rental Market Discrimination |
| JEL: | J15 J18 R21 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:max:cprwps:210&r=ure |
| By: | Yoshida, Jiro |
| Abstract: | The correlation between stock and housing prices, which is critical for household asset allocations, varies widely by metropolitan area and country. A general equilibrium model demonstrates that an aggregate positive technology shock increases stock prices and housing demand but can decrease housing prices where land supply is elastic because stable future rents are discounted at higher interest rates. Using panel data of U.S. metropolitan areas and OECD countries, I find that the housing price response to TFP shocks as well as the stock-housing correlation are smaller and even negative where the housing supply is elastic. I also find that household equity investment is positively related to housing supply elasticity. |
| Keywords: | macroeconomic shocks, total factor productivity, general equilibrium, regional heterogeneity, house price, housing supply elasticity, asset allocation |
| JEL: | E32 R21 R31 G11 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:hit:remfce:72&r=ure |
| By: | Sieverding, Maia; Krafft, Caroline; Elbadawy, Asmaa |
| Abstract: | Widespread reliance on private tutoring has raised concerns over the hidden costs of Egypt’s “free” education system. This paper examines the drivers of tutoring at different levels of education, using nationally representative survey data as well as qualitative data on youth experiences in public, private, and religious schools. Our findings indicate that the drivers of tutoring are multiple and vary by schooling level. Structured around high-stakes exams, the Egyptian education system has fostered the growth of a diverse tutoring market. In general secondary school, tutoring has become a social expectation that leads teachers and students to shirk in school to devote more attention to tutoring. In basic education, teacher pressure is a major motivation for public school students to take tutoring. In order to reduce the prevalence of tutoring and ensure greater equality in education, there is an urgent need to test mechanisms for ensuring accountability in schools. |
| Keywords: | Private tutoring,educational supplements,school quality,Egypt |
| JEL: | I21 I22 I24 N35 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:135&r=ure |
| By: | Christian Dustmann; Hyejin Ku; Do Wan Kwak |
| Abstract: | We exploit two unusual policy features of academic high schools in Seoul, South Korea—random assignment of pupils to high schools within districts and conversion of some existing single-sex schools to the coeducational (coed) type over time—to identify three distinct causal parameters: the between-school effect of attending a coed (versus a single-sex) school; the within-school effect of school-type conversion, conditional on (unobserved) school characteristics; and the effect of class-level exposure to mixed-gender (versus same-sex) peers. We find robust evidence that pupils in single-sex schools outperform their counterparts in coed schools, which could be due to single-sex peers in school and classroom, or unobservable school-level covariates. Focusing on switching schools, we find that the conversion of the pupil gender type from single-sex to coed leads to worse academic outcomes for both boys and girls, conditional on school fixed effects and time-varying observables. While for boys, the negative effect is largely driven by exposure to mixed-gender peers at school-level, it is class-level exposure to mixed-gender peers that explains this disadvantage for girls. |
| Keywords: | gender, single sex schools, school inputs, random assignment |
| JEL: | I20 J16 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6535&r=ure |
| By: | Thiess Büttner |
| Abstract: | This paper considers the welfare implications of a tax on real estate transfers. A theoretical analysis shows how the discouragement of mutually beneficial transactions as well as tax-sheltering activities give rise to a welfare loss that can be estimated comprehensively from the empirical elasticity of the tax base. In the absence of tax planning, the elasticity of the tax base is determined by the hazard rate to deter transactions at the margin. With tax planning, the elasticity of the tax base is also driven by the “technology†of tax sheltering. Empirical evidence on the deadweight loss is obtained from the analysis of real estate transfer taxes in Germany. After a constitutional reform has granted the German states the right to set the local rate of the real estate transfer tax, over the last ten years many states have made use of this discretion and have increased the tax rate - some of them repeatedly. Based on the empirical estimate of the revenue effect of these tax increases, the paper shows that the German experience points to a substantial welfare cost of real estate transfer taxation. The preferred estimate suggests that each additional Euro of revenues raised is associated with an increase of the deadweight loss of about 67 cents. |
| Keywords: | real estate transfer tax, marginal cost of funds, tax rate elasticity of the tax base, tax avoidance |
| JEL: | H20 H26 R38 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6321&r=ure |
| By: | Jan K. Brueckner; Sofia F. Franco |
| Abstract: | This paper constructs a theoretical model that facilitates analysis of the effects of employer-paid parking on mode choice, road investment and suburbanization. The model simplifies urban space by dividing it into two zones (islands), center and suburbs, which are connected by a congested road and a public-transit line. Each road commuter requires an allotment of CBD land for parking, and because the central zone’s area is fixed, parking land reduces the amount available for central residences and CBD production. The model characterizes optimal resource allocation from the perspective of a social planner. The planning solution can be decentralized, which requires employee- rather than employer-paid parking, congestion tolls, and a tax (subsidy) to offset the road capacity deficit (surplus). The analysis then considers the effect of switching to employer-paid parking, with the burden of parking costs shifting from road users to employers, thus reducing the wage for all workers. This switch inefficiently increases road usage and capacity investment, while spurring an inefficient increase in suburbanization. |
| Keywords: | employer-paid parking, mode choice, suburbanization |
| JEL: | R40 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6298&r=ure |
| By: | Kunka Petkova; Alfons J. Weichenrieder |
| Abstract: | This paper analyzes the tax effects of the German real estate transfer tax (RETT). While the vast majority of single-family houses in Germany are owner-occupied, apartments are usually held by private and incorporated investors. For this reason, we conducted a regression analysis to determine the effects of increasing RETT on the number and the prices of transactions separately for these two market segments. Our findings suggest that increasing the RETT by 1% is associated with a decline in transactions by 0.23% for single-family houses, but with no significant effect on the prices of traded houses. Conversely, for apartments, we find no significantly negative effects on the transactions, but the price effect of the RETT tends to be negative. Finally, for vacant lots, we find even larger quantity effects than for single-family houses suggesting roughly an elasticity of -1. The results for this specific market segment indicate that the government operates near the top of a Laffer curve. |
| Keywords: | real estate transaction tax, stamp duty, housing market, taxation, financial transaction tax |
| JEL: | H24 R21 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6538&r=ure |
| By: | Felipe Carozzi; Luca Repetto |
| Abstract: | We study distributive politics inside cities by analysing how local governments allocate investment projects to voters across neighbourhoods. In particular, we ask whether politicians use investment to target their own supporters. To this aim, we use detailed geo-located investment data from Plan E, a large fiscal stimulus program carried out in Spain in 2009-2011. Our empirical strategy is based on a close-elections regression-discontinuity design. In contrast to previous studies – which use aggregate data at the district or municipal level – we exploit spatial variation in both investment and voter support within municipalities and find no evidence of supporter targeting. Complementary results indicate that voters may be responding to investment by increasing turnout. Overall, our findings suggest that distributive politics only play a minor role inside the city. |
| Keywords: | political economy, distributive politics, partisan alignment, local governments |
| JEL: | H70 R53 D72 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6628&r=ure |
| By: | Saint-Paul, Gilles |
| Abstract: | This paper provides some elements to explain the observed takeover in some urban areas of a new kind of elite associated with new economy jobs, also known as "bourgeois boheme" (bobos). This takeover has been associated with greater investment in urban amenities and "clean" means of transport, with adverse effects on commuting time. The model allows us to explain those developments by productivity growth in the new economy, and by the differences in production processes between the new and old economies. The consequences of bobo takeover for house prices and employment of unskilled service workers are also discussed. A bunkerized equilibrium in which skilled workers in the old economy no longer reside in the city and have been replaced by service workers is studied. In such an equilibrium urban amenities are at their maximum and commuting flows have been eliminated. For some parameter values, bobos are better-off under bunkerization, in which case they may gain by favoring it with a "diversity" subsidy for unskilled workers to reside in the city. |
| Keywords: | new economy,urban amenities,bobos,residential choice,local public goods,urban voting models,bunkerization |
| JEL: | H7 R3 R4 R5 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201788&r=ure |
| By: | Virgiliu Midrigan (New York University); Denis Gorea (Bank of Canada) |
| Abstract: | We study the severity of liquidity constraints in the U.S. housing market using a lifecycle model with uninsurable idiosyncratic risks in which houses are illiquid, but agents have the option to refinance their long-term mortgages or extract home equity. The model reproduces well the distribution of individual-level balance sheets – the fraction of housing, mortgage debt and liquid assets in a household’s wealth, the fraction of hand-to-mouth homeowners (Kaplan and Violante, 2014), as the well as the frequency of housing turnover and home equity extraction in the 2001 data. The model implies that 75% of homeowners are liquidity constrained and willing to pay an average of 9 cents to extract an additional dollar of liquidity from their home. Liquidity constraints imply sizable welfare losses that amount to a 1.2% permanent drop in consumption, despite the relatively high frequency of home equity extraction observed in the data. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed017:802&r=ure |
| By: | Steven Brakman; Charles van Marrewijk |
| Abstract: | We analyse the link between supply chains and the extent to which the Great Recession has affected national economies. Our analysis is in two steps, namely first for value added measures of supply chains and then for the Grubel-Lloyd index using gross-export data. Regarding value added measures we find, in general, no effect. Only if we separate out Europe do we find that the trough in Europe occurs about 0.17 years later and the recovery (for the countries that have recovered) about 1.55 years later. Moreover, the duration of the decline in Europe is about 4 months longer and of the recovery about 17 months longer. We explain this link and Europe’s special role using a detailed Grubel-Lloyd index applied to gross-exports as an alternative supply chain measure, which significantly affects the impact of the Great Recession regarding the timing and duration of the recovery (later and longer). |
| Keywords: | resilience, Great Recession, supply chains |
| JEL: | E32 R11 R12 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6505&r=ure |
| By: | Guy Michaels; Dzhamilya Nigmatulina; Ferdinand Rauch; Tanner Regan; Neeraj Baruah; Amanda Dahlstrand-Rudin |
| Abstract: | What are the long run consequences of planning and providing basic infrastructure in neighborhoods, where people build their own homes? We study “Sites and Services” projects implemented in seven Tanzanian cities during the 1970s and 1980s, half of which provided infrastructure in previously unpopulated areas (de novo neighborhoods), while the other half upgraded squatter settlements. Using satellite images and surveys from the 2010s, we find that de novo neighborhoods developed better housing than adjacent residential areas (control areas) that were also initially unpopulated. Specifically, de novo neighborhood are more orderly and their buildings have larger footprint areas and are more likely to have multiple stories, as well as connections to electricity and water, basic sanitation and access to roads. And though de novo neighborhoods generally attracted better educated residents than control areas, the educational difference is too small to account for the large difference in residential quality that we find. While we have no natural counterfactual for the upgrading areas, descriptive evidence suggests that they are if anything worse than the control areas. |
| Keywords: | urban economics, economic development, slums, Africa |
| JEL: | R31 O18 R14 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6680&r=ure |
| By: | Michael Funke; Robert Kirkby; Petar Mihaylovski |
| Abstract: | We analyse the effects of macroprudential and monetary policies and their interactions using an estimated dynamic stochastic general equilibrium (DSGE) model tailored to New Zealand. We find that the main historical drivers of house prices are shocks specific to the housing sector. While our estimates show that monetary policy has large spillover effects on house prices, it does not appear to have been a major driver of house prices in New Zealand. We consider macroprudential policies, including the loan-to-value restrictions that have been implemented in New Zealand. We find that loan-to-value restrictions reduce house prices with negligible effects on consumer prices, suggesting that they can be used without derailing monetary policy. We estimate that the loan-to-value restrictions imposed in New Zealand in 2013 reduced house prices by 3.8 per cent and that greater forward guidance on their duration would have made them more effective. |
| Keywords: | macroprudential policies, housing, DSGE, Bayesian estimation, New Zealand |
| JEL: | E32 E44 E52 E58 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6487&r=ure |
| By: | Nicol˜ Barbieri, Davide Consoli; Davide Consoli |
| Abstract: | This paper analyses whether and to what extent regional diversification enables or thwarts green employment in US Metropolitan Areas (MAs) between 2006 and 2014. The recent debate on related and unrelated variety provides the conceptual frame for our study. The main findings are two. First, unrelated diversification is a positive and significant predictor of green employment growth. Second, this effect differs across occupational categories: while unrelated variety at industry level favours the growth of mid- to low-skill green jobs, unrelated variety at occupational level favours high- to mid-skill green jobs. Overall, local related diversification has very little impact. |
| Keywords: | Green employment, Variety, Diversifications |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1727&r=ure |
| By: | Michela Maria Tincani |
| Abstract: | Using a theoretical model where students care about achievement rank, I study effort choices in the classroom and show that rank concerns generate peer effects. The model’s key empirical prediction is that the effect on own achievement of increasing the dispersion in peer cost of effort is heterogeneous, depending on a student’s own cost of effort. To test this, I construct a longitudinal multi-cohort dataset of students, with data on the geographic propagation of building damages from the Chilean 2010 earthquake. I find that higher dispersion in home damages among one’s classmates led, on average, to lower own Mathematics and Spanish test scores. To be able to test the theory, I develop a novel nonlinear difference-in-differences model that estimates effect heterogeneity and that relates observed damages to unobserved cost of effort. I find that some students at the tails of the predicted cost of effort distribution benefit from higher dispersion in peer cost of effort, as predicted by the theoretical model. This finding suggests that observed peer effects on test scores are, at least partly, governed by rank concerns. |
| Keywords: | ability peer effects, rank preferences, semiparametric model |
| JEL: | C51 I29 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6331&r=ure |
| By: | Manuela Krause; Niklas Potrafke |
| Abstract: | In 2006, the reform of the German fiscal constitution realigned legislative powers between the federal and the state governments. Since 2007, the German state governments have been allowed to design real estate transfer tax rates. We investigate whether government ideology predicts the levels and increases in the real estate transfer tax rates; and show that leftwing and center governments were more active in increasing the real estate transfer tax rates than rightwing governments. The result is important because many voters were disenchanted with the policies and platforms of the established German parties in the course of the euro and refugee crisis. Disenchantment notwithstanding, the established political parties are still prepared to offer polarized policies. |
| Keywords: | taxation, real estate transfer tax, reform, partisan politics, government ideology, German states |
| JEL: | D72 H20 H71 P16 R38 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6491&r=ure |
| By: | Johannes Becker; Ronald B. Davies |
| Abstract: | How do countries compete for mobile tax base when they lack precise information on how tax rates affect the tax base? We present a multi-period version of a classic tax competition model in which countries set source-based taxes under incomplete information on the tax base elasticity. This information, however, improves as they observe both their own and their neighbours’ experiences. In contrast to the existing work on policy learning, we focus on learning in the presence of (fiscal) externalities. We show that, because learning can exacerbate this external-ity, the value of learning can be negative and, thus, learning may be too fast. Given that variance in tax policies enhances learning, this implies that, in the sequence of Markov perfect equilibria, tax rates can be too heterogeneous. Furthermore, we contribute to the empirical tax competition literature by showing that learning generates tax patterns that look as if countries react to each other even if there are no fiscal externalities. We conclude that the existing results typically taken as evidence of tax competition may be more nuanced than heretofore recognized. |
| Keywords: | social learning, policy diffusion, tax competition |
| JEL: | H25 H32 H87 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6699&r=ure |
| By: | Alexander Patt; Jens Ruhose; Simon Wiederhold; Miguel Flores |
| Abstract: | We present the first evidence that international emigrant selection on education and earnings materializes through occupational skills. Combining novel data from a representative Mexican task survey with rich individual-level worker data, we find that Mexican migrants to the United States have higher manual skills and lower cognitive skills than non-migrants. Conditional on occupational skills, education and earnings no longer predict migration decisions. Differential labor-market returns to occupational skills explain the observed selection pattern and significantly outperform previously used returns-to-skills measures in predicting migration. Results are persistent over time and hold within narrowly defined regional, sectoral, and occupational labor markets. |
| JEL: | F22 O15 J61 J24 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6527&r=ure |
| By: | Sanni Breining; Joseph Doyle; David N. Figlio; Krzysztof Karbownik; Jeffrey Roth |
| Abstract: | Birth order has been found to have a surprisingly large influence on educational attainment, yet much less is known about the role of birth order on delinquency outcomes such as disciplinary problems in school, juvenile delinquency, and adult crime: outcomes that carry significant negative externalities. This paper uses particularly rich datasets from Denmark and the state of Florida to examine these outcomes and explore potential mechanisms. Despite large differences in environments across the two areas, we find remarkably consistent results: in families with two or more children, second-born boys are on the order of 20 to 40 percent more likely to be disciplined in school and enter the criminal justice system compared to first-born boys even when we compare siblings. The data allow us to examine a range of potential mechanisms, and the evidence rules out differences in health at birth and the quality of schools chosen for children. We do find that parental time investment measured by time out of the labor force is higher for first-borns at ages 2-4, suggesting that the arrival of a second-born child extends early-childhood parental investments for first-borns. |
| JEL: | J01 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6330&r=ure |
| By: | Mario Pietrunti (Bank of Italy); Federico M. Signoretti (Bank of Italy) |
| Abstract: | We model an economy with long-term mortgages and show that some characteristics of mortgage contracts – such as the type of interest rate (adjustable versus fixed) and the loan-to-value ratio – matter for the transmission of monetary policy impulses, both conventional and unconventional. A conventional monetary policy shock has a stronger impact on output and inflation with adjustable-rate mortgages, also reflecting the higher sensitivity of installments to changes in the short-term rate. When households borrow at a fixed rate, unconventional monetary policy can stimulate the economy mainly through a redistribution of income from savers to borrowers, who have a higher marginal propensity to consume. The impact of monetary policy – both conventional and unconventional – is stronger when the level of households' mortgage debt is high relative to housing wealth. |
| Keywords: | long-term mortgages, monetary policy, income channel |
| JEL: | E52 E58 G21 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1142_17&r=ure |
| By: | Zukowska-Gagelmann, Katarzyna |
| Abstract: | This paper studies the effects of the European Union (EU) regional policy transfers on internal migration across regions in Poland for the period 2004-2014. Based on a gravity model of migration, it tests empirically using the Poisson Pseudo-Maximum Likelihood (PPML) estimator whether EU transfers affect the level and the pattern of bilateral migration flows. For the first eleven years of the EU membership, the study finds no evidence of EU funding discouraging residents’ mobility. On the contrary, residents of regions with higher EU transfers attracted are relatively more likely to leave. This effect is especially significant in poorer regions. In addition, EU transfers help regions attract more migrants. Both the “push” and the “pull” effect of the EU transfers on migration intensified over time. Hence, EU regional funding did not hamper, but rather fostered internal migration in Poland leading to a higher regional concentration of population and prosperity. This, however, works against the objective of the EU regional policy, which is to promote economic and social convergence across regions. |
| Keywords: | EU regional policy,EU structural funds,internal migration,migration determinants,Poland,panel data,gravity model,PPML |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:170576&r=ure |
| By: | Pedro Naso Author name: Tim Swanson |
| Abstract: | We propose a novel theoretical framework to study how environmental regulation shapes economic development in a developing country such as China. We develop a dynamic tax competition model in which local governments, located in development zones, use variation in taxes to attract workers to their jurisdictions. Their objective is to maximize tax revenue less local health costs that are proportional to local pollution. Our main result is that competition generates a reallocation of productive factors when national regulation is introduced. Local governments in more productive regions set greater production taxes than in other regions. This makes workers and output to shift from more to less developed regions of the country. |
| Keywords: | Tax competition; Asymmetric tax competition; Environment and Development |
| JEL: | H71 H72 Q56 O13 |
| Date: | 2017–10–05 |
| URL: | http://d.repec.org/n?u=RePEc:gii:ciesrp:cies_rp_54&r=ure |
| By: | Enrica Di Stefano (Bank of Italy) |
| Abstract: | In Italy, young adults tend to postpone their transition to adulthood and live with their parents until very late compared with other countries. A dynamic discrete choice model is proposed in which agents choose residential arrangements, together with labor supply and marital status, conditional on the economic and institutional framework and on other agents' choices. The model is structurally estimated with the Simulated Method of Moments for non-student high-school graduate males and then used to assess, through a variety of counterfactual experiments, the relative importance of factors that are claimed to influence the choice to leave home in the existing literature: labor market conditions, parental resources, housing market conditions and social interaction. Results suggest that Italians choose to remain with their parents due to a combination of poor labor market conditions and high housing costs. The relatively high income of parents could contribute to the patterns observed by acting as an insurance against unemployment. Finally, estimates indicate that individuals tend to conform to a social norm that is influenced by external conditions. |
| Keywords: | transition to adulthood, co-residence, structural estimation |
| JEL: | J11 J12 H31 D10 D31 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1144_17&r=ure |
| By: | Acolin, Arthur (University of Washington); Calem, Paul S. (Federal Reserve Bank of Philadelphia); Jagtiani, Julapa (Federal Reserve Bank of Philadelphia); Wachter, Susan M. (The Wharton School of the University of Pennsylvania) |
| Abstract: | Existing data sources show divergent estimates of the number of homes purchased by first-time homebuyers as a share of all home purchases. In this paper, we use a new data set to construct a time series of the share of first-time homebuyers. This series, based on the Federal Reserve Bank of New York Equifax Consumer Credit Panel (CCP), shows a significant decline in this share, particularly for young households, which is consistent with the decline in homeownership in this age cohort since the early 2000s. |
| Keywords: | first-time homebuyer; homeownership; credit access; housing market trends |
| JEL: | R30 R31 R38 |
| Date: | 2017–10–09 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:17-36&r=ure |
| By: | Nimczik, Jan Sebastian |
| Abstract: | I introduce a novel method to identify endogenous labor markets revealed by job mobility flows. The estimation is based on tools from network analysis. Firms are in the same market if they have similar links to other firms and not because they are located in the same region. I compare endogenous markets to geographically separated markets. I analyze employment spillovers following a large local labor demand shock as well as mobility responses to import competition from China and Eastern Europe. |
| JEL: | J61 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc17:168147&r=ure |
| By: | Hori, Masahiro; Niizeki, Takeshi |
| Abstract: | Using micro data covering almost 500,000 Japanese households over the period 1983−2012, this paper examines to what extent household consumption responds to changes in housing wealth. Instead of employing self-reported or regionally averaged values of housing wealth, we directly estimate the housing wealth of individual households by matching several official statistics, providing an ideal setting to identify housing wealth effects on consumption. Employing cross-section and pseudo-panel based regressions, we find that the marginal propensity to consume (MPC) out of housing wealth is approximately 0.0008−0.0013 for nondurable consumption and 0.0059−0.0082 for total consumption. We further find that the consumption response of older households is larger than that of younger households, which is consistent with the pure wealth effects hypothesis. |
| Keywords: | Housing wealth, household consumption, life cycle/permanent income hypothesis |
| JEL: | D12 D31 E21 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:hit:remfce:69&r=ure |
| By: | Christoph Albert |
| Abstract: | This paper explores the labor market impact of both documented and undocumented immigration in a model featuring search frictions and non-random hiring that generates predictions consistent with novel patterns documented in data. Due to their lower earnings, a rise in the share of immigrant workers in the economy leads to the creation of additional jobs, but also more job competition for natives. As undocumented immigrants earn the lowest wages of all workers, their job creation effect is large, whereas it is small and potentially negative for documented immigrants. Model simulations show that the job creation effect of undocumented immigration dominates the competition effect, leading to gains in terms of both employment and wages for natives, which does not hold in case of documented immigration. Stricter immigration enforcement in form of a higher deportation risk for undocumented immigrants mutes job creation and raises the unemployment rate of all workers, having an even larger detrimental effect if it targets employed immigrants because this leads to a risk premium in their wages. I present empirical evidence that gives support to the qualitative predictions of the model. |
| Keywords: | wage gap, migrant workers, hiring, employment |
| JEL: | J31 J61 J63 J64 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6575&r=ure |
| By: | Frank Goetzke; William Hankins; Gary A. Hoover |
| Abstract: | Using data on federal highway grants from the Department of Transportation’s Federal High- way Administration, this paper investigates several questions regarding the political economy of highway funding. We investigate the period 1994 - 2008 and examine whether political align- ment and political ideology play a role in determining how much highway funding per capita a state receives. We find evidence that Republican-dominated House of Representatives del-egations receive more highway funding per capita compared to Democrats, especially in rural states. We also find that senators in the party of the president are able to secure more highway funding per capita. Overall, the distribution of highway spending over this time period appears to have been determined by political rather than deterministic considerations and in a way that is consistent with how the Interstate Highway System has distributed Republican voters to rural areas. |
| Keywords: | federal highway administration grants, political alignment, political ideology |
| JEL: | D72 H77 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6603&r=ure |
| By: | Ambrose, Brent W.; Coulson, N. Edward; Yoshida, Jiro |
| Abstract: | One of the largest components of official price indexes is housing services, which account for 16 percent to 41 percent of major price indexes in the United States (e.g., Consumer Price Index). This paper demonstrates that the current measure of housing rents does not accurately track the actual inflation rate of housing rents. We construct an alternative quality-adjusted measure of housing rents that is based on a monthly statistic of landlord net rental income. Compared with our modified inflation rate, the official rate was overestimated by 1.4 percent to 3.4 percent annually during the Great Recession but underestimated by 0.3 percent to 0.7 percent annually during the current expansionary period after the recession. We further demonstrate significant impacts of our improved measurement of inflation rates on the cost of living adjustment to Social Security and real gross domestic product. These impacts persist for a long term because the modified price indexes are integrated of order one whereas the official indexes are trend stationary. |
| Keywords: | measurement error, economic statistics, owners' equivalent rent, Consumer Price Index, Personal Consumption Expenditures, National Income and Product Accounts |
| JEL: | E01 E31 R31 H55 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:hit:remfce:71&r=ure |
| By: | Shihe Fu (A209) |
| Abstract: | This paper develops a new approach for measuring the stringency of a major form of land use regulation, building height restrictions, and applies it to an extraordinary data set of land-lease transactions from China. Our theory shows that the elasticity of land price with respect to the floor area ratio (FAR), a building height indicator, is a measure of the regulation's stringency (the extent to which FAR is kept below the free-market level). Using a national sample, estimation allowing this elasticity to be city-specific shows variation in the stringency of FAR regulation across Chinese cities. Single-city estimation for Beijing shows that stringency varies with site characteristics. |
| Keywords: | floor-area ratio, density restriction, urban development |
| JEL: | R14 R52 |
| Date: | 2017–10–16 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:wpaper:002361&r=ure |
| By: | Michel Serafinelli; Guido Tabellini |
| Abstract: | Creativity is often highly concentrated in time and space, and across different domains. What explains the formation and decay of clusters of creativity? In this paper we match data on thousands of notable individuals born in Europe between the XIth and the XIXth century with historical data on city institutions and population. After documenting several stylized facts, we show that the formation of creative clusters is not preceded by increases in city size. Instead, the emergence of city institutions protecting economic and political freedoms facilitates the attraction and production of creative talent. Keywords: innovation, agglomeration, political institutions, immigration, gravity. JEL: R10, O10, J61, N13 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:igi:igierp:608&r=ure |
| By: | Luc Arrondel; Pierre Lamarche; Frédérique Savignac |
| Abstract: | This paper studies the heterogeneity of the marginal propensity to consume out of wealth based on French household surveys. This heterogeneity is driven by differences in both wealth composition and wealth levels. We find a decreasing marginal propensity to consume out of wealth across the wealth distribution for all net wealth components. The marginal propensity to consume out of financial assets tends to be higher compared with the effect of housing assets, except at the top of the wealth distribution. The marginal propensity to consume out of housing wealth increases with debt pressure and depends on debt composition. Based on a simulation exercise, we find a limited effect of wealth shocks on consumption inequality. An increase in stock prices tends however to slightly increase consumption inequality, especially at the top of the distribution. |
| Keywords: | consumption, marginal propensity to consume out of wealth, policy distributive effects, household survey |
| JEL: | D12 E21 C21 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6676&r=ure |
| By: | Christoph Basten; Benjamin Guin; Cathérine Tahmee Koch |
| Abstract: | We exploit a unique data set that features both un-intermediated mortgage requests and independent offers from multiple banks for each request. We show that households typically are not prudent risk managers but prioritize the minimization of current mortgage payments over the risk of possible hikes in future mortgage payments. We also provide evidence that banks do influence the contracted mortgage rate fixation periods, trading off their own exposure to interest rate risk against the borrowers’ affordability and credit risk. Our results challenge the implicit assumption of the existing mortgage choice literature whereby fixation periods are determined entirely by households. |
| Keywords: | Fixed-Rate Mortgage (FRM), Adjustable-Rate Mortgage (ARM), fixation period, maturity mismatch, interest rate risk, credit risk, duration |
| JEL: | D12 E43 G21 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6649&r=ure |
| By: | Fritzsche, Carolin; Vandrei, Lars |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc17:168307&r=ure |
| By: | Jonathan D. Fisher |
| Abstract: | I examine the influence of neighbors on the consumer bankruptcy decision using administrative bankruptcy records linked the 2000 Decennial Census. Two empirical strategies remove unobserved common factors that affect identification. The first strategy uses small geographical areas to isolate neighborhood effects, and the second strategy identifies the effect using past bankruptcy filers who moved states. The findings from both strategies reinforce each other and confirm the role of social influence on the bankruptcy decision. Having a past bankruptcy filer move into the block from a different state increases the likelihood of filing by 10 percent. |
| Keywords: | Personal bankruptcy; program participation; social influence; |
| JEL: | D12 K35 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:17-60&r=ure |
| By: | Roesel, Felix |
| Abstract: | States merge local governments to achieve economies of scale. Little is known to which extent mergers of county-sized local governments reduce expenditures, and influence political outcomes. I use the synthetic control method to identify the effect of mergers of large local governments in Germany (districts) on public expenditures. In 2008, the German state of Saxony reduced the number of districts from 22 to 10. Average district population increased substantially from 113,000 to 290,000 inhabitants. I construct a synthetic counterfactual from states that did not merge districts for years. The results do neither show reductions in total expenditures, nor in expenditures for administration, education, and social care. There seems to be no scale effects in jurisdictions of more than 100,000 inhabitants. By contrast, I find evidence that mergers decreased the number of candidates and voter turnout in district elections while vote shares for populist right-wing parties increased. |
| Keywords: | Municipal mergers,Local government,Expenditures,Synthetic control method,Local elections,Voter turnout |
| JEL: | D72 H11 H72 R51 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tudcep:1617&r=ure |
| By: | Yun Liang and John Gibson |
| Abstract: | China's fertility rate is below replacement level. The government is attempting to increase this rate by relaxing the one-child policy. China faces a possible tradeoff because further urbanization is needed to raise incomes but may reduce future fertility. We decompose China's rural–urban fertility gaps using both de facto and de jure criteria for defining the urban population. The fertility-depressing effects of holding urban hukou are more than three times larger than effects of urban residence. Less of the rural–urban fertility gap by hukou status is due to differences in characteristics than is the case for the fertility gap by place of residence. |
| Keywords: | fertility, hukou, urbanization, China |
| URL: | http://d.repec.org/n?u=RePEc:een:appswp:201738&r=ure |
| By: | Christian Leßmann; Arne Steinkraus |
| Abstract: | We study whether the spatial distribution of natural resources across different ethnic groups within countries impede spatial inequality, national economic performance, and the incidence of armed conflict. By providing a theoretical rent-seeking model and analysing a set of geocoded data for mines, night-time light emissions, local populations and ethnic homelands, we show that the distribution of resources is a major driving factor of ethnic income inequality and, thus, induces rent-seeking behaviour. Consequently, we extend the perspective of the resource curse to explain cross-country differences in economic performance and the onset of civil conflicts. We show that the inequality in the spatial distribution of resource endowments within countries drives the curse of natural resources, not the resources per se. |
| Keywords: | natural resources, minerals, mines, night lights, luminosity, ethnic income inequality, spatial inequality, development, civil war, conflict |
| JEL: | D72 D74 Q32 Q34 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6299&r=ure |
| By: | Jana Friedrichsen; Tobias König; Renke Schmacker |
| Abstract: | Using a laboratory experiment, we present first evidence that stigmatization through public exposure causally reduces the take-up of an individually beneficial transfer. Our design exogenously varies the informativeness of the take-up decision by varying whether transfer eligibility is based on ability or luck, and how the transfer is financed. We find that subjects avoid the inference both of being low-skilled and of being willing to live off others. Using a placebo treatment we can exclude other explanations for the observed stigma effect. In the experiment, social stigmatization implies a reduction in the take-up rate of 30 percentage points. |
| Keywords: | stigma, signaling, redistribution, non take-up, welfare program |
| JEL: | D03 H31 I38 C91 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6519&r=ure |
| By: | Pedro Naso; Yi Huang Author Name: Tim Swanson |
| Abstract: | We examine the relationship between environmental regulation and competitiveness in China. Exploiting exogenous changes in national pollution standards for three industries—ammonia, paper and cement—we test whether environmental regulation increases industry productivity. Our results show that the strong version of the Porter hypothesis does not hold, but that regulation might reallocate productivity spatially. We show that regulated industries that are located in newly developing cities see an increase in their productivity as compared to the same industries in other cities. This means that environmental regulation is more likely to drive the spatial distribution of productivity changes than it is to drive the pace and direction of technological change. |
| Keywords: | Tax competition; Production Technology and Environment and Development |
| JEL: | H71 O13 Q56 D24 |
| Date: | 2017–10–04 |
| URL: | http://d.repec.org/n?u=RePEc:gii:ciesrp:cies_rp_53&r=ure |
| By: | Pedro G. Fonseca; Hugo D. Lopes |
| Abstract: | Binary classification is highly used in credit scoring in the estimation of probability of default. The validation of such predictive models is based both on rank ability, and also on calibration (i.e. how accurately the probabilities output by the model map to the observed probabilities). In this study we cover the current best practices regarding calibration for binary classification, and explore how different approaches yield different results on real world credit scoring data. The limitations of evaluating credit scoring models using only rank ability metrics are explored. A benchmark is run on 18 real world datasets, and results compared. The calibration techniques used are Platt Scaling and Isotonic Regression. Also, different machine learning models are used: Logistic Regression, Random Forest Classifiers, and Gradient Boosting Classifiers. Results show that when the dataset is treated as a time series, the use of re-calibration with Isotonic Regression is able to improve the long term calibration better than the alternative methods. Using re-calibration, the non-parametric models are able to outperform the Logistic Regression on Brier Score Loss. |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1710.08901&r=ure |
| By: | Mohammed B. Degnet; Edwin van der Werf; Verina Ingram; Justus Wesseler |
| Abstract: | With the rapid expansion of private forest plantations worldwide, their impacts on local development are under scrutiny by NGOs and researchers alike. This study investigates the impacts of private forest plantations on local infrastructure and social services in rural Tanzania. We take a comparative approach involving households living in villages adjacent to private forest plantations and households in villages adjacent to a state-owned plantation. We use survey data from 338 households to analyze their perceptions about the impacts of the plantations on the number and quality of roads, bridges, and health centers, as well as on school enrolment and quality of education. We triangulate the results from a logistic regression model with observations of the size and quality of infrastructure and social services in the villages and with findings from focus group discussions. The results show that the private forest plantations have positively affected local infrastructure and social services in adjacent villages. The results suggest that large-scale private forest plantations can contribute to rural development in developing countries. We highlight the importance of taking into account the perceptions of various groups in society when assessing the sustainability of forestry investments and their impacts on local communities. |
| Keywords: | private forest plantations, infrastructure, public goods, perceptions, socio-economic impacts, Tanzania |
| JEL: | H41 M14 Q01 Q15 Q23 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6690&r=ure |
| By: | Alessandro Dovis; Rishabh Kirpalani |
| Abstract: | Expectations of bailouts by central governments incentivize overborrowing by local governments. In this paper, we ask if fiscal rules can correct these incentives to overborrow when central governments cannot commit and if these rules will arise in equilibrium. We address these questions in a reputation model in which the central government can either be a commitment or a no-commitment type and the local governments learn about this type over time. We find that if the central government's reputation is low enough, then fiscal rules can lead to even more debt accumulation relative to the case with no rules. This is because the punishment for violating the fiscal rule worsens the payoffs of preserving reputation. Despite being welfare reducing, binding fiscal rules will arise in the equilibrium of a signaling game due to the incentives of the commitment type to reveal its type. |
| JEL: | E40 E6 E61 F5 H6 H7 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23942&r=ure |