nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2017‒12‒03
forty-two papers chosen by
Steve Ross
University of Connecticut

  1. City Equilibrium with Borrowing Constraints: Structural Estimation and General Equilibrium Effects By Amine Ouazad; Romain Rancière
  2. Housing Finance and Real Estate Markets in Colombia By Francisco Roch
  3. Highways, Market Access and Spatial Sorting By Stephan Fretz; Raphaël Parchet; Frédéric Robert-Nicoud
  4. School reforms and pupil performance By Eyles, Andrew; Hupkau, Claudia; Machin, Stephen
  5. Local agglomeration, entrepreneurship and the 2008 recession: evidence from Italian industrial districts By Brunello, Giorgio; Langella, Monica
  6. Regional strategic assets and the location strategies of emerging countries’ multinationals in Europe By Crescenzi, Riccardo; Pietrobelli, Carlo; Rabellotti, Roberta
  7. Loan-to-value policy and housing finance: effects on constrained borrowers By Douglas Kiarelly Godoy de Araujo; João Barata R B Barroso; Rodrigo Barbone Gonzalez
  8. Stabilizing the System of Mortgage Finance in the United States By Richard Koss
  9. The spatial decay in commuting probabilities: employment potential vs. community gravity By Ahlfeldt, Gabriel M.; Wendland, Nicolai
  10. Mortgage Debt, Consumption, and Illiquid Housing Markets in the Great Recession By Garriga, Carlos; Hedlund, Aaron
  11. Trade, Merchants, and the Lost Cities of the Bronze Age By Gojko Barjamovic; Thomas Chaney; Kerem A. Coşar; Ali Hortaçsu
  12. Owner Occupied Housing in the CPI: Making the User Cost Approach Work and Why It Matters By Robert J. Hill; Miriam Steurer; Sofie R. Waltl
  13. On the optimal design of place-based policies: A structural evaluation of EU regional transfers By Yashar Blouri, Maximilian v. Ehrlich
  14. Tall Building and Land Values: Height and Construction Cost Elasticities in Chicago, 1870 - 2010 By Gabriel Ahlfeldt; Daniel McMillen
  15. A Tale of Two Cities: Cross-Border Casino Competition Between Detroit and Windsor By Juin-Jen Chang; Ching-Chong Lai; Ping Wang
  16. Landlockedness and Economic Development: Analyzing Subnational Panel Data and Exploring Mechanisms By Michael Jetter; Saskia Moesle; David Stadelmann
  17. Generalized Yule–Walker estimation for spatio-temporal models with unknown diagonal coefficients By Dou, Baojun; Parrella, Maria Lucia; Yao, Qiwei
  18. Law, Human Capital and the Emergence of Free City-States in Medieval Italy By Marianna Belloc; Francesco Drago; Roberto Galbiati
  19. Not too close, not too far: testing the Goldilocks principle of ‘optimal’ distance in innovation networks By Fitjar, Rune Dahl; Hubert, Franz; Rodríguez-Pose, Andrés
  20. Housing as asset based welfare: A comment By Whitehead, Christine M E
  21. Local and Non-Local Knowledge Typologies: Technological Complexity in the Irish Knowledge Space By Adam Whittle
  22. Decentralization, fiscal transfers and income inequality in Central and Eastern European countries By Makreshanska, Suzana; Petrevski, Goran
  23. Effect of Population Density on the Level of Development By Hakeem, Mohammad Abbas
  24. Do emigrants self-select along cultural traits? Evidence from the MENA countries By Frédéric Docquier; Aysit Tansel; Riccardo Turati
  25. The impact of supply constraints on house prices in England By Hilber, Christian A. L.; Vermeulen, Wouter
  26. Travel time variability and rational inattention By Fosgerau, Mogens; Jiang, Gege
  27. Technology and the Effectiveness of Regulatory Programs Over Time: Vehicle Emissions and Smog Checks with a Changing Fleet By Nicholas J. Sanders; Ryan Sandler
  28. Ethnic Geography: Measurement and Evidence By Roland Hodler; Michele Valsecchi; Alberto Vesperoni
  29. Planning, value(s) and the market: An analytic for “What comes next?” By Holman, Nancy
  30. The geography of city liveliness and consumption: evidence from location-based big data By Wu, Wenjie; Wang, Jianghao; Li, Chengyu; Wang, Mark
  31. Regional patterns of employability in the Greek Labour market By Tsampra, Maria; Bouranta, Nancy; Gkerats, Reveka
  32. Identifying preference-based discrimination in rental market: A field experiment in Paris By Mathieu Bunel; Yannick L'Horty; Loïc du Parquet; Pascale Petit
  33. Public Private Partnership management effects on road safety outcomes By Daniel Albalate; Paula Bel-Piñana
  34. Ethnic Diversity and Growth: Revisiting the Evidence By Montalvo, Jose G; Reynal-Querol, Marta
  35. Ethnic diversity and political participation: the role of individual income By G. Bellettini; C. Berti Ceroni; C. Monfardini
  36. What Drive Regional Economic Inequalities in Tunisia? Evidence From Unconditional Quantile Decomposition Analysis By Hatem Jemmali
  37. Shifting horizons in local and regional development By Pike, Andy; Rodríguez-Pose, Andrés; Tomaney, John
  38. Racial prejudice and labour market penalties during economic downturns By Johnston, David W.; Lordan, Grace
  39. Determinants of Repo Haircuts and Bankruptcy By Jean-Marc Bottazzi; Mario R. Pascoa; Guillermo Ramirez
  40. Urbanization Patterns, Social Interactions and Female Voting in Rural Paraguay By Alberto Chong; Gianmarco León; Vivian Roza; Martín Valdivia; Gabriela Vega
  41. The economic effects of density: A synthesis By Ahlfeldt, Gabriel M.; Pietrostefani, Elisabetta
  42. Picking Winners: Measuring the Effectiveness of Selectively Placed Policy Interventions By Melinda Vigh; Chris Elbers

  1. By: Amine Ouazad; Romain Rancière
    Abstract: This paper develops a general equilibrium model of location choice with social interactions where mortgage approval rates determine household-specific choice sets that differ across neighborhoods and years in observable and unobservable dimensions. Existence and local uniqueness of city equilibria enable comparative statics estimates of the impact of changes in borrowing constraints on neighborhood-level prices and demographics. Estimation the model using micro data on property transactions, household demographics, neighborhood amenities, mortgage applications, and bank liquidity for the San Francisco Bay area, reveals that the price sensitivity of borrowing constraints explains about two-thirds of the price elasticity of neighborhood demand. General equilibrium estimates of the impact of the relaxation of lending standards on prices and neighborhood demographics bring two out-of-sample predictions for the period 2000-2006: (i) an increase in house prices accompanied by a compression of the price distribution and (ii) a reduction in the isolation of Whites in line with evidence of gentrification in the San Francisco Bay. Both predictions are supported by empirical observation.
    JEL: G21 R21 R31 R51
    Date: 2017–11
  2. By: Francisco Roch
    Abstract: Colombian house prices have increased significantly between 2005 and 2016. This paper estimates the extent of misalignments in house prices relative to fundamentals and evaluates the overall risk to the economy from the housing sector. The results suggest a moderate house price misalignment relative to fundamentals which is, however, mitigated by housing finance characteristics.
    Keywords: Colombia;Financial stability;Western Hemisphere;House price, price misalignment, mortgage markets, Financial Markets and the Macroeconomy, Housing Demand, Housing Supply and Markets
    Date: 2017–08–18
  3. By: Stephan Fretz; Raphaël Parchet; Frédéric Robert-Nicoud
    Abstract: We design a spatial model featuring workers embodied with heterogeneous skills. In equilibrium, locations with improved market access become relatively more attractive to the high-skilled, high-income earners. We then empirically analyze the effects of the construction of the Swiss highway network between 1960 and 2010 on the distribution of income at the local level, as well as on employment and commuting by education level. We find that the advent of a new highway access within 10km led to a long-term 19%-increase of the share of high-income taxpayers and a 6%-decrease of the share of low-income taxpayers. Results are similar for employment data decomposed by education level, as well as for in- and out-commuters. Highways also contributed to job and residential urban sprawl.
    Keywords: transportation, highway, market access, income sorting
    JEL: D31 O18 H54 R11 R23
    Date: 2017–11
  4. By: Eyles, Andrew; Hupkau, Claudia; Machin, Stephen
    Abstract: The relationship between school reforms, specifically those involving the introduction of new school types, and pupil performance is studied. The particular context is the introduction of academy schools in England, but related evidence on Swedish free schools and US charter schools is also presented. The empirical evidence shows a positive causal impact of the conversion of disadvantaged schools to academies on end of school pupil performance and on the subsequent probability of degree completion at university. There is heterogeneity in this impact, such that more disadvantaged pupils and those attending London academies experience bigger performance improvements.
    Keywords: academies; school reform; school anatomy; pupil performance
    JEL: I20 I21 I28
    Date: 2016–08–01
  5. By: Brunello, Giorgio; Langella, Monica
    Abstract: We investigate whether the impact of recessions on entrepreneurship is affected by the presence of industrial districts, a source of local agglomeration economies. Using Italian Labour Force quarterly data from 2006 to 2011 and a "difference-in-differences" approach, we show that the share of entrepreneurs in local labour markets where industrial districts are present has declined more than in comparable areas after the beginning of the 2008 recession. The estimated negative differential effect ranges between 4.8 and 7.9 percent in absolute value. We examine alternative explanations - including differences in industrial specialisation and composition, access to credit propensity, exports, population density and the composition of talents - and conclude that our result is consistent with the intense social interactions typical of industrial districts, acting as a multiplier that amplifies the response to shocks.
    Keywords: industrial districts; 2008 recession; agglomeration effects
    JEL: J1
    Date: 2016–03–23
  6. By: Crescenzi, Riccardo; Pietrobelli, Carlo; Rabellotti, Roberta
    Abstract: This paper explores the location strategies of Multinational Enterprises (MNEs) from emerging countries (EMNEs) in search for regional strategic assets. The analysis is based on a systematic comparison between EMNEs and multinationals from advanced countries (AMNEs) in order to unveil similarities and differences between these two major sources of foreign investments into the regions of the European Union. The empirical results suggest that EMNEs follow a distinct logic in their location strategies because they are attracted by the availability of technological competences only when their subsidiaries pursue more sophisticated and technology-intensive activities. Conversely EMNEs share some behavioural similarities with AMNEs in their response to the spatial agglomeration of investments.
    Keywords: innovation; regions; multinationals; European Union
    JEL: F21 F23 O33 R12 R58
    Date: 2016–02–01
  7. By: Douglas Kiarelly Godoy de Araujo; João Barata R B Barroso; Rodrigo Barbone Gonzalez
    Abstract: This paper explores the effects on constrained borrowers of an LTV limit implemented on September 2013 on two major segments of housing finance in Brazil. LTV (hard) limits and related policies entail identification challenges, since constrained individuals are no longer directly observed after policy implementation. In this paper, partially observed treatment status is overcome by the use of an adjusted difference-in-difference method, focusing on the average treatment effect on the treated borrowers (i.e. those that would violate the LTV limit if allowed to do so). We use comprehensive loan-level data on mortgages augmented with a detailed and granular employment register. In the most affected segment, constrained individuals must meet the new LTV limit. These treated borrowers purchase more affordable homes and are less likely to be in arrears 12 months in the future. In the least affected segment, constrained borrowers also end-up meeting the new LTV limit, but the impacts are smaller and we find no significant effects on borrower's housing choice or morose debt.
    Keywords: macroprudential policy, credit registry data, panel data models
    JEL: G21 G28
    Date: 2017–11
  8. By: Richard Koss
    Abstract: It has been over a decade since the peak of house prices in the US was attained, and while there has been a concerted regulatory response to the subsequent collapse, the two Government Sponsored Enterprises (GSEs) remain in conservatorship. While this action served to forestall a deeper crisis at the time, over the past several years risks related to the system of mortgage finance can be seen building across several dimensions that need to be addressed. While reforms to the GSEs are an important part of dealing with these concerns, this paper argues that broader changes need to be made across the entire mortgage landscape to stabilize the system, even before the final state of the GSEs is fully determined.
    Keywords: Housing;Western Hemisphere;United States;Capital Markets, Housing Demand, Housing Supply and Markets, Government Policy and Regulation
    Date: 2017–08–08
  9. By: Ahlfeldt, Gabriel M.; Wendland, Nicolai
    Abstract: We show that an employment potential capitalisation model produces estimates of the spatial decay in employment impact on land prices that are very close to the decay observed in commuting data.
    Keywords: Accessibility; commuting; employment; gravity; potential
    JEL: R12 R38 R48
    Date: 2016–04–28
  10. By: Garriga, Carlos (Federal Reserve Bank of St. Louis); Hedlund, Aaron (University of Missouri,)
    Abstract: Using a model with housing search, endogenous credit constraints, and mortgage default, this paper accounts for the housing crash from 2006 to 2011 and its implications for aggregate and cross-sectional consumption during the Great Recession. Left tail shocks to labor market uncertainty and tighter down payment requirements emerge as the key drivers. An endogenous decline in housing liquidity amplifies the recession by increasing foreclosures, contracting credit, and depressing consumption. Balance sheets act as a transmission mechanism from housing to consumption that depends on gross portfolio positions and the leverage distribution. Low interest rate policies accelerate the recovery in housing and consumption.
    Keywords: Housing; Consumption; Liquidity; Debt; Great Recession
    JEL: D31 D83 E21 E22 G11 G12 G21
    Date: 2017–10–01
  11. By: Gojko Barjamovic; Thomas Chaney; Kerem A. Coşar; Ali Hortaçsu
    Abstract: We analyze a large dataset of commercial records produced by Assyrian merchants in the 19th Century BCE. Using the information collected from these records, we estimate a structural gravity model of long-distance trade in the Bronze Age. We use our structural gravity model to locate lost ancient cities. In many instances, our structural estimates confirm the conjectures of historians who follow different methodologies. In some instances, our estimates confirm one conjecture against others. Confronting our structural estimates for ancient city sizes to modern data on population, income, and regional trade, we document persistent patterns in the distribution of city sizes across four millennia, even after controlling for time-invariant geographic attributes such as agricultural suitability. Finally, we offer evidence in support of the hypothesis that large cities tend to emerge at the intersections of natural transport routes, as dictated by topography.
    JEL: N15 N7 N75 R12
    Date: 2017–11
  12. By: Robert J. Hill (University of Graz, Austria); Miriam Steurer (University of Graz, Austria); Sofie R. Waltl (Luxembourg Institute of Socio-Economic Research, Luxembourg)
    Abstract: The treatment of owner-occupied housing (OOH) is probably the most important unresolved issue in inflation measurement. In particular, for over a decade, the statistical institute of the European Union (Eurostat) has been grappling with the problem of how to include OOH in the Harmonized Index of Consumer Prices (HICP). The three main approaches for measuring OOH costs are the user cost, rental equivalence and acquisitions methods. There are also a number of different variants on each of these methods. We show that a particular version of the user cost method has desirable theoretical properties, and is easier to apply in practice than the more widely used rental equivalence and acquisitions methods. Using quantile hedonic regression methods and a housing dataset consisting of 1.3 million price and rent observations, we then compare the impact of eight different treatments of OOH on the consumer price index (CPI). We find that the impact is large, and that, with our preferred treatment of OOH, an inflation targeting central bank will automatically lean against a housing boom. The treatment of OOH in the CPI is therefore an important prerequisite to any discussion on how monetary policy should respond to housing booms and busts.
    Keywords: Measurement of infl ation; Owner occupied housing; Quantile regression; Hedonic imputation; Housing booms and busts; Monetary policy
    JEL: C31 C43 E01 E31 E52 R31
    Date: 2017–11
  13. By: Yashar Blouri, Maximilian v. Ehrlich
    Abstract: We quantify general equilibrium e ects of place-based policies in a multiregion framework with mobility, trade and agglomeration economies. Using detailed data on EU transfers, we infer the local e ects of di erent transfer types on productivity, income and transportation cost. Based on these estimates and the general equilibrium model we derive the spatial distribution of economic activity and the resulting aggregate welfare e ects if (i) no transfers were paid and taxes set to zero, (ii) transfers were distributed uniformly, (iii) transfers were welfare-optimally distributed. Characterizing the optimal distributions, we reveal complementarities between transfer types and between transfers and local endowments.
    Keywords: economic geography; place-based policies; structural estimation; subsidies; public investments; European structural funds
    JEL: R10 R50 F10 F20 H20
    Date: 2017–10
  14. By: Gabriel Ahlfeldt; Daniel McMillen
    Abstract: Cities around the world are experiencing unprecedented vertical growth. Yet, the economics of skyscrapers remain empirically understudied. This paper analyzes the determinants of the urban height profile by combining a micro-geographic data set on tall buildings with a unique panel of land prices covering 140 years. We provide novel estimates of the land price elasticity of height, the height elasticity of construction cost, and the elasticity of substitution between land and capital for tall buildings. In line with improvements in construction technology, the land price elasticity of height increased substantially over time, rationalizing a trend to ever taller buildings. The land price elasticity of height is larger for commercial than for residential buildings, suggesting that the typical segregation of land uses within cities is not exclusively shaped by the demand side, but also by the supply side.
    Keywords: Chicago, construction cost, density, height, land value, skyscraper
    JEL: R20 R30
    Date: 2017
  15. By: Juin-Jen Chang; Ching-Chong Lai; Ping Wang
    Abstract: We develop a framework to study analytically and quantitatively relentless cross-border casino competition with social-disorder and income-creation externalities. Two bordering casinos compete with each other for the external source of demand of recreational and problem gamblers from the neighboring city and the two city governments set their optimal casino revenue tax and gambler tax surcharge to maximize social welfare. We show that cross-border casino gambling makes aggregate casino demand more elastic despite the addictive nature of gambling. While a lower commuting cost favors a cross-border casino in a city with a weaker taste for gambling, the positive scale effect of its own population may be offset by a negative effect on cross-border gambling. By calibrating the model to fit the Detroit-Windsor market, we find that cross-border competition induces both cities to lower casino taxes to below their pre-existing rates, while the optimal tax mix features a shift from the tax surcharge to the casino revenue tax. Our counterfactual analysis suggests that lowering the commuting cost to the pre-911 level need not have favored Windsor, whereas increasing Detroit's population to the 2000 level would have only given Windsor a modest welfare gain.
    JEL: D21 D62 H2
    Date: 2017–10
  16. By: Michael Jetter; Saskia Moesle; David Stadelmann
    Abstract: This paper revisits the hypothesis that landlocked regions are systematically poorer than regions with ocean access, using panel data for 1,527 subnational regions in 83 nations from 1950-2014. This data structure allows us to exploit within-country-time variation only (e.g., regional variation within France at one point in time), thereby controlling for a host of unobservables related to country-level particularities, such as a country's unique history, cultural attributes, or political institutions. Our results suggest lacking ocean access decreases regional GDP per capita by 10 - 13 percent. We then explore potential mechanisms and possible remedies. First, national political institutions appear to play a marginal role at best in the landlocked-income relationship. Second, the income gap between landlocked and non-landlocked regions within the same nation widens as i) GDP per capita rises, ii) international trade becomes more relevant for the nation, and iii) national production shifts to manufacturing. Finally, we find evidence consistent with the hypothesis that national infrastructure (i.e., transport-related infrastructure and rail lines) can alleviate the lagging behind of landlocked regions.
    Keywords: landlockedness, geography, GDP per capita, trade openness, infrastructure
    JEL: E43 H54 O18 O40 R12
    Date: 2017
  17. By: Dou, Baojun; Parrella, Maria Lucia; Yao, Qiwei
    Abstract: We consider a class of spatio-temporal models which extend popular econometric spatial autoregressive panel data models by allowing the scalar coefficients for each location (or panel) different from each other. To overcome the innate endogeneity, we propose a generalized Yule–Walker estimation method which applies the least squares estimation to a Yule–Walker equation. The asymptotic theory is developed under the setting that both the sample size and the number of locations (or panels) tend to infinity under a general setting for stationary and α-mixing processes, which includes spatial autoregressive panel data models driven by i.i.d. innovations as special cases. The proposed methods are illustrated using both simulated and real data.
    Keywords: α-mixing; dynamic panels; high dimensionality; least squares estimation; spatial autoregression; stationarity
    JEL: C13 C23 C32
    Date: 2016–10–01
  18. By: Marianna Belloc; Francesco Drago; Roberto Galbiati
    Abstract: In this paper, we study how the birth of the first universities in Italy affected the emergence of the Italian free cities-states (the commune) in the period 1000-1300 a.d. Exploiting a panel dataset of 121 cities, we show that after the foundation of a new university the distance between each city in the sample and the university negatively predicts the timing of the birth of communal institutions in the city. Our evidence is consistent with the idea that universities in the Middle Ages provided the necessary juridical knowledge and skills to build legal capacity and develop broader-based institutions.
    Keywords: institutional change, education, human capital accumulation, communal movement
    JEL: I20 I23 K00 N33
    Date: 2017
  19. By: Fitjar, Rune Dahl; Hubert, Franz; Rodríguez-Pose, Andrés
    Abstract: This paper analyses how the formation of collaboration networks affects firm-level innovation by applying the ‘Goldilocks principle’. The ‘Goldilocks principle’ of optimal distance in innovation networks postulates that the best firm-level innovation results are achieved when the partners involved in the network are located at the ‘right’ distance, i.e. ‘not too close and not too far’ from one another, across non-geographical proximity dimensions. This principle is tested on a survey of 542 Norwegian firms conducted in 2013, containing information about firm-level innovation activities and key innovation partners. The results of the ordinal logit regression analysis substantiate the Goldilocks principle, as the most innovative firms are found among those that collaborate with partners at medium levels of proximity for all non-geographical dimensions. The analysis also underscores the importance of the presence of a substitution–innovation mechanism, with geographical distance problems being compensated by proximity in other dimensions as a driver of innovation, while there is no support for a potential overlap–innovation mechanism.
    Keywords: proximities; innovation; collaboration; Goldilocks principle; Norway
    JEL: J50
    Date: 2016–08–17
  20. By: Whitehead, Christine M E
    Abstract: This paper aims to provide a contribution to the debate about housing as asset based welfare begun in this journal in 2015. It suggests that there are strong reasons associated with life cycle earnings and consumption why owner-occupation can be a desirable option, especially for older households. However owner-occupation can be a high risk option for less well-off households while increasing both inequality across income groups and particularly through its impact on inter-generational income and wealth. Even so, housing inequalities, despite all the market failures associated with its provision and allocation, are more an outcome of broader economic fundamentals. Moreover housing policies can improve the lived experience for many. Policies should aim to provide a tenure neutral-taxation environment but also to reduce credit and other constraints to entering owner-occupation. At the same time there must be support for those with inadequate income to achieve acceptable housing standards.
    Keywords: home ownership; housing finance; welfare policy
    JEL: Q15
    Date: 2016–05–12
  21. By: Adam Whittle
    Abstract: It is now commonplace to assume that the production of economically valuable knowledge is central to modern theories of growth and regional development. At the same time, it is also well known that not all knowledge is equal, and that the spatial and temporal distribution of knowledge is highly uneven. Combing insights from Evolutionary Economic Geography (EEG) and Economic Complexity (EC) the primary aim of this paper is to investigate whether more complex knowledge is generated by local of non-local (foreign) firms. From this perspective, a series of recent contributions have highlighted the role of foreign firms in enacting structural transformation, but such an investigation has yet to account for the complexity of the knowledge produced. Exploiting information contained within a recently developed Irish patent database our measure of complexity uses a modified bipartite network to link the technologies produced within regions, to their country of origin i.e. local or non-local. Results indicate that the most complex technologies tend to be produced in a few diverse regions. For Ireland, our results indicate that the most complex technologies tend to be produced in a few diverse regions. In addition, we find that the majority of this complex knowledge is generated in technology classes where the share of foreign activity is greater than local firms. Lastly, we generate an entry model to compute the process of complex regional diversification. Here the focus is on how regions develop a comparative advantage in a technological domains more complex than those already present in that region. As such, we focus our attention only on those technologies with the highest complexity values, as these technologies are said to underpin the European UnionÕs Smart Specialisation thesis.
    Keywords: Relatedness, Technological Complexity, Diversification, Knowledge Space, Smart Specialisation, Ireland
    Date: 2017–11
  22. By: Makreshanska, Suzana; Petrevski, Goran
    Abstract: Although income redistribution is primarily a central government responsibility, decentralization can improve or deteriorate the equity in resource and income redistribution depending on how the process of decentralization is designed and implemented. This paper provides empirical evidence on the association between fiscal decentralization and income distribution for a panel of 11 economies from Central and Eastern Europe (CEE) during 1995-2011. In these regards, we focus on three research topics: the effect of decentralization on income inequality; the effects of the structure of local government finance on income inequality; and the validity of the Kuznets-hypothesis. The main findings from the empirical exercise are as follows: first, we cannot provide firm evidence on the presumes favourable effects of fiscal decentralization on income distribution in the CEE countries; second, our empirical model suggests that the effects of fiscal decentralization on income inequality depend on the source of finance of sub-national governments, i.e. intergovernmental transfers might have a role in income equalization; third, we provide empirical support for the validity of the Kuznets-hypothesis in the CEE countries in which there is a nonlinear relationship between the level of economic development and income inequality.
    Keywords: Fiscal decentralization; Fiscal transfers; GINI; Central and Eastern Europe; Panel Data Models
    JEL: D31 H70 H73
    Date: 2016–09–25
  23. By: Hakeem, Mohammad Abbas
    Abstract: The world population has crossed the 7 billion mark and simultaneously much has been researched and said on the subject from the economic perspective videlicet linking population growth to economic growth. With booming population, however, one issue remains not adequately addressed which is the concentration of this population at certain geographic points - urban centres, cities. Therefore, I have chosen to analyse in this paper the effect of population density on development. With established economic models such as Solow's, we know that population growth drives economic growth. But, is the same true about increasing density of population? We would, here, discuss the notion that increased density would strain the resources, make infrastructure more susceptible to rivalry, and increase costs of provision of public goods.
    Keywords: Population density; cities; economic development; technology; public goods; environment
    JEL: J0 J11 O15
    Date: 2017–04
  24. By: Frédéric Docquier (FNRS & IRES, Université Catholique de Louvain (Belgium), and FERDI (France)); Aysit Tansel (Middle East Technical University (Turkey), IZA (Germany) and ERF (Egypt)); Riccardo Turati (IRES, Université Catholique de Louvain (Belgium))
    Abstract: This paper empirically investigates whether emigrants from MENA countries self-select on cultural traits such as religiosity and gender-egalitarian attitudes. To do so, we use Gallup World Poll data on individual opinions and beliefs, migration aspirations, short-run migration plans, and preferred destination choices. We find that individuals who intend to emigrate to OECD, high-income countries exhibit significantly lower levels of religiosity than the rest of the population. They also share more gender-egalitarian views, although the effect only holds among the young (aged 15 to 30), among single women, and in countries with a Sunni minority. For countries mostly affected by Arab Spring, since 2011 the degree of cultural selection has decreased. Nevertheless, the aggregate effects of cultural selection should not be overestimated. Overall, self-selection along cultural traits has limited (albeit non negligible) effects on the average characteristics of the population left behind, and on the cultural distance between natives and immigrants in the OECD countries.
    Keywords: International migration, self-selection, cultural traits, gender-egalitarian attitudes, religiosity, MENA region.
    JEL: F22 J61 Z10
    Date: 2017–11
  25. By: Hilber, Christian A. L.; Vermeulen, Wouter
    Keywords: house prices; housing supply; supply constraints; land use regulation
    JEL: N0
    Date: 2016
  26. By: Fosgerau, Mogens; Jiang, Gege
    Abstract: This paper sets up a rational inattention model for the choice of departure time for a traveler facing random travel time. The traveler chooses how much information to acquire about the travel time outcome before choosing departure time. This reduces the cost of travel time variability compared to models in which the information is exogenously fixed.
    Keywords: rational inattention; random travel time variability; value of reliability; discrete choice
    JEL: D1 D8 R4
    Date: 2017–10
  27. By: Nicholas J. Sanders; Ryan Sandler
    Abstract: Personal automobile emissions are a major source of urban air pollution. Many U.S. states control emissions through mandated vehicle inspections and repairs. But there is little empirical evidence directly linking mandated inspections, maintenance, and local air pollution levels. To test for a link, we estimate the contemporaneous effect of inspections on local air quality. We use day-to-day, within-county variation in the number of vehicles repaired and recertified after failing an initial emissions inspection, with individual-level data from 1998–2012 from California’s inspection program. Additional re-inspections of pre-1985 model year vehicles reduce local carbon monoxide, nitrogen oxide, and particulate matter levels, while re-inspections of newer vehicles with more modern engine technology have no economically significant effect on air pollution. This suggests emissions inspections have become less effective at reducing local air pollution as more high-polluting vehicles from the 1970s and 1980s leave the road, and provides an example of how the social efficiency of programs can change under improving technologies. We also estimate the importance of station quality, using a metric devised for California’s new STAR certification program. We show re-inspections of older vehicles conducted by low quality inspection stations do not change air pollution, while inspections at high quality stations have a moderate effect on pollution concentrations, which suggests the potential for ineffective monitoring at low quality inspection stations. We find little effect on ambient ozone levels, regardless of station quality or vehicle age.
    JEL: Q52 Q53 Q58
    Date: 2017–10
  28. By: Roland Hodler; Michele Valsecchi; Alberto Vesperoni
    Abstract: The effects of ethnic geography, i.e., the distribution of ethnic groups across space, on economic, political and social outcomes are not well understood. We develop a novel index of ethnic segregation that takes both ethnic and spatial distances between individuals into account. Importantly, we can decompose this index into indices of spatial dispersion, generalized ethnic fractionalization, and the alignment of spatial and ethnic distances. We use maps of traditional ethnic homelands, historical population density data, and language trees to compute these four indices for more than 150 countries. We apply these indices to study the relation between historical ethnic geography and current economic, political and social outcomes. Among other things, we document that countries with higher historical alignment, i.e., countries where ethnically diverse individuals lived far apart, have higher-quality government, higher incomes and higher levels of trust.
    Keywords: ethnic diversity, ethnic geography, segregation, fractionalization, quality of government, economic development, trust
    JEL: C43 D63 O10 Z13
    Date: 2017
  29. By: Holman, Nancy
    Abstract: For 30 years planning has been attacked both rhetorically and materially in England as governments have sought to promote economic deregulation over land use planning. Our paper examines two new moments of planning deregulation. These are the loosening of regulation around short-term letting (STL) in London and the new permitted development rights (PDR), which allow for office to residential conversion without the need for planning permission. Whilst these may be viewed as rather innocuous reforms on the surface, they directly and profoundly illustrate how planners are often trapped between their legal duty to promote public values as dictated by national planning policy and the government’s desire to deregulate. We argue that viewing these changes through a value-based approach to economy and regulation illuminates how multiple and complex local values and understandings of value shape planners’ strategies and actions and thus vary national policies in practice. In so doing, the paper demonstrates how planners have, at least, the opportunity to develop a critical voice and to advocate for policy interpretations that can help to create better outcomes for local communities.
    Keywords: neoliberalism; deregulation; London; short-term letting; permitted development rights
    JEL: Q15
    Date: 2017–11–27
  30. By: Wu, Wenjie; Wang, Jianghao; Li, Chengyu; Wang, Mark
    Abstract: Understanding the complexity in the connection between city liveliness and spatial configurationsfor consumptive amenities has been an important but understudied research field in fast urbanising countries like China. This paper presents the first step towards filling this gap though location-based big data perspectives. City liveliness is measured by aggregated spacetime human activity intensities using mobile phone positioning data.Consumptive amenities are identified by point-of-interest data from Chinese Yelp website (dian ping). The results provide the insights into the geographic contextual uncertainties of consumptive amenities in shaping the rise and fall in the vibrancy of city liveliness.
    Keywords: big data; local linear estimator; city liveliness; consumption; China
    JEL: Q15
    Date: 2016–11
  31. By: Tsampra, Maria; Bouranta, Nancy; Gkerats, Reveka
    Abstract: Massive unemployment and underemployment has been the major implication of 2008-crisis in Europe and particularly in the most vulnerable economies, as Greece. The shock resulted to decreased job-vacancy rates and increased job-seeker rates all over Europe. In a most recent study we focus on un/underemployment to particularly explore the post-crisis demand and supply discrepancy of the Greek labour market. Seeking to provide a coherent analysis of employability patterns across regional labour markets in Greece, we analyze regional-level data (employment flows, industrial specialization and labour market specificities) and individual-level data (demographic factors, qualifications and personal attitudes). We argue that regional un/underemployment is largely attributed to the mismatch between low-skill job vacancies and job-seekers’ high qualifications.
    Keywords: Employability, labour market mismatch, regional diversity
    JEL: J21 J24 R12
    Date: 2017–07–05
  32. By: Mathieu Bunel; Yannick L'Horty; Loïc du Parquet; Pascale Petit
    Date: 2017
  33. By: Daniel Albalate (GiM-IREA, Universitat de Barcelona); Paula Bel-Piñana (GiM-IREA, Universitat de Barcelona)
    Abstract: Public Private Partnerships (PPP) have become common in providing high-quality infrastructure in many countries worldwide. One of the main reasons for PPP agreements is to improve efficiency and quality in the delivery of public services, as well as to boost investments for expensive projects. Despite PPPs having been particularly widespread in the case of the construction and rehabilitation of high-capacity road infrastructure, their impact in terms of road safety outcomes is still unexplored. This paper studies the effects of PPPs on road safety outcomes by taking advantage of the variety of management models provided in the Spanish highway network. Results based on a panel-data fixed-effects method show that the most relevant aspect influencing road safety outcomes is the quality of design of the road. However, we find strong evidence suggesting that privately operated highways perform better in terms of road safety outcomes than publicly operated highways, for roads with a similar quality of design.
    Keywords: Public Private Partnership, highway, road safety, management
    JEL: H23 I18 L33
    Date: 2017–11
  34. By: Montalvo, Jose G; Reynal-Querol, Marta
    Abstract: The relationship between ethnic heterogeneity and economic growth is complex. Empirical research working with cross-country data finds a negative, or statistically insigni cant, relationship. However, research at the city level usually fi nds a positive relationship between diversity and wages/productivity. Generally, the trade-off between the economic bene fits of diversity and the costs of heterogeneity implies that the relationship between diversity and growth depends on the size of the area used as the unit of observation. In this paper we perform a systematic analysis of the effect of the size of geographical units on the relationship between ethnic diversity and growth. We fi nd a positive relationship for small geographical areas and no effect for large areas and countries. There are potentially different mechanisms that can explain this result depending on the structure of the economy and its level of development. In the case of Africa, we argue that a possible explanation of the positive relationship between diversity and growth is the increase in trade at the boundaries between ethnic groups due to ethnic specialization.
    Keywords: Economic Growth; Ethnicity; Scale
    Date: 2017–10
  35. By: G. Bellettini; C. Berti Ceroni; C. Monfardini
    Abstract: We exploit a unique dataset merging data on individual socio-economic characteristics and political participation in an Italian municipality to investigate the relationship between ethnic diversity in residential neighborhoods and individuals' propensity to vote. We document a sizable negative impact of diversity on overall electoral turnout which reects differential effects at the individual level, depending on household equivalent income. Speciffically, we show that ethnic heterogeneity in the neighborhood reduces the political participation of the poor, while it fosters that of the more affluent. These results highlight a potential democratic deficit stemming from reduced and unequal electoral turnout in increasingly ethnically heterogeneous neighborhoods.
    JEL: D72
    Date: 2017–11
  36. By: Hatem Jemmali (University of Tunis El-Manar, Tunisia)
    Abstract: This paper analyzes the level and main drivers of economic inequality among rural–urban, littoral-inland and nonmetropolitan-metropolitan households in Tunisia using nationally representative data set. On average and across the welfare distribution, households living in privileged regions, mainly in urban and metropolitan areas, are found to be wealthier than their counterparts in rural and nonmetropolitan areas. The analysis finds a non-uniform inequality as well (U-shape) across quantiles in the logarithm of household's consumption expenditure per capita suggesting that consumption differentials are found to be much higher at the top end and the bottom than at the middle of the welfare distribution. Using the newly developed methods of decomposition, we endeavor to decompose the distributional welfare differentials among households into endowment effects, explained by differences in households' characteristics, including the head's educational and employment characteristics, and unexplained effects attributable to unequal returns to these covariates. We find that the endowment effects dominate the return effects and contribute more to the overall gap throughout the welfare distribution. General household’s characteristics and educational level of the head appear as the main and common drivers of different regional consumption differentials.
    Date: 2017–11–23
  37. By: Pike, Andy; Rodríguez-Pose, Andrés; Tomaney, John
    Abstract: Shifting horizons in local and regional development. Regional Studies. This paper aims, first, to trace the evolution of thinking about local and regional development in order to situate current debates in their sometimes neglected historical context and, second, to outline the elements of a future research agenda suited to contemporary challenges informed by the fundamental question of what kind of regional development and for whom. It shows how local and regional development has become a global challenge, but also how the approaches to it reflect shifting theories and ideologies which are mediated through particular structures of government and governance that shape diverse types of policy intervention.
    Keywords: regional development; institutions; place-based policies; development strategies
    JEL: O1 O18 R5 R58
    Date: 2017–01–01
  38. By: Johnston, David W.; Lordan, Grace
    Abstract: Do economic downturns encourage racist attitudes? Does this in-turn lead to worse labour market outcome for minorities? We assess these important questions using British attitude and labour force data. The attitude data show that racial prejudice is countercyclical, with the effect driven by large increases for high-skilled middle-aged working men – a 1%-point increase in unemployment is estimated to increase self-reported racial prejudice by 4%-points. Correspondingly, the labour force data show that racial employment and wage gaps are counter-cyclical, with the largest effects also observed for high-skilled men, especially in the manufacturing and construction industries – a 1%-point increase in unemployment is estimated to increase the wage gap by 3%. These results are entirely consistent with the theoretical literature, which proposes that racial prejudice and discrimination are the result of labour market competition among individuals with similar traits, and that the effects of this competition are exacerbated during periods of economic downturn.
    Keywords: prejudice; recessions; racism; discrimination
    JEL: J01 J70 J71
    Date: 2016
  39. By: Jean-Marc Bottazzi; Mario R. Pascoa; Guillermo Ramirez
    Abstract: Variations in repo haircuts play a crucial role in leveraging (or deleveraging) in security markets, as observed in the two major economic events that happened so far in this century, the US housing bubble that burst into the great recession and the European sovereign debts episode. Repo trades are secured but recourse loans. Default triggers insolvency. Collateral may be temporarily exempt from automatic stay but creditors' final reimbursement depends on the bankruptcy outcome. We show examples of bankruptcy equilibria. We infer how haircuts are related to asset or counterparty risks whenever a bankruptcy equilibrium exists. JEL codes:
    Date: 2017
  40. By: Alberto Chong; Gianmarco León; Vivian Roza; Martín Valdivia; Gabriela Vega
    Abstract: We use a field experiment to evaluate the impact of two informational get-out-the-vote (GOTV) campaigns to boost female electoral participation in Paraguay. We find that public rallies have no effect either on registration or on voter turnout in the 2013 presidential elections. However, households that received door-to-door (D2D) treatment are 4.6 percentage points more likely to vote. Experimental variation on the intensity of the treatment at the locality level allows us to estimate spillover effects, which are present in localities that are geographically more concentrated, and thus may favor social interactions. Reinforcement effects to the already treated population are twice as large as diffusion to the untreated. Our results underscore the importance of taking into account urbanization patterns when designing informational campaigns.
    Keywords: voter behavior, electoral politics, urbanization, spillover effects, Paraguay
    JEL: O10 D72 O53 D71
    Date: 2017–11
  41. By: Ahlfeldt, Gabriel M.; Pietrostefani, Elisabetta
    Abstract: This paper synthesises the state of knowledge on the economic effects of density. We consider 15 outcome categories and 202 estimates of density elasticities from 102 studies. More than 50% of these estimates have not been previously published and have been provided by authors on request or inferred from published results in auxiliary analyses. We contribute own estimates of density elasticities of 16 distinct outcome variables that belong to categories where the evidence base is thin, inconsistent or non-existent. Along with a critical discussion of the quality and the quantity of the evidence base we present a set of recommended elasticities. Applying them to a scenario that roughly corresponds to an average high-income city, we find that a 10% increase in density in per capita and year terms is associated with a $140 increase in wage and a $243 increase in rent. The decrease in real wage net of taxes of $171 is partially compensated for by an aggregate amenity effect of $106 and there is a positive external welfare effect of $29. Density has important positive amenity and resource implications, but also appears to create a scarcity rent, which harms renters and first-time buyers.
    Keywords: compact; city; density; meta-analysis; elasticity; urban
    JEL: Q15
    Date: 2017–01
  42. By: Melinda Vigh (Tinbergen Institute); Chris Elbers (Tinbergen Institute)
    Abstract: In practice, social and development interventions are often targeted at groups or individuals with the largest expected benefits. In such cases, treatment effects are usually affected by selection on unobservable factors. We show that modeling the process of selective intervention placement allows us to correct for this and identify the Average Treatment Effect using observational panel data. We illustrate the estimation method using simulated data, as well as, data on a large-scale sanitation intervention in Mozambique. Our results provide a useful tool for the assessment of targeted policy interventions, and inform decisions on their continuation or replication.
    Keywords: Program evaluation; Selection effect; Correlated random coefficients
    JEL: D04 C23
    Date: 2017–11–24

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