nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2018‒01‒15
43 papers chosen by
Steve Ross
University of Connecticut

  1. Cities and the Structure of Social Interactions: Evidence from Mobile Phone Data By Büchel, Konstantin; Ehrlich, Maximilian v.
  2. Home values and firm behaviour By Bahaj, Saleem A.; Foulis, Angus; Pinter, Gabor
  3. Linguistic Distance, Networks and Migrants' Regional Location Choice By Bredtmann, Julia; Nowotny, Klaus; Otten, Sebastian
  4. Immigrant Locations and Native Residential Preferences: Emerging Ghettos or New Communities? By Fernández-Huertas Moraga, Jesús; Ferrer-i-Carbonell, Ada; Saiz, Albert
  5. Mortgage Defaults, Expectation-Driven House Prices and Monetary Policy By BEKIROS, Stelios D.; NILAVONGSE, Rachatar; UDDIN, Gazi S.
  6. Spatial Scale of Agglomeration and Dispersion: Theoretical foundations and empirical implications By AKAMATSU Takashi; MORI Tomoya; OSAWA Minoru; TAKAYAMA Yuki
  7. School Choice during a Period of Radical School Reform: Evidence from the Academy Programme By Bertoni, Marco; Gibbons, Stephen; Silva, Olmo
  8. The analysis of regional disparities in Romania with Gini/Struck coefficients of concentration By Antonescu Daniela
  9. School Performance, Score Inflation and Economic Geography By Battistin, Erich; Neri, Lorenzo
  10. Social capital, resilience and regional diversification in Italy By Roberto Antonietti; Ron Boschma
  11. Asymmetric effects of monetary policy in regional housing markets By Knut Are Aastveit; Author-Name: André K. Anundsen
  12. Expenditure cascades, low interest rates or property booms? Determinants of household debt in OECD countries By Stockhammer, Engelbert; Wildauer, Rafael
  13. Oil Discoveries and Education Spending in the Postbellum South By Stephan E. Maurer
  14. Snooze or Lose: High School Start Times and Academic Achievement By Groen, Jeffrey A.; Pabilonia, Sabrina Wulff
  15. Knowledge Spillovers and Learning in the Workplace: Evidence from the U.S. Patent Office By Michael D. Frakes; Melissa F. Wasserman
  16. Spillovers in Education Choice By Joensen, Juanna Schrøter; Nielsen, Helena Skyt
  17. The Impact of Tobacco-Free School Laws on Student and Staff Smoking Behavior By Bhatt, Rachana; Hinrichs, Peter
  18. Parental Proximity and Earnings after Job Displacements By Krolikowski, Pawel; Coate, Patrick; Zabek, Michael A.
  19. Performance-Based Rankings and School Quality By Herresthal, C.; ; ;
  20. Urban Consumption Inequality in China, 1995–2013 By Xia, Qingjie; Li, Shi; Song, Lina
  21. Resource Transfers to Local Governments: Political Manipulation and Voting Patterns in West Bengal By Anusha Nath; Dilip Mookherjee
  22. Change in urban concentration and economic growth By Susanne Frick; Andres Rodriguez-Pose
  23. Portfolio choice with house value misperception By Corradin, Stefano; Fillat, Jose; Vergara-Alert, Carles
  24. When Officials Dont Know What They Dont Know: Dunning-Kruger Effect in the Case of Green Budgeting for Local Government By Alvin Ulido Lumbanraja
  25. Labour mobility, skill-relatedness and plant survival over the industry life cycle: Evidence from new Dutch plants By Ron Boschma; Riccardo Cappelli; Anet Weterings
  26. Resistance to Institutions and Cultural Distance: Brigandage in Post-Unification Italy By Giampaolo Lecce; Laura Ogliari; Tommaso Orlando
  27. The Impact of Public Employment: Evidence from Bonn By Sascha O. Becker; Stephan Heblich; Daniel M. Sturm
  28. Ethnic Diversity and Political Participation: The Role of Individual Income By Giorgio Bellettini; Carlotta Berti Ceroni; Chiara Monfardini
  29. Quality Perceptions and School Choice in Rural Pakistan By Marine De Talance
  30. Disability Discrimination in the Italian Rental Housing Market: A Field Experiment with Blind Tenants By Luca Fumarco
  31. Measuring productivity dispersion:Lessons from counting one-hundred million ballots By Ilzetzki, Ethan; Simonelli, Saverio
  32. Racial and Ethnic Discrimination in the Labor Market for Child Care Teachers By Boyd-Swan, Casey; Herbst, Chris M.
  33. Firm Productivity and Cities: The Case of Colombia By Jorge Balat; Camila Casas
  34. Willingness to Pay for Clean Air in China By Richard Freeman; Wenquan Liang; Ran Song; Christopher Timmins
  35. The Effect of Changes in Border Regimes on Border Regions Crime Rates: Evidence from the Schengen Treaty By Malte Sandner; Pia Wassmann
  36. Improved asymptotic analysis of Gaussian QML estimators in spatial models By Jakub Olejnik; Alicja Olejnik
  37. Infrastructure investment and social progress in Brazil By Neri, Marcelo Cortes
  38. Religious Tolerance as Engine of Innovation By Cinnirella, Francesco; Streb, Jochen
  39. Who Seeks Re-Election: Local Fiscal Restraints and Political Selection By Susana Peralta; João Pereira dos Santos
  40. The Research on the Stagnant Development of Shantou Special Economic Zone Under Reform and Opening-Up Policy By Bowen Cai
  41. Roads and the Spread of AIDS in Africa By Elodie Djemai
  42. Liquidity Constraints, Transition Dynamics, and the Chinese Housing Return Premium By Yu Zhang
  43. Knowledge spillovers and patent citations: trends in geographic localization, 1976-2015 By Hyuk-Soo Kwon; Jihong Lee; Sokbae Lee; Ryungha Oh

  1. By: Büchel, Konstantin (University of Bern and CRED); Ehrlich, Maximilian v. (‡University of Bern, CAGE, CRED, and CESifo)
    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 find that distance is highly detrimental to interpersonal exchange. We show that, despite distance-related costs, urban residents do not 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: Economic Geography; Agglomeration Economies; Social Interactions; Network Analysis; Spatial Sorting JEL Classification: R10; R23; D83; D85; Z13.creation-date: 2018
  2. By: Bahaj, Saleem A.; Foulis, Angus; Pinter, Gabor
    Abstract: The homes of those in charge of firms are an important source of finance for ongoing businesses. We use firm level accounting data, transaction level house price data and loan level residential mortgage data from the UK to show that a £1 increase in the value of the residential real estate of a firm’s directors increases the firm’s investment and wage bill by £0.03 each. These effects run through smaller firms and are similar in booms and busts. In aggregate, the homes of firm directors are worth 80% of GDP. Using this, a back of the envelope calculation suggests that a 1% increase in real estate prices leads, through this channel, to up to a 0.28% rise in business investment and a 0.08% rise in total wages paid. We complement this with evidence on how a firm responds to changes in the value of its own corporate real estate; we find that, in aggregate, the residential real estate of directors is at least as important for activity. We use an estimated general equilibrium model to quantify the importance of both types of real estate for the propagation of shocks to the macroeconomy.
    JEL: E32 R30
    Date: 2017–08–30
  3. By: Bredtmann, Julia (RWI); Nowotny, Klaus (University of Salzburg); Otten, Sebastian (RWI)
    Abstract: This paper analyzes the interaction between migrant networks and linguistic distance in the location choice of migrants to the EU at the regional level. We test the hypothesis that networks and the ability to communicate in the host country language, proxied by linguistic distance, are substitutes in the location decision. Based on individual level data from a special evaluation of the European Labour Force Survey (EU-LFS) and a random utility maximization framework, we find that networks have a positive effect on the location decisions while the effect of linguistic distance is negative. We also find a strong positive interaction effect between the two factors: networks are more important the larger the linguistic distance between the home country and the host region, and the negative effect of linguistic distance is smaller the larger the network size. In several extensions and robustness checks, we show that this substitutable relationship is extremely robust.
    Keywords: location choice, ethnic networks, linguistic distance, EU migration, multilateral resistance
    JEL: F22 J61 R23
    Date: 2017–11
  4. By: Fernández-Huertas Moraga, Jesús (Universidad Carlos III de Madrid); Ferrer-i-Carbonell, Ada (IAE Barcelona (CSIC)); Saiz, Albert (Massachusetts Institute of Technology)
    Abstract: While the impact of immigrants on labor markets may be small, strong political movements voicing opposition to the growth of resident foreign-born populations are on the upswing. We study whether natives voted with their feet in reaction to the largest and fastest migration shock in the OECD. The inflow, causing the population of Spain to grow by 10 percent between 1998 and 2008, represented largely a new phenomenon the size of which had not been factored into previous expectations, thereby providing quasi-experimental sources of variance. Our results show that immigrant inflows caused mild native flight from denser, established neighborhoods, but also more real estate development there. In parallel, both natives and immigrants were concurrently moving into new booming suburban communities, resulting in no changes in overall measures of ethnic segregation. In contexts where large ethnic minority arrivals spur the creation of new neighborhoods, conventional empirical methods may overstate the degree of segregationist behavior.
    Keywords: residential segregation, international migration, white flight
    JEL: F22 J61 D33
    Date: 2017–11
  5. By: BEKIROS, Stelios D.; NILAVONGSE, Rachatar; UDDIN, Gazi S.
    Abstract: We contribute to the literature on dynamic stochastic general equilibrium models with housing collaterals by including shocks to house price expectations. We incorporate endogenous mortgage defaults which are rarely included in DSGE models with housing collaterals. We show that our theoretical model of mortgage default is consistent with empirical evidence. We use this particular DSGE setup to study the effects of variations in house price expectations on macroeconomic dynamics and their implications for monetary policy. Extensive model simulations show that an increase in expected future house prices leads to a decline in mortgage default rates as well as in interest rates on loans, whereas it leads to an increase in house prices, household debt, bank leverage ratios and economic activity. As opposed to previous studies we find that inflation is low during a house price boom. Finally, we demonstrate that although monetary policy that reacts to household credit growth improves the stability of the real economy and enhances financial stability, yet it jeopardizes price stability.
    Keywords: House price expectations, Inflation dynamics, Monetary policy, Mortgage defaults
    JEL: E32 E44 E52
    Date: 2017
  6. By: AKAMATSU Takashi; MORI Tomoya; OSAWA Minoru; TAKAYAMA Yuki
    Abstract: This paper studies the theoretical properties of existing economic geography models with agglomeration and dispersion forces in a many-region setup, rather than their original two-region space, to investigate the spatial scale—global or local—of agglomeration and dispersion intrinsic to each model. We show that models in the literature reduce to two canonical classes that differ starkly in their engendered spatial patterns and comparative statics. Our formal results offer a consistent explanation for the set of various outcomes from the extant reduced-form regression analyses and also provide qualitative predictions of the treatment effects in the structural model-based studies on regional agglomeration.
    Date: 2017–12
  7. By: Bertoni, Marco (University of Padova); Gibbons, Stephen (London School of Economics); Silva, Olmo (London School of Economics)
    Abstract: Education policy worldwide has sought to incentivize school improvement and facilitate pupil-school matching by introducing reforms that promote autonomy and choice. Understanding the way in which families choose schools during these periods of reform is crucial for evaluating the impact of such policies. We study the effects of a recent shock to the English school system – the academy programme – which gave existing state schools greater autonomy, but provided limited information on possible expected benefits. We use administrative data on school applications for three cohorts of students to estimate whether academy conversion changes schools' popularity. We find that families – particularly non-poor, White British ones – rank converted schools higher on average. We investigate the likely mechanisms that could give rise to our findings. The patterns we document suggest that families combine academy conversion with home-school distance and prior information on quality and popularity as a heuristic to inform school choice.
    Keywords: school reform, choice and autonomy, preference formation
    JEL: I21 H75
    Date: 2017–11
  8. By: Antonescu Daniela (Romanian Academy-INCE)
    Abstract: A key objective of regional development policy is to reduce disparities between regions and to ensure a relatively balanced level of development. To achieve this goal there are necessary studies and social and economic analysis, based on certain techniques and methods of evaluation. In scientific literature, there are plenty of models that can be applied to assess regional disparities. One of the methods commonly used in practice is related to the calculation and analysis of the degree of concentration/diversification of activities within a region. The increase or decrease of the degree of concentration of certain activities or areas of activity in a region provides information on: the level of overall economic development; economic development and growth rate; the specific of the region, the potential, local traditions, etc. The expert analysis indicate that, in a high level of overall development or a sustained economic growth rate, there are favorable conditions for economic activities to locate in any region, so they are relatively uniformly distributed throughout the country. Knowing the degree of concentration and also the influence factors is useful in making decisions and setting regional policy measures. This article proposes a synthetic analysis of the development level of regions in Romania with the concentration/diversification model (Gini/Struck coefficients), based on the existing key statistical indicators.
    Keywords: regional analysis,regional disparities,concentration/diversification
    Date: 2017–10–09
  9. By: Battistin, Erich; Neri, Lorenzo
    Abstract: Abstract We show that grading standards for primary school exams in England have triggered an inflation of quality indicators in the national performance tables for almost two decades. The cumulative effects have resulted in significant differences in the quality signaled to parents for otherwise identical schools. These differences are as good as random, with score inflation resulting from discretion in the grading of randomly assigned external markers. We find large housing price gains from the school quality improvements artificially signaled by inflation as well as lower deprivation and more businesses catering to families in local neighborhoods. The design ensures improved external validity for the valuation of school quality with respect to boundary discontinuities and has the potential for replication outside of our specific case study.
    Keywords: House Prices; School quality; Score inflation
    JEL: C26 C31 I2
    Date: 2017–11
  10. By: Roberto Antonietti; Ron Boschma
    Abstract: There is increasing interest in the question how institutions affect regional diversification, especially in times of economic crisis. This paper investigates the role of social capital for the entry of new industries and the exits of existing industries in Italian provinces during the 2004-2010 period. Our results show that bridging social capital in a region positively contributes to the entry of new industries, especially when they are unrelated to existing specializations in the region. Diversification in regions (especially more unrelated diversification) tends to rely on bridging, not on bonding social capital. We also find that bridging social capital loses its impact on regional diversification during the crisis. Bonding, not bridging social capital, appears to make regions resilient in times of crisis, by reducing the probability of exit, especially in industries unrelated to existing specializations in regions. While bridging social capital has a negative effect on exit in times of prosperity, it shows no such effect anymore during the crisis period. Our findings suggest that bridging social capital loses its supportive role in times of crisis.
    Keywords: bonding social capital, bridging social capital, regional diversification, resilience, economic crisis, Italy
    JEL: R11 O14 D02
    Date: 2018–01
  11. By: Knut Are Aastveit; Author-Name: André K. Anundsen
    Abstract: The responsiveness of house prices to monetary policy shocks depends both on the nature of the shock – expansionary versus contractionary – and on city-specific housing supply elasticities. We test and find supporting evidence for the hypothesis that expansionary monetary policy shocks have a larger impact on house prices when supply elasticities are low on 263 US metropolitan areas. We also test whether contractionary shocks are orthogonal to supply elasticities, as implied by downward rigidity of housing supply, and find supporting evidence. A final theoretical conjecture is that contractionary shocks should have a greater impact on house prices than expansionary shocks, as long as supply is not perfectly inelastic. For areas with high housing supply elasticity, our results are in line with this conjecture. However, for areas with an inelastic housing supply, we find that expansionary shocks have a greater impact on house prices than contractionary shocks. We provide evidence that this is related to a momentum effect that is more pronounced when house prices are increasing than when they are falling.
    Keywords: House prices, Heterogeneity, Monetary policy, Non-linearity, Supply elasticities
    Date: 2017–12
  12. By: Stockhammer, Engelbert; Wildauer, Rafael
    Abstract: The past decades have witnessed a strong increase in household debt and high growth of private consumption expenditures in many countries. This paper empirically investigates four explanations: First, the expenditure cascades hypothesis argues that an increase in inequality induced lower income groups to copy the spending behaviour of richer peer groups and thereby drove them into debt (‘keeping up with the Joneses’). Second, the housing boom hypothesis argues that increasing property prices encourage household spending and household borrowing due to wealth effects, eased credit constraints and the prospect of future capital gains. Third, the low interest hypothesis argues that low interest rates encouraged households to take on more debt. Fourth, the financial deregulation hypothesis argues that deregulation of the financial sector boosted credit supply. The paper tests these hypotheses by estimating the determinants of household borrowing using a panel of 11 OECD countries (1980-2011). Results indicate that real estate prices and low interest rates were the most important drivers of household debt. In contrast the data does not support the expenditure cascades hypothesis as a general explanation of debt accumulation across OECD countries. Our results are consistent with the financial deregulation hypothesis, but its explanatory power for the 1995-2007 period is low.
    Keywords: household debt; income distribution; property prices
    Date: 2017–08–01
  13. By: Stephan E. Maurer
    Abstract: This paper studies the effect of oil wealth on the provision of education in the early 20th century United States. Using information on the location and discovery of major oil fields, I find that oil wealth increased local revenue and education spending. The quality of white teachers increased, and oil-rich counties were more likely to participate in the Rosenwald school building program for blacks. In addition, student-teacher ratios for black school children declined substantially. However, I do not find increased school enrolment rates for either race.
    Keywords: oil, education, race, rosenwald, local public finances, resource booms, teachers
    JEL: I2 N3 Q3
    Date: 2018–01
  14. By: Groen, Jeffrey A. (U.S. Bureau of Labor Statistics); Pabilonia, Sabrina Wulff (U.S. Bureau of Labor Statistics)
    Abstract: Many U.S. high schools start classes before 8:00 A.M., yet research on circadian rhythms suggests that students' biological clocks shift to later in the day as they enter adolescence. Some school districts have moved to later start times for high schools based on the prospect that this would increase students' sleep and academic achievement. This paper examines the effect of high school start times on student learning. We use longitudinal data from the Child Development Supplement to the Panel Study of Income Dynamics (PSID-CDS) to conduct the first study of this relationship using a nationally-representative sample of students. We also use the CDS time diaries to explore the effects of high school start times on students' time allocation. Results indicate that female students who attend schools with later start times get more sleep and score higher on reading tests. Male students do not get more sleep when their schools start later and their test scores do not change.
    Keywords: academic achievement, school start times, sleep, time allocation
    JEL: I12 I20 J22
    Date: 2017–11
  15. By: Michael D. Frakes; Melissa F. Wasserman
    Abstract: Using application-level data from the Patent Office from 2001 to 2012, merged with personnel data on patent examiners, we explore the extent to which the key decision of examiners—whether to allow a patent—is shaped by the granting styles of her surrounding peers. Taking a number of methodological approaches to dealing with the common obstacles facing peer-effects investigations, we document strong evidence of peer influence. For instance, in the face of a one standard-deviation increase in the grant rate of her peer group, an examiner in her first two years at the Patent Office will experience a 0.15 standard-deviation increase in her own grant rate. Moreover, we document a number of markers suggesting that such influences arise, at least in part, through knowledge spillovers among examiners, as distinct from peer-pressure mechanisms. We even find evidence that some amount of these spillovers may reflect knowledge flows regarding specific pieces of prior art that bear on the patentability of the applications in question, as opposed to just knowledge flows regarding general examination styles. Finally, we find evidence suggesting that the magnitude of these peer examiner influences are just as strong, or stronger, than the influence of the examination styles of supervisors.
    JEL: J01 M50 O30
    Date: 2017–12
  16. By: Joensen, Juanna Schrøter (University of Chicago); Nielsen, Helena Skyt (Aarhus University)
    Abstract: This paper examines how skills are shaped by social interactions in families. We show that older siblings causally affect younger sibling's education choices and early career earnings. We focus on critical course choices in high school and overcome the identification challenges of estimating spillover effects in education by exploiting exogenous variation in choice sets stemming from a pilot program. The pilot induced an essentially random subset of older siblings to choose advanced math-science at a lower cost, while not directly affecting the course choices of younger siblings. We find that younger siblings are 2-3 percentage points more likely to choose math-science if their older sibling unexpectedly could choose math-science at a lower cost. We argue that the main influence of the pilot program on the younger siblings may be attributed to the social influence of the older sibling. Spillovers are strongest among closely spaced siblings, in particular brothers, and they have a lasting impact on the career out-comes of younger brothers. We argue that competition is likely one of the driving forces behind younger siblings conforming to their older siblings' choices.
    Keywords: high school curriculum, siblings, social interaction, skill formation
    JEL: I21 I24 J24
    Date: 2017–11
  17. By: Bhatt, Rachana (Board of Regents of the University System of Georgia); Hinrichs, Peter (Federal Reserve Bank of Cleveland)
    Abstract: A number of US states have enacted bans on tobacco use by students, staff, and visitors anywhere on the grounds of public elementary and secondary schools statewide. These laws are intended to reduce tobacco use, reduce exposure to secondhand smoke, reinforce anti-tobacco curricula taught in schools, and prevent children from viewing their teachers and fellow students using tobacco products. We examine the impact that the laws have on the smoking behavior of students, teachers, and other school staff by estimating difference-in-differences models that exploit the time variation in adoption of the laws across states. We generally find that these laws do not impact smoking behavior, although we do find some evidence suggesting a possible effect on nonteaching school staff.
    Keywords: smoking; tobacco; smoke-free laws;
    JEL: I10 I20
    Date: 2017–12–21
  18. By: Krolikowski, Pawel (Federal Reserve Bank of Cleveland); Coate, Patrick (National Council for Compensation Insurance); Zabek, Michael A. (University of Michigan)
    Abstract: Young adults, ages 25 to 35, who live in the same neighborhoods as their parents experience stronger earnings recoveries after a job displacement than those who live farther away. This result is driven by smaller on-impact wage reductions and sharper recoveries in both hours and wages. We show that geographic mobility, different job search durations, housing transfers, and ex-ante differences between individuals are unlikely explanations. Our findings are consistent with a framework in which some individuals living near their parents face a better wage-offer distribution, though we find no direct evidence of parental network effects.
    Keywords: Parents; adult children; job loss; neighborhood; transfers; networks;
    JEL: J61 J64 R23
    Date: 2017–11–29
  19. By: Herresthal, C.; ; ;
    Abstract: I study students' inferences about school quality from performance-based rankings in a dynamic setting. Schools differ in location and unobserved quality, students differ in location and ability. Short-lived students observe a school ranking as a signal about schools' relative quality, but this signal also depends on the ability of schools' past intakes. Students apply to schools, trading off expected quality against proximity. Oversubscribed schools select applicants based on an admission rule. In steady-state equilibrium, I find that rankings are more informative if oversubscribed schools select more able applicants or if students care less about distance to school.
    Keywords: performance-based rankings, information acquisition, endogenous signal, consumer choice
    JEL: D83 I21 H75
    Date: 2017–12–11
  20. By: Xia, Qingjie (Peking University); Li, Shi (Beijing Normal University); Song, Lina (University of Nottingham)
    Abstract: We use 1995, 2002 and 2013 CHIP data to investigate the urban household consumption expenditure inequality. The overall inequality of urban household consumption expenditure measured by Gini coefficient slightly decreases from 0.33 in 1995 to 0.32 in 2002, but increases to 0.36 in 2013, which follows the same trend with that of urban income but is severer. However, the percentile ratio of p90/p10 shows that consumption inequality increases all the time. Besides, the inequality of basic food consumption is much smaller than the overall consumption, its contribution to the overall consumption inequality decreases from 20% in 1995 and 2002 to 15% by 2013, and its share also decreases steadily from 34% in 1995 to 30% in 2002 and further to 24% in 2013, and finally its share steadily decreases as the overall consumption level moving up the distribution in each of the three years. The inequality of housing consumption is much larger than overall consumption but decreasing over time, its contribution to the overall consumption inequality increases 35% in earlier two years to 40% by 2013, and its share also sharply increases from 23% in 1995 to 30% in 2002 and further to 38% in 2013, besides its share shows upward sloping as overall consumption level increases in each of the three years.
    Keywords: consumption, household surveys, inequality
    JEL: D3 D63
    Date: 2017–11
  21. By: Anusha Nath (Federal Reserve Bank of Minneapolis and University of Minnesota); Dilip Mookherjee (Boston University)
    Abstract: This paper examines how electoral competition in parliamentary constituencies aects allocation of resources to local governments and subsequent impacts on voter behavior. We examine the consequences of treating the 2007 redistricting of electoral boundaries in rural West Bengal as a shock to political competition between the Left Front (LF) and Trinamool Congress (TMC) in the parliamentary constituency that a village is located in. 21 villages out of a sample of 89 villages were redistricted by a non-partisan Election Commission to a dierent constituency. Using electoral victory margins in the previous 2004 election as a measure of political competition, we find that resources transferred by LF-controlled district governments to LF-dominated village governments for citizen benefit programs increased significantly if moved to an electoral constituency where the LF was in a weaker competitive position. These changes in benefit flows help predict corresponding changes in vote shares, consistent with the view that resource transfers to GPs were motivated by electoral considerations. Stronger changes were exhibited for recurring private benefits (mainly employment program (NREGA) funds) compared to one-time private benefits and local public goods (water, housing, roads, BPL cards). The evidence is consistent with models of electoral opportunism based on pork-barrel politics and/or clientelistic relational contracts between parties and voters, particularly the latter.
    Date: 2017
  22. By: Susanne Frick; Andres Rodriguez-Pose
    Abstract: The paper investigates (1) the evolution of urban concentration from 1985 to 2010 in 68 countries around the world and (2) the extent to which the degree of urban concentration affects national economic growth. It aims to overcome the limitations of existing empirical literature by building a new urban population dataset that allows the construction of a set of Herfindahl-Hirschman-Indices which capture a country?s urban structure in a more nuanced way than the indicators used hitherto. We find that, contrary to the general perception, urban concentration levels have on average decreased or remained stable (depending on indicator). However, these averages camouflage diverging trends across countries. The results of the econometric analysis suggest that there is no uniform relationship between urban concentration and economic growth. Urban concentration is beneficial for economic growth in high-income countries, while this effect does not hold for developing countries. The results differ from previous analyses that generally underscore the benefits of urban concentration at low levels of economic development. The results are robust to accounting for reverse causality through IV analysis, using exogenous geographic factors as instruments.
    Keywords: Agglomeration, urban primacy, economic growth, high-income countries, low-income countries
    JEL: R11 R12
    Date: 2018–01
  23. By: Corradin, Stefano (European Central Bank); Fillat, Jose (Federal Reserve Bank of Boston); Vergara-Alert, Carles (Universidad de Navarra)
    Abstract: Households systematically overvalue or undervalue their houses. We compute house value misperception as the difference between self-reported and market house values. Misperception is sizable, countercyclical, and persistent. We find that a 1 percent increase in house overvaluation results, on average, in a 4.56 percent decrease in the share of risky stock holdings for those households that participate in the stock market. We then build a rational inattention model in which households make decisions based on their perceived level of housing wealth. Numerical simulations generate the effects of house value misperception on the portfolio choices that we observe in the data.
    Keywords: portfolio choice; housing; transaction costs; information costs; inaction bands; rational inattention
    JEL: C61 D11 D91 G11 R21
    Date: 2017–10–01
  24. By: Alvin Ulido Lumbanraja (Researcher, Institute for Economic and Social Research, Faculty of Economics, University of Indonesia, Jakarta)
    Abstract: This paper extends the key findings of Kruger & Dunning (1999), which shows that people who are unskilled in a given domain tend to be unaware of their lack of skills, to government circle that is supposed to be filled by professionals. This paper compared individual government officials’ self-assessment of their offices’ ability to perform certain tasks related to green budgeting with their responses to questions that implicitly assess their actual ability to perform such tasks. Consistent with Kruger & Dunning (1999), individuals who have sufficient knowledge and expertise in a given domain tend to have more accurate self-assessment when asked to rate their own expertise, and vice versa. This paper also discusses the theoretical underpinning of how compensation structure is related with Dunning-Kruger effect on policy design and how tying the outcome with compensation can promote learning and better metacognitive abilities, even for less knowledgeable individuals
    Keywords: Dunning-Kruger Effect — Green Budgeting — Government Officials
    JEL: D86 H10 J30 J45 M52
    Date: 2017–11
  25. By: Ron Boschma; Riccardo Cappelli; Anet Weterings
    Abstract: Labour mobility is often considered a crucial factor for regional development. However, labour mobility is not good per se for local firms. There is increasing evidence that labour recruited from skill-related industries has a positive effect on plant performance, in contrast to intra-industry labour recruits. However, little is known about which types of labour are recruited in different stages of the evolution of an industry, and whether that matters for plant performance. This paper attempts to fill these gaps in the literature using plant-level data for manufacturing and services industries in the Netherlands for the period 2001-2009. Our study focuses on the effects of different types of labour recruits on the survival of new plants. We show that the effects of labour recruits from the same industry and from skill-related and unrelated industries on plant survival vary between the life cycle stages of industries. We also find that inter-regional labour flows do not impact on plant survival.
    Keywords: labour mobility, skill-relatedness, industry life cycle, industrial dynamics, firm survival
    JEL: R11 R12 O18
    Date: 2017–12
  26. By: Giampaolo Lecce (Cowles Foundation, Yale University); Laura Ogliari (Bocconi University); Tommaso Orlando (Bank of Italy)
    Abstract: We study how cultural distance affects the rejection of imposed institutions. To do so, we exploit the transplantation of Piedmontese institutions on Southern Italy that occurred during the Italian unification. We assemble a novel and unique dataset containing municipal-level information on episodes of brigandage, a form of violent uprising against the unitary government. We use the geographic distance from local settlements of Piedmontese descent as a proxy for the cultural distance between each municipality and the new rulers. We find robust evidence that cultural distance from the origins of the transplanted institutions is significantly associated with more intense resistance to these institutions. Our results further suggest that the rejection of the transplanted institutions may have a long-lasting effect on political participation.
    Keywords: Institutions, Institutional Transplantations, Culture, Social Unrest, Electoral Turnout
    JEL: N43 D74 P16 Z10
    Date: 2017–08
  27. By: Sascha O. Becker; Stephan Heblich; Daniel M. Sturm
    Abstract: This paper evaluates the impact of public employment on private sector activity using the relocation of the German federal government from Berlin to Bonn in the wake of the Second World War as a source of exogenous variation. To guide our empirical analysis, we develop a simple economic geography model in which public sector employment in a city can crowd out private employment through higher wages and house prices, but also generates potential productivity and amenity spillovers. We find that relative to a control group of cities, Bonn experiences a substantial increase in public employment. However, this results in only modest increases in private sector employment with each additional public sector job destroying around 0.2 jobs in industries and creating just over one additional job in other parts of the private sector. We show how this finding can be explained by our model and provide several pieces of evidence for the mechanisms emphasised by the model.
    Keywords: economic geography, public employment, place-based policies, German division
    JEL: F15 J45 N44 R12
    Date: 2018–01
  28. By: Giorgio Bellettini; Carlotta Berti Ceroni; Chiara 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 reflects differential effects at the individual level, depending on household equivalent income. Specifically, 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.
    Keywords: ethnic heterogeneity, electoral turnout, income
    JEL: D72
    Date: 2017
  29. By: Marine De Talance (LEDa - Laboratoire d'Economie de Dauphine - Université Paris-Dauphine)
    Keywords: I25,I21,School choice,Qualityof education,Private schooling,Perceptions,Pakistan,Demand for schooling,I28
    Date: 2017–12–20
  30. By: Luca Fumarco
    Abstract: I test discrimination against blind tenants assisted by guide dogs in the Italian rental housing market by using fake application letters. I compare three fictitious household tenants: married couples, married couples where the wife is blind and owns a guide dog, and married couples where the normal-sighted wife owns a normal dog. I find that the households with a blind wife are invited less often to visit apartments they applied for, because of the presence of their guide dog; using the language of Italian and E.U. laws, this behavior is called indirect discrimination against disabled people. This result is robust.
    Date: 2017
  31. By: Ilzetzki, Ethan; Simonelli, Saverio
    Abstract: We measure output per worker in nearly 8,000 municipalities in the Italian electoral process using ballot counting times in the 2013 general election and two referenda in 2016. We document large productivity dispersion across provinces in this very uniform and low-skill task that involves nearly no technology and requires limited physical capital. Using a development accounting framework, this measure explains up to half of the firm-level productivity dispersion across Italian provinces and more than half the north-south productivity gap in Italy. We explore potential drivers of our measure of labor efficiency and find that its association with measures of work ethic and trust is particularly robust.
    Keywords: Labor productivity; development accounting; work ethic; cultural economics.
    JEL: J24 O47 Z10
    Date: 2017–08–31
  32. By: Boyd-Swan, Casey (Kent State University); Herbst, Chris M. (Arizona State University)
    Abstract: This paper examines racial and ethnic discrimination in the labor market for center-based child care teachers. We assemble a novel dataset that combines a resume audit study of child care centers in several large U.S. cities with a follow-up survey of the providers in the original audit sample. The provider survey was administered to obtain detailed information about the children, teachers, and administrators within the center. Together, these data provide three insights about the influence of applicant race and ethnicity on teacher hiring. First, we uncover robust evidence of discrimination: black and Hispanic applicants receive significantly fewer interview requests than observationally equivalent whites. Nevertheless, we show that program directors exhibit strong own-race preferences: white directors favor white applicants, while minority directors favor those from their own racial and ethnic background. Second, our results suggest that teacher hiring is consistent with a model of customer discrimination. In particular, the racial and ethnic composition of children attending the center is strongly correlated with the characteristics of job-seekers receiving an interview request. Finally, we show that states' child care regulations and quality certification programs mitigate or eliminate entirely the racial and ethnic gap in interview requests. These benefits accrue disproportionately to high-skilled minorities, and to those applying to child care centers located in high-income communities. We posit that these firm-level licensing requirements increase the cost to employers of using race and ethnicity as signals of teacher productivity.
    Keywords: customer discrimination, racial/ethnic labor market discrimination, child care market, child care regulations
    JEL: J71
    Date: 2017–11
  33. By: Jorge Balat (The University of Texas at Austin); Camila Casas (Banco de la República de Colombia)
    Abstract: In this paper we study the determinants of firm-level productivity in Colombia. We are interested in the effects of agglomeration forces that explain why manufacturing economic activity tends concentrate geographically as well as the effect of forces that can hurt productivity in high-density areas. An unfortunate major example of the latter forces in Colombia is its high levels of crime and terrorist attacks. We carry out this study by exploiting two very rich data sources: a firm-level panel which allows us to estimate firm-level productivity and a panel of municipality characteristics. To address selection and endogeneity issues in the estimation of firm-level productivity we use a control function approach. Our main findings are the following. First, scale economies do not seem to affect firm-level productivity. Second, we do find evidence of location economies (industrial specialization has a positive effect on productivity). Industrial variety, on the other hand, lowers productivity. It seems that firms in Colombia benefit from forming clusters and locating in cities with less industrial variety. We also find non-trivial effects of city fiscal performance, education level and quality, and crime and violent attacks. Classification JEL: R00, R12, R32, O14, L6, C14
    Keywords: Cities, Colombia, Productivity, TFP, Total Factor Productivity, Agglomeration
    Date: 2018–01
  34. By: Richard Freeman; Wenquan Liang; Ran Song; Christopher Timmins
    Abstract: We develop a residential sorting model incorporating migration disutility to recover the implicit value of clean air in China. The model is estimated using China Population Census Data along with PM2.5 satellite data. Our study provides new evidence on the willingness to pay for air quality improvement in developing countries and is the first application of an equilibrium sorting model to the valuation of non-market amenities in China. We employ two novel instrumental variables based on coal-fired electricity generation and wind direction to address the endogeneity of local air pollution. Results suggest important differences between the residential sorting model and a conventional hedonic model, highlighting the role of moving costs and the discreteness of the choice set. Our sorting results indicate that the economic value of air quality improvement associated with a one-unit decline in PM2.5 concentration is up to $8.83 billion for all Chinese households in 2005.
    JEL: Q51 Q53 R23
    Date: 2017–12
  35. By: Malte Sandner (Institute for Employment Research (IAB)); Pia Wassmann (NRW.BANK)
    Abstract: In recent years many countries increased border controls, partly in response to public concerns that open borders are favoring cross-border crime. Despite these widespread concerns, empirical research on whether public fears are justi ed is still scarce. This article evaluates whether the abolishment of border controls at the eastern German and Austrian borders accompanying the implementation of the Schengen Treaty in December 2007 increased crime rates in border counties of these countries. Based on official crime statistics, conditional difference-in-differences estimation allows the evaluation of border controls in a causal way. Results show that in Germany and Austria only for burglaries a significant positive effect can be observed suggesting that for this type of criminal offense, public concerns proved to be justified. In contrast, for overall crime rates as well as for other common types of crime against property no significant effect can be observed, indicating that there is only little empirical evidence for the widespread concerns about public security.
    Keywords: Crime Rates, Border Regions, Schengen Treaty, Open Borders
    JEL: K42 R10
    Date: 2018–01
  36. By: Jakub Olejnik (Department of Mathematics and Computer Science, University of Lodz); Alicja Olejnik (Faculty of Economics and Sociology, University of Lodz)
    Abstract: This paper presents a fundamentally improved statement on asymptotic behaviour of the well-known Gaussian QML estimator of parameters in high-order mixed regressive/autoregressive spatial model. We generalize the approach previously known in the econometric literature by considerably weakening assumptions on the spatial weight matrix, distribution of the residuals and the parameter space for the spatial autoregressive parameter. As an example application of our new asymptotic analysis we also give a statement on the large sample behaviour of a general fixed effects design.
    Keywords: spatial autoregression, quasi-maximum likelihood estimation, high-order SAR model, asymptotic analysis, fixed effects model
    JEL: C21 C23 C51
    Date: 2017–12
  37. By: Neri, Marcelo Cortes
    Abstract: This paper draws a broad empirical diagnosis on the evolution of infrastructure coverage in Brazil and potencial social impacts. it focuses on the sectors of sewerage, water, electricity, urban transportation and communication technologies (ICTs). Most of the analysis departs from houshold surveys, bringing the population perspective into the picture. We analyze socio-economic determinants of infrastructure coverage, a social outcome in itself, as well as their possible indirect impacts on income generation, time cost of transportation, housing values and education. We also consider briefly direct consequences of increasing infrastructure coverage in the budget constraint through services costs and payments delays and direct utility effects through subjective data on the quality and importance attributed to different infrastructure sectors.
    Date: 2017–12–21
  38. By: Cinnirella, Francesco; Streb, Jochen
    Abstract: We argue that, for a given level of scientific knowledge, tolerance and diversity are conducive to technological creativity and innovation. In particular, we show that variations in innovation within Prussia during the second industrial revolution can be ascribed to differences in religious tolerance that developed in continental Europe from the Peace of Westphalia onwards. By matching a unique historical dataset about religious tolerance in 1,278 Prussian cities with valuable patents for the period 1877-1890, we show that higher levels of religious tolerance are strongly positively associated with innovation during the second industrial revolution. Religious tolerance is measured through population's religious diversity, diversity of churches, and diversity of preachers and religious teachers, respectively. Endogeneity issues are addressed using local variation across cities, within counties. Estimates using preindustrial levels of religious tolerance address issues of reverse causality. As for the channels of transmission, we find significant complementarity between religious tolerance and human capital. Furthermore, we find that cities with higher levels of religious tolerance attracted a larger share of migrants. Finally, higher levels of religious diversity in the population translated into higher levels of religious diversity in the workforce by industrial sector. This result suggests that religious diversity did not generate labor market segmentation by denomination but might have fostered interaction of different denominations.
    Keywords: diversity; Innovation; openness; Patenting Activity; Pluralism; Tolerance
    JEL: N13 N33 O14 O31 Z12
    Date: 2017–11
  39. By: Susana Peralta (Nova School of Business and Economics, Universidade NOVA de Lisboa, Campus de Campolide, 1099-032 Lisbon, Portugal); João Pereira dos Santos (Nova School of Business and Economics, Universidade NOVA de Lisboa, Campus de Campolide, 1099-032 Lisbon, Portugal)
    Abstract: This paper analyses the consequences of local fiscal autonomy for political selection. We propose a model of political careers where both decisions to become candidates and seek re-election are endogenous. Market and political ability are private information, and the latter is revealed to the incumbent during her first period in office. Following an unanticipated reduction in the returns from holding office, we show that incumbents with high market ability are more likely to refrain from running again for office than their lower ability counterparts. We test this prediction exploiting an unexpected reduction in the upper bound of the municipal property tax rate, announced by the Portuguese Prime Minister in July 2008, just 15 months before the local elections. We rely on a comprehensive dataset on all Portuguese mainland municipalities for the 2005 and 2009 elections, including municipality and individual mayor characteristics. We follow a difference-in-differences strategy to show that affected mayors – those who were forced to decrease the property tax rate, and thus faced a sharp tax revenue decrease – are less likely to seek re-election. This effect is driven by high quality incumbents, as proxied by their previous occupation.
    Keywords: Political Selection, Fiscal Autonomy, Local Governments
    JEL: C23 D71 H71 H72
    Date: 2018–01
  40. By: Bowen Cai
    Abstract: This study briefly introduces the development of Shantou Special Economic Zone under Reform and Opening-Up Policy from 1980 through 2016 with a focus on policy making issues and its influences on local economy. This paper is divided into two parts, 1980 to 1991, 1992 to 2016 in accordance with the separation of the original Shantou District into three cities: Shantou, Chaozhou and Jieyang in the end of 1991. This study analyzes the policy making issues in the separation of the original Shantou District, the influences of the policy on Shantou's economy after separation, the possibility of merging the three cities into one big new economic district in the future and reasons that lead to the stagnant development of Shantou in recent 20 years. This paper uses statistical longitudinal analysis in analyzing economic problems with applications of non-parametric statistics through generalized additive model and time series forecasting methods. The paper is authored by Bowen Cai solely, who is the graduate student in the PhD program of Applied and Computational Mathematics and Statistics at the University of Notre Dame with concentration in big data analysis.
    Date: 2017–11
  41. By: Elodie Djemai (PSL, Université Paris-Dauphine, LEDa, UMR DIAL)
    Abstract: We use GIS and HIV data from ve African countries to estimate the e ect of road proximity on HIV infection. We nd a negative e ect of the distance to the nearest paved road on the probability of being infected with HIV: a one standard-deviation rise in the distance (approximately 2.3 kilometers) reduces the probability of infection by 0.34-2.3 percentage points. Using slope as an instrument for road distance continues to produce a negative and signi cant estimated coecient. Alternative instrumental variables include historical routes and hypothetical lines connecting major cities as of 1890-1900. However this relationship may also re ect selection and reverse causality in individual choice of location, and we extensively discuss the role of migration. While the number of lifetime sexual partners is signi cantly in uenced by the presence of roads, in recent years the e ect of road distance in access to protection has disappeared.
    Keywords: HIV/AIDS epidemic, infrastructure, geography, risk-taking, Sub-Saharan Africa
    JEL: I10 R23 C21
    Date: 2017–12
  42. By: Yu Zhang (Princeton University)
    Abstract: Home price movements received increasing academic and public attention in recent years. In this paper, I propose a novel explanation for large housing booms in emerging markets that highlights the effect of household wealth accumulation on housing prices under liquidity constraints, using the recent Chinese housing boom as an example. In China, housing prices grew 170% during 2003–2012 in real terms. Returns on housing commanded a 12% premium annually over the risk-free rate. Across Chinese cities, increases in the value of housing are closely associated with increases in household wealth, whether measured with or without housing. I argue that the high Chinese housing return premium results from an upward transition in household wealth from a low initial condition interacted with liquidity constraints. Specifically, low initial household wealth, under liquidity constraints, limits housing prices to be low in 2003; but as household wealth quickly rises aided by high household savings, housing prices also quickly increase. I quantitatively assess this explanation using an otherwise standard consumption-housing two-asset dynamic portfolio choice model, augmented with realistic liquidity constraints and low initial wealth, with housing priced in industry equilibrium. The model matches the high housing return premium and explains 92% of the observed increase in housing prices. The model also generates other intriguing predictions, including an investment motive that helps explain the high Chinese household saving rate puzzle. It also predicts that a permanent slowdown in Chinese economic growth might only lead to a temporary dip in Chinese housing prices. The analysis in this paper also provides insights for understanding other episodes in emerging housing markets for which there are both liquidity constraints and low initial household wealth.
    Date: 2017
  43. By: Hyuk-Soo Kwon (Institute for Fiscal Studies); Jihong Lee (Institute for Fiscal Studies); Sokbae Lee (Institute for Fiscal Studies and Columbia University and IFS); Ryungha Oh (Institute for Fiscal Studies)
    Abstract: This paper examines the trends in geographic localization of knowledge spillovers via patent citations, considering US patents from the period of 1976-2015. Despite accelerating globalization and widespread perception of the "death of distance," our multi-cohort "matched-sample" study reveals signi cant and growing localization effects of knowledge spillovers at both intra- and international levels after the 1980s. We also develop a novel network index based on the notion of "farness," which an instrumental variable estimation shows to be a signifi cant and sizable determinant of the observed trends at the state-sector level.
    Keywords: Innovation, knowledge spillovers, patent citation, agglomeration, network index, farness
    JEL: C36 C81 O33 O34 O51
    Date: 2017–12–06

This nep-ure issue is ©2018 by Steve Ross. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.