nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2018‒06‒11
fifty-five papers chosen by
Steve Ross
University of Connecticut

  1. Land Use Regulations, Migration and Rising House Price Dispersion in the U.S. By Wukuang Cun; M. Hashem Pesaran
  2. The Wider Impacts of High-Technology Employment: Evidence from U.S. Cities By Thomas Kemeny; Taner Osman
  3. How large are road traffic externalities in the city? The highway tunneling in Maastricht, the Netherlands By Joep Tijm; Thomas Michielsen; Peter Zwaneveld; Raoul van Maarseveen
  4. The Propagation of Regional Shocks in Housing Markets: Evidence from Oil Price Shocks in Canada By Lutz Kilian; Xiaoqing Zhou
  5. Do House Prices Sink or Ride the Wave of Immigration? By Larkin, Matthew P.; Askarov, Zohid; Doucouliagos, Chris; Dubelaar, Chris; Klona, Maria; Newton, Joshua; Stanley, T. D.; Vocino, Andrea
  6. Fiscal Transfers in the Spatial Economy By Marcel Henkel; Tobias Seidel; Jens Suedekum
  7. Measuring the Impact of Insurance on Urban Recovery with Light: The 2010-2011 New Zealand Earthquakes By Cuong Nguyen; Ilan Noy
  8. The accessibility to the nearest urban metropolitan area and rural poverty in Japan By Takeru Sugasawa
  9. Educator Incentives and Educational Triage in Rural Primary Schools By Gilligan, Daniel O.; Karachiwalla, Naureen; Kasirye, Ibrahim; Lucas, Adrienne; Neal, Derek
  10. Exploring Brexit with dynamic spatial panel models : some possible outcomes for employment across the EU regions By Fingleton, Bernard
  11. Does related variety affect regional resilience? New evidence from Italy By Giulio Cainelli; Roberto Ganau; Marco Modica
  12. The Distributional Effects of Early School Stratification – Non-Parametric Evidence from Germany By Marcus Roller, Daniel Steinberg
  13. Monetary policy when households have debt: new evidence on the transmission mechanism By James Cloyne; Clodomiro Ferreira; Paolo Surico
  14. Autonomous Schools and Strategic Pupil Exclusion By Machin, Stephen; Sandi, Matteo
  15. Inter-ethnic relations of teenagers in England’s schools: the role of school and neighbourhood ethnic composition By Simon Burgess; Lucinda Platt
  16. Teacher Performance Ratings and Professional Improvement By Cory Koedel; Jiaxi Li; Matthew G. Springer; Li Tan
  17. Relocation of the Rich: Migration in Response to Top Tax Rate Changes from Spanish Reforms By David R. Agrawal; Dirk Foremny
  18. Housing Constraints and Spatial Misallocation By Hsieh, Chang-Tai; Moretti, Enrico
  19. Impact of School Zoning: A Review of The Economic Literature By Sirin Zahra; Mohamad Fahmi; Ben Satriatna
  20. Industrial Relatedness and Regional Resilience in the European Union By Giulio Cainelli; Roberto Ganau; Marco Modica
  21. Keeping Community at the Heart of the Community Reinvestment Act : a speech at the Association of Neighborhood and Housing Development Eighth Annual Community Development Conference Build.Community.Power, New York, New York, May 18, 2018. By Brainard, Lael
  22. Public Procurement, Local Labor Markets and Green Technological Change: Evidence from US Commuting Zones. By Orsatti, Gianluca; Perruchas, François; Consoli, Davide; Quatraro, Francesco
  23. How Effective is Energy-Efficient Housing? Evidence from a Field Experiment in Mexico By Lucas W. Davis; Sebastian Martinez; Bibiana Taboada
  24. Price or Variety? An Evaluation of Mergers Effects in Grocery Retailing By Elena Argentesi; Paolo Buccirossi; Roberto Cervone; Tomaso Duso; Alessia Marrazzo
  25. Somatic Distance, Cultural Affinities, Trust and Trade By Jacques Melitz; Farid Toubal
  26. The Transformation of Manufacturing and the Decline in U.S. Employment By Kerwin Kofi Charles; Erik Hurst; Mariel Schwartz
  27. The Platform Economy and Regulatory Disruption: Estimating the Impact on Municipal Revenue in Toronto By Zachary Spicer
  28. Spatial competition and quality: Evidence from the English family doctor market By Gravelle, Hugh S; Liu, Dan; Propper, Carol; Santos, Rita
  29. “Misinformation and Misperception in the market for parking” By Daniel Albalate; Albert Gragera
  30. Remarks at the Economic Press Briefing on Homeownership and Housing Wealth, Federal Reserve Bank of New York, New York City By Hirtle, Beverly
  31. Real estate prices and corporate investment: theory and evidence of heterogeneous effects across firms By Denis Fougere; Rémy Lecat; Simon Ray
  32. The effects of uncertainty on market liquidity: Evidence from Hurricane Sandy By Rehse, Dominik; Riordan, Ryan; Rottke, Nico; Zietz, Joachim
  33. The Effect of Quarantining Welfare on School Attendance in Indigenous Communities By Cobb-Clark, Deborah A.; Kettlewell, Nathan; Schurer, Stefanie; Silburn, Sven
  34. The Impact of Formal Networking on the Performance of SMEs By Davide Vannoni
  35. The Effect of Real Estate Prices on Chinese Bank Performance By Anil K. Jain; Samuel M. Mackey
  36. Does the Relative Income of Peers Cause Financial Distress? Evidence from Lottery Winners and Neighboring Bankruptcies By Agarwal, Sumit; Mikhed, Vyacheslav; Scholnick, Barry
  37. The high importance of de-industrialization and job polarization for regional diversification By Jacob Rubæk Holm; Christian Richter Østergaard
  38. There and back again: A simple theory of planned return migration By Knauth, Florian; Wrona, Jens
  39. The “Belt and Road Initiative†and comparative regional productivity in China By John Gibson and Chao Li
  40. The Impact of Language on Socioeconomic Integration of Immigrants By Zorlu, Aslan; Hartog, Joop
  41. Cascading Failures in Production Networks By Baqaee, David Rezza
  42. Are Schools Different? Wellbeing and Commitment among Staff in Schools and Elsewhere By Bryson, Alex; Stokes, Lucy; Wilkinson, David
  43. An Estimable Model of Income Redistribution in a Federation: Musgrave Meets Oates By Milligan Kevin; Michael Smart
  44. Happily Ever After: Immigration, Natives' Marriage, and Fertility By Carlana, Michela; Tabellini, Marco
  45. Local Candidates and Distributive Politics under Closed-list Proportional Representation By Jon H. Fiva; Askill Halse; Daniel M. Smith
  46. The network of inter-industry flows in a SAM framework By Susana Santos; Tanya Araújo
  47. L'union fait la force? Evidence for Wage Discrimination in Firms with High Diversity By Grinza, Elena; Kampelmann, Stephan; Rycx, Francois
  48. Regional Employment and Artificial Intelligence in Japan By HAMAGUCHI Nobuaki; KONDO Keisuke
  49. Financial stability and the ECB By Christophe Blot; Jérôme Creel; Paul Hubert; Fabien Labondance; Xavier Ragot
  50. Entry Through the Narrow Door: The Costs of Just Failing High Stakes Exams By Stephen Machin; Sandra McNally; Jenifer Ruiz-Valenzuela
  51. Railway line capacity utilisation and its impact on maintenance costs By Odolinski, Kristofer; Boysen, Hans E.
  52. Understanding the mechanisms through which adverse childhood experiences affect lifetime economic outcomes By Stefanie Schurer; Kristian Trajkovski
  53. Regional Development Policies of Korea and Policy Suggestions for Azerbaijan By Yusifov, Sabuhi
  54. Regional and Ethnic Favoritism in the Allocation of Humanitarian Aid By Christian Bommer; Axel Dreher; Marcello Perez-Alvarez
  55. The Effects of Immigration in Developed Countries: Insights from Recent Economic Research By Anthony Edo; Lionel Ragot; Hillel Rapoport; Sulin Sardoschau; Andreas Steinmayr

  1. By: Wukuang Cun; M. Hashem Pesaran
    Abstract: This paper develops a dynamic spatial equilibrium model of regional housing markets in which house prices are jointly determined with migration flows. Agents optimize period-by-period and decide whether to remain where they are or migrate to a new location at the start of each period. The gain from migration depends on the differences in incomes, housing and migration costs. The agent’s optimal location choice and the resultant migration process is shown to be Markovian with the transition probabilities across all location pairs given as non-linear functions of income and housing cost differentials, which are endogenously determined. On the supply side, in each location the construction firms build new houses by combing land and residential structures. The regional land supplies are exogenously given. When a tightening of regional land-use regulation reduces local housing supply, upward pressure on house prices created by excess housing demand cascades to other locations via migration. It is shown that the deterministic version of the model has a unique equilibrium and a unique balanced growth path. We estimate the state-level supplies of new residential land from the model using housing market and urban land acreage data. These estimates are shown to be significantly negatively correlated with the Wharton Residential Land Use Regulatory Index. The model can simultaneously account for the rise in house price dispersion and the interstate migration in the U.S. during the period 1976-2014. Counterfactual simulations suggest that reducing either land supply differentials or migration costs could significantly lower house price dispersion. The model predicts substantially smaller impacts of land-use deregulation on population reallocation as compared to recent existing models of housing and migration that assume population are perfectly mobile.
    Keywords: house price dispersion, endogenous location choice, interstate migration, land-use restriction, spatial equilibrium
    JEL: E00 R23 R31
    Date: 2018
  2. By: Thomas Kemeny (Queen Mary, University of London); Taner Osman (University of California, Los Angeles)
    Abstract: Innovative, high-technology industries are commonly described as drivers of regional development. ‘Tech’ workers earn high wages, but they are also said to generate knock-on effects throughout the local economies that host them, spurring growth in jobs and wages in nontradable activities. At the same time, in iconic high-tech agglomerations like the San Francisco Bay Area, the home of Silicon Valley, the success of the tech industry creates tensions, in part as living costs rise beyond the reach of many non-tech workers. Across a large sample of U.S. cities, this paper explores these issues systematically. Combining annual data on wages, employment and prices from the Quarterly Census of Employment and Wages, the Department of Housing and Urban Development and the Consumer Price Index, it estimates how growth in tradable tech employment affects the real, living-cost deflated wages of local workers in nontradable sectors. Results indicate that high-technology employment has significant, positive, but modest effects on the real wages of workers in nontradable sectors. These effects appear to be spread consistently across different kinds of nontradable activities. In terms of substantive wider impacts, tech appears benign, though fairly ineffectual.
    Keywords: high-technology, inequality, real wages, nontradable services; specialization, housing
    JEL: E24 J21 J31 L86 O18 R11 R31
    Date: 2018–05
  3. By: Joep Tijm (CPB Netherlands Bureau for Economic Policy Analysis); Thomas Michielsen (CPB Netherlands Bureau for Economic Policy Analysis); Peter Zwaneveld (CPB Netherlands Bureau for Economic Policy Analysis); Raoul van Maarseveen
    Abstract: Infrastructure projects are increasingly aiming to improve liveability, in particular in urban areas. We analyse a specifi c case in which an existing highway in an urban area was moved underground in order to improve intercity traffic flows and to reduce traffic externalities. As travel times within the city hardly changed, this allows for a clean identifi cation of the value of traffic externalities. We find that the liveability bene fits of such integrated infrastructure are substantial relative to the construction costs. Each halving of distance to the tunneled segment is associated with 3.5% more appreciation in house prices since the start of the project.
    JEL: R12 J24 J31
    Date: 2018–05
  4. By: Lutz Kilian; Xiaoqing Zhou
    Abstract: Shocks to the demand for housing that originate in one region may seem important only for that regional housing market. We provide evidence that such shocks can also affect housing markets in other regions. Our analysis focuses on the response of Canadian housing markets to oil price shocks. We document that, at the national level, real oil price shocks account for 11% of the variability in real house price growth over time. At the regional level, we find that unexpected increases in the real price of oil raise real house prices not only in oil-producing regions, but also in other regions. We develop a theoretical model of the propagation of real oil price shocks across regions that helps understand this finding. The model differentiates between oil-producing and non-oil-producing regions and incorporates multiple sectors, trade between provinces, government redistribution, and consumer spending on fuel. We empirically confirm the model prediction that oil price shocks are transmitted to housing markets in nonoil-producing regions by the government redistribution of oil revenue and by increased interprovincial trade.
    Keywords: house price, regional heterogeneity, oil price, redistribution, resource boom, Canada
    JEL: F43 Q33 Q43 R12 R31
    Date: 2018
  5. By: Larkin, Matthew P. (Deakin University); Askarov, Zohid (Deakin University); Doucouliagos, Chris (Deakin University); Dubelaar, Chris (Deakin University); Klona, Maria (Deakin University); Newton, Joshua (Deakin University); Stanley, T. D. (Deakin University); Vocino, Andrea (Deakin University)
    Abstract: The sharp rise in international migration is a pressing social and economic issue, as seen in the recent global trend towards nationalism. One major concern is the impact of immigration on housing. We assemble a comprehensive database of 474 estimates of immigration's impact on house prices in 14 destination countries and find that immigration increases house prices, on average. However, attitudes to immigrants moderate this effect. In countries less welcoming to immigrants, house price increases are more limited.
    Keywords: immigration, house prices, attitudes, meta-regression
    JEL: F22 R31
    Date: 2018–04
  6. By: Marcel Henkel; Tobias Seidel; Jens Suedekum
    Abstract: Many countries operate pronounced fiscal equalization schemes that shift tax revenue across jurisdictions. We use a general equilibrium model with multiple asymmetric regions, costly trade and labor mobility to carve out the aggregate implications of this policy. Calibrating the model for Germany, we find that it indeed delivers smaller spatial economic disparities across regions. This comes at the cost of lower national output, however, because activity is diverted away from core cities and towards remote areas with low productivity. But despite this output loss, fiscal transfers may still raise national welfare, because they effectively countervail over-congestion in large cities.
    Keywords: fiscal equalization, regional transfers, migration, spatial economics
    JEL: F15 R12 R13 R23
    Date: 2018
  7. By: Cuong Nguyen; Ilan Noy
    Abstract: We measure the longer-term effect of a major earthquake on the local economy, using night-time light intensity measured from space, and investigate whether insurance claim payments for damaged residential property affected the local recovery process. We focus on the destructive Canterbury Earthquake Sequence (CES) 2010 -2011 as our case study. Uniquely for this event, more than 95% of residential housing units were covered by insurance, but insurance payments were staggered over 5 years, enabling us to identify their local impact. We find that night-time luminosity can capture the process of recovery and describe the recovery’s determinants. We also find that insurance payments contributed significantly to the process of economic recovery after the earthquake, but delayed payments were less affective and cash settlement of claims were more effective than insurance-managed repairs in contributing to local recovery.
    Keywords: earthquake, recovery, disaster, insurance, light
    JEL: G22 Q54 R11
    Date: 2018
  8. By: Takeru Sugasawa
    Abstract: This study examines the effects of accessibility to the nearest urban metropolitan area on rural poverty by using Japanese municipality-level data. We conduct nationwide cross-sectional analyses and Ibaraki prefecture's, a suburban area of Tokyo, municipality-level panel analyses. we find that a larger time distance to the nearest urban metropolitan area significantly increases regional poverty rates. The results of the panel analyses suggest that the effects of reducing rural poverty require 6-10 years to be observed. Therefore, regional policy makers might need to consider that transportation investments that improve inter-regional accessibility do not affect regional economic performance for several years.
    Date: 2018–05
  9. By: Gilligan, Daniel O. (International Food Policy Research Institute); Karachiwalla, Naureen (IFPRI, International Food Policy Research Institute); Kasirye, Ibrahim (Economic Policy Research Centre); Lucas, Adrienne (University of Delaware); Neal, Derek (University of Chicago)
    Abstract: In low-income countries, primary school students often fall far below grade level and primary dropout rates remain high. Further, in some countries, educators encourage their weaker students to drop out before reaching the end of primary school. These educators hope to avoid the negative attention that authorities direct to a school when its students perform poorly on the primary leaving exams that governments use to certify primary completion and eligibility for secondary school. We report the results of an experiment in rural Uganda that sought to reduce dropout rates in grade six and seven by offering bonus payments to grade six teachers that rewarded each teacher for the performance of each of her students relative to comparable students in other schools. Teachers responded to this Pay for Percentile (PFP) incentive system in ways that raised attendance rates two school years later from .56 to .60. These attendance gains were driven primarily by outcomes in treatment schools that provide textbooks for grade six math students, where two-year attendance rates rose from .57 to .64. In these same schools, students whose initial skills levels prepared them to use grade six math texts enjoyed significant gains in math achievement. We find little evidence that PFP improved attendance or achievement in schools without books even though PFP had the same impact on reported teacher effort in schools with and without books. We conjecture that teacher effort and books are complements in education production and document several results that are consistent with this hypothesis.
    Keywords: achievement, dropout, educational triage, incentives, Uganda, complements in education production, teaching at the right level
    JEL: I0 J3 O1
    Date: 2018–05
  10. By: Fingleton, Bernard
    Abstract: Starting with a reduced form derived from standard urban economics theory, this paper estimates the possible job-shortfall across UK and EU regions using a time-space dynamic panel data model with a Spatial Moving Average Random Effects (SMA-RE) structure of the disturbances. The paper provides a logical rational for the presence of spatial and temporal dependencies involving the endogenous variable, leading to estimates based on a dynamic spatial Generalized Moments (GM) estimator proposed by Baltagi, Fingleton and Pirotte (2018). Given state-of-the art interregional trade estimates, the simulations are based on a linear predictor which utilizes different regional interdependency matrices according to assumptions about interregional trade post-Brexit.
    Keywords: Brexit; Interregional trade; Urban economics theory; Panel data; Spatial lag; Spatio-temporal lag; Dynamic; Spatial moving average; Prediction; Simulation.
    JEL: C23 C33 C53 E27 F10 J21 R12
    Date: 2018–05–06
  11. By: Giulio Cainelli; Roberto Ganau; Marco Modica
    Abstract: Although several contributions have studied the effect of related variety on the economic performance of firms and regions, its influence on regional resilience ? that is, regions' capacity to adapt to external shocks ? has received little attention. This paper contributes to this debate by analysing empirically the relationship between related variety and regional resilience at the Italian Local Labour Market (LLM) level. The analysis adopts the definition of regional resilience developed by Martin (2012), and employs spatial econometric techniques ? besides standard non-spatial models ? to analyse the role played by related variety as a short-run shock absorber with respect to the 2008 Great Recession. The results obtained from the estimation of Spatial Error Models suggest that LLMs characterised by a higher level of related variety have shown a higher capacity to adapt to an external shock, that is, the Great Recession. This evidence is confirmed with respect to two different short-run time horizons, the one-year period 2012-2013 and the three-year period 2010-2013.
    Keywords: Regional Resilience; Related Variety; Local Labour Markets; Italy
    JEL: B52 C21 R11
    Date: 2018–05
  12. By: Marcus Roller, Daniel Steinberg
    Abstract: Whether early school stratification is conducive or detrimental to scholastic performance has been subject to controversial debates in educational policy and science across many countries. We exploit a unique exogenous variation in Lower Saxony, Germany, where performance based tracking was preponed from grade 7 to grade 5 in 2004, i.e. with the completion of primary school. In particular, we measure the long-run effects of this reform on PISA achievement test scores based on a difference-in-differences setup. In order to disentangle average from distributional achievement effects, we complementarily rely on a changes-in-changes framework. Our results indicate that preponed school tracking increased test scores at the upper tail of the skill distribution and lowered test scores at the lower tail of the skill distribution, compensating each other on average.
    Keywords: Analysis of Education; Education and Inequality; Tracking; Government Policy
    JEL: I21 I24 I28
    Date: 2017–12
  13. By: James Cloyne (University of California Davis, NBER and CEPR); Clodomiro Ferreira (Banco de España); Paolo Surico (London Business School and CEPR)
    Abstract: How do changes in monetary policy affect consumption? Using household data for the US and the UK, we show that most of the aggregate response of consumption to interest rates is driven by households with a mortgage. Outright home owners do not adjust expenditure at all and renters change their spending but by less than mortgagors. Income rises for all households as interest rate cuts directly affect firm investment and household consumption, boosting aggregate demand. A key dierence between these housing tenure groups is the composition of their balance sheets: mortgagors hold sizable illiquid assets but little liquid wealth, consistent with a higher marginal propensity to consume.
    Keywords: monetary policy, household balance sheets, liquidity constraints
    JEL: E21 E32 E52
    Date: 2018–05
  14. By: Machin, Stephen (London School of Economics); Sandi, Matteo (University of Sussex)
    Abstract: This paper studies whether pupil performance gains in autonomous schools in England can be attributed to the strategic exclusion of poorly performing pupils. In England there were two phases of academy school introduction, the first in the 2000s being a school improvement programme for poorly per-forming schools, the second a mass academisation programme from 2010 for better-performing schools. Overall, exclusion rates are higher in academies, with the earlier programme featuring a much higher increase in the exclusion rates. However, rather than a means of test score manipulation, the higher exclusion rate reflects the rigorous discipline enforced by the pre-2010 academies.
    Keywords: academies, discipline, exclusion
    JEL: I20 I21 I28
    Date: 2018–04
  15. By: Simon Burgess (University of Bristol); Lucinda Platt (London School of Economics)
    Abstract: The paper presents an empirical analysis of inter-ethnic relations among adolescents in England’s schools, the first national study of schools throughout England to relate inter-ethnic attitudes to both school and area ethnic composition. We combine survey data on ‘warmth’ of feeling for specific ethnic groups, friendships and attitudes with administrative data on the shares of those groups at school and area level. We confirm that the pupils have warmer feelings for their own ethnic group than for others. Second, we show that in schools with more pupils from another ethnic group the gap between a pupil’s views of those from her own group and from another ethnic group is smaller. This is true for attitudes of the majority and of minority ethnic groups. Third, we show that school composition (interpreted as contact) mitigates area composition (interpreted as exposure).
    Date: 2018–05
  16. By: Cory Koedel (University of Missouri - Columbia); Jiaxi Li (Department of Economics, at the University of Missouri); Matthew G. Springer (Peabody College of Education and Human Development at Vanderbilt University); Li Tan (Department of Economics, at the University of Missouri)
    Abstract: Like other public workers, teachers typically receive high and compressed ratings that do little to differentiate them based on performance. Motivated by empirical evidence of substantial variation in effectiveness among teachers, there has been a recent push to develop more informative evaluation systems with greater ratings dispersion. We study one of the first of these new systems, implemented in Tennessee, in order to understand how teachers respond to the provision of new, more-differentiated performance ratings. We focus on whether summative ratings influence teachers’ self-reported, self-directed professional improvement activities as measured by four items on a statewide teacher survey. Using a regression discontinuity design we find no evidence that teachers alter their time investments in professional improvement, or adjust their professional improvement activities based on evaluation feedback, in response to their ratings.
    Keywords: evaluation; public employee evaluation; compressed employee ratings; rating effects; regression discontinuity
    JEL: I2 J2
    Date: 2018–05
  17. By: David R. Agrawal; Dirk Foremny
    Abstract: A recent Spanish tax reform granted regions the authority to set income tax rates, resulting in substantial tax differentials. We use individual-level information from Social Security records over a period of one decade. Conditional on moving, taxes have a significant effect on location choice. A one percent increase in the net of tax rate for a region relative to others increases the probability of moving to that region by 1.7 percentage points. Focusing on the stock of top-taxpayers, we estimate an elasticity of the number of top taxpayers with respect to net-of-tax rates of 0.85. Using this elasticity, a theoretical model implies that the mechanical increase in tax revenue due to higher tax rates is larger than the loss in tax revenue from the out-ow of migration.
    Keywords: migration, taxes, mobility, rich, fiscal decentralization
    JEL: H24 H31 H73 J61 R23
    Date: 2018
  18. By: Hsieh, Chang-Tai; Moretti, Enrico
    Abstract: We quantify the amount of spatial misallocation of labor across US cities and its aggregate costs. Misallocation arises because high productivity cities like New York and the San Francisco Bay Area have adopted stringent restrictions to new housing supply, effectively limiting the number of workers who have access to such high productivity. Using a spatial equilibrium model and data from 220 metropolitan areas we find that these constraints lowered aggregate US growth by 36% from 1964 to 2009.
    Date: 2018–05
  19. By: Sirin Zahra (Department of Economics, Padjadjaran University); Mohamad Fahmi (Department of Economics, Padjadjaran University); Ben Satriatna
    Abstract: This study is using economic literature study, with purpose to see the impact of school zoning. From the literature author have found, in general school zoning have some impact : the decline in the quality of education but more equal, increasing housing price, equitable socio-economic, and increasing rates of walkers. This study also recommended the government to manage public schools and private schools in order to avoid a clashed.
    Keywords: shool zoning, school choice, education policy, urban development, housing prices, education quality, socio-economic, commuting.
    JEL: I2
    Date: 2018–05
  20. By: Giulio Cainelli; Roberto Ganau; Marco Modica
    Abstract: The 2008 Great Recession prompted interest in the concept of regional resilience. This paper discusses and empirically investigates the relationship between industrial relatedness and economic resilience across European Union regions over the 2008-2012 crisis period. The analysis focuses on two types of industrial relatedness: technological and vertical (i.e. market-based). The empirical analysis is performed on a sample of 209 NUTS-2 regions in 16 countries. Our results highlight a positive effect of technological relatedness on the probability of resilience in the very short run (i.e. the 2008-2009 period), while the negative effect of vertical relatedness seems to persist for longer.
    Keywords: Technological Relatedness; Vertical Relatedness; Regional Resilience; European Union
    JEL: B52 C25 O52 R11
    Date: 2018–05
  21. By: Brainard, Lael (Board of Governors of the Federal Reserve System (U.S.))
    Date: 2018–05–22
  22. By: Orsatti, Gianluca; Perruchas, François; Consoli, Davide; Quatraro, Francesco (University of Turin)
    Abstract: The present paper investigates whether and through which channels green public procurement (GPP) stimulates local environmental innovation capacity. To this end, we use detailed data sources on green patents and procurement expenditure at the level of US Commuting Zones for the period 2000-2011. We also check for the moderating effects of local labor market composition in the relation between green public procurement and green innovation capacity. Lastly, we exploit the richness of patent information to test for differential effects of green public procurement on different classes of green technologies. The main finding is that GPP is an important driver in explaining the growth of local green-tech stock. The positive effect of GPP is mainly driven by expenditures for procured green services and is magnified by the local presence of high shares of abstract- intensive occupations. When separately considering diverse kinds of green technologies, we do find evidence of a more pronounced effect of GPP on the growth of local knowledge stocks of mitigation technologies.
    Date: 2018–04
  23. By: Lucas W. Davis; Sebastian Martinez; Bibiana Taboada
    Abstract: Despite growing enthusiasm, there is little empirical evidence on how well energy efficiency investments work. Evidence is particularly lacking from low- and middle-income countries, despite a widespread view that these countries have many of the best opportunities. This paper evaluates a field experiment in Mexico in which a quasi-experimental sample of new homes was provided with insulation and other energy-efficient upgrades. A novel feature of our study is that we deploy large numbers of data loggers which allow us to measure temperature and humidity at high frequency inside homes. We find that the upgrades had no detectable impact on electricity use or thermal comfort, with essentially identical temperature and humidity levels in upgraded and non-upgraded homes. These results stand in sharp contrast to the engineering estimates that predicted up to a 26% decrease in electricity use. Part of the explanation is that air conditioner ownership is lower than expected, thus reducing the potential for reductions in energy use. In addition, we document that most households have their windows open on hot days, nullifying the thermal benefits of roof and wall insulation. Overall, we conclude that the benefits from these investments are unlikely to exceed the costs, which added $400-$500 USD to the cost of each home. Our results underscore the urgent need to fully incorporate socioeconomic conditions and human behavior into engineering models of energy use.
    JEL: D12 H23 Q40 Q54
    Date: 2018–05
  24. By: Elena Argentesi; Paolo Buccirossi; Roberto Cervone; Tomaso Duso; Alessia Marrazzo
    Abstract: Assortment decisions are key strategic instruments for firms responding to local market conditions. We assess this claim by studying the effect of a national merger between two large Dutch supermarket chains on prices and on the depth as well as composition of assortment. We adopt a difference-in-differences strategy that exploits local variation in the merger’s effects, controlling for selection on observables when defining our control group through a matching procedure. We show that the local change in competitive conditions due to the merger did not affect individual products’ prices but it led the merging parties to reposition their assortment and increase average category prices. While the low-variety and low-price target’s stores reduced the depth of their assortment when in direct competition with the acquirer’s stores, the latter increased their product variety. By analyzing the effect of the merger on category prices, we find that the target most likely dropped high priced products, while the acquirer added more of them. Thus, the merging firms reposition their product offerings in order to avoid cannibalization and lessen local competition. Further, we show that other dimensions of heterogeneity, such as market concentration, whether a divestiture was imposed by the Dutch competition authority, and the re-branding strategy of the target stores, are important for explaining the post-merger dynamics. A simple theoretical model of local-market variety competition explains most of our findings.
    Keywords: variety, assortment, mergers, ex-post evaluation, retail sector, supermarkets, grocery
    JEL: L10 L41 L66 L81 D22 K21 C23
    Date: 2018
  25. By: Jacques Melitz; Farid Toubal
    Abstract: Somatic distance, or differences in physical appearance, proves to be extremely important in the gravity model of bilateral trade in conformity with results in other areas of economics and outside of it in the social sciences. This is also true quite independently of survey evidence about bilateral trust. These findings are obtained in a sample of the 15 members of the European Economic Association in 1996. Robustness tests also show that somatic distance has a more reliable influence on bilateral trade than the other cultural variables. The article finally discusses the interpretation and the breadth of application of these results.
    Keywords: somatic distance, cultural interactions, trust, language, bilateral trade
    JEL: F10 F40 Z10
    Date: 2018
  26. By: Kerwin Kofi Charles (Edwin A. and Betty L. Bergman Distinguished Service Professor, Harris School of Public Policy); Erik Hurst (V. Duane Rath Professor of Economics, Booth School of Business; Deputy Director of BFI); Mariel Schwartz (University of Chicago)
    Abstract: Using data from a variety of sources, this paper comprehensively documents the dramatic changes in the manufacturing sector and the large decline in employment rates and hours worked among prime-aged Americans since 2000. We use cross-region variation to explore the link between declining manufacturing employment and labor market outcomes. We find that manufacturing decline in a local area in the 2000s had large and persistent negative effects on local employment rates, hours worked and wages. We also show that declining local manufacturing employment is related to rising local opioid use and deaths. These results suggest that some of the recent opioid epidemic is driven by demand factors in addition to increased opioid supply. We conclude the paper with a discussion of potential mediating factors associated with declining manufacturing labor demand including public and private transfer receipt, sectoral switching, and inter-region mobility. Overall, we conclude that the decline in manufacturing employment was a substantial cause of the decline in employment rates during the 2000s particularly for less educated prime age workers. Given the trends in both capital and skill deepening within this sector, we further conclude that many policies currently being discussed to promote the manufacturing sector will have only a modest labor market impact for less educated individuals.
    Keywords: employment, manufacturing, labor market outcomes
    JEL: E24 J21 J23 R23
    Date: 2018–05
  27. By: Zachary Spicer (University of Toronto)
    Abstract: Platform economy firms such as Uber and Airbnb have attracted attention in cities around the world, given the impact of these firms on the existing taxi industry or the rental market, but little has been written about the effects of the platform economy on municipal fiscal health. This paper estimates the regulatory cost and potential revenue opportunities of the platform economy, examining the impact of three firms in Toronto: Uber, Airbnb, and Rover. Overall, I expect that the approaches that the City of Toronto has taken to regulate the activities of firms, such as Uber and Airbnb, will be revenue-neutral. Since neither of these services directly competes with other city services, I examine only the costs of the regulatory scheme put in place. The third platform firm, Rover, does compete with the City’s Green P parking service. However, Rover’s operations are not at the scale necessary to meaningfully disrupt Green P services. If regulated effectively, the platform economy would have a minimal impact on municipal revenue. However, regulatory delay has a cost. The lesson learned from Toronto’s experience is to not delay the creation of a regulatory regime. Municipalities need to be proactive in researching the appropriate regulatory approach and matching the regulatory reach to the platform in question, namely a digital regulatory approach for a digital service.
    Keywords: platform economy, regulatory disruption, municipal revenue, Toronto
    JEL: H25 H71 O33 O38
    Date: 2018–06
  28. By: Gravelle, Hugh S; Liu, Dan; Propper, Carol; Santos, Rita
    Abstract: We examine whether family doctor firms in England respond to local competition by increasing their quality. We measure quality in terms of clinical performance and patient-reported satisfaction to capture its multi-dimensional nature. We use a panel covering 8 years for over 8000 English general practices, allowing us to control for unobserved local area effects. We measure competition by the number of rival doctors within a small distance. We find that increases in local competition are associated with increases in clinical quality and patient satisfaction, particularly for firms with lower quality. However, the magnitude of the effect is small.
    Keywords: Quality; healthcare; choice; competition; family physicians
    JEL: I11 I18
    Date: 2018–05
  29. By: Daniel Albalate (Universitat de Barcelona, Departament d’Estadística, Econometria i Economia Aplicada, Avda. Diagonal 690, 08034); Albert Gragera (Technical University of Denmark, Produktionstorvet Building 426, 2800 Kgs.Lyngby)
    Abstract: This article studies the level of knowledge and information held by drivers in the car parking market. By drawing on a survey conducted with 576 garage customers in Barcelona, we provide new evidence on the market frictions produced by the misinformation and misperception of drivers searching for parking spaces. We identify the factors that aggravate/mitigate misinformation and misperception, and examine how they affect the functioning of the parking market, damaging market competition, undermining effective regulatory actions and exacerbating negative externalities. Our evidence shows that drivers’ misperceptions increase cruising-for-parking and its consequences: congestion, pollution and accidents.
    Keywords: Parking, imperfect information, misperception, search cost, cruising. JEL classification:D82, D62, L15, R41, R48.
    Date: 2018–06
  30. By: Hirtle, Beverly (Federal Reserve Bank of New York)
    Abstract: Remarks at the Economic Press Briefing on Homeownership and Housing Wealth, Federal Reserve Bank of New York, New York City.
    Keywords: household balance sheets; financial wealth; stock market wealth; housing wealth; housing debt; renting; mortgage credit; housing finance; millennials
    Date: 2018–05–17
  31. By: Denis Fougere (Observatoire sociologique du changement); Rémy Lecat (Centre de recherche de la Banque de France); Simon Ray (Centre de recherche de la Banque de France)
    Abstract: In this paper, we investigate the effect of real estate prices on productive investment. We build a simple theoretical framework of firms’ investment with credit rationing and real estate collateral. We show that real estate prices affect firms’ borrowing capacities through two channels. An increase in real estate prices raises the value of the firms’ pledgeable assets and mitigates the agency problem characterizing the creditor-entrepreneur relationship. It simultaneously cuts the expected profit due to the increase in the cost of inputs. While the literature only focuses on the first channel, the identification of the second channel allows for heterogeneous effects of real estate prices on investment across firms. We test our theoretical predictions using a large French database. We do find heterogeneous effects of real estate prices on productive investment depending on the position of the firms in the sectoral distributions of real estate holdings. Our preferred estimates indicate that a 10% increase in real estate prices causes a 1% decrease in the investment rate of firms in the first decile of the distribution but a 6% increase in the investment rate of firms belonging to the last decile.
    Keywords: Firms’ investment; Real estate prices; Collateral channel; Financial constraints
    Date: 2017–03
  32. By: Rehse, Dominik; Riordan, Ryan; Rottke, Nico; Zietz, Joachim
    Abstract: We test the effects of uncertainty on market liquidity using Hurricane Sandy as a natural experiment. Given the unprecedented strength, scale and nature of the storm, the potential damages of a landfall near the Greater New York area were unpredictable and therefore uncertain. Using a difference-in-differences setting, we compare the market reactions of Real Estate Investment Trusts (REITs) with and without properties in the widely-published evacuation zone of New York City prior to landfall. We nd relatively less trading and wider bid-ask spreads in affected REITs. The results confirm theory on the detrimental effects of uncertainty on market functioning.
    Keywords: Uncertainty,liquidity,financial crisis,natural experiment
    JEL: G12 G14
    Date: 2018
  33. By: Cobb-Clark, Deborah A. (University of Sydney); Kettlewell, Nathan (University of Sydney); Schurer, Stefanie (University of Sydney); Silburn, Sven (Menzies School of Health Research)
    Abstract: We analyze the impact of a recent initiative by the Australian Government to reduce disadvantage and improve children's welfare in Aboriginal communities. The policy – known as income management – quarantines 50 percent of welfare payments to be spent on priority goods (e.g., food, housing, education) and not on socially harmful goods (drugs, pornography, gambling). Our focus is on children's school attendance, which is a precise, high-frequency measure of community functionality and a key policy objective. We identify the causal impact of income management on attendance rates by exploiting exogenous variation in its staggered rollout across communities. We find no evidence that income management increased attendance. Rather, the introduction of income management reduced attendance by 2.7 percentage points (4 percent) on average in the first five months after which attendance eventually returned to its initial level. The attendance penalty is similar for boys and girls, but is larger for secondary school students and students with a tendency to attend school regularly. Exploring the potential mechanisms, we show that income management did not significantly affect student enrollments or mobility patterns into and out of Aboriginal communities. Nor are our results explained by confoundedness with other policy initiatives. Instead, we find that the attendance penalty associated with the introduction of income management is virtually zero after the adoption of more exible administrative arrangements suggesting that implementation issues may be responsible for the temporary reduction in school attendance that we observe.
    Keywords: income management, in-kind transfers, policy evaluation, Indigenous disadvantage, welfare quarantining
    JEL: D04 I28 I38
    Date: 2018–04
  34. By: Davide Vannoni (Department of Economics and Statistics)
    Abstract: Using a large sample of Italian small and medium enterprises (SMEs), we investigate the effect of membership in a formal business network (?contratto di rete?) on firms? economic performance. We find that network participation has a positive effect on value added and exports, but not on profitability. The advantages of networking are stronger in the case of: smaller SMEs, firms operating in traditional and in more turbulent markets, firms located in less developed areas and firms not already exploiting the weaker ties offered by industrial districts. Network characteristics, such as size, geographical dispersion and diversity, are also found to influence performance.
    Keywords: formal business network, small and medium firms, economic performance
    JEL: D22 L25 M21
    Date: 2018–04
  35. By: Anil K. Jain; Samuel M. Mackey
    Abstract: This note examines how a major fall in real estate prices could affect banks' performances.
    Date: 2018–05–16
  36. By: Agarwal, Sumit (Georgetown university); Mikhed, Vyacheslav (Federal Reserve Bank of Philadelphia); Scholnick, Barry (University of Alberta)
    Abstract: We examine whether relative income differences among peers can generate financial distress. Using lottery winnings as plausibly exogenous variations in the relative income of peers, we find that the dollar magnitude of a lottery win of one neighbor increases subsequent borrowing and bankruptcies among other neighbors. We also examine which factors may mitigate lenders’ bankruptcy risk in these neighborhoods. We show that bankruptcy filers can obtain secured but not unsecured debt, and lenders provide secured credit to low-risk but not high-risk debtors. In addition, we find evidence consistent with local lenders reducing bankruptcy risk using soft information.
    Keywords: financial distress; social comparisons among peers
    JEL: D14 D31 G02 K35
    Date: 2018–05–24
  37. By: Jacob Rubæk Holm; Christian Richter Østergaard
    Abstract: The process of regional diversification has received a growing interest in recent years with a focus on the role of relatedness between economic activities. The main argument is that regions diversify into economic activities closely related to their current activities. However, there are also processes working against this rather path dependent process, such as de-industrialization, job polarization, skill-biased technological change, and urbanization. The purpose of this paper is to analyse the importance of relatedness and these major processes in regional diversification with specific emphasis on the role of job polarization and de-industrialisation. The paper draws on linked employer-employee census data from Denmark 2008-2013. Results show that, while relatedness does matter for regional diversification, job polarization and deindustrialisation entail that the most related industries tend to contract. Hence, the results show that regional diversification is affected by relatedness, but its effect is overshadowed by job polarisation and de-industrialization. This effect is consistent across regions. The results show a role for policy and entrepreneurship in introducing unrelated diversification.
    Keywords: diversification, relatedness, polarization
    Date: 2018–05
  38. By: Knauth, Florian; Wrona, Jens
    Abstract: We present supportive empirical evidence and a new theoretical explanation for the negative selection into planned return migration between similar regions in Germany. In our model costly temporary and permanent migration are used as imperfect signals to indicate workers' high but otherwise unobservable skills. Production thereby takes place in teams with individual skills as strategic complements. Wages therefore are determined by team performance and not by individual skill, which is why migration inflicts a wage loss on all workers, who expect the quality of their co-workers to decline. In order to internalise this negative migration externality, which leads to sub-optimally high levels of temporary and permanent migration in a laissez-faire equilibrium, we propose a mix of two policy instruments, which reduce initial outmigration while at the same time inducing later return migration.
    Keywords: return migration,signalling,selection,strategic complementarity
    JEL: R23 J61 D82
    Date: 2018
  39. By: John Gibson and Chao Li
    Abstract: We study potential internal effects of China's Belt and Road Initiative. These effects may occur sooner than the international effects, since they face no delay from partner negotiations and from financing and security concerns. For a key part of the overland Silk Road Economic Belt, we identify 46 prefectural†level units in a corridor from the China–Kazakh border to Xi'an that are likely to see increased investment and economic activity from Belt and Road. These units are smaller, more diverse, poorer, and less productive than are prefectural†level units in the rest of China. The Belt and Road Initiative will disperse some economic activity to places that the market would not direct it, such as to this corridor. Given that these areas are less productive and are likely to have lower absorptive capacity, investments here will have an efficiency cost since they should yield more GDP if deployed elsewhere in China.
    Keywords: Belt & Road, China, DEA, regional policy, sub†national productivity
    Date: 2018–05–21
  40. By: Zorlu, Aslan (University of Amsterdam); Hartog, Joop (University of Amsterdam)
    Abstract: This study examines the causal effects of Dutch language proficiency of immigrants from four main source countries on their labour market and social integration outcomes. Language proficiency appears ranked according to linguistic distance to The Netherlands, a ranking that even holds for the gender gap in proficiency. We assess the effect of language proficiency on two objective indicators of integration (employment and income) and two subjective measures (feeling Dutch and feeling integrated). The analysis shows that endogeneity of language skills masks a substantial part of language effects. Once accounted for endogeneity, effects of Dutch language proficiency on social and economic integration of immigrants are more than double the estimates ignoring endogeneity.
    Keywords: language skills, immigrants, integration, treatment effects
    JEL: J15
    Date: 2018–04
  41. By: Baqaee, David Rezza
    Abstract: This paper analyzes a general equilibrium economy featuring input-output connections, imperfect competition, and external economies of scale owing to entry and exit. The interaction of input-output networks with industry-level market structure affects the amplification of shocks and the pattern of diffusion in the model, generating cascades of firm entry and exit across the economy. In this model, sales provide a poor measure of the systemic importance of industries. Unlike the relevant notions of centrality in competitive constant-returns to-scale models, systemic importance depends on the industry's role as both a supplier and as a consumer of inputs, as well as the market structure of industries. A basic calibration of the model suggests that aggregate output is three times more volatile in response to labor productivity shocks when compared to a perfectly competitive model.
    Date: 2018–05
  42. By: Bryson, Alex (University College London); Stokes, Lucy (National Institute of Economic and Social Research (NIESR)); Wilkinson, David (University College London)
    Abstract: Using nationally representative linked employer-employee data for Britain in 2004 and 2011 we find school staff are more satisfied and more contented with their jobs than "like" employees in other workplaces. The differentials are largely accounted for by the occupations school employees undertake and perceptions of job quality. School employees are also more committed to their organization than non-school employees, a difference that remains large and statistically significant having conditioned on job quality, human resource management practices (HRM), managerial style and other features of employees' working environment. Using panel data for workplaces and their employees observed in 2004 and 2011 we find increases in organizational commitment are linked to improvements in workplace performance in schools, but not in other workplaces.
    Keywords: schools, teachers, job satisfaction, job contentment, organizational commitment, school performance, human resource management, managerial style
    JEL: I21
    Date: 2018–04
  43. By: Milligan Kevin; Michael Smart
    Abstract: We develop a theory of cross-border income shifting in response to subnational personal taxation in a federation and examine its implications for the excess burden of personal taxes. We show how a properly-chosen federal tax rate can offset the fiscal externality between states and facilitate decentralization, even in a heterogeneous federation where unitary taxation is suboptimal. Optimal taxes depend on the elasticities of national tax avoidance and of cross-state tax base shifting. We estimate these elasticities around a tax decentralization reform in Canada, finding both to be empirically relevant. We discuss the implications for optimal federalism.
    Keywords: taxation, redistribution, fiscal federalism
    JEL: H20
    Date: 2018
  44. By: Carlana, Michela (Bocconi University); Tabellini, Marco (Massachusetts Institute of Technology)
    Abstract: In this paper, we study the effects of immigration on natives' marriage, fertility, and family formation across US cities between 1910 and 1930. Instrumenting immigrants' location decision by interacting pre-existing ethnic settlements with aggregate migration flows, we find that immigration raised marriage rates, the probability of having children, and the propensity to leave the parental house for young native men and women. We show that these effects were driven by the large and positive impact of immigration on native men's employment and occupational standing, which increased the supply of "marriageable men". We also explore alternative mechanisms − changes in sex ratios, natives' cultural responses, and displacement effects of immigrants on female employment − and provide evidence that none of them can account for a quantitatively relevant fraction of our results.
    Keywords: immigration, marriage, fertility, employment
    JEL: J12 J13 J61 N32
    Date: 2018–04
  45. By: Jon H. Fiva; Askill Halse; Daniel M. Smith
    Abstract: Geographic representation is an important consideration in candidate nominations, even under closed-list proportional representation (PR), and may even matter for distributive policy outcomes. However, since nominations are determined strategically, the causal effects of local representation are difficult to identify. We investigate the relationship between local representation and electoral and distributive politics in the closed-list PR setting of Norway. Exploiting as-good-as-random election outcomes for marginal candidates, we find that parties obtain higher support in subsequent elections in the hometowns of narrowly-elected candidates. This effect appears to be driven by the local candidate appearing at the top of the party list in the next election. However, we find no evidence that representation results in geographically targeted policy benefits going to the candidates’ hometowns.
    Keywords: distributive politics, representation, voting behavior
    JEL: D72
    Date: 2018
  46. By: Susana Santos; Tanya Araújo
    Abstract: The networks of nominal flows between industries in a Social Accounting Matrix (SAM) framework are studied. The flows of the SAM submatrices of production (or output of goods and services) and intermediate consumption, are identified, which are constructed from the supply and use tables of the National Accounts. From these flows, the inter-industry networks are induced. The structure of these networks are analysed, as well as, the underlying generation of income. An application to Portugal illustrates the approach.
    Keywords: Social Accounting Matrix; Inter-Industries flows; Network Analysis
    JEL: C89 D57 E01
    Date: 2018–05
  47. By: Grinza, Elena (University of Milan); Kampelmann, Stephan (Free University of Brussels); Rycx, Francois (Free University of Brussels)
    Abstract: Measuring the economic impact of coworkers from different countries of origin sparked intense scrutiny in labor economics, albeit with an uncomfortable methodological limitation. Most attempts involved metrics that eliminate most of the economically relevant distances among different countries of origin. The typical examples of such metrics are diversity indicators that divide the firm's workforce into blacks and whites, foreigners and natives, non-Europeans and Europeans, etc. We propose an entirely novel approach. It is based on the conversion of the qualitative information on individuals' countries of origin into an aggregate firm-level diversity indicator, built on the United Nations Development Programme's Human Development Index (HDI), a standard harmonized measure of cross-country variations that is available for virtually all the countries in the world. By resorting to rich matched employer-employee panel data for Belgium, we use this new aggregate measure to estimate state-of-the-art firm-level wage equations, which control for a wide range of observable and time-invariant unobservable factors, including variations in labor productivity between firms and within firms over time. Our results suggest that the majority of firms do not discriminate against foreigners. Yet, we find that firms with high diversity largely discriminate against them. The wage discrimination in high-diversity firms could be alleviated through a stronger presence of collective bargaining and/or efforts to de-cluster foreigners from low-HDI countries in these firms.
    Keywords: diversity, workers' origin, wages, discrimination, matched employer-employee panel data
    JEL: J15 J16 J24 J31 J7
    Date: 2018–05
  48. By: HAMAGUCHI Nobuaki; KONDO Keisuke
    Abstract: This study investigates employment risk caused by new technology, such as artificial intelligence (AI) and robotics, using the probability of computerization by Frey and Osborne (2017) and Japanese employment data. The new perspective of this study is the consideration of regional heterogeneity in labor markets due to the uneven geographical distribution of occupations, which is especially observed between male and female workers. This study finds that female workers are exposed to higher risks of computerization than male workers, since they tend to be engaged in occupations with a high probability of computerization. This tendency is more pronounced in larger cities. Our results suggest that supporting additional human capital investment alone is not enough as a risk alleviation strategy against new technology, and policymakers need to address structural labor market issues, such as gender biases for career progression and participation in decision-making positions, in the AI era to mitigate unequal risk of computerization between workers.
    Date: 2018–05
  49. By: Christophe Blot (Observatoire français des conjonctures économiques); Jérôme Creel (Observatoire français des conjonctures économiques); Paul Hubert (Observatoire français des conjonctures économiques); Fabien Labondance (Observatoire français des conjonctures économiques); Xavier Ragot (Observatoire français des conjonctures économiques)
    Abstract: For nearly two decades, the policy debate has focused on the attitude of central banks regarding financial stability and asset price bubbles. This debate is resurfacing with the recent episodes of expansionary monetary policies implemented through unconventional measures. The aim of this policy brief is to feed reflections on the risks for financial stability associated with the extension of quantitative easing (QE) by the ECB. We first recall that the theoretical and empirical literature does not provide a clear consensus on the influence of monetary policy on asset price bubbles. Then, we propose indicators of asset price bubbles for the euro area and we discuss the effect of monetary policy on these indicators. So far, there is no evidence of presence of asset price bubbles in the euro area. Besides, the change in the ECB balance sheet would not trigger bubbles in the stock and housing markets. However, it may be a concern for the bond market. From this, we argue that a gradual decline in ECB’s balance sheet would be important to limit the risk of a new banking crisis in the euro area.
    Keywords: financial stability; price bubbles
    JEL: E5
    Date: 2017–02
  50. By: Stephen Machin (University College London); Sandra McNally (London School of Economics); Jenifer Ruiz-Valenzuela (London School of Economics)
    Abstract: In many countries, important thresholds in examinations act as a gateway to higher levels of education and/or good employment prospects. This paper examines the consequences of just failing a key high stakes national examination in English taken at the end of compulsory schooling in England. It uses unique administrative data to show that students of the same ability have significantly different educational trajectories depending on whether or not they just pass or fail this exam. Three years later, students who just fail to achieve the required threshold have a lower probability of entering an upper-secondary high-level academic or vocational track and of starting tertiary education. Those who fail to pass the threshold are also more likely to drop out of education by age 18, without some form of employment. The moderately high effects of just passing or failing to pass the threshold in this high stakes exam are therefore a source of educational inequality with high potential long-term consequences for those affected.
    Keywords: high stakes examinations, manipulation, English
    JEL: I20 I21 I24
    Date: 2018–05
  51. By: Odolinski, Kristofer (CTS - Centre for Transport Studies Stockholm (KTH and VTI)); Boysen, Hans E. (CTS - Centre for Transport Studies Stockholm (KTH and VTI))
    Abstract: In this paper, we analyse how railway maintenance costs are affected by different levels of railway line capacity utilisation. Previous studies have focused on the wear and tear of the infrastructure, while this paper shows that it is important to also acknowledge the heterogeneity of the maintenance production environment. Specifically, we estimate marginal costs for traffic using econometric methods on a panel dataset from Sweden and show that these costs increase with line capacity utilisation. The results are significant considering that current EU regulation (2015/909) states that track access charges can be based on marginal costs, with the aim of creating an effective use of available infrastructure capacity.
    Keywords: maintenance; marginal cost; rail infrastructure; capacity; track access charges
    JEL: L92 R48
    Date: 2018–05–30
  52. By: Stefanie Schurer (The University of Sydney); Kristian Trajkovski (The University of Sydney)
    Abstract: Over the past two decades, researchers have shown a growing interest in the role of adverse childhood experiences (ACEs) – children’s confrontation with maltreatment and household dysfunction – in shaping lifetime opportunities. However, this is the first study to quantify the economic penalties of ACEs and identify the mechanisms which produce the relationship. We source data from the National Child Development Study to construct an ACE index based on prospective childhood information and estimate an earnings penalty of 7.3 percent for each additional ACE, a 53.1 percent higher probability of being welfare dependent, and a 34 percent higher probability of poverty at age 55, controlling for important background factors measured in childhood. The results are driven by parental neglect, a component of the ACE index based on teacher assessments. Observed differences in later-life earnings between children with and without neglect exposure can be fully explained by observable differences in human capital accumulated by age 33. The productivity loss in an economy due to parental failures to nurture and protect their children is likely to be high. Our findings contribute to a wider discussion on the multidimensionality and expanding definitions of childhood poverty.
    Keywords: childhood poverty, adverse childhood experiences, economic outcomes, welfare dependence, human capital
    JEL: I32 J12
    Date: 2018–06
  53. By: Yusifov, Sabuhi (Azerbaijan Technological University)
    Abstract: Regional development has been an increasing priority in the development strategy of Korea. Korea's development experience offers good lessons for developing countries in search of sustainable development. In fact, the study of Korea's economic and social transformation provides a unique opportunity to better understand the factors that drive development. The approaches the country has taken to respond to shifting balances, as well as various issues regarding compensation and competitiveness, set a very impressive example of a proper approach to the development process. Meanwhile, Azerbaijan, as an oil-rich country, has made great progress thanks to its substantial oil profits. However, like Korea, it also faces the problem of urban-rural disparity and is applying numerous regional policies to tackle the issue. Given the relevance and usefulness of Korea's development experiences, it would be wise for Azerbaijan to consider the examples provided by Korea and find clues for possible solutions to the challenges it currently faces. The aim of this paper is to look into the paradigm shifts in the regional development of Korea and Azerbaijan, and to draw policy suggestions for Azerbaijan to upgrade its regional development strategies. The paper offers five policy suggestions for Azerbaijan in light of the Korean experience: (1) regional development policy approaches; (2) designing mechanisms to distribute national resources across regions; (3) increasing spaces for bottom-up initiatives; (4) identifying mechanisms to develop regional specialization; (5) the use of monitoring and evaluation as a learning tool.
    Keywords: Korea; Azerbaijan; regional development
    Date: 2018–05–04
  54. By: Christian Bommer; Axel Dreher; Marcello Perez-Alvarez
    Abstract: International humanitarian aid is pivotal in the response to natural disasters suffered by low-and middle-income countries. While its allocation has been shown to be influenced by donors’ foreign policy considerations, power relations within recipient countries have not been addressed. This paper is the first to investigate the role of regional and ethnic favoritism in the formation of humanitarian aid flows. We construct a novel dataset combining information on birth regions of political leaders and the geographic distribution of ethnic groups within countries with high numbers of natural disasters building on census (IPUMS) and Demographic and Health Surveys (DHS) data. Our results suggest that the Office of US Foreign Disaster Assistance (OFDA) disburses larger amounts of aid when natural disasters affect the birth region of the countries’ leader. We find some evidence that OFDA disburses aid more frequently to leaders’ birth regions as well as when regions hit by disasters are populated by politically powerful or discriminated ethnicities. Our findings imply that humanitarian aid is not given for humanitarian reasons alone, but also serves elite interests within recipient countries.
    Keywords: humanitarian aid, disasters, ethnic favoritism, regional favoritism
    JEL: F35
    Date: 2018
  55. By: Anthony Edo; Lionel Ragot; Hillel Rapoport; Sulin Sardoschau; Andreas Steinmayr
    Abstract: The rise in international migration over the past decades and particularly the recent influx of refugees to the European Union has given more audience to the economic and political consequences of immigration. A major concern in the public debate is that immigrants could take jobs from natives, reduce their wages and negatively contribute to public finances. At the same time, the rise of right-wing populist movements has brought to light that the skepticism towards immigrants and refugees may not only be based only on economic but also on cultural considerations. This report is devoted to investigating these considerations by carefully relying on the existing evidence. We thus study the vast literature on the effects of immigration on the labor market and welfare system in host societies, as well as the more recent literature on the attitudinal and political consequences of immigration. The literature on the labor market impact of immigration indicates that immigration has a negligible average impact on the wages and employment of native workers. However, because adjustments take time, particularly when immigration is unexpected, the initial and longer run impacts of immigration can differ. The average impact of immigration on public finance is also negligible, sometimes slightly positive or slightly negative. We also document that immigration can have distributional consequences. In particular, the age and educational structure of immigrants plays an important role in determining their impact on the labor market and public finances. The fact that immigration is sometimes perceived as a factor depressing economic outcomes in host countries tends to affect native attitudes and electoral outcomes. In this regard, the literature first suggests that cultural concerns is the main driving force behind the skepticism towards immigration and that fiscal or labor market concerns only play a secondary role. Second, immigration tends to reduce the support for redistribution among native workers. Third, the effect of local level exposure to immigrants and refugees on native attitudes towards immigrants and extreme voting has been found to vary by context and can be positive or negative.
    Keywords: Immigration;Labour Market;Public finance;Redistribution; Voting
    JEL: D72 E62 F22 H62 J15
    Date: 2018–04

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