nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2018‒08‒27
sixty-six papers chosen by
Steve Ross
University of Connecticut

  1. Labor Demand Shocks and Housing Prices across the US: Does One Size Fit All? By Osei, Michael J.; Winters, John V.
  2. The Rise of Housing Supply Regulation in the US: Local Causes and Aggregate Implications By Andrii Parkhomenko
  3. Housing Wealth Effects: The Long View By Adam M. Guren; Alisdair McKay; Emi Nakamura; Jón Steinsson
  4. Spillover of Mortgage Default Risks in the United States: Evidence from Metropolitan Statistical Areas and States By Qiang Ji; Rangan Gupta; Festus Victor Bekun; Mehmet Balcilar
  5. An Equilibrium Model of Housing and Mortgage Markets with State-Contingent Lending Contracts By Alexei Tchistyi
  6. Housing Prices and Consumer Spending: The Bank Balance Sheet Channel By Nuno Paixao
  7. Immigrant Voters, Taxation and the Size of the Welfare State By Arnaud Chevalier; Benjamin Elsner; Andreas Lichter; Nico Pestel
  8. Who Teaches the Teacher? A RCT of Peer-to-Peer Observation and Feedback in 181 Schools By Richard Murphy; Felix Weinhardt; Gill Wyness
  9. Regional Market Integration and City Growth in East Africa: Local but no Regional Effects? By Andreas Eberhard-Ruiz; Alexander Moradi
  10. Racial Divisions and Criminal Justice: Evidence from Southern State Courts By Benjamin Feigenberg; Conrad Miller
  11. Identifying Neighborhood Effects among Firms: Evidence from Location Lotteries of the Tokyo Tsukiji Fish Market By Kentaro Nakajima; Kensuke Teshima
  12. Delivering Social Housing: An Overview of the Housing Crisis in Dublin By Lima, Valesca
  13. Anticipating Critical Transitions of Chinese Housing Markets By Zhang Qun; Didier Sornette; Hao Zhang
  14. The Role of Industry, Occupation, and Location-Specific Knowledge in the Survival of New Firms By C. Jara Figueroa; Bogang Jun; Edward L. Glaeser; César Hidalgo
  15. Maybe Some People Shouldn’t Own (3) Homes By Christopher Foote; Jaromir Nosal; Lara Loewenstein; Paul Willen
  16. Institutional change and the development of lagging regions in Europe By Andrés Rodríguez-Pose; Tobias Ketterer
  17. Job Displacement, Inter-Regional Mobility and Long-Term Earnings By Maczulskij, Terhi; Böckerman, Petri; Kosonen, Tuomas
  18. Mass Refugee Inflow and Long-Run Prosperity: Lessons from the Greek Population Resettlement By Murard, Elie; Sakalli, Seyhun Orcan
  19. What drives employment growth and social inclusion in the regions of the European Union? By Di Cataldo, Marco; Rodríguez-Pose, Andrés
  20. Inputs, Incentives, and Complementarities in Education: Experimental Evidence from Tanzania By Isaac Mbiti; Karthik Muralidharan; Mauricio Romero; Youdi Schipper; Constantine Manda; Rakesh Rajani
  21. Slum Upgrading and Long-run Urban Development: Evidence from Indonesia By Mariaflavia Harari; Maisy Wong
  22. Improving the growth and transition of small and medium Enterprises in the Greater Kampala Metropolitan Area By Kuteesa, Annette; Paul Lakuma; Rakesh Gupta; Ibrahim Kasirye
  23. The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco By Rebecca Diamond; Franklin Qian; Timothy McQuade
  24. Disentangling the channels from birthdate to educational attainment By Luís Martins; Manuel Coutinho Pereira
  25. What Happened: Financial Factors in the Great Recession By Mark Gertler; Simon Gilchrist
  26. Torn Apart? The Impact of Manufacturing Employment Decline on Black and White Americans By Gould, Eric D.
  27. The Effect of Residential Location and Housing Unit Characteristics on Labor Force Participation of Childbearing Women in Indonesia: Using Twin Births As A Quasi-Natural Experiment By Yusuf Sofiyandi1
  28. Is there an Optimal Size for Local Governments? A Spatial Panel Data Model Approach By Miriam Hortas-Rico; Vicente Rios
  29. Lessons for Effective Fiscal Decentralization in Sub-Saharan Africa By Niko A Hobdari; Vina Nguyen; Salvatore Dell'Erba; Edgardo Ruggiero
  30. Striking a Balance: A National Assessment of Economic Development Incentives By Mary Donegan; T. William Lester; Nichola Lowe
  31. Crowdsourced innovation: How community managers affect crowd activities By Hornuf, Lars; Jeworrek, Sabrina
  32. Human Capital and Migration: a Cautionary Tale By Salvador Navarro; Jin Zhou
  33. Borrowing From The Demographer's Toolbox: Longitudinal Methods in Regional Science By McClain, Verena; Waldorf, Brigitte
  34. The Production Function for Housing: Evidence from France By Pierre-Philippe Combes; Gilles Duranton; Laurent Gobillon
  35. Shift-Share Instruments and the Impact of Immigration By David A. Jaeger; Joakim Ruist; Jan Stuhler
  36. Political Cycles, Government Spending, and Efficiency of Indonesia' Local Governments By Chalil, Tengku Munawar
  37. The role of Internet of Things in developing smart cities By Tirziu, Andreea-Maria; Vrabie, Catalin
  38. Measuring Integration and Urban Sustainability with Indicators: Monitoring Progress towards Integrated Public Transport By Zsuzsanna Olofsson; Karin Brundell Freij
  39. On Regional Borrowing, Migration, and Default By Grey Gordon; Pablo Guerron-Quintana
  40. Why Does Education Reduce Crime? By Brian Bell; Rui Costa; Stephen Machin
  41. Land Use Regulation, the Redevelopment Premium and House Prices By Ryan Greenaway-McGrevy; Gail Pacheco; Kade Sorensen
  42. Re-examining the Effects of Trading with China on Local Labor Markets: A Supply Chain Perspective By Zhi Wang; Shang-Jin Wei; Xinding Yu; Kunfu Zhu
  43. Spatial Competition, Innovation and Institutions: The Industrial Revolution and the Great Divergence By Klaus Desmet; Avner Greif; Stephen Parente
  44. Fear and the Safety Net: Evidence from Secure Communities By Marcella Alsan; Crystal Yang
  45. How Do Regional Interactions in Space Affect China’s Mitigation Targets and Economic Development? By Wang Lu; Hao Yu; Wei Yi-Ming
  46. On the Direct and Indirect Real Effects of Credit Supply Shocks By Laura Alfaro; Enrique Moral-Benito; Manuel Garcia-Santana
  47. The Triple Trigger? Negative Equity, Income Shocks and Institutions as Determinants of Mortgage Default By Andrew Lynn; Ronan C Lyons
  48. Top ten smart cities in the world. What do they have in common and how can Eastern European cities use that? By Vrabie, Catalin; Tirziu, Andreea-Maria
  49. The Spatial Efficiency Multiplier and Common Correlated Effects in a Spatial Autoregressive Stochastic Frontier Model By Glass, Anthony J.; Kenjegalieva, Karligash; Sickles, Robin C.; Weyman-Jones, Thomas
  50. Testing for Peer Effects Using Genetic Data By Cawley, J.;; Han, E.;; Kim, J.;; Norton, E.C.;
  51. Macroeconomic Shocks and Changing Dynamics of the U.S. REITs Sector By Rangan Gupta; Zhihui Lv; Wing-Keung Wong
  52. Deep-Rooted Culture and Economic Development: Taking the Seven Deadly Sins to Build A Well-Being Composite Indicator By Luis Cesar Herrero-Prieto; Ivan Boal-San Miguel; Mafalda Mafalda Gomez-Vega
  53. Why Are So Few Africans at Work in Ireland? Immigration Policy and Labour Market Disadvantage By Philip J O'Connell
  54. Incentivizing School Attendance in the Presence of Parent-Child Information Frictions By de Walque, Damien; Valente, Christine
  55. Does Subsidized Care for Toddlers Increase Maternal Labor Supply?: Evidence from a Large-Scale Expansion of Early Childcare By Kai-Uwe Müller; Katharina Wrohlich
  56. What push migrants out of their rural areas? Empirical evidences from Sub-Saharan Africa By Lantz, Tiffany Louise; Arbolino, Roberta; Caracciolo, Francesco; Cembalo, Luigi
  57. The Multiple Roles of Demand in Regional Development A Conceptual Analysis By Martin, Hanna; Martin, Roman; Zukauskaite, Elena
  58. How the DC Council can Help Shape the Future of Education Data By Steven Glazerman
  59. My way or the highway? The influence of peers in the formation and consequences of physician practice styles By Avdic, D.;; Ivets, M.;; Sriubaite, I.;
  60. The role of regional and sectoral factors in Russian inflation developments By Elena Deryugina; Natalia Karlova; Alexey Ponomarenko; Anna Tsvetkova
  61. Fiscal stability during the Great Recession: Putting decentralization design to the test By Santiago Lago-Peñasa; Jorge Martinez-Vazquez; Agnese Sacchic
  62. Mortgage-rate pass-through in the presence of refinancing By David Berger; Fabrice Tourre; Konstantin Milbradt
  63. A Short Course on Spatial Econometrics and GIS By Burkey, Mark L.
  64. On Public Education Spending under Nonlinear Income Taxation By Alan Krause
  65. The Employment Effects of Regional Integration: A Case Study of the Association of Southeast Asian Nations (ASEAN) By Bano, Sayeeda; Tabbada, Jose
  66. Use of extra-school time and child behaviours. Evidence from the UK. By Meroni, Elena Claudia; Piazzalunga, Daniela; Pronzato, Chiara

  1. By: Osei, Michael J. (Oklahoma State University); Winters, John V. (Iowa State University)
    Abstract: This paper examines whether effects of labor demand shocks on housing prices vary across time and space. Using data on 321 US metropolitan statistical areas, we estimate the medium- and long-run effects of increases in metropolitan statistical area-level employment and total labor income on housing prices. Instrumental variable estimates for different time periods, and also for coastal, non-coastal, large, and small metropolitan statistical areas are obtained using the shift-share instrument. Results suggest that labor demand shocks have positive effects on housing prices. However, these effects appear to vary across time periods and across different types of metropolitan statistical areas.
    Keywords: housing prices, labor demand shocks, labor market, housing market
    JEL: J23 O18 R12 R23 R31
    Date: 2018–06
  2. By: Andrii Parkhomenko (University of Southern California, Marshall School of Business)
    Abstract: Regulatory restrictions on housing supply have been rising in recent decades in the U.S. and have become a major determinant of house prices. What are the implications of the rise in regulation for aggregate productivity, and for wage and house price dispersion across metropolitan areas? To answer this question, I build a general equilibrium model with multiple locations, heterogeneous workers and endogenous regulation. Regulation is decided by voting: homeowners want more regulation and renters want less. In locations with faster exogenous productivity growth, labor supply and house prices also grow more rapidly. Homeowners in these places vote for stricter regulation, which raises prices further and leads to greater price dispersion. High-skilled workers, being less sensitive to housing costs, sort into productive places, which leads to larger wage dispersion. Thus, wage and house price differences are amplified by regulation choices. To quantify this amplification effect, I calibrate the model to the U.S. economy and find that the rise in regulation accounts for 23% of the increase in wage dispersion and 85% of the increase in house price dispersion across metro areas from 1980 to 2007. I find that if regulation had not increased, more workers would live in productive areas and output would be 2% higher. I also show that policy interventions that weaken incentives of local governments to restrict supply could reduce wage and house price dispersion, and boost productivity.
    Date: 2018
  3. By: Adam M. Guren; Alisdair McKay; Emi Nakamura; Jón Steinsson
    Abstract: We provide new, time-varying estimates of the housing wealth effect back to the 1980s. We exploit systematic differences in city-level exposure to regional house price cycles to instrument for house prices. Our main findings are that: 1) Large housing wealth effects are not new: we estimate substantial effects back to the mid 1980s; 2) Housing wealth effects were not particularly large in the 2000s; if anything, they were larger prior to 2000; and 3) There is no evidence of a boom-bust asymmetry. We compare these findings to the implications of a standard life-cycle model with borrowing constraints, uninsurable income risk, illiquid housing, and long-term mortgages. The model explains our empirical findings about the insensitivity of the housing wealth effects to changes in the loan-to-value (LTV) distribution, including the dramatic rise in LTVs in the Great Recession. The insensitivity arises in the model for two reasons. First, impatient low-LTV agents have a high elasticity. Second, a rightward shift in the LTV distribution increases not only the number of highly sensitive constrained agents but also the number of underwater agents whose consumption is insensitive to house prices.
    JEL: E21 R21
    Date: 2018–06
  4. By: Qiang Ji (Center for Energy and Environmental Policy Research, Institutes of Science and Development, Chinese Academy of Sciences, Beijing, China); Rangan Gupta (Department of Economics, University of Pretoria, Pretoria, South Africa); Festus Victor Bekun (Department of Economics, Eastern Mediterranean University, Famagusta, Northern Cyprus, Turkey); Mehmet Balcilar (Department of Economics, Eastern Mediterranean University, Famagusta, Northern Cyprus, Turkey and Montpellier Business School, Montpellier, France)
    Abstract: This paper offers a new perspective to the analysis of spillover transmission in the housing market, specifically dealing with mortgage default risks. To do this, the recently developed generalized forecast error variance decomposition (FEVD) methodology proposed by Diebold and Yilmaz (2014) is utilized to investigate the degree of interconnectedness of mortgage default risks in metropolitan statistical areas (MSAs) and states of the U.S. The empirical findings, based on a real-time mortgage default risks index, reveal complex interconnectedness across twenty MSAs and forty-three states. Our study finds that Chicago, New York, and Los Angeles are net transmitters of spillover effects to other regions in the housing market investigated. This study also corroborates with the central place theory (CPT), as Washington DC serves as a key player in the housing market among the MSA’s. Amongst the states, Minnesota, followed by Arizona, Pennsylvania, New York and New Hampshire, are found to be the main source of mortgage default risks spillovers.
    Keywords: Mortgage default risk, connectedness network, centrality, metropolitan statistical area, states, United States
    JEL: C32 R30
    Date: 2018–08
  5. By: Alexei Tchistyi (University of Illinois)
    Abstract: We develop a tractable general equilibrium framework of housing and mortgage markets with aggregate and idiosyncratic risks, costly liquidity and strategic defaults, empirically relevant informational asymmetries, and endogenous mortgage design. We show that adverse selection plays an important role in shaping the form of an equilibrium contract. If borrowers' homeownership values are known, the equilibrium state-contingent contract depends on both aggregate wages and house prices. However, when lenders cannot observe borrowers' homeownership values, the equilibrium contract only depends on house prices and takes the form of a home equity insurance mortgage (HEIM) that eliminates the strategic default option and insures the borrower's equity position. Interestingly, we show that widespread adoption of such loans has ambiguous effects on the homeownership rate and household welfare. In economies in which recessions are expected to be severe, the HEIM equilibrium Pareto dominates the equilibrium with fixed-rate mortgages. However, if economic downturns are not severe, HEIMs can lower the homeownership rate and make some marginal home buyers worse-o¤. We also note that adjustable-rate mortgages (ARMs) may share some benefits with HEIMs. Finally, we find that unrestricted competition in contract design among lenders may lead to a non-existence of equilibrium. This suggests that government-sponsored enterprises may stabilize mortgage markets by subsidizing certain lending contracts.
    Date: 2018
  6. By: Nuno Paixao (Bank of Canada)
    Abstract: I quantify the extent to which deterioration of bank balance sheets explains the large contraction in housing prices and consumption experienced by the U.S. during the last recession. I introduce a Banking Sector with balance sheet frictions into a model of long-term collateralized debt with risk of default. Credit supply is endogenously determined and depends on the capitalization of the entire banking sector. Mortgage spreads and endogenous down payments increase in periods when banks are poorly capitalized. I simulate an increase in the stock of housing and a negative income shock to match the decline in house prices between 2006-2009. The model generates changes in consumption, foreclosures and refinance rates similar to those observed in the U.S. between 2006 and 2009. Changes in financial intermediaries’ cost of funding explain, respectively, 38, 22 and 29 percent of the changes in housing prices, foreclosures and consumption generated by the model. These results show that the endogenous response of banks’ credit supply can partially explain how changes in housing prices affect consumption decisions. I use this framework to analyze the impact of debt forgiveness and banks’ recapitalization to mitigate the drop in housing prices and consumption. I also present empirical evidence that balance sheet mechanism implied by the model was operational during this period. In other words, I show that during the great recession, changes in the real estate prices impacted the balance sheet of the banks that reacted by contracting their mortgage credit supply.
    Date: 2018
  7. By: Arnaud Chevalier (Royal Holloway University of London and the Institute of Labor Economics); Benjamin Elsner (University College Dublin, IZA and CReAM); Andreas Lichter (IZA); Nico Pestel (IZA and ZEW Mannheim)
    Abstract: This paper studies the impact of immigration on public policy setting. As a natural experiment, we exploit the sudden arrival of eight million forced migrants in West Germany after World War II. These migrants were on average poorer than the West German population, but unlike most international migrants they had full voting rights and were eligible for social welfare. Using panel data for West German cities and applying difference-in-differences and an instrumental variables approach, we show that local governments responded to this migration shock with selective and persistent tax raises as well as shifts in spending. In response to the inflow, farm and business owners were taxed more while residential property and wage bill taxes were left unchanged. Moreover, high-inflow cities significantly raised welfare spending while reducing spending on infrastructure and housing. Election data suggest that these policy changes were partly driven by the political influence of the immigrants: in high-inflow regions, the major parties were more likely to nominate immigrants as candidates, and a pro-immigrant party received high vote shares. We further document that this episode of mass immigration had lasting effects on people’s preferences for redistribution. In areas with larger inflows in the 1940s, people have substantially higher demand for redistribution more than 50 years later.
    Date: 2018–08–06
  8. By: Richard Murphy; Felix Weinhardt; Gill Wyness
    Abstract: It is well established that teachers are the most important in-school factorin determining student outcomes. However, to date there is scant robustquantitative research demonstrating that teacher training programs can havelasting impacts on student test scores. To address this gap, weconduct andevaluate a teacher peer-to-peer observation and feedback program underRandomized Control Trial (RCT) conditions. Half of 181 volunteer primaryschools in England were randomly selected to participate in the two yearprogram. We find that students of treated teachers perform no better onnational tests a year after the program ended. The absence of externalobservers and incentives in our program may explain the contrast of theseresults with the small body of work which shows a positive influence ofteacher observation and feedback on pupil outcomes.
    Keywords: Education, teachers, RCT, peer mentoring
    JEL: I21 I28 M53
    Date: 2018
  9. By: Andreas Eberhard-Ruiz; Alexander Moradi
    Abstract: We investigate changes in the spatial concentration of economic activities after the establishment of a regional economic community between Kenya, Tanzania, and Uganda in 2001. Measuring city growth using satellite imagery of lights emanated out to space at night, we demonstrate that cities close to the community’s internal borders expanded more than other cities further away. The growth effect is temporary and also highly localized: only cities less than 90 minutes of travel from the border experience an acceleration in growth rates; after four years growth rates revert to their pre-treatment level. We show that this is consistent with an asymmetric reduction in trade costs for two types of trade modalities that co-exist in many parts of sub-Saharan Africa, local small-scale trade and regional large-scale trade, with a larger reduction in costs of the former. Yet, while local e?ects are relatively large, equivalent to a 5.6% higher GDP for cities near the EAC’s internal borders, they do not imply a large reorganisation of economic activity across space nor a substantial alteration of countries’ urban systems.
    Keywords: Market Integration; Trade; Cross-Border Trade; City Growth; Periphery; Africa
    JEL: F1 F14 F15 O17 O18 O55 R12
    Date: 2018
  10. By: Benjamin Feigenberg; Conrad Miller
    Abstract: The US criminal justice system is exceptionally punitive. We test whether racial heterogeneity is one cause, exploiting cross-jurisdiction variation in criminal justice practices in four Southern states. We estimate the causal effect of jurisdiction on initial charge outcome, validating our estimates using a quasi-experimental research design based on defendants that are charged in multiple jurisdictions. Consistent with a simple model of ingroup bias in electorate preferences, the relationship between local punitiveness and the black share of defendants follows an inverted U-shape. Heterogeneous jurisdictions are more punitive for both black and white defendants. By contrast, punishment norms are unrelated to local crime rates. Simulation results suggest that adopting the punishment norms of homogeneous jurisdictions would decrease the share of charges leading to an incarceration sentence and the black-white gap in this share by 16-19%.
    JEL: J15 K14 K41 K42
    Date: 2018–06
  11. By: Kentaro Nakajima (Hitotsubashi University); Kensuke Teshima (Instituto Tecnologico Autonomo de Mexico)
    Abstract: The theories of retail cluster formation suggest that stores perform better when surrounded by other stores of diverse complementary products because diverse stores attract consumers with love of variety preference. We analyze the impact of the diversity of neighboring stores among intermediate wholesalers located in the Tokyo Tsukiji Fish Market by exploiting a unique feature of their shop locations within the market in which their locations are determined every 4-10 years by relocation lotteries, generating exogenous variation in the diversity of neighboring stores. First, we confirm that these intermediate wholesalers’ shop locations are indeed randomly distributed. Then, we find that the diversity of the types of neighboring firms positively affect the performance of small-sized and specialized firms. We find no effect of the characteristics of close neighbors not facing the same corridor and thus not sharing the flow of shoppers. This provides evidence that our results are not due to factors other than shopping behavior, such as technology spillovers. Finally, to illustrate the general applicability of the mechanism we find, we use the Census of Commerce covering all the retailers in Tokyo to show that smaller and more specialized retailers are more likely to be located together while larger and standardized ones are isolated. Overall, our analysis shows that the complementarity of products between specialized diverse stores is an important factor behind urban agglomeration.
    Date: 2018
  12. By: Lima, Valesca
    Abstract: This paper explores the responses to the housing crisis in Dublin, Ireland, by analysing recent housing policies promoted to prevent family homelessness. I argue that private rental market subsides have played an increasing role in the provision of social housing in Ireland. Instead of policies that facilitate the construction of affordable housing or the direct construction of social housing, current housing policies have addressed the social housing crisis by encouraging and relying excessively on the private market to deliver housing. The housing crisis has challenged governments to increase the social housing supply, but the implementation of a larger plan to deliver social housing has not been effective, as is evidenced by the rapid decline of both private and social housing supply and the increasing number of homeless people in Dublin
    Keywords: housing crisis; homelessness; Dublin; social exclusion; austerity.
    JEL: O18 R21 R31
    Date: 2018–07–01
  13. By: Zhang Qun (Guangdong University of Foreign Studies); Didier Sornette (ETH Zürich and Swiss Finance Institute); Hao Zhang (Guangdong University of Foreign Studies)
    Abstract: We introduce a novel quantitative methodology to detect real estate bubbles and forecast their critical end time, which we apply to the housing markets of China's major cities. Building on the Log-Periodic Power Law Singular (LPPLS) model of self-reinforcing feedback loops, we use the quantile regression calibration approach recently introduced by two of us to build confidence intervals and explore possible distinct scenarios. We propose to consolidate the quantile regressions into the arithmetic average of the quantile-based DS LPPLS Confidence indicator, which accounts for the robustness of the calibration with respect to bootstrapped residuals. We make three main contributions to the literature of real estate bubbles. First, we verify the validity of the arithmetic average of the quantile-based DS LPPLS Confidence indicator by studying the critical times of historical housing price bubbles in the U.S., Hong Kong, U.K. and Canada. Second, the LPPLS detection methods are applied to provide early warning signals of the housing markets in China's major cities. Third, we determine the possible turning points of the markets in BeiJing, ShangHai, ShenZhen, GuangZhou, TianJin and ChengDu and forecast the future evolution of China's housing market via our multi-scales and multi-quantiles analyses.
    Keywords: real estate bubbles, forecasting, Log-Periodic Power Law Singularity, multi-scale analysis, quantile regression, DS LPPLS Confidence indicator
    JEL: C22 C51 C53 E31 E37 G01 G17 R30
    Date: 2017–05
  14. By: C. Jara Figueroa; Bogang Jun; Edward L. Glaeser; César Hidalgo
    Abstract: How do regions acquire the knowledge they need to diversify their economic activities? How does the migration of workers among firms and industries contribute to the diffusion of that knowledge? Here we measure the industry, occupation, and location specific knowledge carried by workers from one establishment to the next using a dataset summarizing the individual work history for an entire country. We study pioneer firms–firms operating in an industry that was not present in a region–because the success of pioneers is the basic unit of regional economic diversification. We find that the growth and survival of pioneers increase significantly when their first hires are workers with experience in a related industry, and with work experience in the same location, but not with past experience in a related occupation. We compare these results with new firms that are not pioneers and find that industry specific knowledge is significantly more important for pioneer than non-pioneer firms. To address endogeneity we use Bartik instruments, which leverage national fluctuations in the demand for an activity as shocks for local labor supply. The instrumental variable estimates support the finding that industry related knowledge is a predictor of the survival and growth of pioneer firms. These findings expand our understanding of the micro-mechanisms underlying regional economic diversification events.
    JEL: D22 J24 N1 N16 O1 O14 O15 O5 O54 R12
    Date: 2018–07
  15. By: Christopher Foote (Federal Reserve Bank of Boston); Jaromir Nosal (Boston College); Lara Loewenstein (Federal Reserve Bank of Boston); Paul Willen (Federal Reserve Bank of Boston)
    Abstract: We study the impact on debt and default in the Great Recession of mortgage investors - individuals holding mortgages on multiple properties. These individuals have been identified by prior studies (Albanesi, DeGiorgi, Nosal (2017)) to have been a major driver of the aggregate behavior of debt and default. We use the Equifax Consumer Credit Panel to shed light on the mechanism behind that contribution in terms of the relation between the behavior of mortgage investors and the subsequent rise and fall in debt and explosion of defaults. To that end, we explore detailed geographical location information included in the CCP, as well as HMDA and CoreLogic. Some of the questions we address in the paper are: Was mortgage investor activity much more pronounced in states with liberal recourse regulations? Did increases in house prices lead or lag the rise of investor activity? Did mortgage investors foreclose on all their properties or just the investment properties - so was their default purely strategic? Was there significant misreporting of the status of the purchased investment property as non-investment -- and hence were these loans mispriced? Finally, do we see a rise in mortgage investor activity post-recession now that house prices rebounded to new high levels?
    Date: 2018
  16. By: Andrés Rodríguez-Pose (Department of Geography and Environment, London School of Economics); Tobias Ketterer (International Center for Public Policy (Georgia State University) & Governance and Economics research Network (GEN))
    Abstract: The success of the policy in delivering greater economic convergence does not hide the fact that we are witnessing a decline in the returns of intervention in the three main growth axes. There is, for example, growing concern about a potential exhaustion of additional investments in transport infrastructure and of improvements in accessibility as drivers of growth in certain lagging regions of Europe (Crescenzi and Rodríguez-Pose, 2012). While this issue remains controversial, the truth is that physical capital, human capital, and technology can explain a waning share of the variation in regional economic growth in Europe. Growth theories that accounted for differences in economic performance relatively well two decades ago are becoming less capable of doing so. The residual factor is growing, meaning that, in spite of improvements in growth theory, we tend to know less about what determines regional growth in Europe.
    Date: 2018–02
  17. By: Maczulskij, Terhi (Labour Institute for Economic Research); Böckerman, Petri (Labour Institute for Economic Research); Kosonen, Tuomas (Labour Institute for Economic Research)
    Abstract: We examine the effect of job displacement on regional mobility using linked employer-employee panel data for the 1995-2014 period. We also study whether displaced movers obtain earnings and employment gains compared to displaced stayers. The results show that job displacement increases the migration probability by ~70%. However, social capital in a region and housing characteristics decrease the propensity to move, indicating that people do not make the migration decisions solely based on short-term economic incentives. Migration has an immediate negative relationship with earnings, but the link diminishes as time passes and eventually turns positive for men. The link between migration and employment is nevertheless positive and persistent for both genders.
    Keywords: unemployment, job displacement, migration, earnings, employment
    JEL: J61 J63
    Date: 2018–06
  18. By: Murard, Elie (IZA); Sakalli, Seyhun Orcan (Université de Lausanne)
    Abstract: This paper investigates the long-term consequences of mass refugee inflow on economic development by examining the effect of the first large-scale population resettlement in modern history. After the Greco-Turkish war of 1919–1922, 1.2 million Greek Orthodox were forcibly resettled from Turkey to Greece, increasing the Greek population by more than 20% within a few months. We build a novel geocoded dataset locating settlements of refugees across the universe of more than four thousand Greek municipalities that existed in Greece in 1920. Exploiting the spatial variation in the resettlement location, we find that localities with a greater share of refugees in 1923 have today higher earnings, higher levels of household wealth, greater educational attainment, as well as larger financial and manufacturing sectors. These results hold when comparing spatially contiguous municipalities with identical geographical features and are not driven by pre-settlement differences in initial level of development across localities. The long-run beneficial effects appear to arise from agglomeration economies generated by the large increase in the workforce, occupational specialization, as well as by new industrial know-hows brought by refugees, which fostered early industrialization and economic growth.
    Keywords: refugees, immigration, historical persistence, economic development
    JEL: O10 O43 N34 N44
    Date: 2018–06
  19. By: Di Cataldo, Marco; Rodríguez-Pose, Andrés
    Abstract: The European Union promotes development strategies aimed at producing growth with “a strong emphasis on job creation and poverty reduction”. However, whether the economic conditions in place in EU regions are ideal for the generation of high- and low-skilled employment and labour market inclusion is unclear. This paper assesses how the key factors behind EU growth strategies – infrastructure, human capital, innovation, quality of government – condition employment generation and labour market exclusion in European regions. The findings indicate that the dynamics of employment and social exclusion vary depending on the conditions in place in a region. While higher innovation and education contribute to overall employment generation in some regional contexts, low-skilled employment grows the most in regions with a better quality of government. Regional public institutions, together with the endowment of human capital, emerge as the main factors for the reduction of labour market exclusion – particularly in the less developed regions – and the promotion of inclusive employment growth across Europe.
    Keywords: social exclusion; employment; skills; regions; Europe
    JEL: J64 O52 R23
    Date: 2017–02–03
  20. By: Isaac Mbiti; Karthik Muralidharan; Mauricio Romero; Youdi Schipper; Constantine Manda; Rakesh Rajani
    Abstract: The idea that complementarities across policies can yield increasing returns from joint implementation has been posited in several economic settings. Yet there is limited, well-identified evidence of such complementarities in practice. We present results from a randomized experiment across a representative sample of 350 schools in Tanzania that studied the impact of providing schools with (a) unconditional school grants, (b) bonus payments to teachers based on student performance, and (c) both of the above. At the end of two years, we find (a) no impact on student test scores from providing school grants, (b) some evidence of positive effects from offering performance-linked bonuses to teachers, and (c) significant positive effects on learning from providing both programs. Most importantly, we find strong evidence of complementarities between the two programs, with the effect of joint provision being significantly greater than the sum of the individual effects. Our results suggest that accounting for complementarities between inputs and incentives could substantially improve the effectiveness of public spending on education.
    JEL: C93 H52 I21 M52 O15
    Date: 2018–07
  21. By: Mariaflavia Harari (The Wharton School, University of Pennsy); Maisy Wong (University of Pennsylvania)
    Abstract: The United Nations estimates that a quarter of the world’s urban population lives in slums. This paper sheds light on how a developing country city grows out of informality, through the lens of one of the largest slum upgrading programs in the world. The 1969-1984 Kampung Improvement Program (KIP) provided basic public goods in slums, covering 5 million people and 25% of the city of Jakarta, Indonesia. We assemble a granular database with program boundaries, historical maps, current land values, building heights, measures of land fragmentation, and a novel quality index of informal settlements based on Google Street View and field photos. Our research design compares KIP areas with historical slums that were never treated. Our findings are similar using a boundary discontinuity design. KIP areas today have 12% lower land values and buildings with 1.6 fewer floors on average, implying aggregate impacts of US$11 billion. Greater land fragmentation in KIP areas points towards the importance of land assembly costs as a barrier to formalization. These long-term costs need to be weighed against the benefits of the program. Overall, our findings suggest slum upgrading may be more cost effective for cities in early stages of urban development.
    Date: 2018
  22. By: Kuteesa, Annette; Paul Lakuma; Rakesh Gupta; Ibrahim Kasirye
    Abstract: Urban areas in Uganda are increasingly facing competition for their resources in the face of rising population. More than one out of every five Ugandans are residing in urban areas and the urban population is expected to triple in next two decades. Most of the urban population resides in GKMA—a region challenged with unemployment and inadequate opportunities. Enhancing firm performance in urban areas offers a promise for jobs and local revenue to boost city development. Local governments and city council need to create mechanisms that address firm constraints and harness the factors that drive firm competiveness, growth and transition. Potential opportunities lie in collaborating with financial institutions to provide affordable credit, improving taxation procedures, establishing of business spaces for the small firms and influencing vocational schools to impact relevant skills.
    Keywords: Community/Rural/Urban Development, Consumer/Household Economics, Institutional and Behavioral Economics
    Date: 2017–04–20
  23. By: Rebecca Diamond (Stanford University); Franklin Qian (Stanford University); Timothy McQuade (Stanford University)
    Abstract: In this paper, we exploit quasi-experimental variation in the assignment of rent control in San Francisco to study its impacts on tenants, landlords, and the rental market as a whole. Leveraging new micro data which tracks an individual's migration over time, we find that rent control increased the probability a renter stayed at their address by close to 20 percent. At the same time, we find that landlords whose properties were exogenously covered by rent control reduced their supply of available rental housing by 15\%, by either converting to condos/TICs, selling to owner occupied, or redeveloping buildings. This led to a city-wide rent increase of 5.1% and caused $2.9 billion of total loss to renters. We develop a dynamic, structural model of neighborhood choice to evaluate the welfare impacts of our reduced form effects. We find that rent control offered large benefits to impacted tenants during the 1995-2012 period, averaging between $2300 and $6600 per person each year, with the present discounted value of aggregate benefits totaling $2.9 billion. The substantial welfare losses due to decreased housing supply could be mitigated if insurance against large rent increases was provided as a form of government social insurance, instead of a regulated mandate on landlords.
    Date: 2018
  24. By: Luís Martins; Manuel Coutinho Pereira
    Abstract: This paper uses a large multi-country database with data from the OECD PISA program to disentangle the effects of birthdate on educational performance. As far as age effects are concerned, we conclude that children are disadvantaged because they are the youngest in class (relative age effect), not because they are young per se. Our findings go against delaying mandatory school entry as a general policy, as there is no gain from a rise in entry age - keeping age differences among students constant - to make up for the shortening of length of schooling. This evidence that postponing school entry postpones learning is more marked for children belonging to disadvantaged households. In contrast, the relative age effect does not interact with family background, and remains stable across school entry age cohorts. The size of this effect, measured at the age 15 is not large, but its interaction with early grade retention and tracking may enhance long-term effects. Finally, we do not detect an association between birthdate and achievement originating in unobservable characteristics of students.
    JEL: E21 E60 F40
    Date: 2017
  25. By: Mark Gertler; Simon Gilchrist
    Abstract: Since the onset of the Great Recession, an explosion of both theoretical and empirical research has investigated how the financial crisis emerged and how it was transmitted to the real sector. The goal of this paper is to describe what we have learned from this new research and how it can be used to understand what happened during the Great Recession. In the process, we also present some new evidence on the role of the household balance sheet channel versus the disruption of banking. We examine a panel of quarterly state level data on house prices, mortgage debt and employment along with a measure of banking distress. Then exploiting both panel data and time series methods, we analyze the contribution of the house price decline versus the banking distress indicator to the overall decline in employment during the Great Recession. We confirm a common finding in the literature that the household balance sheet channel is important for regional variation in employment. However, we also find that the disruption in banking was central to the overall employment contraction
    JEL: E32 E44
    Date: 2018–06
  26. By: Gould, Eric D. (Hebrew University, Jerusalem)
    Abstract: This paper examines the impact of manufacturing employment decline on the socio-economic outcomes within and between black and white Americans from 1960 to 2010. Exploiting variation across cities and over time, the analysis shows that manufacturing decline negatively impacted blacks (men, women, and children) in terms of their wages, employment, marriage rates, house values, poverty rates, death rates, single parenthood, teen motherhood, child poverty, and child mortality. In addition, the decline in manufacturing increased inequality within the black community in terms of overall wages and the gaps between education groups in wages, employment, and marriage rates. Many of the same patterns are found for whites, but to a lesser degree – leading to larger gaps between whites and blacks in wages, marriage patterns, poverty, single-parenthood, and death rates. The results are robust to the inclusion or exclusion of several control variables, and the use of a "shift-share" instrument for the local manufacturing employment share. Overall, the decline in manufacturing is reducing socio-economic conditions in general while increasing inequality within and between racial groups – which is consistent with a stronger general equilibrium effect of the loss of highly-paid, lower-skilled jobs on the less-educated segments of the population.
    Keywords: racial gaps, manufacturing decline
    JEL: J10
    Date: 2018–06
  27. By: Yusuf Sofiyandi1 (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia)
    Abstract: I empirically investigated the influence of residential location and housing unit characteristics on the labor force participation of childbearing women by applying quasi-experimental methods and taking a developing country’s perspective – where the family size tends to grow faster. While the choices of residential location and housing unit characteristics are rarely exogenous, it is important to deal with the endogeneity problem. I use instrumental variable models, with twin births and gender composition as the exogenous sources of variation in the family size, and exploit an enormous micro dataset from the Indonesian Census Population 2010. Previous works of literature have examined the effect of twin birth on the female labor supply, but less attention given to the housing decision. This study provides new evidence of a forward-looking behavior about the residential location and housing consumption due to household size effects and shows that such behavior will most likely influence the female labor supply
    Keywords: residential location — housing — labor force — childbearing women — twin births
    JEL: J01 J21 J22 R21 O18
    Date: 2018–07
  28. By: Miriam Hortas-Rico (Department of Economics and Public Finance, The Autonomous University of Madrid & Governance and Economics research Network (GEN)); Vicente Rios (Department of Economics, Public University of Navarre)
    Abstract: The paper presents a framework for determining the optimal size of local jurisdictions. To that aim, we rst develop a theoretical model of cost eciency that takes into account spatial interactions and spillover e ects among neighbouring jurisdictions. The model solution leads to a Spatial Durbin panel data speci cation of local spending as a non-linear function of population size. The model is tested using local data over the 2003-2011 period for two aggregate (total and current) and four disaggregate measures of spending. The empirical ndings suggest a U-shaped relationship between population size and the costs of providing public services that varies depending on (i) the public service provided and (ii) the geographical heterogeneity of the territory.
    Date: 2018–02
  29. By: Niko A Hobdari; Vina Nguyen; Salvatore Dell'Erba; Edgardo Ruggiero
    Abstract: Fiscal decentralization is becoming a pressing issue in a number of countries in sub-Saharan Africa, reflecting demands for a greater local voice in spending decisions and efforts to strengthen social cohesion. Against this backdrop, this paper seeks to distill the lessons for an effective fiscal decentralization reform, focusing on the macroeconomic aspects. The main findings for sub-Saharan African countries that have decentralized, based on an empirical analysis and four case studies (Kenya, Nigeria, South Africa, Uganda), are as follows: • Determinants and effectiveness: Empirical results suggest that (1) the major driving forces behind fiscal decentralization in sub-Saharan Africa include efforts to defuse ethnic conflicts, the initial level of income, and the urban-ization rate, whereas strength of democracy is not an important determi-nant for decentralization; and (2) decentralization in sub-Saharan Africa is associated with higher growth in the presence of stronger institutions. • Spending assignments: The allocation of spending across levels of gov-ernment in the four case studies is broadly consistent with best practice. However, in Uganda, unlike in the other three case studies, subnational governments have little flexibility to make spending decisions as a result of a deconcentrated rather than a devolved system of government. • Own revenue: The assignment of taxing powers is broadly in line with best practice in the four case studies, with the bulk of subnational revenue coming from property taxes and from fees for local services. However, own revenues are a very small fraction of subnational spending, reflecting weak cadaster systems and a high level of informality in the economy.
    Date: 2018–07–06
  30. By: Mary Donegan (University of Connecticut); T. William Lester (University of Connecticut); Nichola Lowe (University of Connecticut)
    Abstract: The use of incentive packages has intensified as local governments compete for new plants and corporate relocations, and as private firms increasingly demand a deal. While incentives promise jobs and tax revenue, scholars and practitioners criticize their high cost and limited accountability. Through a comparison of matched establishments, this paper explores how governmental incentive-granting strategy impacts incentive performance. We examine the overall impact of incentives and whether incentives granted to smaller firms perform better. Using economic development budget data, we also assess the state’s overall approach to economic development to determine which strategies are prioritized through funding. By showing that incentivized firms fail to create more jobs than matched controls, our analysis casts doubt on claims that “but for” incentives job creation would not occur. Still, our findings suggest that states are smarter in their incentive use when they strike a balance between recruiting industry and supporting “homegrown” businesses and technology.
    Keywords: Incentives, mediating policies, employment, equity, economic development
    JEL: R0 R3 R5 H2 H7
    Date: 2018–09
  31. By: Hornuf, Lars; Jeworrek, Sabrina
    Abstract: In this study, we investigate whether and to what extent community managers in online collaborative communities can stimulate crowd activities through their engagement. Using a novel data set of 22 large online idea crowdsourcing campaigns, we find that active engagement of community managers positively affects crowd activities in an inverted U-shaped manner. Moreover, we evidence that intellectual stimulation by managers increases community participation, while individual consideration of users has no impact on user activities. Finally, the data reveal that community manager activities that require more effort, such as media file uploads instead of simple written comments, have a larger effect on crowd participation.
    Keywords: crowdsourcing,open innovation,crowdsourced innovation,crowdworking,ideation,managerial attention
    JEL: J21 J22 L86 M21 M54 O31
    Date: 2018
  32. By: Salvador Navarro (University of Western Ontario); Jin Zhou (University of Chicago)
    Abstract: We study the interaction of migration and education decisions, and their effects on labor market outcomes of individuals in sending locations. We consider the possibility that, while the level of human capital affects the migration decisions of an individual (i.e., self-selection of migrants), it is also the case that the possibility of migration itself affects the human capital accumulation decisions of agents. In particular, we first analyze how the migration option can reduce the incentives to accumulate human capital in the context of a simple Roy model with exogenous migration. As we show, even when the return to migrating is positive,if the return to education for migrants is lower in the receiving location than in the sending location, the mere possibility of migrating reduces the returns to human capital accumulation for people in the sending location. We analyze data on rural migration in China, where this pattern of returns seems to hold. We then use diff-in-diff to show that, consistent with our simple model's prediction, educational attainment in rural China slowed down compared to urban regions after an early 80's reform that relaxed the restrictions to rural migration. Finally, we build a structural model of rural-urban migration in China, where we estimate the reduction in migration costs that happened as a consequence of the reform. To quantify the effect of the policy, we simulate what would have happened had the policy not been implemented. We find that the attendance rates for high school, some college and college would have increased by 29%, 141%, and 24%, respectively.
    Date: 2018
  33. By: McClain, Verena; Waldorf, Brigitte
    Abstract: This paper provides a review of the regional science research employing longitudinal models. Three groups of studies are distinguished. The first group includes studies modelling variations in distance rather than duration. The second group includes studies that focus on spatial behavior in an event history setting. The last group is still in its infancy and casts regional change in a longitudinal perspective. We recommend that methodological advances should focus on designing space-time models that synthesize longitudinal with spatial econometric techniques.
    Keywords: Community/Rural/Urban Development, Research Methods/ Statistical Methods
    Date: 2017–11–14
  34. By: Pierre-Philippe Combes (Université de Lyon, ECON - Département d'économie - Sciences Po); Gilles Duranton (Department of Economics, Harvard University); Laurent Gobillon (PSE - Paris School of Economics, CEPR - Center for Economic Policy Research - CEPR, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We propose a new nonparametric approach to estimate the production function for housing. Our estimation treats output as a latent variable and relies on the firstorder condition for profit maximisation with respect to nonland inputs by competitive house builders. For parcels of a given size, we compute housing by summing across the marginal products of nonland inputs. Differences in nonland inputs are caused by differences in land prices that reflect differences in the demand for housing across locations. We implement our methodology on newlybuilt singlefamily homes in France. We find that the production function for housing is reasonably well, though not perfectly, approximated by a CobbDouglas function and close to constant returns. After correcting for differences in user costs between land and nonland inputs and taking care of some estimation concerns, we estimate an elasticity of housing production with respect to nonland inputs of about 0.80.
    Keywords: housing,production function
    Date: 2016–11
  35. By: David A. Jaeger (City University of New York Graduate Center); Joakim Ruist (University of Gothenburg); Jan Stuhler (Universidad Carlos III de Madrid)
    Abstract: A large literature exploits geographic variation in the concentration of immigrants to identify their impact on a variety of outcomes. To address the endogeneity of immigrants’ location choices, the most commonly-used instrument interacts national inflows by country of origin with immigrants’ past geographic distribution. We present evidence that estimates based on this “shift-share” instrument conflate the short- and long-run responses to immigration shocks. If the spatial distribution of immigrant inflows is stable over time, the instrument is likely to be correlated with ongoing responses to previous supply shocks. Estimates based on the conventional shift-share instrument are therefore unlikely to identify the short-run causal effect. We propose a “multiple instrumentation” procedure that isolates the spatial variation arising from changes in the country-of-origin composition at the national level and permits us to estimate separately the short- and long-run effects. Our results are a cautionary tale for a large body of empirical work, not just on immigration, that rely on shift-share instruments for causal inference.
    Keywords: immigration, geographic variation, shocks, multiple instrumentation, spatial analysis
    JEL: C36 J15 J21 J61
    Date: 2018–02
  36. By: Chalil, Tengku Munawar
    Abstract: The paper presents a test of the relationship between rational political cycles with the government spending behavior and its efficiency by using extensive data set of whole Indonesian municipalities/cities from 2008-2014. The results show that politicians/local leaders in Indonesia tend to maximize their preference during the election year but anticipate the election time through strategy to deceive voters.
    Keywords: election, political cycles, government expenditure
    JEL: D72 D78 H72 I31
    Date: 2018–07–18
  37. By: Tirziu, Andreea-Maria; Vrabie, Catalin
    Abstract: A main characteristic of smart cities is the use of information and communications technology in all aspects of city life. In this regard, Internet of Things (IoT) is a core element in the process of developing communities “ruled” by an improved communication, better understanding and wait times decrease. This paper aims to present the ways in which IoT networks and services can contribute to develop smart cities, giving as example various cities that have implemented this concept. The methodology used to carry out this research is both bibliographic – opting here to study the work of specialists in the field, authors from Romania and abroad, and empirical – formed by a case study on various smart cities around the world that use IoT. This type of smart cities is starting to transform all public institutions, changing their culture, from one control-based to one performance-centered. IoT is starting to play an important role in smart cities’ evolution and it brings an improvement in the government-citizens relationship. We have identified that although technology is a central element, there should also be considered the capability and willingness of citizens and public institutions to collaborate in order to implement the best solutions for the communities.
    Keywords: Internet of Things; urban development; smart cities
    JEL: Z0
    Date: 2018–05–03
  38. By: Zsuzsanna Olofsson; Karin Brundell Freij
    Abstract: This paper proposes a framework to monitor progress towards improved integration in public transport. The framework adapts some elements of Transport Sustainability Barometer (TSB) which is a tool to assess transport sustainability in Swedish cities. The suggested indicator set follows the complex hierarchy of layers in integration (Process, System, Quality and Use). The selected indicators allow progress to be monitored from two perspectives, objective evidence and citizens’ perceptions. The proposed framework is only the first step towards a tool to monitor integration in public transport, and we provide recommendations to further develop a tool in consultation with its intended users.
    Date: 2017–08–16
  39. By: Grey Gordon (Indiana University); Pablo Guerron-Quintana (Boston College)
    Abstract: Migration plays a key roll in city finances with every new entrant reducing debt per person and every exit increasing it. We study the interactions between regional borrowing, migration, and default from empirical, theoretical, and quantitative perspectives. Empirically, we document that intercity migration rates are high in the U.S. (exceeding 6%), in-migration rates are negatively correlated with deficits, and many cities appear to be at or near state-imposed borrowing limits. Additionally, we show defaults can occur after booms or busts in labor productivity and population. Our quantitative model is able to rationalize these features of the data in large part because of a key externality that induces over-borrowing. Counterfactuals in the model reveal (1) Detroit should have slashed spending and raised taxes in 2008 to avoid default; (2) migration is overwhelmingly positive for the economy, boosting GDP by 18% or more and reducing income inequality; (3) a return to the high-interest rate environment prevailing in the 1990s could double default rates; and (4) halving the dispersion of geographic-specific productivity---which we document occurred from 1986 to 2000---can potentially account for all of the secular decline in migration rates from 1991 to 2011. This last finding provides additional support for the mechanism proposed in Kaplan and Schulhofer-Wohl (2017).
    Date: 2018
  40. By: Brian Bell; Rui Costa; Stephen Machin
    Abstract: Prior research shows reduced criminality to be a beneficial consequence of education policies that raise the school leaving age. This paper studies how crime reductions occurred in a sequence of state-level dropout age reforms enacted between 1980 and 2010 in the United States. These reforms changed the shape of crime-age profiles, reflecting both a temporary incapacitation effect and a more sustained, longer run crime reducing effect. In contrast to the previous research looking at earlier US education reforms, crime reduction does not arise solely as a result of education improvements, and so the observed longer run effect is interpreted as dynamic incapacitation. Additional evidence based on longitudinal data combined with an education reform from a different setting in Australia corroborates the finding of dynamic incapacitation underpinning education policy-induced crime reduction.
    Keywords: crime age profiles, school dropout, compulsory schooling laws
    JEL: I2 K42
    Date: 2018–08
  41. By: Ryan Greenaway-McGrevy (Centre for Applied Research in Economics, Department of Economics, University of Auckland); Gail Pacheco (NZ Work REsearch Institute, Faculty of Business, Economics and Law, Auckland University of Technology); Kade Sorensen (Department of Economics, University of Auckland)
    Abstract: The option to redevelop a residential property can carry a significant positive premium. Although the existing literature has examined how this redevelopment premium is affected by the inherent characteristics of a property, comparatively little research has focussed on how land use regulations (LURs) interact with these characteristics to affect property values. In this paper we study the effect of upzoning (i.e., a relaxation of restrictions on residential density) on property values using a rich dataset of residential sales transactions. To study the effects of this policy change, we embed a difference-in-differences structure within a hedonic pricing function, wherein the upzoning quasi-treatment is interacted with a commonly-used empirical proxy for the opportunity cost of redevelopment - site intensity (i.e., the ratio of improved value to the total value of the property). We find that upzoning signifcantly increased the redevelopment option and inflated the price of under-developed properties. But we also find that upzoning deflated the price of properties that were already intensively developed, suggesting that the increase in the redevelopment option was offset by concurrent effects of upzoning, such as disamenities from increased population density.
    Date: 2018–03
  42. By: Zhi Wang; Shang-Jin Wei; Xinding Yu; Kunfu Zhu
    Abstract: The United States imports intermediate inputs from China, helping downstream US firms to expand employment. Using a cross-regional reduced-form specification but differing from the existing literature, this paper (a) incorporates a supply chain perspective, (b) uses intermediate input imports rather than total imports in computing the downstream exposure, and (c) uses exporter-specific information to allocate imported inputs across US sectors. We find robust evidence that the total impact of trading with China is a positive boost to local employment and real wages. The most important factor is employment stimulation outside the manufacturing sector through the downstream channel. This overturns the received wisdom from the reduced-form literature and provides statistical support for a key mechanism hypothesized in general equilibrium spatial models.
    JEL: F16
    Date: 2018–08
  43. By: Klaus Desmet; Avner Greif; Stephen Parente
    Abstract: A market-size-only theory of industrialization cannot explain why England developed nearly two centuries before China. One shortcoming of such a theory is its exclusive focus on producers. We show that once we incorporate the incentives of factor suppliers' organizations such as craft guilds, industrialization no longer depends on market size, but on spatial competition between the guilds' jurisdictions. We substantiate our theory (i) by providing historical and empirical evidence on the relation between spatial competition, craft guilds and innovation, and (ii) by showing the calibrated model correctly predicts the timings of the Industrial Revolution and the Great Divergence.
    JEL: N10 O11 O14 O31 O43
    Date: 2018–06
  44. By: Marcella Alsan; Crystal Yang
    Abstract: This paper explores the impact of fear on the incomplete take-up of safety net programs in the United States. We exploit changes in deportation fear due to the roll-out and intensity of Secure Communities (SC), an immigration enforcement program that empowers the federal government to check the immigration status of anyone arrested by local police, leading to the forcible removal of approximately 380,000 immigrants. We estimate the spillover effect of SC on the take-up of federal means-tested programs by Hispanic citizens. Though not at personal risk of deportation, Hispanic citizens may fear their participation could expose non-citizens in their network to immigration authorities. We find significant declines in SNAP and ACA enrollment, particularly among mixed-citizenship status households and in areas where deportation fear is highest. The response is muted for Hispanic households residing in sanctuary cities. Our results are most consistent with network effects that perpetuate fear rather than lack of benefit information or stigma.
    JEL: I14 I3 K00
    Date: 2018–06
  45. By: Wang Lu; Hao Yu; Wei Yi-Ming
    Abstract: China is faced with the big challenge of maintaining a remarkable economic growth in an environmental friendly manner; that is why forecasting the turning point is of necessity. Traditional econometric approaches do not consider the spatial dependence that inevitably exists in the economic units, which probably risks misspecification and generating a biased estimation result. This paper firstly constructs Theil index to measure the intra-and inter regional inequality of CO2 emissions, we find that difference in emissions between regions is narrowed but gap within the Western China is sharply expanding. Then the Spatial Durbin model is employed to shape the relationship between mitigation and economic growth using the panel data of 29 provinces ranging from 1995 to 2011. Results show that the peak of per capita carbon dioxide emissions in China would be seen when GDP per capita reaches between $USD 21594 to 24737 (at 2000 constant price), much smaller when compared with the estimations of models which ignore the spatial dependence. This implies that territorial policy and industry transfer, on one hand would favor those underdeveloped regions with investment, technology and labors transfer; on the other hand enables developed regions more potential to mitigation, thus, chances are that China achieves the emissions peak of carbon dioxide earlier than conventional wisdom.
    Keywords: Environmental Economics and Policy
    Date: 2017–06–14
  46. By: Laura Alfaro (Harvard Business School); Enrique Moral-Benito (Bank of Spain); Manuel Garcia-Santana (Universitat Pompeu Fabra)
    Abstract: We consider the real effects of bank lending shocks and how they permeate the economy through buyer-supplier linkages. We combine administrative data on all firms in Spain with a matched bank-firm-loan dataset incorporating information on the universe of corporate loans for 2003-2013. Using methods from the matched employer-employee literature for handling large data sets, we identify bank-specific shocks for each year in our sample. Combining the Spanish Input-Output structure and firm-specific measures of upstream and downstream exposure, we construct firm-specific exogenous credit supply shocks and estimate their direct and indirect effects on real activity. Credit supply shocks have sizable direct and downstream propagation effects on investment and output throughout the period but no significant impact on employment during the expansion period. Downstream propagation effects are quantitatively larger in magnitude than direct effects. The results corroborate the importance of network effects in quantifying the real effects of credit shocks and show that real effects vary during booms and busts.
    Date: 2018
  47. By: Andrew Lynn (Bank of England); Ronan C Lyons (Trinity College Dublin)
    Abstract: In understanding the determinants of mortgage default, the consensus has moved from an 'option theory' model to the 'double trigger' hypothesis. Nonetheless, that consensus is based on within-country studies of default. This paper examines the determinants of mortgage default across five European countries, using a large dataset of over 2.3 million active mortgage loans originated between 1991 and 2013 across over 150 banks. The analysis finds support for the double trigger hypothesis: changes in unemployment are important determinants of default, while negative equity itself is a relatively small contributor to default. Nonetheless, the effect of variables such as the interest rate and unemployment is stronger for those in negative equity. The double trigger, however, varies by country: country-specific factors are found to have a large effect on default rates. For any given level of LTV, and as LTV changes, borrowers were more sensitive to the interest rate and unemployment in Ireland and Portugal than in the UK or the Netherlands.
    Keywords: mortgage default, negative equity, double trigger, European Union.
    JEL: G01 G21 D04 E58
    Date: 2018–08
  48. By: Vrabie, Catalin; Tirziu, Andreea-Maria
    Abstract: Although the smart city concept is rather old, the literature fails in defining it properly – however, most, if not all, scholars are sharing the same idea: a main characteristic of smart cities is the use of information and communications technology in all aspects of city life. All of the actors actively involved in building a smart city (and we mention here academia, IT professionals and municipalities’ officials) are trying to build up a common definition, but until now they were not successful. However, many smart city rankings have been made by different researchers from various fields of activity. In this paper we will use the indicators that were found as being common in some of those rakings (made by prestigious institutions) in order to find the most common features of a smart city. Our intention is to suggest a model of a smart city based on the existing international experiences and to offer it for study to municipalities’ officials in Romania and other countries in the region. The main research method will be a quantitative one (based, as we have already mentioned, on the common indicators used in building international rakings), but we will use a qualitative one as well in order to highlight, as study cases, few of the most notorious examples of smart cities.
    Keywords: smart cities; technology; Europe
    JEL: Z0
    Date: 2018–05–03
  49. By: Glass, Anthony J. (Loughborough U); Kenjegalieva, Karligash (Loughborough U); Sickles, Robin C. (Rice U and Loughborough U); Weyman-Jones, Thomas (Loughborough U)
    Abstract: We extend the emerging literature on spatial frontier methods in a number of respects. One contribution includes accounting for unobserved heterogeneity. This involves developing a random effects spatial autoregressive stochastic frontier model which we generalize to a common correlated effects specification to account for correlation between the regressors and the unit specific effects. Another contribution is the introduction of the concept of a spatial efficiency multiplier to show that the efficiency frontiers from the structural and reduced forms of a spatial frontier model differ. To demonstrate various features of the estimators we develop we carry out a Monte Carlo simulation analysis and provide an empirical application. The application is to a state level cost frontier for U.S. agriculture which is a popular case in the efficiency literature and is thus well-suited to highlighting the features of the estimators we propose.
    JEL: C23 C51 D24 Q10
    Date: 2018
  50. By: Cawley, J.;; Han, E.;; Kim, J.;; Norton, E.C.;
    Abstract: This paper tests for peer effects in obesity in a novel way. It addresses the reflection problem by using the alter’s genetic risk score for obesity, which is a significant predictor of obesity, is determined prior to birth, and cannot be affected by the behavior of others. It addresses the endogeneity of peer group formation by examining peers who are not self-selected: full siblings. We find evidence of positive peer effects in weight and obesity; having a sibling with a high genetic predisposition to obesity raises one’s risk of obesity, even controlling for one’s own genetic predisposition to obesity.
    Keywords: peer effects; obesity; genetics;
    JEL: I1 I12 I18 D1 J1 Z18
    Date: 2018–08
  51. By: Rangan Gupta (Department of Economics, University of Pretoria, Pretoria, South Africa); Zhihui Lv (School of Mathematics and Statistics, Northeast Normal University, China); Wing-Keung Wong (Department of Finance, Fintech Center, and Big Data Research Center, Asia University; Department of Medical Research, China Medical University Hospital, Taiwan; Department of Economics and Finance, Hang Seng Management College, Hong Kong, China; Department of Economics, Lingnan University, Hong Kong, China.)
    Abstract: This paper develops a change-point vector autoregressive (VAR) model and then analyzes the regime-specific impact of demand, supply, monetary policy, and spread yield shocks, identified using sign-restrictions, on real estate investment trusts (REITs) returns. The model first isolates four major macroeconomic regimes in the US since the 1970s, and discloses important changes to the statistical properties of REITs returns and its responses to the identified shocks. A variance decomposition analysis revealed aggregate supply shocks to have dominated in the early part of the sample period, and monetary policy spread shocks at the end.
    Keywords: Change-point VAR Model, Macroeconomic Shocks, US REITs Sector
    JEL: C32 E32 E42 R30
    Date: 2018–08
  52. By: Luis Cesar Herrero-Prieto (Department of Applied Economics, University of Valladolid); Ivan Boal-San Miguel (Department of Applied Economics, University of Valladolid); Mafalda Mafalda Gomez-Vega (Department of Applied Economics, University of Valladolid)
    Abstract: This work involves undertaking a reappraisal of the Seven Deadly Sins in order to construct synthetic indicators of well-being aimed at measuring spatial economic disparities and their link to economic development. The Seven Deadly Sins constitute a way of describing vices vis-Ã -vis Christian moral education. Yet they might also be viewed as general norms of social behaviour and interpreted today as notions related to the concept of well-being. For example, the level of concentration of wealth (greed), sustainability of resources (gluttony), safety index (wrath), problems adapting to the labour market or workplace absenteeism (sloth), etc. The Seven Deadly Sins have also yielded emblematic examples of artistic iconography and cultural production. How they are perceived and expressed may also differ depending on each group’s cultural idiosyncrasy, in the sense of a series of beliefs and attitudes forged over the centuries. Based on these premises, the current work first seeks to compile variables that reflect each conceptual dimension so as to later construct a synthetic indicator of well-being with territorial disaggregation. This enables us to explore spatial disparities and the extent to which they relate to economic development. This is applied to a group of countries in the European Union with NUTS 2 territorial disaggregation (regions). The sources of information are basically Eurostat. The method involves applying Data Envelopment Analysis to construct the synthetic indicator, and spatial econometrics to pinpoint spatial dependence effects.
    Keywords: cultural identity, welfare indicators, economic development, synthetic indicators, Deadly Sins, Europe
    JEL: Z11 Z13 R12 O12
    Date: 2018–07
  53. By: Philip J O'Connell (UCD Geary Institute for Public Policy)
    Abstract: This paper set out to explore why African immigrants have poor labour market outcomes in Ireland, with very low employment and exceptionally high unemployment rates. The analysis draws on data from the 2011 Census of Population to examine underlying differences of experience and of composition between different groups of immigrants. Controlling for individual characteristics of immigrants suggests that the labour market disadvantages suffered by Africans cannot be attributed to compositional differences: on average, Africans in Ireland are a relatively well-educated group concentrated in the prime working-age groups. The paper investigates an alternative explanation that suggests that some of the African disadvantage may be due to the policy of excluding asylum seekers from the labour market in the Direct Provision system. I create a novel measure of the risk of being exposed to the Irish asylum system by expressing the number of asylum seekers in the years prior to the 2011 Census as a proportion of the resident population from each country. These asylum risk variables are found to influence labour market outcomes, reducing employment chances and increasing unemployment odds. Moreover, their inclusion in the models also reduce the effects of belonging to the African and Asian immigrant groups, both of whom are heavily represented in the asylum system in Ireland. Even controlling for individual characteristics and the risk of exposure to the asylum system, there remains a substantial residual African disadvantage in both employment and unemployment, which may be due to discriminatory practices by employers.
    Date: 2018–08–03
  54. By: de Walque, Damien (World Bank); Valente, Christine (University of Bristol)
    Abstract: Education conditional cash transfer programs may increase school attendance in part due to the information they transmit to parents about their child's attendance. This paper presents experimental evidence that the information content of an education conditional cash transfer program, when given to parents independently of any transfer, can have a substantial effect on school attendance. The effect is as large as 75 percent of the effect of a conditional cash transfer incentivizing parents, and not significantly different from it. In contrast, a conditional transfer program incentivizing children instead of parents is nearly twice as effective as an "information only" treatment providing the same information to parents about their child's attendance. Taken together, these results suggest that children have substantial agency in their schooling decisions. The paper replicates the findings from most evaluations of conditional cash transfers that gains in attendance achieved by incentivizing parents financially do not translate into gains in test scores. But it finds that both the information only treatment and the alternative intervention incentivizing children substantially improve math test scores.
    Keywords: school attendance, conditional cash transfers, moral hazard
    JEL: I25 D82 N37
    Date: 2018–06
  55. By: Kai-Uwe Müller; Katharina Wrohlich
    Abstract: Expanding public or publicly subsidized childcare has been a top social policy priority in many industrialized countries. It is supposed to increase fertility, promote children's development and enhance mothers' labor market attachment. In this paper, we analyze the causal effect of one of the largest expansions of subsidized childcare for children up to three years among industrialized countries on the employment of mothers in Germany. Identification is based on spatial and temporal variation in the expansion of publicly subsidized childcare triggered by two comprehensive childcare policy reforms. The empirical analysis is based on the German Microcensus that is matched to county level data on childcare availability. Based on our preferred specification which includes time and county fixed effects we find that an increase in childcare slots by one percentage point increases mothers' labor market participation rate by 0.2 percentage points. The overall increase in employment is explained by the rise in part-time employment with relatively long hours (20-35 hours per week). We do not find a change in full-time employment or lower part-time employment that is causally related to the childcare expansion. The effect is almost entirely driven by mothers with medium-level qualifications. Mothers with low education levels do not profit from this reform calling for a stronger policy focus on particularly disadvantaged groups in coming years.
    Keywords: childcare provision; mother's labor supply; generalized difference-in-difference
    JEL: J22 J13 H43
    Date: 2018
  56. By: Lantz, Tiffany Louise; Arbolino, Roberta; Caracciolo, Francesco; Cembalo, Luigi
    Abstract: The uncertainty and the generic nature of the migration determinants, combined with the subsequent lack of specific policies implemented to improve the economic conditions of the developing or underdeveloped countries, has generated the need to study these causes in detail. We use nationally representative data from Ethiopia’s 2015/16 Socioeconomic Survey (ESS) to examine the socioeconomic determinants of migration of this specific sub-Saharan country. By performing a logistic regression we drive the migration decision at household level. We also consider some of the observable trends on migration flows from this area of the world. Empirical results lend credence to the fact that in Ethiopia the decision to migrate is family based and that the probability to have a migrant in the household depends on households size as well as on some residence region.
    Keywords: Community/Rural/Urban Development, International Development
    Date: 2017–08–31
  57. By: Martin, Hanna (Karlstad University,); Martin, Roman (Gothenburg University); Zukauskaite, Elena (Halmstad University)
    Abstract: This paper contributes to the literature on new regional industrial path development by highlighting the multiple roles that demand can play in regional development. We develop a conceptual framework relating different roles of demand to different types of new path development. Based on the literature on regional development, we differentiate among the role of demand as anonymous consumer, sophisticated buyer, active co-developer, public procurer, and norm and value setter. These roles influence different types of new path development, including path extension, path renewal and new path creation. New path development can be triggered by changing norms and values in the society (e.g. environmental concerns and the growing demand for cleaner technologies), public procurement for innovation (governments demand new products or services and thereby steer economic development) or by users modifying existing products or developing novel solutions that are not yet on the market (e.g. user innovations). In order to foster a new industrial growth path in a region, local firms need to sustain, establish and grow their market shares, focusing on the role of anonymous consumers. The various roles of demand, as well as its effect on new path development, depend on the geographical context. Changes of demand in one region might contribute to path extension, path renewal or new path creation in other regions. We argue that taking a nuanced view toward demand will add a novel dimension to the debate on new path development.
    Keywords: regional development; demand; innovation; new path development
    JEL: O10 O30 R11 R58
    Date: 2018–08–17
  58. By: Steven Glazerman
    Abstract: Steve Glazerman testified before the DC Council on the importance of building data infrastructure, and focusing on data governance.
    Keywords: Steve Glazerman, testimony, council, Education, Research, evidence
    JEL: I
  59. By: Avdic, D.;; Ivets, M.;; Sriubaite, I.;
    Keywords: provider practice style; peers; cardiology; quality of care;
    JEL: I11 I14 I19
    Date: 2018–08
  60. By: Elena Deryugina (Bank of Russia, Russian Federation); Natalia Karlova (Bank of Russia, Russian Federation); Alexey Ponomarenko (Bank of Russia, Russian Federation); Anna Tsvetkova (Bank of Russia, Russian Federation)
    Abstract: This paper examines the relative roles of region-specific and commodity-specific developments in the consumer price setting in Russia. For this purpose, we estimate a dynamic hierarchical factor model using inflation rates across regions and sectors. We found little evidence of association between region-specific factors and inflation developments, although there are several regions (mostly located in the Far East and North Caucasus) where the idiosyncratic component may contribute substantially. Conversely, the role of cross-commodity relative price changes in inflation developments in Russia is substantial.
    Keywords: dynamic hierarchical factor model, regional inflation, relative prices, Russia
    JEL: C38 E31 D4
    Date: 2018–07
  61. By: Santiago Lago-Peñasa (Governance and Economics research Network (GEN), University of Vigo); Jorge Martinez-Vazquez (International Center for Public Policy (Georgia State University) & Governance and Economics research Network (GEN)); Agnese Sacchic (La Sapienza University of Rome (Italy) & Governance and Economics research Network (GEN))
    Abstract: There is a longstanding debate in the economics literature on whether fiscally decentralized countries are inherently more fiscally unstable. The Great Recession provides a fertile testing ground for analyzing how the degree of decentralization does actually affect countries’ ability to implement fiscal stabilization policies in response to macroeconomic shocks. We provide an empirical analysis aiming at disentangling the roles played by decentralization design itself and several recently introduced budgetary institutions such as subnational borrowing rules and fiscal responsibility laws on country’s fiscal stability. We use OECD countries’ data since 1995, which includes both a boom period of worldwide economic growth and the Great Recession. Our main finding is that well-designed decentralized systems are not destabilizing. But, in addition, sub-national fiscal and borrowing rules should be at work to improve the overall fiscal stability performance of decentralized countries.
    Date: 2018–02
  62. By: David Berger (Northwestern University); Fabrice Tourre (Northwestern University); Konstantin Milbradt (Northwestern University)
    Abstract: We present an analytically tractable model of the mortgage-rate pass through and the cross-section of coupon rates in the economy. Competitive banks offer downward adjustable fixed-rate risk-free mortgages (“refinancing”) with current mortgage rate m(r) where r is the prevailing short-rate the bank uses to finance the mortgage. We present two versions: (1) Rational attentive investors facing small adjustment cost refinance as soon as the current mortgage rate is below their individual mortgage rate; (2) rational inattentive consumers facing small adjustment cost refinance as soon as they become aware of the current mortgage rate being below their individual mortgage rate. We analytically derive m(r) for general processes and the ergodic distribution of mortgage rates in the economy. The mortgage rate function m(r) is increasing and additionally concave. Thus, monetary policy has a differential impact on the housing market depending on the level of the interest rate r. Further, the mortgage pass-through is affected by default risk, financial literacy, and the competitiveness of the banking industry.
    Date: 2018
  63. By: Burkey, Mark L.
    Abstract: This resource gives a brief overview of a website and playlist of YouTube videos using open source software (R, GeoDa, and QGIS) designed to help get scholars up and running with analyzing their own data using Spatial Econometrics. Sample data, handouts, code, and map files are provided for ease of replication. The course covers the basics of integrating data into a spatial data set, contiguity and spatial correlation, doing basic spatial regressions in GeoDa, and doing more sophisticated specification tests and regressions in R.
    Keywords: spatial econometrics, instructional videos
    JEL: C21 R1
    Date: 2018–08
  64. By: Alan Krause
    Abstract: This paper examines a model in which public education spending is skill specific. It may be directed towards low-skill or high-skill individuals, increasing their respective skills and wages. Education spending is financed by nonlinear income taxation. We show that the tax and education-spending policy most preferred by low-skill individuals may include more education spending for high-skill individuals than for themselves. The tax and education-spending policy most preferred by high-skill individuals has no spending on education for low-skill individuals. Our results provide support for previous findings that education policy should favour the high-skilled, despite the government's redistributive goals.
    Keywords: Public education, nonlinear income, taxation
    JEL: H21 H42
    Date: 2018–08
  65. By: Bano, Sayeeda; Tabbada, Jose
    Keywords: International Relations/Trade
    Date: 2017
  66. By: Meroni, Elena Claudia; Piazzalunga, Daniela; Pronzato, Chiara (University of Turin)
    Abstract: In this paper, we study the effects of extra-school activities on children’s non-cognitive development, using data from the Millennium Cohort Study (UK) and focusing on children aged 7-11 years old. We classify the time spent out of school into six homogenous groups of activities, using principal component analysis, and estimate the relationship thereof with five behavioural dimensions drawn from the Strength and Difficulties questionnaire, exploiting the panel structure of the data. Results show the beneficial effects on children’s behaviour of sports, school-related activities, time with parents and household chores, while a small detrimental effect of video-screen time is detected. We test the robustness of our estimates against omitted variable bias, and the results are confirmed. We also observe that children from more advantaged backgrounds have easier access to more beneficial activities. Overall, our results suggest that different uses of time may reinforce inequalities across children from different backgrounds.
    Date: 2018–06

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