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on Urban and Real Estate Economics |
| By: | Zhang, Calvin (Federal Reserve Bank of Philadelphia) |
| Abstract: | The Great Recession led to widespread mortgage defaults, with borrowers resorting to both foreclosures and short sales to resolve their defaults. I first quantify the economic impact of foreclosures relative to short sales by comparing the home price implications of both. After accounting for omitted variable bias, I find that homes selling as short sales transact at 9.2% to 10.5% higher prices on average than those that sell after foreclosure. Short sales also exert smaller negative externalities than foreclosures, with one short sale decreasing nearby property values by 1 percentage point less than a foreclosure. So why weren’t short sales more prevalent? These home price benefits did not increase the prevalence of short sales because free rents during foreclosures caused more borrowers to select foreclosures, even though higher advances led servicers to prefer more short sales. In states with longer foreclosure timelines, the benefits from foreclosures increased for borrowers, so short sales were less utilized. I find that one standard deviation increase in the average length of the foreclosure process decreased the short sale share by 0.35 to 0.45 standard deviation. My results suggest that policies that increase the relative attractiveness of short sales could help stabilize distressed housing markets. |
| Keywords: | foreclosures; short sales; externalities; home prices; mortgage servicing |
| JEL: | D14 G01 G21 R31 |
| Date: | 2019–02–20 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:19-13&r=all |
| By: | Erlend Eide Bø (Statistics Norway) |
| Abstract: | In this paper, I explore and explain how buy-to-let investors affect housing price dynamics. The impact of buy-to-let investors on the housing market is much discussed by policy makers, but previously not considered in the literature. I develop a structural search model that allows housing owners to buy second houses to let out, and let rents be determined endogenously. To motivate the model, I present empirical evidence from the city of Oslo showing that a significant share of buyers are buy-to-let investors, and both rents and the share of second house buyers are positively correlated with housing prices. The model introduces two mechanisms that affect volatility compared to a model with no landlords and constant rents. First, the endogenous correlation of rents and housing prices makes it attractive for non-owners to buy in “hot” markets, to avoid paying high rents. Second, the increased incentives to become landlords in high rent periods further increase the number of buyers and amplify the effect of high rents on housing prices and transaction volumes. The model is calibrated using data from Oslo, and is able to match quantitatively the high investor share and housing price volatility of a housing boom. |
| Keywords: | Housing; Search; Rental market |
| JEL: | D83 R21 R31 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:896&r=all |
| By: | Damianov, Damian S; Escobari, Diego |
| Abstract: | Real hedging is the practice of getting onto the property ladder in order to trade up to a larger home in the future. We define the value of the real hedge of home ownership as the difference between the risk premiums of renting and owning and explore how this value depends on local housing price dynamics and household characteristics. Controlling for the potential endogeneity of housing bubble bursts across different U.S metropolitan areas, we find a significantly higher correlation in the appreciation rates across the Standard & Poor's Case-Shiller tiered house price indices in the period after the housing crisis. We conclude that real hedging has become more attractive in the period after the crisis, particularly in markets exhibiting momentum and high volatility in returns. |
| Keywords: | Housing prices, Price tiers, Dynamic correlation, Real hedging |
| JEL: | C32 G11 R32 |
| Date: | 2019–02–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92389&r=all |
| By: | Kazakova, Maria (Казакова, Мария) (The Russian Presidential Academy of National Economy and Public Administration); Pospelova, Ekaterina (Поспелова, Екатерина) (The Russian Presidential Academy of National Economy and Public Administration) |
| Abstract: | The diversity of Russia's geography and its complex economic history are important factors explaining the differences in regional economic development. In recent decades, many studies have emerged devoted to the study of spatial inequality of economic development. Now there is a large amount of evidence to identify common characteristics in achieving a high level of economic efficiency. These characteristics include a high level of urbanization and economic density, proximity and connectivity with large markets and highly skilled people. However, to understand the factors shaping the economic potential of the regions, it is necessary to take into account the specific aspects of the country's context. This paper reviews the factors causing inequality in the Russian regions, taking into account the specificity of the country. |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:rnp:wpaper:021927&r=all |
| By: | Borowiecki, Karol Jan (Department of Business and Economics) |
| Abstract: | This research illuminates the historical development of creative activity in the United States. Census data is used to identify creative occupations (i.e., artists, musicians, authors, actors) and data on prominent creatives, as listed in a comprehensive biographical compendium. The analysis first sheds light on the socio-economic background of creative people and how it has changed since 1850. The results indicate that the proportion of female creatives is relatively high, time constraints can be a hindrance for taking up a creative occupation, racial inequality is present and tends to change only slowly, and education plays a significant role for taking up a creative occupation. Second, the study systematically documents and quantifies the geography of creative clusters in the United States and explains how these have evolved over time and across creative domains. Third, it investigates the importance of outstanding talent in a discipline for the local growth of an artistic cluster. |
| Keywords: | Creativity; artists; geographic clustering; agglomeration economies; urban history |
| JEL: | N33 R10 Z11 |
| Date: | 2019–02–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sdueko:2019_003&r=all |
| By: | Boeri, Tito; Ichino, Andrea; Moretti, Enrico; Posch, Johanna |
| Abstract: | In many European countries, wages are determined by collective bargaining agreements intended to improve wages and reduce inequality. We study the local and aggregate effects of collective bargaining in Italy and Germany. The two countries have similar geographical differences in firm productivity - with the North more productive than the South in Italy and the West more productive than the East in Germany - but have adopted different models of wage bargaining. Italy sets wages based on nationwide contracts that allow for limited local wage adjustments, while Germany has moved toward a more flexible system that allows for local bargaining. We find that, as a consequence, Italy exhibits limited geographical wage differences in nominal terms and almost no relationship between local productivity and local nominal wages, while Germany has larger geographic wage differences and a tighter link between local wages and local productivity. While the Italian system is successful at reducing nominal wage inequality, it also creates costly geographic imbalances. In Italy, low productivity provinces have significantly higher non-employment rates than high productivity provinces, because employers cannot lower wages, while in Germany the relationship between non-employment and productivity is significantly weaker. In Italy, the relationship between real wages and productivity is negative, with lower real wages in the North compared to the South, since the latter has low housing costs but similar nominal wages. Thus, conditional on having a job, Italian workers have higher purchasing power in the South, but the probability of having a job is higher in the North. We conclude that the Italian system has significant costs in terms of forgone aggregate earnings and employment because it generates a spatial equilibrium where workers queue for jobs in the South and remain unemployed while waiting. If Italy adopted the German system, aggregate employment and earnings would increase by 11.04% and 7.45%, respectively. Our findings are relevant for several other European countries with systems similar to Italy's. |
| JEL: | J3 J5 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13545&r=all |
| By: | Muhammad Halley Yudhistira (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia); Regi Kusumaatmadja (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia); Mochammad Firman Hidayat (National Planning Agency, Indonesia) |
| Abstract: | Travel demand restriction is getting popular to disentangle trafic jams in heavily congested urban areas. The policy is easy to implement while reduction in congestion level is perceived to be substantial. We test this hypothesis by evaluating the impact of odd-even policy on congestion level in Jakarta, one of most severe congested cities in the world. Using hourly travel time data at road segment level drawn from GoogleMaps, the odd-even policy reduces the travel time by 3% on average after a month of its implementation. The effect is higher during weekend and at afternoon peak-hour window. Yet, the effect vanishes after the third week of policy introduction. Our result then sheds an indication of ineffective transport demand restriction in Jakarta. |
| Keywords: | odd-even policy — travel time — Jakarta — trafic demand management |
| JEL: | R41 R42 R48 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:lpe:wpaper:201829&r=all |
| By: | Paul Anand (Open University); Jere Behrman (University of Pennsylvania); Hai-Anh H. Dang (World Bank); Sam Jones (United Nations University) |
| Abstract: | Inequalities in the opportunity to obtain a good education in low-income countries are widely understood to be related to household resources and schooling quality. Yet, to date, most researchers have investigated the contributions of these two factors separately. This paper considers them jointly, paying special attention to their covariation, which indicates whether schools exacerbate or compensate for existing household-based inequalities. The paper develops a new variance decomposition framework and applies it to data on more than one million children in three low-income East African countries. The empirical results show that although household factors account for a significant share of total test score variation, variation in school quality and positive sorting between households and schools are, together, no less important. The analysis also finds evidence of substantial geographical heterogeneity in schooling quality. The paper concludes that promoting equity in education in East Africa requires policies that go beyond raising average school quality and should attend to the distribution of school quality as well as assortative matching between households and schools. |
| Keywords: | inequality of opportunity, education achievement, decomposition, household, school, sorting, Africa |
| JEL: | D60 H00 I20 O10 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2019-009&r=all |
| By: | Chakrabortya, Tanika; Schüller, Simone; Zimmermann, Klaus F. |
| Abstract: | Estimating the effect of ethnic capital on human capital investment decisions is complicated by the endogeneity of immigrants’ location choice, unobserved local correlates and the reflection problem. We exploit the institutional setting of a rare immigrant settlement policy in Germany, that generates quasi-random assignment across regions, and identify the causal impact of heterogeneous ethnic capital on educational outcomes of children. Correcting for endogenous location choice and correlated unobservables, we find that children of low-educated parents benefit significantly from the presence of high-educated parental peers of the same ethnicity. High educated parental peers from other ethnicities do not influence children’s learning achievements. Our estimates are unlikely to be confounded by the reflection problem since we study the effects of parental peers’ human capital which is pre-determined with respect to children’s outcomes. Our findings further suggest an increase in parental aspirations as a possible mechanism driving the heterogeneous ethnic capital effects, implying that profiling peers or ethnic role models could be important for migrant integration policies. |
| Keywords: | Education,Ethnic Capital,Germany,Peer Effects,Policy Experiment |
| JEL: | R23 J15 I21 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:322&r=all |
| By: | Ransom, Tyler (University of Oklahoma) |
| Abstract: | This paper examines the role of labor market frictions and moving costs in explaining the migration behavior of US workers by employment status. Using data on low-skilled workers from the Survey of Income and Program Participation (SIPP), I estimate a dynamic model of individual labor supply and migration decisions. The model incorporates a reduced-form search model and allows for migration for non-market reasons. My estimates show that moving costs are substantial and that labor market frictions primarily inhibit migration of the employed. I use the model to study migration responses to local labor market shocks and to a moving subsidy. Workers' preferences for non-market amenities, coupled with substantial moving costs and employment frictions, grant market power to incumbent employers. Large moving costs also likely affect employers' recruiting behavior. |
| Keywords: | migration, job search, dynamic discrete choice |
| JEL: | C35 E32 J22 J61 J64 R23 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12139&r=all |
| By: | Avraamova, Elena (Авраамова, Елена) (The Russian Presidential Academy of National Economy and Public Administration); Klyachko, Tatiana (Клячко, Татьяна) (The Russian Presidential Academy of National Economy and Public Administration); Loginov, Dmitriy (Логинов, Дмитрий) (The Russian Presidential Academy of National Economy and Public Administration); Semionova, Elena (Семионова, Елена) (The Russian Presidential Academy of National Economy and Public Administration); Tokareva, Galina (Токарева, Галина) (The Russian Presidential Academy of National Economy and Public Administration) |
| Abstract: | The scientific report presents the results of a monitoring study of the effectiveness of general education conducted by the Center for Continuing Education Economics of the RANEPA in 2013–2018. The participants of a sociological survey of the sixth monitoring wave of 2018 were 40 school principals, 2195 representatives of households, 2077 teachers of educational institutions located in urban settlements and rural areas of the Chelyabinsk region, Altai and Stavropol areas, as well as in St. Petersburg. The positions of teachers on a wide range of issues related to general education are considered: the staffing situation in schools, the quality of teaching, the requirements of families for the organization of the educational process, the satisfaction of teachers with their professional activities. Monitoring research is based on assessments of participants in educational relations and is one of the key resources for managing change in education and improving the performance of schools. |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:rnp:ppaper:021906&r=all |
| By: | Cohen, Shani; Gandal, Neil |
| Abstract: | A large literature has used patent data to measure knowledge spillovers across inventions but has not explicitly considered the collaboration networks formed by inventors as a mechanism for shaping these knowledge flows. Using a recently developed methodology, we examine the incidence and nature of knowledge flows mediated by the collaboration networks of inventors. We apply this methodology to three sectors in which programming skills are vital: (i) Information and Communication Technology/Information Security (ICT/IS) (ii) Financial Technology (Fin-Tech,) and (iii) Medical Technology (Med-Tech.) These are all areas of innovation in which Israel should have a comparative advantage. We find the following: (I) the quality of the Israeli ICT/information security inventions is systematically linked to the structure of the collaborative network. In particular, we find positive and significant direct and indirect knowledge spillovers. (II) We find no evidence of such spillovers in either Fin-Tech or Med-Tech. |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13467&r=all |
| By: | Mendez-Guerra, Carlos |
| Abstract: | This paper studies environmental efficiency convergence across the prefectures of Japan over the 1992-2008 period. Using a novel nonparametric density estimation clustering framework, two alternative indicators of environmental efficiency are contrasted: a conventional indicator, based on the ratio of gross regional product to CO2 emissions, and a more comprehensive indicator, based on the data envelopment analysis (DEA) model. Results show, on the one hand, a lack of intra-distributional mobility and potentially a unique convergence cluster when using the more conventional indicator. On the other hand, large backward mobility and at least two convergence clusters are identified when using the DEA-based indicator of environmental efficiency. The paper concludes arguing the importance of accounting for production inputs, as they appear to be driving the formation of regional convergence clusters in Japan. |
| Keywords: | environmental efficiency, convergence, nonparametric density, Japan |
| JEL: | O47 O53 R10 R11 |
| Date: | 2019–02–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92245&r=all |
| By: | Koen Schoors; Maria Semenova; Andrey Zubanov (-) |
| Abstract: | We analyze whether bank familiarity affects depositor behavior during financial crisis. Familiarity is measured by regional or local cues in the bank’s name. Depositor behavior is measured by the depositor’s sensitivity to observable bank risk (market discipline). Using 2001-2010 bank-level and region-level data for Russia, we find that depositors of familiar banks become less sensitive to bank risk after a financial crisis relative to depositors of unfamiliar banks. To validate that our results stem from a flight to familiarity during crisis and not from implicit guarantees from regional governments, we interact the variables of interest with measures of regional affinity and trust in local governments. The flight to familiarity effect is strongly confirmed in regions with strong regional affinity, while the effect is absent in regions with more trust in regional and local governments, lending support to the thesis that our results are driven a flight to familiarity rather than implicit guarantees. |
| Keywords: | Market discipline, Bank, Personal deposit, Region, Russia, Flight to familiarity, Trust, Implicit guaranty, Regional authorities. |
| JEL: | G21 G01 P2 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:rug:rugwps:19/959&r=all |
| By: | Bjerke, Lina (Jönköping International Business School); Mellander, Charlotta (Jönköping International Business School, Jönköping University & Centre of Excellence for Science and Innovation Studies (CESIS)) |
| Abstract: | The accepted rural-urban migration theory suggests that economic gains are made by moving from a rural to an urban area. Its premise is: “If you stay, you lose.” However, are losses still the rule? And, if so, how big is the economic loss once other factors are controlled for? In this paper, we specifically focus on the income effects of migration decisions among young individuals from rural areas, using microdata for Sweden. We find that, contrary to accepted theory, staying in a rural region most often is insignificant in relation to an individual’s income level. When taking housing values into account, it can even be financially beneficial for some to stay in a rural area. Only for highly educated individuals is it consistently financially beneficial to move to an urban area, also after controlling for housing costs. |
| Keywords: | rural-urban youth migration; income; mover; stayer |
| JEL: | J10 P25 R23 |
| Date: | 2019–02–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0476&r=all |
| By: | Mathias Hoffmann (Department of Economics, University of Zurich); Tetsuji Okazaki (Faculty of Economics, The University of Tokyo); Toshihiro Okubo (Faculty of Economics, Keio University) |
| Abstract: | The banking sector in Japan experienced a substantial organizational change in the early twentieth century, including an expansion of branch networks. In this paper, we explore the implications of branch banking in regional economies, using unique bank branch office-level data for four rural regions: Fukushima, Tottori, Kumamoto, and Miyazaki Prefectures. We find that branch banking had a positive scale effect on lending. However, compared with branch offices of banks headquartered in the same municipality, branch offices of banks headquartered in other municipalities, especially in other prefectures, tended to have a lower propensity to issue loans. In particular, branch offices of banks headquartered in urban areas, such as Osaka and Tokyo, tended to collect deposits rather than to lend money through their branch networks, which restricted regional finance. |
| Keywords: | branch banking, bank merger, regional economy |
| JEL: | G2 N2 N9 |
| Date: | 2019–01–16 |
| URL: | http://d.repec.org/n?u=RePEc:keo:dpaper:2019-004&r=all |
| By: | Osawa, Minoru; Akamatsu, Takashi |
| Abstract: | This paper addresses a longstanding stability issue of equilibria in a seminal model in spatial economic theory, making use of the potential game approach. The model explains the formation of multiple business centers in cities as an equilibrium outcome under the presence of commuting costs of households and positive production externalities between firms. We fist show that the model can be viewed as a large population (nonatomic) potential game. To elucidate properties of stable spatial equilibria in the model, we select global maximizers of the potential function, which are known to be globally stable under various learning dynamics. We find that the formation of business centers (agglomeration of firms) is possible only when the commuting costs of households are sufficiently low and that the size (number) of business centers increases (decreases) monotonically as communication between firms becomes easier. Our results indicate a new range of applications, i.e., spatial economic models, for the theory of potential games. |
| Keywords: | Agglomeration; multiple equilibria; equilibrium selection; potential game; global stability. |
| JEL: | C62 C72 C73 R14 |
| Date: | 2019–02–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92395&r=all |
| By: | Hasan, Rana (Asian Development Bank); Jiang, Yi (Asian Development Bank); Rafols , Radine Michelle (Asian Development Bank) |
| Abstract: | The Government of India initiated a program in 1994 to promote manufacturing in districts designated as backward. The way the backward districts were identified enables us to employ a regression discontinuity design to evaluate the impacts of the program. We find that the program’s 5-year tax exemption to manufacturers led to a significant increase in firm entry and employment in relatively better-off backward districts, particularly in light manufacturing industries. However, the program also resulted in negative spillover effects in districts which were neighboring these backward districts and relatively weaker in economic activity. The findings emphasize that the spatial effects of place-based policies deserve greater attention from policy makers. |
| Keywords: | backward districts; place-based policy; preferential tax; sharp regression discontinuity; spatial spillovers |
| JEL: | H32 O14 R12 |
| Date: | 2017–11–16 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0524&r=all |
| By: | Claudio R. Lucinda; Rodrigo Moita |
| Abstract: | Despite widely prescribed by economists, a congestion tax is seldom used in practice. Why? This paper combines a structural econometric model with a simulation algorithm to estimate an optimal congestion tax and investigate its political acceptance. Results for Sao Paulo show the tax to be 2 USD per trip. Policy simulations indicate that (i) commuters that switch to the public transportation bears the largest share of the tax burden and (ii) revenue recycling is essential for the policy to be accepted. Skepticism about the use of tax revenues is the likely cause for the low use of the congestion tax. |
| Keywords: | pigouvian tax; urban transportation; congestion; urban toll |
| JEL: | L92 R41 L91 |
| Date: | 2019–02–19 |
| URL: | http://d.repec.org/n?u=RePEc:spa:wpaper:2019wpecon10&r=all |
| By: | Duccio Gamannossi degl’Innocenti (University of Exeter, UK); Matthew D. Rablen (University of Sheffield, UK) |
| Abstract: | We relate tax evasion behavior to a substantial literature on social comparison in judgements. Taxpayers engage in tax evasion as a means to boost their expected consumption relative to others in their social network. The unique Nash equilibrium of the model relates optimal evasion to a (Bonacich) measure of network centrality: more central taxpayers evade more. Given that tax authorities are now investing heavily in big-data tools that aim to construct social networks, we investigate the value of acquiring network information. We do this using networks that allow for celebrity taxpayers, whose consumption is widely seen, and who are systematically of higher wealth. We show that there are pronounced returns to the initial acquisition of network information, albeit targeting audits with highly incomplete knowledge of social networks may be counterproductive. |
| Keywords: | Tax Evasion; Social Networks; Network centrality; Optimal Auditing; Social Comparison; Relative Consumption |
| JEL: | H26 D85 K42 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2019005&r=all |
| By: | Wen-Jung Liang; Chao-Cheng Mai; Jacques-François Thisse; Ping Wang |
| Abstract: | Science parks play a growing in knowledge-based economies by accommodating high-tech firms and providing an environment that fosters location-dependent knowledge spillovers and promote R&D investments by firms. Yet, not much is known about the economic conditions under which such entities may form in equilibrium without government interventions. This paper develops a spatial equilibrium model with a competitive final sector and a monopolistic competitive intermediate sector, which allows us to determine necessary and sufficient conditions for a science park to emerge as an equilibrium outcome. We show that strong localized knowledge spillovers, high startup costs, skilled labor abundance, or low commuting costs make intermediate firms more likely to cluster and a science park more likely to form. We also show that the productivity of the final sector is highest when intermediate firms cluster. As the decay penalty, firms' startup and workers' commuting costs become lower, science parks will eventually be fragmented. |
| JEL: | D51 L22 O33 R13 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25595&r=all |
| By: | Batabyal, Amitrajeet; Beladi, Hamid |
| Abstract: | We analyze the impact of preference matching and income on the distribution of the population in an aggregate economy consisting of an urban and an adjacent rural region. It costs more (less) to live in the urban (rural) region. Individuals choose freely to live either in the urban or in the rural region. They differ in their incomes. These incomes are uniformly distributed on the unit interval. Our analysis leads to four results. First, when the cost differential parameter satisfies a condition, both regions are occupied in the equilibrium. Second, when this parametric condition holds, in any equilibrium in which the mean income of individuals varies across the two regions, every resident of the rural region has a lower income than every resident of the urban region. Third, there exists an income threshold and all individuals with higher (lower) incomes choose to live in the urban (rural) region. Finally, in the equilibrium with income sorting, it is possible to make everyone better off by slightly modifying their residential choices. |
| Keywords: | Income, Population Distribution, Preference Matching, Rural Region, Urban Region |
| JEL: | O18 R12 |
| Date: | 2018–09–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92308&r=all |
| By: | Batistich, Mary Kate (Purdue University); Bond, Timothy N. (Purdue University) |
| Abstract: | Many of the positive economic trends coming out of the Civil Rights Era for black men stagnated or reversed during the late 1970s and early 1980s. These changes were concurrent with a rapid rise in import competition from Japan. We assess the impact of this trade shock on racial disparities using commuting zone level variation in exposure. We find it decreased black manufacturing employment, labor force participation, and median earnings, and increased public assistance recipiency. However these manufacturing losses for blacks were offset by increased white manufacturing employment. This compositional shift appears to have been caused by skill upgrading in the manufacturing sector. Losses were concentrated among black high school dropouts and gains among college educated whites. We also see a shifting of manufacturing employment towards professionals, engineers, and college educated production workers. We find no evidence the heterogeneous effects of import competition can be explained by unionization, prejudice, or changes in spatial mismatch. Our results can explain 66-86% of the relative decrease in black manufacturing employment, 17-23% of the relative rise in black non-labor force participation, and 34-44% of the relative decline in black median male earnings from 1970-1990. |
| Keywords: | race, trade, import competition, black-white wage gap, Japan |
| JEL: | F14 J31 F14 N32 N62 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12133&r=all |
| By: | Manfred Perlik (CDE - Centre pour le Développement et l'Environnement - Universität Bern [Bern]); Andrea Membretti (Dipartimento di Sociologia e Ricerca Sociale - UNIMIB - Università degli Studi di Milano-Bicocca [Milano]) |
| Abstract: | This article discusses current European migration flows, their impacts on the European Alps, and future options for addressing issues of migration. It explores these issues from the perspective of regional development, taking into account the currently prevailing goals of economic competitiveness and local self-interest. It focuses on the Alps, a region in which rural areas are losing economic, demographic, and decision-making power due to outmigration. An end to outmigration in the Alps is currently unlikely, but there may be other ways to stem the resulting losses. Based on a review of migration literature and 3 case studies, the article explores ways in which programs for hosting and integrating migrants can also benefit long-time residents by contributing in many different ways to the development of mountain areas. From this perspective, efforts to integrate migrants can be seen as a form of social innovation that can contribute to the future of the entire Alpine economic space. Rather than focusing on drivers of migration or its humanitarian or constitutional aspects, the paper explores the potential benefits to all parties of a better integration of migrants into the host regions, and the possibility that this could become a model of social innovation. It suggests an agenda for research on how to reach this potential and agenda points for policy regarding measures to fulfill the potential. |
| Keywords: | social innovation,peripheral regions,exclusion,mountain immigration,European Alps.,Forced migration,social integration,displacement |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01992189&r=all |
| By: | Ha Trong Nguyen (Telethon Kids Institute and Bankwest Curtin Economic Centre, Curtin University); Luke B Connelly (The University of Queensland); Huong Thu Le (School of Population and Global Health, University of Western Australia); Francis Mitrou (Telethon Kids Institute; University of Western Australia); Catherine L Taylor (Telethon Kids Institute; University of Western Australia); Stephen R Zubrick (Telethon Kids Institute; University of Western Australia) |
| Abstract: | Children of Asian immigrants in most English-speaking destinations have better academic outcomes, yet the underlying causes of their advantages are under-studied. We employ panel time-use diaries by two cohorts of children observed over a decade to present new evidence that children of Asian immigrants begin spending more time than their peers on educational activities from school entry; and, that the ethnicity gap in the time allocated to educational activities increases over time. By specifying an augmented value-added model and invoking a quantile decomposition method, we find that the academic advantage of children of Asian immigrants is attributable mainly to their allocating more time to educational activities or their favorable initial cognitive abilities and not to socio-demographics or parenting styles. Furthermore, our results show substantial heterogeneity in the contributions of initial cognitive abilities and time allocations by test subjects, test ages and points of the test score distribution. |
| Keywords: | Migration, Education, Test Score Gap, Time Diary, Quantile Regression, Second generation Immigrants, Australia |
| JEL: | C21 I20 J13 J15 J22 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:ozl:bcecwp:wp1901&r=all |
| By: | Shuaizhang Feng (Jinan University); Naijia Guo (The Chinese University of Hong Kong) |
| Abstract: | This paper studies the effect of state-owned enterprises on the dynamics of the Chinese urban labor market. Using longitudinal monthly panel data, we document very low dynamics in the labor market, especially in the state sector. We develop and calibrate an equilibrium search and matching model with three differences between the state and the non-state sector: labor productivity, labor adjustment cost, and workers’ bargaining power. Counterfactual analysis shows that the lack of dynamics is mainly driven by the strong bargaining power of state-sector workers. Eliminating the differences between the two sectors substantially reduces the unemployment rate and long-term unemployment rate. |
| Keywords: | state sector, labor market dynamics, search and matching, China, long-term unemployment |
| JEL: | J64 J45 P23 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2019-008&r=all |
| By: | Görlitz, Katja (Free University of Berlin); Penny, Merlin (Freie Universität Berlin); Tamm, Marcus (RWI) |
| Abstract: | The previous literature has shown that children who enter school at a more advanced age outperform their younger classmates on competency tests taken between kindergarten and Grade 10. This study analyzes whether these effects of school starting age continue into adulthood. Based on data on math and language test scores for adults in Germany, the identification of the long-term causal effects exploits state and year variation in school entry regulations. The results show that there are no effects of school starting age (SSA) on competencies in math and text comprehension. However, the long-term SSA effect is sizable on receptive vocabulary. |
| Keywords: | school starting age, education, cognitive competencies, instrumental variable estimates |
| JEL: | I21 J21 J31 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12157&r=all |
| By: | Toshihiro Okubo (Faculty of Economics, Keio University); Eiichi Tomiura (Graduate School of Economics, Hitotsubashi University) |
| Abstract: | The international trade literature confirms that the average productivity of exporters is higher than that of non-exporters, while economic geography studies establish that urban firms tend to be more productive than rural ones. By introducing region-specific transportation costs in a Melitz-type heterogeneous firm trade model, the theory predicts that the minimum threshold productivity level for export is higher but that for survival by serving the local market is lower in the periphery region than in the core. Using Japanese plant-level panel data, we find evidence supporting the theoretical prediction that exporters in the peripheral regions, especially those distant from the core, have large productivity premiums. |
| Keywords: | Productivity, transportation costs |
| JEL: | F1 R12 L25 |
| Date: | 2019–01–07 |
| URL: | http://d.repec.org/n?u=RePEc:keo:dpaper:2019-002&r=all |
| By: | Berg, Petter (Department of Economics); Palmgren, Ola (Department of Economics); Tyrefors, Björn (Research Institute of Industrial Economics (IFN)) |
| Abstract: | Admission to high school in Sweden is based on the final grades from junior high. This paper compares students’ final mathematics grade with new data from a high school introductory test score in mathematics. Both the grades and the test are based on the same syllabus, but teachers enjoy great discretion when deciding final grades, as the grades are not externally evaluated. The results show a substantial grading difference, consistent with grading bias against boys. |
| Keywords: | Educational economics; Gender; Grading bias; Mathematics |
| JEL: | I20 I24 I28 J16 |
| Date: | 2019–02–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1263&r=all |
| By: | Mkrtchan, Nikita (Мкртчян, Никита) (The Russian Presidential Academy of National Economy and Public Administration); Florinskaya, Yulia (Флоринская, Юлия) (The Russian Presidential Academy of National Economy and Public Administration) |
| Abstract: | Based on the conducted INSAP RANEPA in 2017 - 2018. studies of international migration and internal migration of the population of the Russian Federation analyzed the prevalence and structural characteristics of skilled migration in the two largest Russian centers of attraction of migrants. The results of the survey showed that skilled migration in the previous 5 years filled up the corresponding labor market by 9-12%, while the majority of Russians (but only half of foreign workers) found work corresponding to their qualifications. The survey also showed that migration after receiving education in other regions, and not academic migration, as is commonly believed, are the main channel for the inflow of qualified specialists to the studied regions. |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:rnp:wpaper:021926&r=all |
| By: | Nessa Winston (School of Social Policy, Social Work and Social Justice, University College Dublin); Patricia Kennedy (IT Carlow) |
| Abstract: | Severe housing deprivation is an important element of social sustainability. Social sustainability has been described as a concept in ‘chaos’ and of limited utility. This paper argues that meeting basic human needs is central to social sustainability and housing is a key dimension of need. It examines severe housing deprivation by analysing the extent to which households living in extreme poverty experience problems such as overcrowding, sub-standard dwelling quality and housing-related risks such as unaffordable housing and rent/mortgage arrears. The paper draws on data from the EU Survey on Income and Living Conditions for this purpose. However, household surveys are somewhat limited in the extent to which they capture some groups living in ‘extreme poverty’. Therefore, we supplement these data with a case study of a particularly vulnerable group who experience housing exclusion in several relatively wealthy European countries - Roma in Ireland. The paper concludes with a discussion of strategies to address severe housing deprivation in the EU. |
| Keywords: | Housing quality; housing affordability; Roma; social sustainability; poverty; deprivation; UN SDGs |
| Date: | 2019–02–13 |
| URL: | http://d.repec.org/n?u=RePEc:ucd:wpaper:201903&r=all |
| By: | Hoppe, Eva I; Schmitz, Patrick W. |
| Abstract: | The government wants an infrastructure-based public service to be provided. First the infrastructure has to be built, subsequently it has to be operated. Should the government bundle the building and operating tasks in a public-private partnership? Or should it choose traditional procurement, i.e. delegate the tasks to different firms? Each task entails unobservable investments to come up with innovations. It turns out that depending on the nature of the innovations, bundling may either stimulate or discourage investments. Moreover, we find that if renegotiation cannot be prevented, a public-private partnership may lead the government to deliberately opt for a technologically inferior project. |
| Keywords: | innovations; moral hazard; Procurement; public-private partnerships; Renegotiation |
| JEL: | D86 H11 H54 H57 L33 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13406&r=all |
| By: | KHOLODILIN Konstantin A.; LIMONOV Leonid E.; WALTL Sofie R. |
| Abstract: | This article studies the evolution of housing rents in St. Petersburg between 1880 and 1917, covering an eventful period of Russian and world history. We collect and digitize over 5,000 rental advertisements from a local newspaper, which we use together with geo-coded addresses and detailed structural characteristics to construct a quality-adjusted rent price index in continuous time. We provide the first pre-war and pre-Soviet index based on market data for any Russian housing market. In 1915, one of the world's earliest rent control and tenant protection policies was introduced in response to soaring prices following the outbreak of World War I. We analyze the impact of this policy: while before the regulation rents were increasing at a similar rapid pace as other consumer prices, the policy reversed this trend. We find evidence for official compliance with the policy, document a rise in tenure duration and strongly increased rent affordability among workers after the introduction of the policy. We conclude that the immediate prelude to the October Revolution was indeed characterized by economic turmoil, but rent affordability and rising rents were no longer the dominating problems. |
| Keywords: | Rental Market; Rent Regulation; Intra-Urban Rent Dynamics; Hedonic Rent Price Index; Economic History; Pre-Soviet Russia; October Revolution |
| JEL: | C14 C43 N93 O18 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:irs:cepswp:2019-03&r=all |
| By: | Blimpo, Moussa P. (University of Oklahoma); Carneiro, Pedro (University College London); Jervis, Pamela (Institute for Fiscal Studies, London); Pugatch, Todd (Oregon State University) |
| Abstract: | This paper studies two experiments of early childhood development programs in The Gambia: one increasing access to services, and another improving service quality. In the first experiment, new community-based early childhood development (ECD) centers were introduced to randomly chosen villages that had no pre-existing structured ECD services. In the second experiment, a randomly assigned subset of existing ECD centers received intensive provider training. We find no evidence that either intervention improved average levels of child development. Exploratory analysis suggests that, in fact, the first experiment, which increased access to relatively low quality ECD services, led to declines in child development among children from less disadvantaged households. Evidence supports that these households may have been steered away from better quality early childhood settings in their homes. |
| Keywords: | early childhood development, cognitive stimulation, teacher training, The Gambia, randomized control trials, Malawi Developmental Assessment Tool |
| JEL: | I25 I38 O15 O22 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12163&r=all |
| By: | Fabien Leurent (LVMT - Laboratoire Ville, Mobilité, Transport - IFSTTAR - Institut Français des Sciences et Technologies des Transports, de l'Aménagement et des Réseaux - UPEM - Université Paris-Est Marne-la-Vallée - ENPC - École des Ponts ParisTech); Sheng Li (LVMT - Laboratoire Ville, Mobilité, Transport - IFSTTAR - Institut Français des Sciences et Technologies des Transports, de l'Aménagement et des Réseaux - UPEM - Université Paris-Est Marne-la-Vallée - ENPC - École des Ponts ParisTech); Hugo Badia (KTH - Royal Institute of Technology [Stockholm]) |
| Abstract: | The paper develops a structural model and a design methodology for transit system planning in an urban area. Transit "components" are modelled by subarea and by sub-mode in terms of line length, station spacing, and fleet size, in order to determine both quality of service and production costs. Roadway networks are modeled with a Macroscopic Fundamental Diagram that relates speed to network capacity and vehicle demand. Local and global environmental impacts are considered. Travel demand includes both mode-dependent users and mode-choosers able to adopt the mode that offers higher utility. The design methodology involves a mathematical program of welfare optimization with respect to transit factors and fares. Two definitions of welfare are given, one that takes into account only demand surplus and supply profit, the other including environmental impacts. An example of application to Greater Paris shows that there is room for system optimization under current subsidy conditions, and that the explicit inclusion of environmental impacts brings about a significant shift in the "optimal" policy package. |
| Keywords: | multimodal transportation,transit network,design model,social welfare,environmental impacts |
| Date: | 2018–09–17 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02010003&r=all |
| By: | Lobo, José (School of Sustainability, Arizona State University); Mellander, Charlotta (Jönköping International Business School, Jönköping University & Centre of Excellence for Science and Innovation Studies (CESIS)) |
| Abstract: | We investigate if there are positive economic effects for individuals residing in ethnic neighborhoods, in particular if the likelihood of labor market participation among foreign born is affected by residentially aggregating with other people from the same region. We also examine to what extent the income level among foreign born who has a job is affected by the extent to which they congregate in ethnic enclaves. We use Swedish micro-level data for the time period 2007 to 2015 and run a Heckman estimation for the population overall, for immigrants, but also for four distinct immigration groups: those from poor and middle-income countries in Africa or Asia, from Former Yugoslavia, and from the Middle East. We control for personal and neighborhood characteristics, as well as work place characteristics. The results suggest that there may be positive effects from ethnic concentration, but only if the group makes up a significant share of the population in that neighborhood. |
| Keywords: | Labor market participation; foreign born; immigration; clustering effects; income levels |
| JEL: | J15 J31 R23 |
| Date: | 2019–02–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0475&r=all |
| By: | Park, Cyn-Young (Asian Development Bank); Claveria, Racquel (Asian Development Bank) |
| Abstract: | This paper employs a multidimensional approach to gauge the degree of regional integration and analyze impact on growth, inequality, and poverty. It constructs a multidimensional regional integration index (MDRII) series that embodies six key facets of regional integration: (i) trade and investment, (ii) money and finance, (iii) regional value chains, (iv) infrastructure and connectivity, (v) movement of people, and (vi) institutional and social integration. The MDRII confirms that regional integration is most advanced in the European Union which scores high in all six dimensions; Asia comes second with the largest contribution from infrastructure and connectivity. Empirical analysis suggests significant and positive development impact of regional integration even when trade and financial openness is controlled. The regional value chain, movement of people, and institutional and social integration dimensions have been significant drivers of economic growth. Infrastructure and connectivity improve income distribution. Overall integration alongside the dimensions of trade and investment, money and finance, and institutional and social integration appear to significantly and robustly reduce poverty. |
| Keywords: | composite index; economic growth; inequality; poverty; regional integration |
| JEL: | C38 C43 F15 O11 |
| Date: | 2018–10–19 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0559&r=all |
| By: | Ana Paula Buhse; José Pedro Pontes |
| Abstract: | In this paper, we try to assess the ability of educationally backward countries, such as Portugal, to catch-up with more developed nations withinthe EU. For that purpose,we use a framework composed by a symmetric coordination n person game that is played by a set of candidates to attend a post-compulsory educational degree, such as university. Higher education has a positive payoff only if a "critical mass" (indeed the unanimity)of students with a low socioeconomic background decide to attend the university. Two strict Nash equilibria exist in this game: either all players decide to attend the university or none does it in equilibrium. By using the "risk dominance"approach to the selection of a unique Nash equilibrium that was suggested by HARSANYI and SELTEN (1988), we are able to recognize the factors that make either strict Nash equilibrium the likelysolution. In spite of the progress they have achieved in schooling, structurally lagging countries such as Portugal seem to be hindered in education development by the fact that, in a large majority of households, income is low and parents lack post-compulsory education. While low household income makes the relative cost of university education high even if tuition fees are modest, a small share of highly educated parents makes the achievement of a "critical mass" of students who attend the university more difficult and thus renders the benefits of college education riskier and less safe. |
| Keywords: | Higher Education; Regional Development; Coordination Games; Risk Dominance. |
| JEL: | C72 I20 O12 R11 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:ise:remwps:wp0752019&r=all |
| By: | Lise Vesterlund |
| Abstract: | Proper assessment of the negotiated ‘item’ is essential in determining whether individualssecure different outcomes through negotiations. For example, evidence that negotiations lead tohigher wages for men than women need not imply differences in negotiation ability but mayreflect differences in outside options and in the assessed value of the employee-employer match.Investigating real estate negotiations, we study a market with detailed information on the value ofthe negotiated item. We find evidence that men secure better prices than women do whennegotiating to buy and to sell property. However, this price difference declines substantiallywhen we include better controls for the property’s value; and the difference is essentiallyeliminated when we control for unobserved heterogeneity in a sample of repeated sales.Intriguingly, the price difference is completely absent when we look at the sales prices individualssecure for property inherited from a deceased parent. This finding suggests that genderdifferences from real estate negotiations likely result from insufficient value assessment and fromfailure to properly control for the different property characteristics demanded by men andwomen. Provided appropriate controls, we find no evidence that men and women securedifferent prices when negotiating over real estate. |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:pit:wpaper:6530&r=all |
| By: | Francesca Volo (Department of Economics, University Of Venice Cà Foscari); Alessandra Drigo (Department of Economics, University Of Venice Cà Foscari); M. Bruna Zolin (Department of Economics, University Of Venice Cà Foscari); Domenico Sartore (Department of Economics, University Of Venice Cà Foscari) |
| Abstract: | The aim of this paper is to evaluate the first impacts of the European Social Fund (hereafter ESF) lifelong learning interventions on the regional development. As is well known, lifelong learning is defined as the all purposeful learning activity, undertaken throughout life, on an ongoing basis, with the aim of improving knowledge, skills, and competence within a personal, civic, social and/or employment-related perspective (CEC, 2000). Beyond the benefits, lifelong learning represents an advantage for the regional economy that could be measured in terms of both estimation of direct impact on domestic demand and evaluation of impacts on the performance of the local economies. The combination of these two kinds of effects generates a positive impact on a wider scale: a higher and skilled workforce attracts more investment, contributing to improve the well-being of a local economy. The case study is the Veneto region. The applied methodologies used in the case study are both a survey and an econometric model. In the first case, the utilized method approaches the topic from a microeconomic perspective, while in the second case the approach is purely macroeconomic. |
| Keywords: | Education, Lifelong learning, Regional economic development, regional policy, regional labour market |
| JEL: | H75 R58 R23 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2019:04&r=all |
| By: | David Neumark (University of California-Irvine, NBER, and IZA); Maysen Yen (University of California-Irvine) |
| Abstract: | We study the effects of the size of older cohorts on labor force participation (LFP) and wages of older workers. In the standard relative supply framework usually applied to relative cohort size, we would expect larger older cohorts to experience lower wages and hence lower employment or LFP. However, there are two reasons that we might find a positive effect. First, we might expect the age structure of the population to affect the composition of consumption and hence labor demand; it is possible that the age structure of employment is such that relative labor demand for an age cohort increases when the relative size of that cohort increases. Second, a large older cohort implies that the old cohort is large relative to at least some other narrowly-defined age cohorts. If two age cohorts are substitutable, then a decline in the relative size of one of them can imply an increase in the relative demand for the other. We use panel data on states, treating the age structure of the population as endogenous, owing to migration. We find that when older cohorts are large relative to a young cohort, the evidence fits the relative supply hypothesis. But when older cohorts are large relative to 25-49 year-olds, the evidence points to a relative demand shift. Thus, we need a more nuanced view than simply whether the older cohort is large relative to the population; the cohort they are large relative to matters. |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp390&r=all |
| By: | V. Kerry Smith; Ben Whitmore |
| Abstract: | This paper provides the first, comprehensive evidence on the question of whether the subsidized flood insurance rates are needed to meet the affordability goal of the National Flood Insurance Program. We use IRS records at the zip code level from 2009 to 2016 to compare the real median incomes of homeowners in areas subject to flooding risks to those homeowners in neighboring zip codes. Our analysis includes all of the Gulf Coast states and over 1000 other communities around the United States containing FEMA designated Special Flood Hazard Areas (SFHA). There are clear patterns of positive income stratification for coastal locations in Florida, New Jersey, and New York. We also find lower income for coastal locations in California, North Carolina, as well as the shoreline along rivers identified as in SFHA in Delaware, and Virginia fit this pattern. |
| JEL: | D31 H2 H84 Q51 Q54 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25580&r=all |
| By: | Ouail Al Maghraoui (LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec, IRT SystemX - IRT SystemX); Flore Vallet (Roberval - UTC - Université de Technologie de Compiègne); Jakob Puchinger (AIT - Austrian Institute of Technology [Vienna]); Bernard Yannou (LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec) |
| Abstract: | Travelers interact with a large number and variety of products and services during their journeys. The quality of a travel experience depends on a whole urban mobility system considered in space and time. This paper outlines the relevant concepts to be considered in designing urban mobility. The goal is to provide a language and insights for the early stages of a design process. A literature review sheds light on the complexity of urban mobility from technical, socio-technical, and user experience (UX) perspectives. Observations of experiences in urban areas provide data for describing and understanding travel experience patterns and issues. The paper proposes a conceptual model to describe and analyze different facets of traveler experience, and categorizes problems that travelers face when they interact with an urban mobility system. A case study is reported illustrating the use of the conceptual model in identifying travel problems for a demand-responsive transport (DRT) service. |
| Keywords: | System design,traveler experience,travel problems,service |
| Date: | 2019–02–13 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02017696&r=all |
| By: | Joyce , Patrick (The Ratio Institute) |
| Abstract: | Sweden, Denmark and Norway have long been refugee destinations. All three countries received record numbers of asylum seekers between 2015 and 2016. This paper gives an overview and comparison on integration policies and labor market outcomes for refugees in the three countries after 2015. The paper also provides lessons from Scandinavia on fostering successful labor market integration for refugees. |
| Keywords: | Patrick Joyce; Labor market; Integration; Education; Social welfare. |
| JEL: | I24 I38 J15 J61 |
| Date: | 2019–02–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ratioi:0319&r=all |
| By: | John Bound (University of Michigan); Arline T. Geronimus (University of Michigan); Timothy A. Waidmann (Urban Institute); Javier M. Rodriguez (Claremount Graduate University) |
| Abstract: | Recent research has found, in some groups of Americans, dramatic increases in deaths due to drug overdose and suicide and an overall stagnation of trends toward increased longevity. This study examines the link between mortality of older working age (45 to 64) adults and local economic downturns in the U.S. to evaluate the role of economic shifts in various causes of death and their related mortality trends. Specifically, we estimate regression models to test the hypotheses that the longevity effects of poor economic prospects are reflected through (1) increased suicide, drug overdose, and other “deaths of despair” and (2) other causes of death linked to exposure to economic and social stress such as heart and cerebrovascular disease. To avoid the problem of endogeneity of local economic conditions to mortality conditions, we measure the local economic shock of lost employment with predicted employment based on baseline industrial composition and national trends in employment by industry. We find evidence consistent with prior research that among non-Hispanic white adults, midlife mortality has increased since 1990, particularly among those with low educational attainment. We also find that “deaths of despair” are important contributors to that trend. However, we find that while distress in local, area economies does predict increased mortality for chronic disease, it predicts decreased mortality from suicides, opioids, and other substance abuse. This finding suggests caution in the application of the construct of despair in explaining recent mortality patterns. |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp389&r=all |