nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2019‒03‒18
43 papers chosen by
Steve Ross
University of Connecticut

  1. Cures and Exits: the drivers of NPL resolution in Ireland from 2012 to 2017 By McCann, Fergal; McGeever, Niall
  2. Linguistic diversity in the classroom, student achievement, and social integration By Bredtmann, Julia; Otten, Sebastian; Vonnahme, Christina
  3. Sorting in an urban housing market - is there a response to demographic change? By Neumann, Uwe; Taruttis, Lisa
  4. Estimation and inference for spatial models with heterogeneous coefficients: an application to U.S. house prices By Michele Aquaro; Natalia Bailey; M. Hashem Pesaran
  5. Long-Term Mortgage Arrears in Ireland By O'Malley, Terry
  6. Residential property price segments and mortgage finance By Gaffney, Edward
  7. Non-Resident Taxes and the Role of House Price Expectations By Mikael Khan; Matthieu Verstraete
  8. Macroprudential Measures and Irish Mortgage Lending: An Overview of 2017 By Kinghan, Christina; Lyons, Paul; Mazza, Elena
  9. Consumer- and society-oriented cost of ownership of electric and conventional cars in Italy By Bergantino, Angela Stefania; Di Liddo, Giuseppe; Porcelli, Francesco
  10. Macroprudential Measures and Irish Mortgage Lending: Insights from H1 2018 By Kinghan, Christina
  11. School Bus Emissions, Student Health, and Academic Performance By Wes Austin; Garth Heutel; Daniel Kreisman
  12. Spatial inequality, geography and economic activity By Sandra Achten; Christian Leßmann
  13. Valuing the Environmental Benefits of Canals Using House Prices By Stephen Gibbons; Cong Peng; Cheng Keat Tang
  14. The Geographic Dispersion of Economic Shocks: Evidence from the Fracking Revolution: Comment By Alexander James; Brock Smith
  15. Breaking Ties: Regression Discontinuity Design Meets Market Design By Atila Abdulkadiroglu; Joshua D. Angrist; Yusuke Narita; Parag A. Pathak
  16. On the Economics of Science Parks By Liang, Wen-Jung; Mai, Chao-Cheng; Thisse, Jacques-François; Wang, Ping
  17. Effect of an increase in longevity on housing prices: Evidence from a panel data By Sun, Tianyu; Chand, Satish; Sharpe, Keiran
  18. Oh Mother: The Neglected Impact of School Disruptions By David Jaume; Alexander Willén
  19. What drives banks' geographic expansion? The role of locally non-diversifiable risk By Gropp, Reint E.; Noth, Felix; Schüwer, Ulrich
  20. A Vulnerability Analysis for Mortgaged Irish Households By Tsiropoulos, Vasilis
  21. An Overview of Interest-Only Mortgages in Ireland By Gaffney, Edward; Kinghan, Christina; Nevin, Ciarán
  22. Do Institutions Determine Economic Geography? Evidence from the Concentration of Foreign Suppliers By Fariha Kamal; Asha Sundaram
  23. Financing climate-resilient infrastructure: A political-economy framework By Meyer, Peter B.; Schwarze, Reimund
  24. Identifying and Disentangling the Impact of Fiscal Decentralization on Economic Growth By Cristian Sepulveda; Jorge Martinez-Vazquez; Jorge Martinez-Vazquez
  25. Long-run Effects from Comprehensive Student Support: Evidence from Pathways to Education By Adam M. Lavecchia; Philip Oreopoulos; Robert S. Brown
  26. Violent Crime and the Overmilitarization of US Policing By Federico Masera
  27. Immigrants' Earnings Growth and Return Migration from the U.S.: Examining their Determinants using Linked Survey and Administrative Data By Randall Akee; Maggie R. Jones
  28. “The determinants of students' achievement: a difference between OECD and not OECD countries” By Barra, Cristian; Boccia, Marinella
  29. Do enterprise zones promote local business development? Evidence from Vietnam By VU, Tien Manh; Yamada, Hiroyuki
  31. The making of the modern metropolis: evidence from London By Stephan Heblich; Stephen J. Redding; Daniel M. Sturm
  33. Trade Shocks and the Shifting Landscape of U.S. Manufacturing By Katherine Eriksson; Katheryn Russ; Jay C. Shambaugh; Minfei Xu
  34. An application of dynamic factor models to nowcast regional economic activity in Spain By María Gil; Danilo Leiva-Leon; Javier J. Pérez; Alberto Urtasun
  35. Immigrants’ Earnings Growth and Return Migration from the U.S.: Examining their Determinants using Linked Survey and Administrative Data By Randall Akee; Maggie R. Jones
  36. Fiscal Austerity and Migration: A Missing Link By Guillherme Bandeira; Jordi Caballé; Eugenia Vella
  37. Setting a good example? Examining sibling spillovers in education achievement using a regression discontinuity design By Krzysztof Karbownik; Umut Özek
  38. Selection and educational attainment: Why some children are left behind? Evidence from a middleincome country By Luciana Méndez-Errico; Xavier Ramos
  39. Street-level bureaucracy: best to be grey (or silver) on Friday, in Halifax By Shaun Hargreaves Heap; Oleksandr Talavera
  40. Regional health care decentralization in unitary states: equal spending, equal satisfaction? By Costa-Font, Joan; Turati, Gilberto
  41. Rising inequalities in access to home ownership among young households in France, 1973-2013 By Carole Bonnet; Bertrand Garbinti; Sébastien Grobon
  42. Externalities in Knowledge Production: Evidence from a Randomized Field Experiment By Hinnosaar, Marit; Hinnosaar, Toomas; Kummer, Michael; Slivko, Olga
  43. A Tale of Two Cities: An Experiment on Inequality and Preferences By M. Bigoni; S. Bortolotti; V. Rattini

  1. By: McCann, Fergal (Central Bank of Ireland); McGeever, Niall (Central Bank of Ireland)
    Abstract: Non-performing loan (NPL) balances in the Irish retail banking system declined from e85bn in 2013 to around e25bn in 2017. In this Note, we document how this decline came about using regulatory return data and loan-level data for all property-related lending segments. Firstly, we highlight that NPL resolution is a gradual process: the majority of NPL balances in one year remain as NPLs a year later. Secondly, we show that loan “cure” (the return of previously-defaulted balances to Performing Loan status) is the key driver of NPL reduction in the residential mortgage segment. This is particularly true for principal dwelling home mortgages, where loan restructuring has played a pivotal role. In contrast, loan exit —through liquidations, write-offs, and sales—accounts for a large majority of the NPL reduction in the commercial real estate segment, where concerns about borrowers’ access to housing are less central to the policy discussion. Buy-to-Let (BTL) mortgages, on the other hand, share some of the characteristics of each of the aforementioned asset classes: Exit plays a relatively more important role for BTLs than for PDH mortgages, while Cure plays a greater for BTLs than it does for CRE loans.
    Date: 2018–09
  2. By: Bredtmann, Julia; Otten, Sebastian; Vonnahme, Christina
    Abstract: In this article, we analyze whether non-native speakers in the classroom affect the educational achievement and social integration of migrant and native students. In contrast to previous studies, which mainly examine the effect of the share of immigrant pupils, we focus on language heterogeneity by using a novel measure of the degree of linguistic diversity in the classroom. Our analysis is based on a comprehensive survey of 4th-grade students in German primary schools, which contains detailed information on students' language and math scores, their social integration, as well as on sociodemographic and school characteristics. We find a negative association between the share of non-native speakers in the classroom and students' test scores and their social integration in the class. Conditional on the immigrant concentration in the class, the degree of linguistic diversity has no adverse effect on students' language and math skills, but worsens the social integration of immigrant students. We demonstrate the robustness of these findings in a variety of robustness checks.
    Keywords: linguistic diversity,educational performance,social integration,migrant peer effects
    JEL: I21 I24 J15
    Date: 2018
  3. By: Neumann, Uwe; Taruttis, Lisa
    Abstract: In urban areas, there is considerable neighbourhood-level variation in population characteristics. Using Dortmund as a case study we analyse whether and to what extent rents, housing prices and segregation dynamics corresponded with demographic ageing in urban neighbourhoods between 2007 and 2016. We find that in Dortmund so far there has been no slump of the housing market in neighbourhoods where the population ages more rapidly. Nevertheless, over the study period demographic segregation was on the rise and, according to a hedonic analysis, prices for apartments were higher in districts with a comparatively "younger" population. In the course of further demographic change in Germany, which has come to a contemporary halt due to immigration, the response to ageing on urban housing markets in terms of location choice and prices may therefore become more evident. A large-scale urban regeneration project has revitalised the housing market of a declining Dortmund community during this decade. Since local ageing has not affected housing markets severely so far, it appears to be within the scope of urban policy to upgrade the attractiveness of ageing neighbourhoods as perceived by younger generations.
    Keywords: neighbourhood sorting,demographic segregation,hedonic analysis,urban policy
    JEL: R21 R23 R31 R58 J61
    Date: 2018
  4. By: Michele Aquaro; Natalia Bailey; M. Hashem Pesaran
    Abstract: This paper considers the problem of identification, estimation and inference in the case of spatial panel data models with heterogeneous spatial lag coefficients, with and without (weakly) exogenous regressors, and subject to heteroskedastic errors. A quasi maximum likelihood (QML) estimation procedure is developed and the conditions for identification of spatial coefficients are derived. Regularity conditions are established for the QML estimators of individual spatial coefficients, as well as their means (the mean group estimators), to be consistent and asymptotically normal. Small sample properties of the proposed estimators are investigated by Monte Carlo simulations for Gaussian and non-Gaussian errors, and with spatial weight matrices of differing degrees of sparsity. The simulation results are in line with the paper's key theoretical findings even for panels with moderate time dimensions, irrespective of the number of cross section units. An empirical application to U.S. house price changes during the 1975-2014 period shows a significant degree of heterogeneity in spill-over effects over the 338 Metropolitan Statistical Areas considered.
    Keywords: spatial panel data models, heterogeneous spatial lag coefficients, identification, quasi maximum likelihood (QML) estimators, non-Gaussian errors, house price changes, Metropolitan Statistical Areas
    JEL: C21 C23
    Date: 2019
  5. By: O'Malley, Terry (Central Bank of Ireland)
    Abstract: Approximately 29,000 residential mortgages in Ireland have accumulated at least two years worth of missed payments as of March 2018. In this paper, I analyse a sample of these mortgages in long-term arrears. By end-2017, the number of loans entering long-term mortgage arrears slowed to its lowest rate since the crisis began. The number of loans leaving long-term arrears has also generally slowed. Roughly half of the loans leaving long-term arrears in 2017 are due to voluntary and involuntary lossof- ownership, compared with less than a third three years ago. The remaining longterm arrears mortgages have an average arrears balance of e66,000 and the estimated average loan-to-value ratio is close to 90%. The balances in arrears are on average around one fth of the estimated value of the property.
    Date: 2018–09
  6. By: Gaffney, Edward (Central Bank of Ireland)
    Abstract: I measure shares of mortgage finance in different price segments of the property market by comparing loan-level records of mortgage originations by Irish banks to the national register of property transactions between February 2015 and June 2018. Mortgage finance is more frequent at higher prices for all but the most expensive properties, rising from 5 per cent of purchases in the first price decile to 72 per cent in the ninth decile. The relationship between price and finance is similar in urban and rural regions. Price grew more quickly between 2015 and 2018 at lower price levels, where buyers rely less on mortgage finance.
    Date: 2018–11
  7. By: Mikael Khan; Matthieu Verstraete
    Abstract: In recent years, the governments of Ontario and British Columbia have imposed taxes on purchases by non-Canadian residents of residential properties in certain jurisdictions. The outsized decline in housing resales observed after these taxes were implemented suggests that the taxes altered residents’ housing market expectations. Using data from the Canadian Survey of Consumer Expectations (CSCE), we show that house price expectations played a material, albeit temporary, role in observed housing market dynamics following the implementation of the non-resident taxes. This effect was more pronounced in Metro Vancouver than in the Greater Golden Horseshoe Area.
    Keywords: Financial stability; Housing
    JEL: D84 R21
    Date: 2019
  8. By: Kinghan, Christina (Central Bank of Ireland); Lyons, Paul (Central Bank of Ireland); Mazza, Elena (Central Bank of Ireland)
    Abstract: This note provides an overview of residential mortgage lending in Ireland in 2017. It uses data reported to the Central Bank of Ireland as part of the macroprudential mortgage measures. In total, 35,472 loans are covered with a value of e7.4 billion. For first-time buyers (FTBs), the average loan-to-value (LTV) and loan-to-income (LTI) were 79.8 per cent and 3.0 times gross income respectively. Regarding the LTI limit, 18 per cent of the aggregate value of lending to both FTBs and second and subsequent buyers (SSBs) exceeded the limit of 3.5 in 2017. This corresponds to 25 per cent of the value of FTB lending and 10 per cent of the value of SSB lending. Regarding LTV, 17 per cent of the aggregate value of SSB lending in 2017 exceeded the 80 per cent LTV limit. On average, borrowers with an LTI allowance had larger loan sizes and loan terms, were more likely to be based in Dublin and be single compared to those borrowers without an LTI allowance. SSBs with an LTV allowance had larger loan sizes and incomes but lower property values and were younger than those without an LTV allowance.We observe that allowances were allocated to borrowers in all four quarters of 2017.
    Date: 2018–04
  9. By: Bergantino, Angela Stefania; Di Liddo, Giuseppe; Porcelli, Francesco
    Abstract: Using a new measure of urban sprawl, we evaluate the impact of urban sprawl on municipal expenditures of Italian municipalities in local public transport, roads and traffic management, and municipal technical offices for the year 2013. Our results suggest that urban sprawl leads to an increase in standard expenditure needs of Italian municipalities for all expenditure categories considered. The relationship between urban sprawl and expenditure is stronger for expenditures in road and traffic management.
    Date: 2019
  10. By: Kinghan, Christina (Central Bank of Ireland)
    Abstract: This note provides an overview of residential mortgage lending in Ireland in H1 2018. In total, 17,415 loans are covered with a value of e3.75 billion. The majority (97 per cent) of lending in-scope of the mortgage measures was for primary dwelling (PDH) loans. For firsttime buyers (FTBs), the average loan-to-value (LTV) and loan-to-income (LTI) were 79.6 per cent and 3.1 times gross income, respectively. Regarding the LTV limit, 16 per cent of the total value of second and subsequent buyers (SSB) lending in H1 2018 exceeded the 80 per cent LTV limit. Regarding the LTI limit, 23 per cent of the aggregate value of FTB lending exceeded the LTI limit, with 9 per cent of the value of SSB lending originated with an LTI above 3.5. On average, borrowers with an LTI allowance had larger loan sizes and loan terms, were more likely to be based in Dublin and be a single applicant compared to those borrowers without an LTI allowance. SSBs with an LTV allowance had larger loan sizes and incomes and were younger than those without an LTV allowance. These trends were similar to those observed in H1 2017.
    Date: 2018–10
  11. By: Wes Austin; Garth Heutel; Daniel Kreisman
    Abstract: Diesel emissions from school buses expose children to high levels of air pollution; retrofitting bus engines can substantially reduce this exposure. Using variation from 2,656 retrofits across Georgia, we estimate effects of emissions reductions on district-level health and academic achievement. We demonstrate positive effects on respiratory health, measured by a statewide test of aerobic capacity. Placebo tests on body mass index show no impact. We also find that retrofitting districts see significant test score gains in English and smaller gains in math. Results suggest that engine retrofits can have meaningful and cost-effective impacts on health and cognitive functioning.
    JEL: I18 I20 Q53
    Date: 2019–03
  12. By: Sandra Achten; Christian Leßmann
    Abstract: We study the effect of spatial inequality on economic activity. Given that the relationship is highly simultaneous in nature, we use exogenous variation in geographic features to construct an instrument for spatial inequality, which is independent from any man-made factors. Inequality measures and instruments are calculated based on grid-level data for existing countries as well as for artificial countries. In the construction of the instrumental variable, we use both a parametric regression analysis as well as a random forest classification algorithm. Our IV regressions show a significant negative relationship between spatial inequality and economic activity. This result holds if we control for country-level averages of different geographic variables. Therefore, we conclude that geographic heterogeneity is an important determinant of economic activity.
    Keywords: regional inequality, spatial inequality, economic activity, development, geography, machine learning
    JEL: R12 O15
    Date: 2019
  13. By: Stephen Gibbons; Cong Peng; Cheng Keat Tang
    Abstract: The canal and waterway network in Britain provides a potentially valuable recreational and environmental amenity. In this paper, we estimate the value of this amenity based on how much households are willing to pay through housing to live close to the canal network, a well-established and theoretically grounded method in the urban and environmental economics literature. To deal with potential omitted confounding factors in our house price regressions we adopt two strategies. First we conduct a cross-sectional analysis, but control for local area fixed effects so we estimate from marginal differences in distance from homes to canals within small geographical neighbourhoods. Secondly, we apply a difference in difference method to analyse the effect of the restoration of the Droitwich canals in the later 2000s. Both methods yield similar conclusions. There is a price premium for living close to a canal, but this is very localised - around 3.4% in 2016 within 100m and zero beyond that. The implication is that the effect is driven predominantly by canal-side properties and others with a direct outlook on the canals or immediate access. The premium fell substantially from the pre-recession to post recession periods. We also find evidence that canal-side locations are attractive for developers, with a much higher proportion of new-build sales within 100m of canals relative to elsewhere - a 5.9% increase on a 7.8% baseline. Some back of the envelope calculations indicate the land value uplift from the canal network was around £0.8-£0.9 billion in 2016.
    Keywords: canals, waterways, house prices, environment, valuation
    JEL: Q51 R3 R2
    Date: 2019–03
  14. By: Alexander James (Department of Economics and Public Policy, University of Alaska Anchorage); Brock Smith (Department of Agricultural Economics and Economics, Montana State University)
    Abstract: In the mid 2000s, shale-energy-rich U.S. counties experienced a sudden and significant economic shock resulting from energy extraction. While the resulting localized economic effects are relatively well understood, less is known about the geographic dispersion of the effects. We build upon an existing literature, most notably Feyrer, Mansur, and Sacerdote (2017), by examining the conditional economic effects of nearby energy production. Because energy-producing counties tend to be located near each other, producing counties experience inward economic spillovers from other nearby producing counties and this inflates the estimated effect of own-county production. Accounting for this, we identify smaller income effects of hydrocarbon production than Feyrer, Mansur, and Sacerdote (2017), limited to counties within 60-80 miles of the source of production. The proposed estimation strategy can be applied more generally to estimate the dispersion of multiple, simultaneously occurring economic shocks.
    Keywords: Economic Shocks; Regional Development; Economic Propagation
    JEL: L14 L81 Q33
    Date: 2018–02
  15. By: Atila Abdulkadiroglu (Duke University); Joshua D. Angrist (MIT); Yusuke Narita (Cowles Foundation, Yale University); Parag A. Pathak (MIT)
    Abstract: Centralized school assignment algorithms must distinguish between applicants with the same preferences and priorities. This is done with randomly assigned lottery numbers, nonlottery tie-breakers like test scores, or both. The New York City public high school match illustrates the latter, using test scores, grades, and interviews to rank applicants to screened schools, combined with lottery tie-breaking at unscreened schools. We show how to identify causal effects of school attendance in such settings. Our approach generalizes regression discontinuity designs to allow for multiple treatments and multiple running variables, some of which are randomly assigned. Lotteries generate assignment risk at screened as well as unscreened schools. Centralized assignment also identi?es screened school effects away from screened school cutoffs. These features of centralized assignment are used to assess the predictive value of New York City’s school report cards. Grade A schools improve SAT math scores and increase the likelihood of graduating, though by less than OLS estimates suggest. Selection bias in OLS estimates is egregious for Grade A screened schools.
    Keywords: Causal Inference, Natural Experiment, Local Propensity Score, Instrumental Variables, Unified Enrollment, School Report Card, School Value Added
    Date: 2019–03
  16. By: Liang, Wen-Jung; Mai, Chao-Cheng; Thisse, Jacques-François; Wang, Ping
    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
    Keywords: intermediate inputs; Knowledge Spillovers; Land use; research & development; science parks
    JEL: D51 L22 O33 R13
    Date: 2019–03
  17. By: Sun, Tianyu; Chand, Satish; Sharpe, Keiran
    Abstract: We test the effect of an increase in longevity on housing prices. The results show that workers and retirees react differently towards the impact of longer lifespans, and thus the housing price is influenced by the relative weight of the retirees vis-à-vis workers in the total population.
    Keywords: Longevity, Housing prices, Semi-parametric analysis
    JEL: J11 R21
    Date: 2018–11–01
  18. By: David Jaume (Bank of Mexico); Alexander Willén (Department of Economics, Norwegian School of Economics)
    Abstract: Temporary school closures (TSC) represent a major challenge to policymakers across the globe due to their potential impact on instructional time and student achievement. A neglected but equally important question relates to how such closures affect the labor market behavior of parents. This paper provides novel evidence on the effect of temporary school closures on parental labor market behavior, exploiting the prevalence of primary school teacher strikes across time and provinces in Argentina. We find clear evidence that temporary school closures negatively impact the labor market participation of mothers, in particular lower-skilled mothers less attached to the labor force and mothers in dual-income households who face a lower opportunity cost of dropping out of the labor force. This effect translates into a statistically significant and economically meaningful reduction in labor earnings: the average mother whose child is exposed to ten days of TSCs suffers a decline in monthly labor earnings equivalent to 2.92% of the mean. While we do not find any effects among fathers in general, fathers with lower predicted earnings than their spouses also experience negative labor market effects. This suggests that the parental response to TSCs depend, at least in part, on the relative income of each parent. A back-of-the-envelope calculation suggest that the aggregate impact of TSCs on annual parental earnings is more than $113 million, and that the average mother would be willing to forego 1.6 months of labor earnings in order to ensure that there are no TSCs while her child is in primary school.
    JEL: I20 J24 J45 J52 J16
    Date: 2019–03
  19. By: Gropp, Reint E.; Noth, Felix; Schüwer, Ulrich
    Abstract: We show that banks that are facing relatively high locally non-diversifiable risks in their home region expand more across states than banks that do not face such risks following branching deregulation in the 1990s and 2000s. These banks with high locally non-diversifiable risks also benefit relatively more from deregulation in terms of higher bank stability. Further, these banks expand more into counties where risks are relatively high and positively correlated with risks in their home region, suggesting that they do not only diversify but also build on their expertise in local risks when they expand into new regions.
    Keywords: banking,geographic expansion,deregulation,locally non-diversifiable risk,catastrophic risk
    JEL: G21 G28
    Date: 2019
  20. By: Tsiropoulos, Vasilis (Central Bank of Ireland)
    Abstract: This note assesses the vulnerability of mortgaged Irish households to financial shocks. It uses the Central Bank of Ireland’s Loan Loss Forecasting internal model and employs loan level data provided by the five main mortgage lenders. The model calculates a vulnerability index for currently performing mortgages under a certain adverse scenario which involves movements in the unemployment rate, house prices and interest rates. The model predicts that the most vulnerable households are those with high current loan-to-value ratios, multiple loans, loans that originated between 2004 and 2009 and those in South-East, Midland and Border region.
    Date: 2018–05
  21. By: Gaffney, Edward (Central Bank of Ireland); Kinghan, Christina (Central Bank of Ireland); Nevin, Ciarán (Central Bank of Ireland)
    Abstract: This note provides insights into interest-only mortgage lending in Ireland. Most interestonly loans outstanding as at 2017 were extended to buy-to-let (BTL) investors before 2007. Loans originated as interest-only are more likely to be on low tracker interest rates and to have relatively higher loan-to-value (LTV) ratios, with significant shares of negative equity and non-performing loans. Since 2015, less than 2 per cent of BTL loans were agreed on an interest-only repayment schedule. These loans are subject to Central Bank of Ireland mortgage measures, under which recent BTL lending has had average originated LTV ratios significantly below the 70 per cent threshold. Across Europe, only a small number of regulators impose minimum principal repayment requirements.
    Date: 2018–07
  22. By: Fariha Kamal; Asha Sundaram
    Abstract: Do institutions shape the geographic concentration of industrial activity? We explore this question in an international trade setting by examining the relationship between country-level institutions and patterns of spatial concentration of global sourcing. A priori, weak institutions could be associated with either dispersed or concentrated sourcing. We exploit location and transaction data on imports by U.S. firms and adapt the Ellison and Glaeser (1997) index to construct a product-country-specific measure of supplier concentration for U.S. importers. Results show that U.S. importers source in a more spatially concentrated manner from countries with weaker contract enforcement. We find support for the idea that, where formal contract enforcement is weak, local supplier networks compensate by sharing information to facilitate matching and transactions.
    Keywords: buyer-seller match, global sourcing, contract enforcement, institutions, spillovers, trade
    JEL: F1 F14 R12
    Date: 2019–02
  23. By: Meyer, Peter B.; Schwarze, Reimund
    Abstract: Urban infrastructure investment is needed for both, mitigation of climate risks and improved urban resiliency. Financing them requires the translation of those benefits into measurable returns on investment in the context of emerging risks that capital markets can understand and appreciate. This paper develops a generic framework to identify what are the necessary and sufficient factors to economically favor climate-change resilient infrastructure in private investment decisions. We specifically demonstrate that carbon pricing alone will not generate the needed will, because market prices at present systematically fail to account for climate change risks such as the costs of stranded assets and the national and local co-benefits of investments in climate resiliency. Carbon pricing is necessary, but not sufficient for an enhanced private financing of climate-resilient infrastructure. The Paris Agreement and other supra-local policies and actors including city networks can concretely help to generate the sufficient social and political will for investments into climate change mitigation and resiliency at the city level.
    Keywords: infrastructure,urban finance,resilience,low carbon economy,city networks,Paris agreement,carbon pricing,Infrastruktur,Finanzierung,Resilienz,Klimaneutralität,Städte,Akteursnetzwerke,Parisabkommen,CO2-Bepreisung
    Date: 2019
  24. By: Cristian Sepulveda (Farmingdale State College, SUNY, USA); Jorge Martinez-Vazquez (International Center for Public Policy, Georgia State University, USA); Jorge Martinez-Vazquez (International Center for Public Policy, Georgia State University, USA)
    Abstract: This paper revisits the relationship between fiscal decentralization and economic growth by addressing the endogeneity issue stemming from reverse causality and unobserved factors that has plagued the extensive previous literature on this subject. In our approach, we use the Geographic Fragmentation Index (GFI) and country size as instrumental variables, which we argue are strong and consistent instruments for fiscal decentralization. Empirically, we find that indeed both instruments are strong and valid in the first stage of estimation and that on average, a 10-percent increase in subnational expenditure or revenue shares—the conventional measures of decentralization—will increase GDP per capita growth by approximately 0.4 percentage points; however, the results differ for developed versus developing countries.
    Date: 2019–03
  25. By: Adam M. Lavecchia; Philip Oreopoulos; Robert S. Brown
    Abstract: We estimate long-run impacts to the Pathways to Education program, a comprehensive set of coaching, tutoring, group activities and financial incentives offered to disadvantaged students beginning in Grade 9. High school administrative records are matched to income tax records to follow individuals up to the age of 28, even when they leave the household or province. We find significant positive effects on persistence in postsecondary education institutions, earnings and employment. Program eligibility increased adult annual earnings by 19 percent, employment by 14 percent and reduced social assistance (welfare) receipt by more than a third.
    JEL: I2 I28 J18
    Date: 2019–03
  26. By: Federico Masera (UNSW Business School)
    Abstract: Using new data at the police department level, I propose an identification strategy to estimate the causal effect that police militarization has on reducing violent crime. I show that previous estimates are likely to be contaminated by unobserved factors that simultaneously determine militarization and violent crime. Upon addressing this issue, I find an effect that is 20 times as large as previously estimated. I then find that one fourth of the effect of militarization is due to the displacement of violent crime to neighboring areas. Police departments overmilitarize because they do not consider this externality. These new findings have significant implications for the policy debate concerning the costs and benefits of police militarization.
    Date: 2019–02
  27. By: Randall Akee; Maggie R. Jones
    Abstract: Using a novel panel data set of recent immigrants to the U.S. (2005-2007) from individual-level linked U.S. Census Bureau survey data and Internal Revenue Service (IRS) administrative records, we identify the determinants of return migration and earnings growth for this immigrant arrival cohort. We show that by 10 years after arrival almost 40 percent have return migrated. Our analysis examines these flows by educational attainment, country of birth, and English language ability separately for each gender. We show, for the first time, that return migrants experience downward earnings mobility over two to three years prior to their return migration. This finding suggests that economic shocks are closely related to emigration decisions; time-variant unobserved characteristics may be more important in determining out-migration than previously known. We also show that wage assimilation with native-born populations occurs fairly quickly; after 10 years there is strong convergence in earnings by several characteristics. Finally, we confirm that the use of stock-based panel data lead to estimates of slower earnings growth than is found using repeated cross-section data. However, we also show, using selection-correction methods in our panel data, that stock-based panel data may understate the rate of earnings growth for the initial immigrant arrival cohort when emigration is not accounted for.
    Keywords: Return Migration, Immigration, Human Capital, Wage Growth, Race, Panel Data.
    JEL: J31 F22 J61 J15
    Date: 2019–03
  28. By: Barra, Cristian; Boccia, Marinella
    Abstract: This paper investigates on the determinants of school performance measured by the average value of students’ tests score (math, reading and science) at school level. PISA data from 2000 to 2012 are used in order to explore this relationship. A multivariate regression is assessed considering the different channels (funds, computers connected to internet, parental education, student teacher ratio, number of girls and ownership) and controlling for time and country fixed effects. The analysis is done both allowing for the total sample and grouping for OECD countries and NO-OECD countries. The most important results show that, considering the all sample and the only OECD countries, school performances are positively driven by the student fees, presence of girls and computers; also the mother’s education plays an important role, while the father’s one is notable only at high level, otherwise is negative. Moreover, differently from that the improvement of the student achievement in NO-OECD countries is encouraged from charity funds, the presence of girls, and the parent’s education level.
    Keywords: Keywords: Test Scores; School Performance; Multivariate Regression
    JEL: C01 I21 I28
    Date: 2019–03–01
  29. By: VU, Tien Manh; Yamada, Hiroyuki
    Abstract: We examined the effects of Vietnamese enterprise zones on local businesses based on different patterns of place-based policies as well as the ownership structure of the zone infrastructure developers (ZIDs). We constructed a panel of communes during 2000–2007 using a census survey of firms having more than nine employees and a census of zones and zone-based firms.We found that place-based policies led to growth in the number of jobs and firms in the communes where enterprise zones were located, even after excluding zone-based firms. Our findings also suggest that privately owned ZIDs worked best under corporate-tax incentives, while zones with a designated central government agency as the ZID had adverse spillover effects on business development in neighboring communes of the same district.
    Keywords: Enterprise zone, Place-based policy, Infrastructure, Private sector, Local business, O14, O18, O25, L53, L52
    Date: 2019–03
  30. By: Manuela Stranges (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); François-Charles Wolff (LEMNA, Université de Nantes, Paris, France)
    Abstract: This paper investigates the trajectories of young migrants arriving in Italy by sea by means of unique data from a centre for reception of refugees and asylum seekers located in the southern region of Calabria during the period 2009-2014. We focus on the influence of family relationships at entry. We find that the length of stay is nearly five times higher for minors who entered in the centre with family than for those arrived alone. More than one-half of minors choose to leave the centre voluntarily and around a quarter are transferred to other places. A multivariate analysis shows that family status is very influential when explaining time spent in the centre. There is substantial heterogeneity in exit motives depending on the minors’ country of origin. Overall, our results raise the issue of the effectiveness of the whole asylum system in Europe since the massive early departures of minors from the centre may suggest that Italy is not their intended destination.
    Keywords: migrants, minors, refugees, refugee centre, administrative data, Italy
    JEL: O15 F22 N3
    Date: 2019–03
  31. By: Stephan Heblich; Stephen J. Redding; Daniel M. Sturm
    Abstract: Stephen Redding and colleagues examine how the introduction of steam railways shaped the emerging metropolitan area of London.
    Keywords: railways, cities, london
    Date: 2019–03
  32. By: Nicolas De Vijlder; Koen Schoors (-)
    Abstract: In this paper we investigate the hypothesis that the economic divergence across Flemish localities between 1830 and 1910 is explained by the theory of Hernando de Soto. We hypothesize that the uniform land rights installed after the French revolution provided borrowers with an attractive form of collateral. Conditional on the presence of local financial development provided by a new government-owned bank this eased access to external finance and fostered industrial and commercial economic activity. Using primary historical data of about 1179 localities in Flanders we find that the variation in the local value of land (collateral) and the variation in local financial development jointly explain a substantial amount of the variation in non-agricultural employment accumulated between 1830 and 1910. By 1910 industrial and commercial economic activity was more developed in localities where both early (1846) rural land prices were high and early (1880) local financial development was more pronounced, which is in line with the “de Soto” hypothesis.
    Keywords: de Soto, financial institutions, industrial development, land prices, Flanders, 19th - 20th centuries
    JEL: N93 O43 R11 R12
    Date: 2019–02
  33. By: Katherine Eriksson; Katheryn Russ; Jay C. Shambaugh; Minfei Xu
    Abstract: Using data over more than a century, we show that shifts in the location of manufacturing industries are a domestic reflection of what the international trade literature refers to as the product cycle in a cross-country context, with industries spawning in high-wage areas with larger pools of educated workers and moving to lower-wage areas with less education as they age or become “standardized.” We exploit the China shock industries as a set of industries that were in the late-stage product cycle by 1990 and show how the activity in those industries shifted from high-innovation areas to low-education areas over the 20th century. The analysis also suggests that the resilience of local labor markets to manufacturing shocks depends on local industries’ phase in the product cycle, on local education levels, and on local manufacturing wages. The risk of unemployment and detachment from the labor force rises most when a shock hits in areas where an industry already has begun phasing out, wages are high, or education levels are low. The results are consistent with the belief that there are long-term, secular trends in U.S. industrial structure driving the movement of industries, which shocks may mitigate or accelerate.
    JEL: F10 F16 F43
    Date: 2019–03
  34. By: María Gil (Banco de España); Danilo Leiva-Leon (Banco de España); Javier J. Pérez (Banco de España); Alberto Urtasun (Banco de España)
    Abstract: The goal of this paper is to propose a model to produce nowcasts of GDP growth of Spanish regions, by means of dynamic factor models. This framework is capable to incorporate in a parsimonious way the relevant information available at the time that each forecast is made. We employ a Bayesian perspective to provide robust estimation of all the ingredients involved in the model. Accordingly, we introduce the Bayesian Factor model for Regions (BayFaR), which allows for the inclusion of missing data and combines quarterly data on regional real output growth (taken from the database of the AIReF and from the individual regional statistics institutes, when available) and monthly information associated to indicators of regional real activity. We apply the BayFaR to nowcast the GDP growth of the four largest regions of Spain, and illustrate the real-time nowcasting performance of the proposed framework for each case. We also apply the model to nowcast Spanish GDP in order to be able to assess the relative growth of each region.
    Keywords: regional activity, nowcasting, dynamic factor model
    JEL: C32 E37 R13
    Date: 2019–03
  35. By: Randall Akee; Maggie R. Jones
    Abstract: Using a novel panel data set of recent immigrants to the U.S. (2005–2007) from individual-level linked U.S. Census Bureau survey data and Internal Revenue Service administrative records, we identify the determinants of return migration and earnings assimilation. We show that by 10 years after arrival almost 40 percent have return migrated. We show, for the first time, that return migrants experience downward earnings mobility over two to three years prior to their return migration. This finding suggests that economic shocks are closely related to emigration decisions. As a result, standard calculations of immigrants earnings growth may be understated.
    JEL: F22 J15 J61
    Date: 2019–03
  36. By: Guillherme Bandeira; Jordi Caballé; Eugenia Vella
    Abstract: In this paper we propose a new channel through which fiscal austerity affects the macroeconomy. To this end, we introduce endogenous migration both for the unemployed and the employed members of the household in a small open economy New Keynesian model with labour market frictions. Our model-based simulations for the austerity mix implemented in Greece over the period 2010-2015 show that the model is able to match the total size of half a million emigrants and output drop of 25%, while the model without migration generates an output drop of 20%. Having established that the model delivers empirically plausible results, we then use it to investigate (i) the two-way relation between migration and austerity, and (ii) the role of migration as shock absorber. We find that tax hikes induce prolonged migration outflows, while the effect of spending cuts is hump-shaped. In turn, emigration implies an increase in both the tax hike and time required to achieve a given size of debt reduction. As a result of the labour-reducing effect of these higher tax hikes, the unemployment gains from migration are only temporary in the presence of austerity and are substantially reversed over time.
    Keywords: fiscal consolidation, Migration, matching frictions, on-the-job search
    JEL: E32 F41
    Date: 2019–03
  37. By: Krzysztof Karbownik; Umut Özek
    Abstract: We identify externalities in human capital production function arising from sibling spillovers. Using regression discontinuity design generated by school-entry cutoffs and school records from one district in Florida, we find positive spillover effects from an older to a younger child in less affluent families and negative spillover effects from a younger to an older child in more affluent families. These results are consistent with direct spillovers dominating in economically disadvantaged families and with parental reinforcement in more affluent families.
    Keywords: sibling spillovers, household dynamics, school starting age, regression discontinuity
    JEL: D13 I20 J13
    Date: 2019
  38. By: Luciana Méndez-Errico (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Xavier Ramos (Departament d'Economia Aplicada. Universitat Autònoma de Barcelona)
    Abstract: We model schooling as a sequential process and examine why some children are left behind. We focus on the factors that explain selection at early stages of the education system. Our findings for Uruguay suggest that long-term factors, such as parental background or ethnicity matter across all education stages while the effect of short-term factors, such as family income, wear out as individuals progress in the education system, suggesting a severe selection process at early stages.
    Keywords: Schooling transition, selection, inequality, education, ethnicity, cognitive and noncognitive abilities, sequential dynamic model
    JEL: I20 I24 J13 J15 J24
    Date: 2019–01
  39. By: Shaun Hargreaves Heap (Kings College London); Oleksandr Talavera (University of Birmingham)
    Abstract: This paper examines the behaviour of a group of 'street-level bureaucrats': the UK’s MOT (certificate of roadworthiness) testers. We find differences in MOT failure rates across postcodes, days of the week and by car color. The postcode variation is worrying in a national test, especially as it is associated with road traffic accidents/fatalities. It plausibly arises from how these 'street-level bureaucrats' are regulated. The 'day-of-the-week' effect is also apparent in financial markets and so our evidence suggests this behavioral bias may be more widespread. The bias with respect to color is new and is unrelated to favourite colors.
    Keywords: Street-level bureaucrats, regulatory failure, accident rate, behavioral bias.
    JEL: R41 R48
    Date: 2019–02
  40. By: Costa-Font, Joan; Turati, Gilberto
    Abstract: Does regional decentralization threaten the commitment to regional equality in government outcomes? We attempt to shed light on this question by drawing on unique evidence from the largest European unitary states to have engaged in countrywide health system decentralization: Italy and Spain. We estimate, decompose, and run counterfactual analysis of regional inequality in government output (health expenditure per capita) and outcome (health system satisfaction) during the expansion of health care decentralization in both countries. We find no evidence of an increase in regional inequalities in outcomes and outputs in the examined period. Inequalities are accounted for by differences in health system design and management by regional governments.
    Keywords: health care decentralization; regional inequality; health care; Oaxaca decomposition
    JEL: N0
    Date: 2018–01–01
  41. By: Carole Bonnet; Bertrand Garbinti; Sébastien Grobon
    Abstract: Amongst young households (ages 25 to 44), inequalities in first-time home-ownership and in the amount of acquired real estate assets have increased between the most modest and the most affluent groups over the past forty years. According to Insee’s Housing surveys, 32% of young low-income households were homeowners in 1973, as compared to only 16% in 2013. Beyond the role of macroeconomic and institutional factors (real estate prices, interest rates, term of loans granted, etc.), a decomposition of changes in ownership rates over the period using the “Oaxaca-Blinder” method highlights the role of changes in family structures (increasing proportion of single-parent families, decline in the share of couples with children in the most modest households) and the sharp decline in small rural home ownership. Family support – gift assistance, inheritance and other forms of aid – also played an important part in the 2000s: four out of ten recent homeowners benefited from it, two out of ten even receiving direct financial assistance for their purchase. This support increased significantly among wealthier households during the 2000s, contributing to a widening gap with the share of homeowners in the least well off populations.
    Keywords: homeownership, real estate wealth, family transfers, gift assistance, Oaxaca decomposition, inequalities
    JEL: D63 D64 J10 R21
    Date: 2019
  42. By: Hinnosaar, Marit; Hinnosaar, Toomas; Kummer, Michael; Slivko, Olga
    Abstract: Do contributions to online content platforms induce a feedback loop of ever more user-generated content or will they discourage future contributions? To assess this, we use a randomized field experiment which added content to some pages in Wikipedia while leaving similar pages unchanged. We find that adding content has a negligible impact on the subsequent long-run growth of content. Our results have implications for information seeding and incentivizing contributions, implying that additional content does not generate sizable externalities, neither by inspiring nor by discouraging future contributions.
    Keywords: knowledge accumulation; User-generated content; Wikipedia
    JEL: C93 L17 L86
    Date: 2019–03
  43. By: M. Bigoni; S. Bortolotti; V. Rattini
    Abstract: We study how differences in socio-economic background correlate with preferences and beliefs, in a sample of college students born in a mid-sized Italian city. Our findings indicate that participants living in an area characterized by a high socio-economic environment tend to trust more and are more inclined to reciprocate higher levels of trust, as compared to those coming from less wealthy neighborhoods. This behavioral difference is, at least in part, driven by heterogeneities in beliefs: subjects from the most affluent part of the city have more optimistic expectations on their counterpart's trustworthiness than those living in a lower socio-economic environment. By contrast, no significant differences emerge in other preferences: generosity, risk-attitudes, and time preferences. Finally, we do not find any systematic evidence of out-group discrimination based on neighborhood identity.
    JEL: C90 D31 D63 R23
    Date: 2019–03

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