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on Urban and Real Estate Economics |
| By: | Bill Cochrane (University of Waikato); Jacques Poot (Vrije Universiteit Amsterdam) |
| Abstract: | This paper provides a survey of the international evidence regarding the impact of immigration on local housing markets. A theoretical framework highlights the complexity of the housing market and the importance of distinguishing between the ownership and use of the stock of dwellings vis-à-vis the residential real estate market. Evidence from eight countries (Canada, France, Italy, New Zealand, Spain, Switzerland, United Kingdom and United States) and from meta-analysis shows that immigration will lead to higher house prices and rents, and lower housing affordability. On average, a one percent increase in immigration in a city may be expected to raise rents by one-half to one percent and the effect on prices is about double that. However, there is a large variance around this average which is related inter alia to the time frame and spatial scale of the analysis, as well as to local economic conditions. Additionally, the housing impact of immigration will depend on the demographic and economic composition of the immigrant flow, on macroeconomic conditions and expectations, on the institutional factors that influence the price elasticity of the supply of new dwellings, and on how the native born react to immigration. The tendency of the native born to move out of city wards where migrants settle can lead to relative house price declines in these areas. Overall, immigration has been only a minor contributor to the sharply rising house prices in many fast-growing agglomerations in recent decades. |
| Keywords: | immigration; housing; real estate; homeownership |
| JEL: | F22 J61 L85 R21 R23 |
| Date: | 2019–06–20 |
| URL: | http://d.repec.org/n?u=RePEc:wai:econwp:19/07&r=all |
| By: | Aviral Kumar Tiwari (Montpellier Business School, 2300, Avenue des Moulins, 34185, Montpellier Cedex 4 0002, France); Christophe Andre (Economics Department, Organisation for Economic Co-operation and Development (OECD), 75775 Paris, Cedex 16, France); Rangan Gupta (Department of Economics, University of Pretoria, Pretoria, South Africa) |
| Abstract: | Real estate, either in physical or securitised form, provides valuable diversification opportunities to investors. However, spillovers reduce the benefits of portfolio diversification, especially in times of crisis, when asset returns tend to be more correlated. This paper assesses the strength and time variation of spillovers between returns on residential real estate, real estate investment trusts (REITs), stocks and bonds in the United States, using the Diebold-Yilmaz (DY) (2012) approach in the time domain and the Baruník-Křehlík (BK) (2018) methodology in the frequency domain. On average, spillovers between housing, stock and bond returns are relatively modest and shocks to stock and bond markets affect housing returns more than the other way round, even though net spillovers from housing to other assets spiked in the aftermath of the subprime crisis. Spillovers in both directions are much stronger between REITs and stocks than between REITs and housing. The analysis in the frequency domain highlights the persistence of effects from shocks originating in the housing market, particularly in the aftermath of the subprime crisis. |
| Keywords: | Real estate, Stocks, Bonds, Spillovers, Portfolio management |
| JEL: | C32 G10 G11 R30 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201947&r=all |
| By: | Yamagishi, Atsushi |
| Abstract: | Whether the minimum wage is an effective redistributive policy is still controversial. I investigate this issue from a new perspective by focusing on the effect of minimum wage hikes on housing rents. It is informative for two reasons. First, if minimum wage hikes increase housing rents, some of the benefits accidentally fall on homeowners rather than workers. Second, housing rents serve as an indicator as to whether and how much minimum wages are beneficial for workers, which I show by developing a spatial equilibrium model. I empirically analyze the causal impact of the minimum wage increase on housing rents in the United States and Japan. In both countries, minimum wages hikes increase housing rents in urban areas: 10% minimum wage increase induces 1%-2% increase in the United States and 2.5%-5% increase in Japan. While the unintended incidence on homeowners is arguably moderate, it is non-negligible. Moreover, it may be more salient if minimum wages induce unemployment. I also suggest the importance of heterogeneous welfare impacts on different groups of minimum wage workers. |
| Keywords: | Minimum Wages, Housing Rents, Incidence, Capitalization, Heterogeneous Workers |
| JEL: | J21 J38 J61 R23 R38 |
| Date: | 2019–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:94238&r=all |
| By: | Niemesh, Gregory; Jones-Farmer, L. Allison; Hart, Joseph; Holmes, William; Soundappan, Nathan |
| Abstract: | A modern land bank is a public entity that purchases and demolishes blighted housing to remove negative externalities. We estimate the impact of land bank demolitions on surrounding property values for a medium-sized municipality. Using a spatial correction hedonic model of house prices, we find modest increases in sales prices associated with land bank activity in a neighborhood. In general, the impact estimates we find are smaller than those found in the literature for a much larger metropolitan area. We speculate on the cause of this difference in findings. |
| Keywords: | Land bank, spatial econometrics, property values |
| JEL: | R3 R38 |
| Date: | 2019–05–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:94193&r=all |
| By: | Jack Favilukis; Pierre Mabille; Stijn Van Nieuwerburgh |
| Abstract: | Housing affordability is the main policy challenge for many large cities in the world. Zoning changes, rent control, housing vouchers, and tax credits are the main levers employed by policy makers. But how effective are they at combatting the affordability crisis? We build a new framework to evaluate the effect of these policies on the well-being of its citizens. It endogenizes house prices, rents, construction, labor supply, output, income and wealth inequality, as well as the location decisions of households. Its main novel features are risk, risk aversion, and incomplete risk-sharing. We calibrate the model to the New York MSA, incorporating current zoning and affordable housing policies. Housing affordability policies carry substantial insurance value but cause misallocation in labor and housing markets. Housing affordability policies that enhance access to this insurance especially for the neediest households create large net welfare gains. |
| JEL: | E21 E6 G11 G12 G18 H2 H76 R1 R13 R21 R28 R3 R31 R41 R51 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25906&r=all |
| By: | Michael Amior; Alan Manning |
| Abstract: | Britain suffers from persistent spatial disparities in employment rates. This paper develops an integrated framework for analyzing two forces expected to equalize economic opportunity across areas: commuting and migration. Our framework is applicable to any level of spatial aggregation, and we use it to assess their contribution to labor market adjustment across British wards (or neighborhoods). Commuting offers only limited insurance against local shocks, because commutes are typically short and shocks are heavily correlated spatially. Analogously, migration fails to fully equalize opportunity because of strong temporal correlation in local demand shocks. |
| Keywords: | spatial inequality, commuting, migration |
| JEL: | J21 J61 J64 R23 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1623&r=all |
| By: | Maria Cotofan (Erasmus University Rotterdam); Ron Diris (Maastricht University); Trudie Schils (Maastricht University) |
| Abstract: | Previous findings on (fleeting) relative age effects in school suggest that, given innate ability, too few younger and too many older students attend academic tracks. Using a regression discontinuity design around school-specific admission thresholds, we estimate the cognitive and non-cognitive effects of track assignment at the achievement margin, across relative age. We find that attending the higher track does not affect cognitive outcomes at any relative age. For older students, attending the higher track increases perseverance, need for achievement, and emotional stability. The results suggest that older students compensate lower ability (given high track attendance) with higher effort. |
| Keywords: | educational economics, school tracking, relative age, non-cognitive skills |
| JEL: | J24 I21 |
| Date: | 2019–06–07 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20190038&r=all |
| By: | Niklas Potrafke; Felix Rösel |
| Abstract: | Spatial inequalities in publicly provided goods such as health care facilities have substantial socioeconomic effects. Little is known, however, as to why publicly provided goods diverge among urban and rural regions. We exploit narrow parliamentary majorities in German states between 1950 and 2014 in an RD framework to show that government ideology influences the urban-rural gap in public infrastructure. Leftwing governments relocate hospital beds from rural regions. We propose that leftwing governments do so to gratify their more urban constituencies. In turn, spatial inequalities in hospital infrastructure increase, which seems to influence general and infant mortality. |
| Keywords: | Publicly provided goods, spatial inequalities, political business cycles, partisan politics, government ideology, health care, hospitals |
| JEL: | D72 H42 I18 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ifowps:_300&r=all |
| By: | Daunfeldt, Sven-Olof (Institute of Retail Economics (HFI)); Mihaescu, Oana (Dalarna University); Öner, Özge (University of Cambridge); Rudholm, Niklas (Centre for Entrepreneurship and Spatial Economics) |
| Abstract: | Opponents of big-box entry argue that large retail establishments generate noise and other types of pollution and a variety of negative externalities associated with traffic. Big-box advocates, on the other hand, argue that access to a large retail market delivers not only direct economic benefits but also a variety of positive spillover effects and therefore can be considered a consumer amenity that increases the attractiveness of the entry location. To test the validity of these competing arguments, we use the entry of IKEA in Sweden as a quasi-experiment and empirically investigate whether increased access to retail affects place attractiveness, which is proxied by residential property values. We find that IKEA entry increases the prices of the properties sold in the entry cities by, on average, 4.4% or 60,425 SEK (approximately 6,400 USD), but this effect is statistically insignificant for the properties in the immediate vicinity of the new IKEA retail trade area. In addition, we observe an attenuation of the effect with distance from the new IKEA store and the associated retail trade area, where the properties located 10 km away experience a 2% price increase. Our results are in line with some previous findings regarding the effects of entry by Walmart or supermarket stores in the US and show that large retailers have the potential to increase place attractiveness, but perhaps not in the immediate vicinity of the new establishment. |
| Keywords: | Retail trade; Large retailers; Property values; Place attractiveness; Difference-in-differences estimation |
| JEL: | D22 P25 R12 R32 |
| Date: | 2019–06–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1287&r=all |
| By: | Murray, Tim |
| Abstract: | Many retirees retain housing equity and do not utilize it to help finance spending on consumption. In this paper, I examine how older Americans (age 55+) may engage in precautionary savings where households would sell their house in the event they face an increase in out-of-pocket medical expenses due to a health shock. Using a counterfactual experiment, I find that older households are 13-percentage points less likely to own a home in their late retirement years when they know they will not have any out-of-pocket medical expenses. This indicates that many older households prefer not to own a home but choose to do so knowing they may get sick and thus are engaging in precautionary savings using their house. I conduct a policy experiment to examine how an insurance policy that would cover all out-of-pocket medical expenses would impact home ownership. I find that when an insurance policy of this nature is offered that costs four percent of income, the baseline economy has the same homeownership and moving rates as the counterfactual experiment where households do not have to pay for out-of-pocket medical expenses. This suggests that if seniors had more adequate health care coverage, they would be more willing to use the equity in their house to increase consumption in retirement. |
| Keywords: | housing, equity, precautionary savings, Medicare, insurance |
| JEL: | D14 E13 E21 R21 R31 |
| Date: | 2019–06–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:94463&r=all |
| By: | Snorre Kverndokk; Erik Figenbaum; Jon Hovi |
| Abstract: | Aiming to reduce the number of brown (polluting) cars on the road, several countries currently promote the purchase and use of green (emission-free) cars through financial and non-financial incentives. We study how such incentives affect consumers who continue to drive brown cars. Using a simple model, we analyze the effects of policy instruments such as subsidizing green cars, taxing brown cars, and allowing green cars to drive in bus lanes. Car owners are influenced by price incentives as well as by external effects from traffic (such as congestion) both in regular lanes and in bus lanes. An extension of the model also considers how changes in local driving habits affect brown-car driving. We find that subsidizing green cars and allowing green cars to drive in bus lanes might increase brown-car driving. We also report the results of a recent survey containing questions specifically designed to tap the significance of the model’s core mechanisms. The results are largely consistent with propositions derived from the model. While most brown-car respondents report their driving was unchanged after the implementation of the policies to promote green cars, some – particularly in major cities – report that these policies caused them to reduce or increase their driving. We conclude that some mechanisms in our model are more important than others and that certain mechanisms appear to influence different brown-car drivers in different ways. Overall, it seems that Norwegian policies to promote the purchase and use of green cars have indeed reduced brown-car driving. |
| Keywords: | electric vehicles, environmental policies, external effects, habit formation, social norms |
| JEL: | D62 H23 Q54 R42 R48 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7679&r=all |
| By: | M. Govinda Rao |
| Abstract: | Achieving sustainable development requires particular attention to the provision of public services in large metropolitan cities. The objective of this paper is to analyze the finances of Mumbai, the largest Indian city. The population in the core city (central business district) of Mumbai has actually shown a decline between 2001 and 2011 census, and the population in the area covered under the Municipal Corporation of Greater Mumbai (MCGM) which includes suburban areas has increased at just 1.2 per cent over the 10 years. This however, does not mean there has been any abatement of migration in search of employment. Most of the migrants have been settling down in the MMR region due to non-availability affordable rental housing within the city. Mumbai has been a centre of economic dynamism, but its future vibrancy depends improving its efficient public service delivery. The study will analyze the finances of the MCGM with a view to identifying areas of reform to enable to create the required agglomeration economies. Section 2 will provide a brief history of Mumbai, its evolution as a major metropolis, its importance in the State and national economy. Section 3 will analyze the assignment of functions and sources of finances of Mumbai Municipal Corporation. Sections 4 will identify and analyze the problem areas and list the challenges before the MCGM. The final section lists the major initiatives required to reform the city finances in Mumbai. In identifying reform areas, the paper will also attempt to draw lessons from some of the successful experiments in other cities in the country. |
| Keywords: | Sustainable development, public services, finances, municipal corporation, India |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:unt:wpmpdd:wp/19/03&r=all |
| By: | Barasinska, Nataliya; Haenle, Philipp; Koban, Anne; Schmidt, Alexander |
| Abstract: | This paper presents a framework for estimating losses in the residential real estate mortgage portfolios of German banks. We develop an EL model where LGD estimates are based on current collateral values and PD dynamics are estimated using a structural PVAR approach. We confirm empirically that foreclosure rates are rising with the unemployment rate and are inversely related to house price inflation. Being consistent with our expectation that strategic defaults do not play a central role given the full personal liability of German households, the results give broad support for the double-trigger hypothesis of mortgage defaults. In order to analyse the possible credit losses stemming from residential mortgage lending we then use the model to run a top-down stress test and simulate losses on the individual bank level for the years from 2018 to 2020 for the whole German banking sector. Our results show that loss rates in the residential mortgage portfolios of German banks do increase significantly in an adverse economic environment. The estimated expected losses are widely distributed in the banking system leading, on average, to a 0.4 percentage points reduction in the CET1 ratio over the simulation period. |
| Keywords: | residential real estate,mortgages,credit risk,stress testing,German banks |
| JEL: | G01 G17 G21 G28 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdps:172019&r=all |
| By: | Gimenez-Nadal, J. Ignacio (University of Zaragoza); Molina, José Alberto (University of Zaragoza) |
| Abstract: | This paper analyzes how gasoline tax rates are related to the time workers in the United States spend commuting by private car, public transport, or with other physical modes of transport. Our identification strategy relies on both between-state differences and time variations in gasoline taxes. Using the American Time Use Surveys for the years 2003 to 2015, we find that higher gasoline tax rates are related with less time spent in commuting. Furthermore, higher gasoline taxes are related to a lower proportion of commuting by private car, and higher proportions of commuting by public transport and/or a physical mode of transport (e.g., walking, cycling). Our results highlight the importance of gasoline taxes (and prices) on the consumption of energy for personal transport, as higher gasoline taxes are related to a greater use of "green" modes of transport, showing that fuel taxes are important for good management of the environment. |
| Keywords: | commuting time, public transport, walking/cycling, gasoline taxes |
| JEL: | D1 Q4 R4 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12377&r=all |
| By: | ITO Hirotake; NAKAMURO Makiko; YAMAGUCHI Shintaro |
| Abstract: | We estimate the effects of class-size reduction by exploiting exogenous variation caused by Maimonides' rule, which requires that the maximum class size be 40 students and classes be split when 41 or more students are enrolled. Our data cover all fourth to ninth graders in 1,064 public schools in an anonymous prefecture for three years. We find that the effects of class-size reduction on academic test scores are small on average, but slightly stronger for students not going to a private tutoring school. We find no evidence that small class size improves non-cognitive skills. Our substantive conclusion does not change when controlling for school fixed effects. |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:19036&r=all |
| By: | Rus’an Nasrudin; Budy P. Resosudarmo |
| Abstract: | This paper provides new evidence on how a relatively open internal migration policy can influence migrant assimilation outcomes. We revisit the findings of previous studies on international labour migration in developing countries by investigating the economic consequences of moving people from rural areas to four Indonesian cities in which international migration is relatively free. The empirical investigation uses cross-sectional and individual-level panel data techniques. The results suggest that Indonesian migrants do not experience earnings penalties following their arrival in urban areas but have persistently higher earnings than their urban non-migrant counterparts. However, the higher earnings are accompanied by a worrying decline in migrant mental health. The finding of persistently higher earnings contrasts with the results of studies in countries such as China and Vietnam, which have more restrictive policies for rural–urban migration. We argue that economic assimilation can be highly successful in developing economies if the internal migration regime is relatively open, yet it creates an adverse mental health consequence. |
| Keywords: | Indonesia, rural–urban migration, migration policy, mental health of internal migrants |
| JEL: | O15 R23 R28 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2019-04&r=all |
| By: | Heiko Karle; Martin Peitz; Markus Reisinger |
| Abstract: | For many products, platforms enable sellers to transact with buyers. We show that the competitive conditions among sellers shape the market structure in plat form industries. If product market competition is tough, sellers avoid competitors by joining different platforms. This allows platforms to sustain high fees and ex plains why, for example, in some online markets, several homogeneous platforms segment the market. Instead, if product market competition is soft, agglomeration on a single platform emerges, and platforms fight for the dominant position. These insights give rise to novel predictions. For instance, market concentration and fees are negatively correlated in platform industries, which inverts the standard logic of competition. |
| Keywords: | intermediation, two-sided markets, market structure, price competition, endogenous segmentation |
| JEL: | L13 D43 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2019_101&r=all |
| By: | Martinez, Sebastian; Sanchez, Raul; Yañez, Patricia |
| Abstract: | This paper studies the effects of areal cable cars on mode of transport, time use and employment in the metropolitan area of La Paz, Bolivia. Using an instrumental variables approach, we estimate local average treatment effects of cable car use for residents who use the system due to proximity to a cable car station. Results suggest that cable-car users substitute private transport in favor of public transit and experience large savings in commute time, which is reallocated toward educational and recreational activities. Users also increase self-employment activities, potentially reflecting improved access to local labor markets. The positive effects of the cable-car are driven by residents of the city of El Alto, a city with high concentration of poor and indigenous households on the high plateau bordering La Paz. The economic benefits of the cable car outweigh costs by a ratio of 1.05 to 2.16. |
| Keywords: | Cable Car; Mi Teleferico; Mass Transit; Travel Time; Employment |
| JEL: | O18 R41 L92 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:36&r=all |
| By: | David Gabauer (Institute of Applied Statistics, Johannes Kepler University, Altenbergerstraẞe 69, 4040 Linz, Austria and Department of Business and Management, Webster Vienna Private University, Praterstraẞe 23, 1020 Vienna, Austria); Rangan Gupta (Department of Economics, University of Pretoria, Pretoria, South Africa) |
| Abstract: | We investigate the spillover across real estate (REU), macroeconomic (MU) and financial uncertainties (FU) in the United States based on monthly data covering the period of July, 1970 to December, 2017. To estimate the propagation of uncertainties across the sectors, a time-varying parameter vector autoregression (TVP-VAR)-based connectedness procedure has been applied. In sum, we show that that since the 1970s, FU has been the main transmitter of shocks driving both, MU and REU, with MU dominating the REU. Our results support the need for better macroprudential policy decisions. |
| Keywords: | Dynamic Connectedness, Uncertainty Transmission, Real Estate Uncertainty, Macroeconomic Uncertainty, Financial Uncertainty, TVP-VAR |
| JEL: | C32 E32 F42 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201944&r=all |
| By: | Polterovich, Victor; Ilinskiy, Dmitry; Boltonosov, Igor; Starkov, Oleg; Tutundzhyan, Artem; Zhikhareva, Alina |
| Abstract: | Modern Russian bank mortgages are not widely available to low- and middle-income households due to the high cost of housing, high interest rates and strict requirements for borrowers. There are reasons to believe that the solvent demand for mortgage loans may be increased through the development of collective savings institutions and cooperatives, such as сontractual savings for housing (Bausparkassen), housing savings accounts, housing savings and housing building cooperatives. This study analyzes foreign and domestic experience of their formation and functioning. It is shown that in the current Russian conditions, Bausparkassen and housing savings accounts are the most promising institution providing accumulation of savings of the general public for the purchase of housing. It is advisable to develop corporate programs to help employees to purchase housing, and combine them with savings and loan programs. Recommendations have been developed to improve legislation aimed at establishing and improving collective savings institutions. The book is based on the research conducted under the state contract No. GK 17/235 dated November 13, 2017. "Improvement of legislative regulation in order to increase the affordability of the population's own housing, including the development of mortgage lending mechanisms, сontractual savings for housing, share building, housing building cooperatives. |
| Keywords: | mortgage, collective savings, сontractual savings for housing (Bausparkassen), housing savings accounts, cooperatives, share building |
| JEL: | D02 D14 G21 |
| Date: | 2019–06–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:94348&r=all |
| By: | Manuela Krause; Niklas Potrafke |
| Abstract: | Since 2007 the German state governments have been allowed by a constitutional reform to set real estate transfer tax rates. We exploit this reform and investigate whether government ideology predicts the levels and increases in the real estate transfer tax rates. The results show that leftwing and center governments were more active in increasing the real estate transfer tax rates than rightwing governments. Many voters were disenchanted with the policies and platforms of the established German parties. Disenchantment notwithstanding, real estate transfer tax policies show that the established political parties are still prepared to offer polarized policies. |
| Keywords: | Real estate transfer tax, partisan politics, reform, government ideology, fiscal federalism |
| JEL: | D72 H20 H71 P16 R38 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ifowps:_302&r=all |
| By: | Kalena E. Cortes; Hans D.U. Fricke; Susanna Loeb; David S. Song; Benjamin N. York |
| Abstract: | The time children spend with their parents affects their development. Parenting programs can help parents use that time more effectively. Text-messaged-based parenting curricula have proven an effective means of supporting positive parenting practices by providing easy and fun activities that reduce informational and behavioral barriers. These programs may be more effective if delivered during times when parents are particularly in need of support or alternatively when parents have more time to interact with their child. This study compares the effects of an early childhood text-messaging program sent during the weekend to the same program sent on weekdays. We find that sending the texts on the weekend is, on average, more beneficial to children’s literacy and math development. This effect is particularly strong for initially lower achieving children, while the weekday texts show some benefits for higher achieving children on higher order skills. Results are consistent with the hypothesis that the parents of lower achieving students, on average, face such high barriers during weekdays that supports are not enough to overcome these barriers, while for parents of higher achieving students, weekday texts are more effective because weekdays are more challenging, but not so difficult as to be untenable for positive parenting. |
| JEL: | I21 I24 J18 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25964&r=all |
| By: | Justine Diokno-Sicat (Assistant Professor at the Cesar E.A. Virata School of Business, University of the Philippines (Diliman)) |
| Abstract: | Strong economic growth and rapid urbanization in the Philippines in recent years has led to increased pressure on government to provide public infrastructure, goods and services. At the same, this economic expansion serves as an opportunity for the public sector to mobilize resources to accommodate and finance increased public services. This study aims to understand how public financing is carried out in Metropolitan (Metro) Manila by examining governance structures and institutional mandates in revenue mobilization. Metro Manila, also known as the National Capital Region (NCR), is the center of economic, political and educational power (Department of Trade and Industry n.d.) and is comprised of 16 cities and 1 municipality. These local government units (LGUs) have revenue raising and spending authority and autonomy as provided in the 1991 Local Government Code (LGC). At the same time these LGUs are under the jurisdiction of the Metropolitan Manila Development Authority (MMDA). This metropolitan governance structure is a public corporation that coordinates development plans, policies and reforms across all the member sub-national governments. |
| Keywords: | Economic growth, urbanization, public infrastructure, resource mobilization |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:unt:wpmpdd:wp/19/02&r=all |
| By: | Cai, Zhengyu (Southwestern University of Finance and Economics); Maguire, Karen (Oklahoma State University); Winters, John V. (Iowa State University) |
| Abstract: | This paper examines local labor market outcomes from an oil and gas boom in Texas. We examine two main outcomes across gender, race, and ethnicity: the probability of employment in the oil and gas industry and the log wages of workers employed outside the oil and gas industry. We find that men and women both gain employment in the oil and gas industry during booms, but such gains are much larger for men and are largest for black and Hispanic men. We also find positive income spillovers for workers in other industries that are similar in magnitude across demographic groups. |
| Keywords: | oil, natural gas, employment, gender, race, energy |
| JEL: | J20 Q33 Q40 R10 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12349&r=all |
| By: | Ivandic, Ria (King's College London); Kirchmaier, Tom (Copenhagen Business School); Machin, Stephen (London School of Economics) |
| Abstract: | Empirical connections between local anti-Muslim hate crimes and international jihadi terror attacks are studied. Based upon rich administrative data from Greater Manchester Police, event studies of ten terror attacks reveal an immediate big spike up in Islamophobic hate crimes and incidents when an attack occurs. In subsequent days, hate crime is amplified by real-time media. It subsequently attenuates, but hate crime incidence cumulates to higher levels than prior to the series of attacks. The overall conclusion is that, even when they reside in places far away from where jihadi terror attacks take place, local Muslim populations face a media magnified likelihood of hate crime victimization following international terror attacks. This matters for community cohesion in places affected by discriminatory hate crime and, from both a policy and research perspective, means that the process of media magnification of hate crime needs to be better understood. |
| Keywords: | islamophobic hate crime, Jihadi terror attacks, media |
| JEL: | K42 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12352&r=all |
| By: | Domínguez, Patricio; Asahi, Kenzo |
| Abstract: | This paper studies the effect of ambient light on crime, taking advantage of the daylight saving time (DST) policy, which imposes exogenous variations in daylight exposure at specific hours of the day. The paper uses a rich administrative database managed by Chile’s national police, a centralized agency that collects detailed information regarding each crime incident. A 20% decrease (increase) in crimes is found when the DST transition increases (decreases) the amount of sunlight by one hour during the 7-9 p.m. period. Importantly, no significant response is detected induced by DST associated with a plausible demand-side response such as the population’s commuting time pattern, and no substantial short-term displacement is found. Most of the changes in property crime due to the DST policy are driven by robbery in residential areas. |
| Keywords: | Economics of crime; Daylight Saving Time; Rational choice |
| JEL: | R41 K42 D01 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:9639&r=all |
| By: | Hieu T. M. Nguyen; Blane D. Lewis |
| Abstract: | We investigate the impact of school starting age on teenage marriage and motherhood in Vietnam, where the rates of both are rising rapidly. We exploit a discontinuity in the age at which children start school and use regression discontinuity methods to identify the causal effect of school starting age on premature marriage—a first in the literature—and early motherhood. We find that girls who start school earlier and who are therefore younger relative to their classmates are significantly more likely to marry and/or give birth in their teenage years. We argue that the negative effects of starting school early are transmitted through adverse peer influences. We also determine that school starting age impacts are heterogeneous across girl subgroups. The significant effects of school starting age are concentrated among teenage girls who are members of ethnic minorities, whose mothers have relatively less education, whose households are relatively poor, and/or who live in rural areas. Girls that fall into these subgroups are more likely to benefit from starting school later. Finally, we present some preliminary and suggestive evidence that participation in extracurricular activities may help mitigate negative school-based peer effects. |
| Keywords: | school starting age, teenage marriage, teenage motherhood, peer influences, regression discontinuity, Vietnam |
| JEL: | J12 J13 J16 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2018-18&r=all |
| By: | Dyah Pritadrajati (Intern at the Macroeconomic and Financing for Development Division) |
| Abstract: | While vocational education is believed to provide students with the opportunity to learn specific-job relevant, empirical evidence on the impact of vocational education on labour market outcomes is far from conclusive. In order to reduce youth unemployment rate, the Indonesian government plans to increase the proportion of vocational schools in upper-secondary education, from 42 per cent today to 70 per cent by 2025. Using a rich longitudinal household survey for Indonesia, this paper analyses the effects of different school types on four labour market outcomes: labour force participation, risk of unemployment, job formality, and income. To correct for endogeneity bias, this paper uses multiple instrumental variables, including parents’ educational backgrounds and the proportion of each school type in the district to reflect the supply of each school type. The results suggest that public vocational education provides better prospects of labour outcomes for women, relative to public general schools. However, no such difference is found for men. Moreover, the results suggest that many vocational schools, especially private ones, perform poorly in terms of their graduate’s job formality and income. For vocational education to truly improve labour market prospects for youth, greater attention needs to be paid to quality assurance as well as change in hiring practice. |
| Keywords: | vocational education, general education, upper-secondary school, labour market outcomes |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:unt:wpmpdd:wp/18/06&r=all |
| By: | Mitnik, Oscar A.; Sanchez, Raul; Yañez, Patricia |
| Abstract: | This paper quantifies the impacts of transport infrastructure investments on economic activity in Haiti, proxied by satellite luminosity data. Our identification strategy exploits the differential timing of rehabilitation projects across various road segments of the primary road network. We combine multiple sources of non-traditional data and carefully address concerns related to unobserved heterogeneity. The results obtained across multiple specifications consistently indicate that receiving a road rehabilitation project leads to an increase in luminosity values between 7 percent and 15 percent at the communal section level. Taking into account the national level elasticity between luminosity values and GDP, we approximate that these interventions translate in GDP increases of around 0.6 percent and 1.2 percent in communal sections that were benefited by a transport project. Findings also uncover some temporal and spatial variation, showing that effects take some time to appear and that it is not the richest or the poorest communities that are gaining from these investments but those in the middle of the income distribution. |
| JEL: | O10 R40 O47 D04 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:28&r=all |
| By: | Stefania Borelli (Department of Social Sciences and Economics, Sapienza University of Rome (IT).); Giuseppe De Arcangelis (Department of Social Sciences and Economics, Sapienza University of Rome (IT).); Majlinda Joxhe (CREA-University of Luxembourg.) |
| Abstract: | We assess the effect of migration on the production structure in a selection of European countries for the pre-Great Recession period 2001-2009. We propose a labor-task approach where the infl ow of migrants raises the relative supply of manual-physical (or simple) tasks and therefore favors simple-task intensive sectors. We use the US O*NET database in conjunction with European labor data to calculate the index of simple-task intensity at the industry and country level. The analysis confirms that a rise in employment migration rates has a generalized positive impact, but that value added increases significantly more in sectors that use more intensively simple tasks. A traditional shift-share instrument is used to overcome possible endogeneity problems. |
| Keywords: | International Migration, Labor Tasks, ONET, Rybczynski Effect. |
| JEL: | F22 C25 J24 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:saq:wpaper:6/19&r=all |
| By: | Heckman, James J. (University of Chicago); Karapakula, Ganesh (University of Chicago) |
| Abstract: | This paper examines the impact of the iconic Perry Preschool Project on the children and siblings of the original participants. The children of treated participants have fewer school suspensions, higher levels of education and employment, and lower levels of participation in crime, compared with the children of untreated participants. Impacts are especially pronounced for the children of male participants. These treatment effects are associated with improved childhood home environments. The intergenerational effects arise despite the fact that families of treated subjects live in similar or worse neighborhoods than the control families. We also find substantial positive effects of the Perry program on the siblings of participants who did not directly participate in the program, especially for male siblings. |
| Keywords: | externalities, early childhood interventions, spillover effects, intergenerational treatment effects, intragenerational treatment effects |
| JEL: | C4 I21 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12363&r=all |
| By: | Razak, Nursakina; Masih, Mansur |
| Abstract: | The purpose of this study is to find the Granger-causal relationship between house price and income. Singapore is taken as a case study and standard time-series approach is employed. The outcome of this relationship will determine the lead-lag relation between house price and income which will then provide some policy implications to tackle the rising housing price and income distribution as well as housing affordability in Singapore. However, the empirical findings based on the generalised VDC (forecast variance decompositions) tend to indicate that unemployment rate is the most lagging factor, while house price is the most leading variable followed by the income variable. This happens due to the probability that house price is controlled and determined by HDB (Housing Development Board), the government entity for public housing in Singapore. This has strong policy implications. |
| Keywords: | HDB, CPI, GDP, House price, cointegration, unemployment, Singapore |
| JEL: | C58 E44 |
| Date: | 2018–06–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:94212&r=all |
| By: | Leone Walters (Department of Economics, University of Pretoria, Pretoria, South Africa); Manoel Bittencourt (School of Economic and Business Sciences, University of the Witwatersrand); Carolyn Chisadza (Department of Economics, University of Pretoria, Pretoria, South Africa) |
| Abstract: | Does ethnic favouritism in administrative governments affect public infrastructure provision? While previous literature has studied the effects of ethnic favouritism on economic growth and development determinants, there has been limited empirical evidence on ethnic favouritism in public infrastructure provision, particularly in South Africa. We study the effects of ethnic favouritism on provision of water and electricity infrastructure. Using municipal-level data for 52 district municipalities from 1996 to 2016, we find that coethnic municipalities are associated with higher growth in infrastructure relative to non-coethnic municipalities. The results remain robust to time and municipal fixed effects, as well as dynamic specifications. Additionally, we construct a counterfactual scenario to confirm our results. |
| Keywords: | Ethnic Favouritism, South Africa, Public Infrastructure |
| JEL: | J15 H54 O55 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201949&r=all |
| By: | Dany Bahar; Prithwiraj Choudhury; Hillel Rapoport |
| Abstract: | We investigate the relationship between the presence of migrant inventors and the dynamics of innovation in the migrants’ receiving countries. We find that countries are 25 to 50 percent more likely to gain advantage in patenting in certain technologies given a twofold increase in the number of foreign inventors from other nations that specialize in those same technologies. For the average country in our sample this number corresponds to only 25 inventors and a standard deviation of 135. We deal with endogeneity concerns by using historical migration networks to instrument for stocks of migrant inventors. Our results generalize the evidence of previous studies that show how migrant inventors “import” knowledge from their home countries which translate into higher patenting. We complement our results with micro-evidence showing that migrant inventors are more prevalent in the first bulk of patents of a country in a given technology, as compared to patents filed at later stages. We interpret these results as tangible evidence of migrants facilitating the technology-specific diffusion of knowledge across nations. |
| Keywords: | innovation, migration, patent, technology, knowledge |
| JEL: | O31 O33 F22 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7690&r=all |
| By: | Isaac Mbiti; Mauricio Romero; Youdi Schipper |
| Abstract: | We use a field experiment in Tanzania to compare the effectiveness on learning of two teacher performance pay systems. The first is a Pay for Percentile system (a rank-order tournament). The second rewards teachers based on multiple proficiency thresholds. Pay for Percentile can (under certain conditions) induce optimal effort among teachers, but our threshold system is easier to implement and provides teachers with clearer goals and targets. Both systems improved student test scores. However, the multiple-thresholds system was more effective in boosting student learning and is less costly. |
| JEL: | C93 H52 I21 M52 O15 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25903&r=all |
| By: | Victor Medeiros (UFMG); Rafael Saulo Marques Ribeiro (UFMG); Pedro Vasconcelos Maia do Amaral (UFMG) |
| Abstract: | Many scholars have highlighted the role of infrastructure investments in promoting economic growth along with poverty reduction and social inclusion. Developing economies show substantial discrepancies in terms of infrastructure in the rural-urban, regional and income dimensions. These disparities may be reinforcing a social and economic framework marked by a large portion of the population living in poverty. In a scenario characterized by immense regional and income heterogeneities, the present study aims to evaluate the effect of infrastructure investments on household poverty in Brazil. In addition, we verify whether these effects vary according to infrastructure characteristics such as provision, quality and access. The analysis is based on detailed household microdata from the Demographic Census and infrastructure variables at the municipal and state levels, captured from a variety of data sources. An additional contribution of the paper is the novel application of multilevel logistic models to investigate the relationship between infrastructure and poverty at household, municipal and state levels. Our results demonstrate negative effects of the infrastructure provision on poverty. These effects, in turn, are strengthened when infrastructure quality and access are greater, which allows us to infer about the importance of public policies aimed at achieving lower inequalities in access to basic sanitation, Internet, transportation, telephone services and electricity. These policies should also take into account the infrastructure heterogeneities at the regional level, since such heterogeneities have been important in explaining household poverty. |
| Keywords: | infrastructure; household poverty; Brazil; multilevel approach; spatial heterogeneity. |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:cdp:texdis:td607&r=all |
| By: | Roy Bahl (Regents Professor of Economics and Founding Dean, Emeritus, Andrew Young School of Policy Studies, Georgia State University); Baoyun Qiao (Professor of Economics and Dean of China Academy of Public Finance Policy, Central University of Finance and Economics, Beijing) |
| Abstract: | Beijing is one of the most populous cities in the world, and its economy is still growing rapidly. It has the peculiar status of being both a province and a metropolitan city government, and it is home to the national capital. Both of these features challenge its expenditure demands and its finances. In this paper we explore the governance, service delivery and financing of the Beijing metropolitan area government. The basic question we ask is the extent to which Beijing City captures some of the advantages of being a metropolitan areawide government, and the extent to which it avoids some of the disadvantages. In particular, we are interested in whether metropolitan governance can lead to a higher rate of revenue mobilization at the local government level. Is there a next step that cities like Beijing might take to improve their fiscal position, and what can other countries learn from the Chinese experience with metropolitan government finance? |
| Keywords: | Financing, metropolitan government |
| JEL: | A10 E20 H00 I30 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:unt:wpmpdd:wp/19/01&r=all |
| By: | SHIMAMOTO Daichi; Yu Ri KIM; TODO Yasuyuki |
| Abstract: | This study examines the effect of social interactions on exporting activities of micro, small, and medium-sized enterprises (MSMEs) in traditional apparel and textile clusters in Vietnam. To deal with econometric issues due to the reflection problem of Manski and endogeneity of network formation, we apply the estimation method developed by Bramoullé et al. (2009). Specifically, we eliminate the sub-network fixed effects using within transformation and instrument the average share of exports among peers of the focal firm by attributes of its peers' peers. This method enables us to identify the effects of exporting activities of the focal firm's peers on its own exporting activities (the endogenous effect according to Manski) and the effect of its peers' attributes (the exogenous effect). We find that peers' export share has a negative and significant effect on own export share, suggesting that the negative competition effect surpasses the positive learning effect. We also find that firms are encouraged to export by their large peers, possibly because firms can obtain technology spillovers from large peers and thus can be productive enough to start exporting. |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:19020&r=all |
| By: | Robert Bartlett; Adair Morse; Richard Stanton; Nancy Wallace |
| Abstract: | Discrimination in lending can occur either in face-to-face decisions or in algorithmic scoring. We provide a workable interpretation of the courts’ legitimate-business-necessity defense of statistical discrimination. We then estimate the extent of racial/ethnic discrimination in the largest consumer-lending market using an identification afforded by the pricing of mortgage credit risk by Fannie Mae and Freddie Mac. We find that lenders charge Latinx/African-American borrowers 7.9 and 3.6 basis points more for purchase and refinance mortgages respectively, costing them $765M in aggregate per year in extra interest. FinTech algorithms also discriminate, but 40% less than face-to-face lenders. These results are consistent with both FinTech and non-FinTech lenders extracting monopoly rents in weaker competitive environments or profiling borrowers on low-shopping behavior. Such strategic pricing is not illegal per se, but under the law, it cannot result in discrimination. The lower levels of price discrimination by algorithms suggests that removing face-to-face interactions can reduce discrimination. Further silver linings emerge in the FinTech era: (1) Discrimination is declining; algorithmic lending may have increased competition or encouraged more shopping with the ease of platform applications. (2) We find that 0.74-1.3 million minority applications were rejected between 2009 and 2015 due to discrimination; however, FinTechs do not discriminate in loan approval. |
| JEL: | G21 G28 J15 K22 K23 R31 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25943&r=all |
| By: | Fiala, Nathan; Premand, Patrick |
| Abstract: | Corruption and mismanagement of public resources can affect the quality of government services and undermine growth. Can citizens in poor communities be empowered to demand better-quality public investments? We look at whether providing social accountability training and information on project performance can lead to improvements in local development projects. The program we study is unique in its size and integration in a national program. We find that offering communities a combination of training and information on project quality leads to significant improvements in household welfare. However, providing either social accountability training or project quality information by itself has no welfare effect. These results are concentrated in areas that are reported by local officials as more corrupt or mismanaged, suggesting local agents have significant information about where corruption and mismanagement is worse. We show evidence that the impacts come in part from community members increasing their monitoring of local projects, making more complaints to local and central officials and increasing cooperation. We also find modest improvements in people’s trust in the central government. The results suggest that government-led, large-scale social accountability programs can strengthen communities’ ability to address corruption and mismanagement as well as improve services. |
| Keywords: | Agricultural and Food Policy, Public Economics |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:ucozwp:290137&r=all |
| By: | Yuksel, Mutlu (Dalhousie University); Akbulut-Yuksel, Mevlude (Dalhousie University); Guven, Cahit (Deakin University) |
| Abstract: | This paper estimates the returns to English-speaking fluency on the socioeconomic outcomes of childhood immigrants. We further investigate whether Muslim childhood immigrants face additional hurdles in economic and social integration into the host country. Motivated by the critical age hypothesis, we identify the causal effects of English skills on socioeconomic outcomes by exploring the differences in the country of origin and age at arrival across childhood immigrants. We first document that all childhood immigrants who migrate from non-English-speaking countries at a younger age attain higher levels of English skills. We also find that acquiring better English-language skills improves the educational attainment and labor and marriage market prospects of non-Muslim childhood immigrants significantly and increases their participation in volunteer work. However, our results show that while a good command of English enhances the educational attainments of Muslim childhood immigrants, it shows no positive return in either the labor or marriage markets. Our results also show that progress in English fails to improve Muslim childhood immigrants' engagement in voluntary work, meaning that the opportunity for social cohesion is missed. |
| Keywords: | immigration, english proficiency, socioeconomic outcomes, Muslims |
| JEL: | J12 J13 J24 J31 J61 J62 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12381&r=all |
| By: | Näslund-Hadley, Emma; Bando, Rosangela; Gertler, Paul |
| Abstract: | We analyze evidence from 10 at-scale field experiments in four countries on the effect of inquiry- and problem-based pedagogy (IPP) on students’ math and science test scores. IPP creates active problem solving opportunities in settings that derive meaning to the child. Students learn by collaboratively solving real life authentic problems, developing explanations, and communicating ideas. We find that IPP increased math test scores by 0.18 standard deviations and science test scores by 0.16 standard deviations after 7 months. Moreover, the results are robust across a wide set of geographic, socio-economic, and cultural, age/grade, and teacher background contexts. |
| JEL: | I25 I38 C93 O15 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:47&r=all |
| By: | Jan-Emmanuel De Neve; Daisy Fancourt; Christian Krekel; Richard Layard |
| Abstract: | Although correlates of mental wellbeing have been extensively studied, little is known about how to effectively raise mental wellbeing in local communities. We conduct a randomised controlled trial of the "Exploring What Matters" course, a scalable social-psychological intervention aimed at raising general adult population mental wellbeing and pro-sociality. The course is run by volunteers in their local communities, and is currently conducted in more than nineteen countries around the world. We find that it has strong positive causal effects on participants' self-reported subjective wellbeing and pro-social behaviour while reducing measures of mental ill health. Impacts seem to be sustained two months post-treatment. Biomarkers are noisy and mostly insignificant. However, there is some evidence that, for certain individuals, effects on self-reported outcomes may be accompanied by positive changes in biomarker outcomes, in particular reduced levels of pro-inflammatory cytokine IL-6. |
| Keywords: | wellbeing, pro-social behaviour, communities, intervention, RCT |
| JEL: | C93 I12 I31 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1630&r=all |
| By: | Hamed, Usama Ben; Thomas, Keith; Naser, Wafa |
| Abstract: | With the establishment of increasing numbers of small breweries the disposal of wet brewery spent grains (WBSG) may pose difficulties in the future particularly for urban breweries and if transport costs make collection uneconomic. The aim of this study is to estimate the transportation cost of spent grains from beverage production. This aim is investigated using a survey addressed to UK breweries. In order to achieve the aim of this study, a model was applied; namely spent grain costing model (SGCM).The SGCM model revealed that the majority of vehicles used to transport WBSG from three different sizes of brewery (small, medium and large) to farms were between 1 to 6 tonne loading capacity and the average distance from these breweries to farms was 5 miles. Data analyses were conducted by three vehicles classes and they were categorized in terms of loading capacity 1 tonne, 3 tonnes and up to 6 tonnes. This analysis was conducted to determine the average cost of transporting WBSG from breweries to farms. The results indicated that the average transport cost per tonne of WBSG for vehicle with the sizes of 1 tonne, 3 tonne and 6 tonnes were £ 10.11, £5.20 and £3.27 respectively. |
| Keywords: | Agricultural Finance, Crop Production/Industries |
| Date: | 2019–04–15 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aesc19:289685&r=all |
| By: | Gary Charness; Francesco Feri; Miguel A. Meléndez-Jiménez; Matthias Sutter |
| Abstract: | The effectiveness of social interaction depends strongly on an ability to coordinate actions efficiently. In large networks, such coordination may be very difficult to achieve and may depend on the communication technology and the network structure. We examine how pre-play communication and clustering within networks affect coordination in a challenging experimental game on eight-person networks. Free-form chat is enormously effective in achieving the non-equilibrium efficient outcome in our game, but restricted communication (where subjects can only indicate their intended action) is almost entirely ineffective. We can rationalize this result with a novel model about the credibility of cheap-talk messages. This credibility is much larger with freeform message communication than with restricted communication. We are the first to model this credibility and show, both theoretically and experimentally, an interaction effect of network structure and communication technologies. We also provide a model of message diffusion, which indeed predicts that diffusion will be more rapid without clustering and is consistent with our data. |
| Keywords: | networks, clustering, communication, credibility, cheap talk, experiment |
| JEL: | C71 C91 D03 D85 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7659&r=all |
| By: | Afees A. Salisu (Department for Management of Science and Technology Development, Ton Duc Thang University, Ho Chi Minh City, Vietnam and Faculty of Business Administration, Ton Duc Thang University, Ho Chi Minh City, Vietnam); Rangan Gupta (Department of Economics, University of Pretoria, Pretoria, South Africa) |
| Abstract: | In this study, we utilize the recent oil shock data of Baumeister and Hamilton (2019) to analyze how housing returns in China, India and Russia respond to different oil shocks. Given the available data for the relevant variables, the MIDAS approach which helps circumvent aggregation problem in the estimation process is employed. We also extend the MIDAS framework to account for nonlinearities in the model. Expectedly, the housing returns of the countries considered respond differently to the variants of oil shocks. More specifically, we find that the housing returns of India and China which are net oil-importing countries do not seem to possess oil risk hedging characteristics albeit with the converse for Russia which is a major net oil-exporter. We also find that modeling with the MIDAS framework offers better predictability than other variants with uniform frequency. |
| Keywords: | Housing return, Oil shock, MIDAS regression, Nonlinearities, Forecasting |
| JEL: | C12 C22 Q41 Q47 R12 R31 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201946&r=all |
| By: | Michael Bailey; Drew Johnston; Theresa Kuchler; Johannes Stroebel; Arlene Wong |
| Abstract: | We study the nature of peer effects in the market for new cell phones. Our analysis builds on de-identified data from Facebook that combine information on social networks with information on users’ cell phone models. To identify peer effects, we use variation in friends’ new phone acquisitions resulting from random phone losses and carrier-specific contract terms. A new phone purchase by a friend has a substantial positive and long-term effect on an individual’s own demand for phones of the same brand, most of which is concentrated on the particular model purchased by the friend. We provide evidence that social learning contributes substantially to the observed peer effects. While peer effects increase the overall demand for cell phones, a friend’s purchase of a new phone of a particular brand can reduce individuals’ own demand for phones from competing brands—in particular those running on a different operating system. We discuss the implications of these findings for the nature of firm competition. We also find that stronger peer effects are exerted by more price-sensitive individuals. This positive correlation suggests that the elasticity of aggregate demand is substantially larger than the elasticity of individual demand. Through this channel, peer effects reduce firms’ markups and, in many models, contribute to higher consumer surplus and more efficient resource allocation. |
| Keywords: | peer effects, demand spillovers, social learning |
| JEL: | L10 L20 M30 D40 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7685&r=all |
| By: | Franklin, Simon |
| Abstract: | Do high search costs affect the labour market outcomes of jobseekers living far away from jobs? I randomly assign transport subsidies to unemployed youth in urban Ethiopia. Treated respondents increase job search intensity and are more likely to find good, permanent, jobs. Subsidies also induce a short‐term reduction in temporary work. I use a high‐frequency phone call survey to track the trajectory of search behaviour over time to show that the subsidies significantly increased job search intensity and the use of formal search methods. The evidence suggests that cash constraints cause young people to give up looking for good jobs too early. |
| JEL: | J1 |
| Date: | 2018–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:87938&r=all |
| By: | Isaure Delaporte |
| Abstract: | A growing concern in Western countries is the fact that immigrants might adopt oppositional identities. Although identity is expected to affect the economic outcomes of immigrants, little is known about the factors that influence the identity choice of the migrants and thus, their employment outcomes. This study investigates the effect of the 9/11 terrorist attacks on the process of identity formation and the employment outcomes of Turkish immigrants in Germany. Using longitudinal data from the German Socio-Economic Panel, this study relies on a difference-in-differences strategy to compare the outcomes of Turks with non-Turks before and after the attacks. The results show that Turks have adopted more extreme identities after 9/11 compared to non-Turks: they are more likely to feel completely German; they are less likely to feel in some respects Turkish whereas they are more likely to feel mostly Turkish. There is no significant impact of the 9/11 terrorist attacks on the Turks’ employment outcomes relative to non-Turks. |
| Keywords: | Immigrant; Integration; Ethnic Identity; Employment; Terrorism; Difference-in-Differences Estimation |
| JEL: | J15 J71 Z13 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:ukc:ukcedp:1906&r=all |
| By: | Jean-Christophe Delfim (University of Geneva); Martin Hoesli (University of Geneva - Geneva School of Economics and Management (GSEM); Swiss Finance Institute; University of Geneva - Research Center for Statistics; University of Aberdeen - Business School) |
| Abstract: | Using U.S. data for 1986-2017, the paper focuses on the impacts of macroeconomic risk factors and leverage on the performance of the various types of real estate exposure (direct, non-listed, and listed). The response of core funds to economic risk factors is akin to that of direct investments; however, real estate fund and direct investment performance are less tightly related as more aggressive (i.e., value-added and opportunistic) strategies are envisaged. Only REIT performance is linked to that of the stock market. Leverage matters as it amplifies the responses to the economic factors and hence investment risk. |
| Keywords: | Direct real estate; Non-listed real estate; Listed real estate; Macroeconomy; Leverage. |
| JEL: | E44 G10 R33 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp1933&r=all |
| By: | Jorge Nogueira de Paiva Britto (Universidade Federal Fluminense); Leonardo Costa Ribeiro (Cedeplar-UFMG); Eduardo da Motta e Albuquerque (Cedeplar-UFMG) |
| Abstract: | This paper investigates networks of cross-border patent citations - the patent assignee as a node and an international patent citation as a link. The data (patents and their international citations, selected years between 1991 and 2009) show a network growing over time - more institutions, more links and more countries - and preserving its scale-free properties, a self-organized system with changes in technological specialization. This firm-led network is compared to a network of international colaboration in science - a university-led network. The overlaping of those two international self-organized systems might be a source of an emerging international system of innovation. |
| Keywords: | Patent Citations; International Knowledge flows; Innovation Systems |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:cdp:texdis:td605&r=all |
| By: | Wahba, Jackline (University of Southampton); Wang, Chuhong (University of Southampton) |
| Abstract: | We study the impact of adult children's internal migration on the health and subjective well-being of elderly parents left behind, distinguishing between the gender of the migrant children. To overcome migration endogeneity, we exploit novel and exogenous variation in children's astrological characteristics and apply instrumental variables methods. We find a positive effect of the migration of daughters on parents' health and life satisfaction, but no such beneficial effects when sons migrate. We further explore the mechanism through which this gender-biased migration effect may arise. Our findings have important implications for regions and countries that have high rates of female emigration. |
| Keywords: | migration, health, subjective well-being, gender, Chinese zodiac signs |
| JEL: | O15 I12 J14 J16 R23 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12370&r=all |
| By: | Abdul Rahman Shaikh; Hamed Alhoori |
| Abstract: | A crucial goal of funding research and development has always been to advance economic development. On this basis, a consider-able body of research undertaken with the purpose of determining what exactly constitutes economic impact and how to accurately measure that impact has been published. Numerous indicators have been used to measure economic impact, although no single indicator has been widely adapted. Based on patent data collected from Altmetric we predict patent citations through various social media features using several classification models. Patents citing a research paper implies the potential it has for direct application inits field. These predictions can be utilized by researchers in deter-mining the practical applications for their work when applying for patents. |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1906.08244&r=all |
| By: | Volker Grossmann; Benjamin Larin; Hans Torben Löfflad; Thomas Steger |
| Abstract: | The upward sloping trend of rents and house prices has initiated a debate on the consequences of surging housing costs for wealth inequality and welfare. We employ a frictionless two-sectoral macroeconomic model with a housing sector to investigate the dynamics of wealth inequality and the determinants of welfare. Households have non-homothetic preferences, implying that the poor choose a higher housing expenditure share, which is compatible with Schwabe’s Law. We first examine the isolated effects of increasing housing costs in partial equilibrium. The model is closed by introducing a production sector that enables us to analyze the general equilibrium consequences of a widely discussed policy option, which aims at dampening the growth of housing costs. Abolishing zoning regulations triggers a slower rent growth and reduces wealth inequality by 0.7 percentage points (measured by the top 10 percent share). Average welfare increases by 0.5 percent. The household-specific welfare effects are asymmetric. The poor benefit more than the rich, and the richest wealth decile is even worse off. |
| Keywords: | macroeconomics and housing, long-term growth, Schwabe’s Law, wealth inequality, welfare |
| JEL: | E10 E20 O40 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7684&r=all |
| By: | Heckman, James J. (University of Chicago); Karapakula, Ganesh (University of Chicago) |
| Abstract: | This paper presents the first analysis of the life course outcomes through late midlife (around age 55) for the participants of the iconic Perry Preschool Project, an experimental high-quality preschool program for disadvantaged African-American children in the 1960s. We discuss the design of the experiment, compromises in and adjustments to the randomization protocol, and the extent of knowledge about departures from the initial random assignment. We account for these factors in developing conservative small-sample hypothesis tests that use approximate worst-case (least favorable) randomization null distributions. We examine how our new methods compare with standard inferential methods, which ignore essential features of the experimental setup. Widely used procedures produce misleading inferences about treatment effects. Our design-specific inferential approach can be applied to analyze a variety of compromised social and economic experiments, including those using re-randomization designs. Despite the conservative nature of our statistical tests, we find long-term treatment effects on crime, employment, health, cognitive and non-cognitive skills, and other outcomes of the Perry participants. Treatment effects are especially strong for males. Improvements in childhood home environments and parental attachment appear to be an important source of the long-term benefits of the program. |
| Keywords: | randomized controlled trial, early childhood interventions, life cycle treatment effects, randomization tests, re-randomization, worst-case inference, least favorable null distributions, partial identification, small-sample hypothesis testing |
| JEL: | C1 C4 I21 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12362&r=all |
| By: | Hanming Fang; Linke Hou; Mingxing Liu; Lixin Colin Xu; Pengfei Zhang |
| Abstract: | We develop a theoretical model of how factional affiliation and local accountability can shape the policy choices of local officials who are concerned about political survivals, and subsequently affect the long-term local development. We provide empirical evidence in support of the theoretical predictions using county-level variations in development performance in Fujian Province in China. When the Communist armies took over Fujian Province from the Nationalist control circa 1949, communist cadres from two different army factions were assigned as county leaders. For decades the Fujian Provincial Standing Committee of the Communist Party was dominated by members from one particular faction, which we refer to as the strong faction. Counties also differed in terms of whether a local guerrilla presence had existed prior to the Communist takeover. We argue that county leaders from the strong faction were less likely to pursue policies friendly to local development because their political survival more heavily relied on their loyalty to the provincial leader than on the grassroots support from local residents. By contrast, the political survival of county leaders from the weak faction largely depended on local grassroots support, which they could best secure if they focused on local development. In addition, a guerrilla presence in a county further improved development performance either by intensifying the local accountability of the county leader, or by better facilitating the provision of local public goods beneficial to development. We find consistent and robust evidence supporting these assumptions. Being affiliated with weak factions and having local accountability are both associated with sizable long-term benefits that are evident in terms of a county’s growth and level of private-sector development, its citizens’ education levels, and their survival rates during the Great Chinese Famine. We also find that being affiliated with the strong faction and adopting pro-local policies are associated with higher likelihood of a local leader’s political survival. |
| JEL: | D72 H70 O1 O43 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25901&r=all |
| By: | Boberg-Fazlic, Nina (University of Southern Denmark); Sharp, Paul (University of Southern Denmark) |
| Abstract: | Despite the growing literature on the impact of immigration, little is known about the role existing migrant settlements can play for knowledge transmission. We present a case which can illustrate this important mechanism and hypothesize that nineteenth century Danish-American communities helped spread knowledge on modern dairying to rural America. From around 1880, Denmark developed rapidly and by 1890 it was a world-leading dairy producer. Using a difference-in-differences strategy, and data taken from the US census and Danish emigration archives, we find that counties with more Danes in 1880 subsequently both specialized in dairying and used more modern practices. |
| Keywords: | Dairying, immigration, knowledge spillovers, technology JEL Classification: F22, J61, N11, N31, N51, O33, Q16 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:420&r=all |
| By: | Edward L. Glaeser; Naomi Hausman |
| Abstract: | American technological creativity is geographically concentrated in areas that are generally distant from the country’s most persistent pockets of joblessness. Could a more even spatial distribution of innovation reduce American joblessness? Could Federal policies disperse innovation without significant costs? If research funding is already maximizing knowledge production, then spatial reallocation of that funding will reduce America’s overall innovation unless that reallocation comes with greater spending. Without any spatial reallocation, the primarily inventive parts of innovation policy, such as N.I.H. grants, can potentially aid underperforming areas by targeting the problems of those areas, like widespread disability. The educational aspects of innovation policy, such as Pell Grants, work-study, vocational training, and Federal overhead reimbursement on grants, currently have multiple objective and could focus more on employability in distressed areas. Lifting the cap on H1B visas in poorer places could attract outside human capital to those places. Geographically targeted entrepreneurship policies, such as eliminating the barriers to new business formation near universities and in distressed places, could potentially enhance employment growth in those regions. Spatially targeted employment subsidies will increase the returns to labor-intensive innovation in depressed areas, but we know little about how much innovation will respond to such subsidies. |
| JEL: | O31 R11 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25913&r=all |
| By: | Jean-Christophe Delfim (University of Geneva); Martin Hoesli (University of Geneva - Geneva School of Economics and Management (GSEM); Swiss Finance Institute; University of Geneva - Research Center for Statistics; University of Aberdeen - Business School) |
| Abstract: | This research starts from the observation that common desmoothing models are likely to generate some extreme returns. Such returns will distort risk measurement and hence can lead to investment decisions that are suboptimal relative to those that would be made if a transaction based index were available. Thus, we propose to improve the desmoothing models by incorporating a robust filter into the procedure. We report that in addition to properly treating for smoothing, the method prevents the occurrence of extreme values. As shown with U.S. data, our method leads to desmoothed series whose characteristics are akin to those of transaction-based indices. |
| Keywords: | Desmoothing models; Robust filter; Appraisal-based index; Private real estate; Unlevered REITs. |
| JEL: | C32 C61 G10 R33 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp1932&r=all |