nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2022‒09‒05
43 papers chosen by
Steve Ross
University of Connecticut

  1. Still Worth the Trip? School Busing Effects in Boston and New York By Joshua Angrist; Guthrie Gray-Lobe; Clemence M. Idoux; Parag A. Pathak
  2. Related Variety and Regional Development By Harald Bathelt; Michael Storper
  3. The Understated ‘Housing Shortage’ in the United States By Corinth, Kevin; Dante, Hugo
  4. Genetic Endowments, Educational Outcomes and the Mediating Influence of School Investments By Benjamin W. Arold; Paul Hufe; Marc Stoeckli
  5. New housing investments' effects on gentrification and affordability in Stockholm, Sweden By Ismail, Mohammad; Wilhelmsson, Mats
  6. Natural disasters and local government finance: Evidence from typhoon Haiyan By Capuno, Joseph; Corpuz, Jose; Samuel Lordemus
  7. Till Debt Do Us Part: Strategic Divorces and a Test of Moral Hazard By Kim, Yeorim; Mastrogiacomo, Mauro; Hochguertel, Stefan; Bloemen, Hans
  8. Boosting African cities' resilience to climate change: The role of green spaces By Brilé Anderson; Jorge Eduardo Patiño Quinchía; Rafael Prieto Curiel
  9. Loss aversion in strategy-proof school-choice mechanisms By Vincent Meisner; Jonas von Wangenheim
  10. Reversing fortunes of German regions, 1926-2019: Boon and bane of early industrialization? By Berbée, Paul; Braun, Sebastian; Franke, Richard
  11. Oil Windfalls and Regional Economic Performance in Russia* By Julia Skretting
  12. Regional Differences in Intersectoral Linkages and Diverse Patterns of Structural Transformation By Paul, Saumik; Raju, Dhushyanth
  13. The Organizational Economics of School Chains By Neri, Lorenzo; Pasini, Elisabetta; Silva, Olmo
  14. Minimum Wages and Labor Markets in the Twin Cities By Loukas Karabarbounis; Jeremy Lise; Anusha Nath
  15. Understanding the Bike-share Market in the Sacramento Region to Increase Demand and Improve Access By Mohiuddin, Hossain; Fitch, Dillon; Handy, Susan
  16. Immigration and Business Dynamics: Evidence from U.S. Firms By Parag Mahajan
  17. Testing for Discrimination in Rental Markets: Experimental Evidence from the UK By Koppensteiner, Martin Foureaux; Oliveira, Tania; Rohith, Nikitha
  18. Social Capital II: Determinants of Economic Connectedness By Raj Chetty; Matthew O. Jackson; Theresa Kuchler; Johannes Stroebel; Nathaniel Hendren; Robert B. Fluegge; Sara Gong; Federico Gonzalez; Armelle Grondin; Matthew Jacob; Drew Johnston; Martin Koenen; Eduardo Laguna-Muggenburg; Florian Mudekereza; Tom Rutter; Nicolaj Thor; Wilbur Townsend; Ruby Zhang; Mike Bailey; Pablo Barberá; Monica Bhole; Nils Wernerfelt
  19. Sitting Next to a Dropout - Academic Success of Students with More Educated Peers By Daniel Goller; Andrea Diem; Stefan C. Wolter
  20. Agglomeration, Innovation, and Spatial Reallocation: The Aggregate Effects of R&D Tax Credits By Alexandre Sollaci
  21. Relationship between Extracurricular Activities in Elementary School and Academics, Non-cognitive Ability, and Future Achievements: Focusing on choice of physical activity or music activity (Japanese) By KUME Koichi; TSURU Kotaro; SANO Shinpei; YASUI Kengo
  22. Revitalising the Silk Road: Evidence from Railway Infrastructure Investments in Northwest China By Yu, Lamont Bo; Tran, Trang My; Lee, Wang-Sheng
  23. Industry Choice and within Industry Earnings Effects By Eric Brunner; Shaun Dougherty; Stephen L. Ross
  24. Social Capital I: Measurement and Associations with Economic Mobility By Raj Chetty; Matthew O. Jackson; Theresa Kuchler; Johannes Stroebel; Nathaniel Hendren; Robert B. Fluegge; Sara Gong; Federico González; Armelle Grondin; Matthew Jacob; Drew Johnston; Martin Koenen; Eduardo Laguna-Muggenburg; Florian Mudekereza; Tom Rutter; Nicolaj Thor; Wilbur Townsend; Ruby Zhang; Mike Bailey; Pablo Barberá; Monica Bhole; Nils Wernerfelt
  25. Mean Convergence, Combinatorics, and Grade-Point Averages By Waddell, Glen R.; McDonough, Robert
  26. Labor Market Pooling and Job Outcomes of Displaced Workers By Kekezi, Orsa
  27. Why is credit riskier in the South? By Luca Casolaro; Marco Gallo; Iconio Garrí
  28. Adjustments of local labour markets to the COVID-19 crisis: The role of digitalisation and working-from-home By Ben Yahmed, Sarra; Berlingieri, Francesco; Brüll, Eduard
  29. Daily Commuting By Berliant, Marcus
  30. Firms price discriminate based on suppliers’ relative distances to competitors By Granlund, David; Meens-Eriksson, Sef
  31. Students' Perceptions of Gained and Lost Value: A Case Study of a Summer School That Had to Suddenly Move Online By Alvaro Pina Stranger; Germán Varas; Gaelle Mobuchon
  32. Romania: Technical Assistance Report on Improving Revenues from the Recurrent Property Tax By International Monetary Fund
  33. Arts and Culture Centers as Catalysts for Urban Vibrancy By Abbas Moosvi
  34. The Long-Term Impact of High School Financial Education: evidence from Brazil By Miriam Bruhn; Gabriel Garber; Sergio Koyama; Bilal Zia
  35. Discount opportunities in hub-and-spoke networks: The determinants of hidden-city ticketing By Luttmann, Alexander; Gaggero, Alberto A
  36. Blending Theory and Data: A Space Odyssey By Dave Donaldson
  37. Malleability of Alcohol Consumption: Evidence from Migrants By Marit Hinnosaar; Elaine M. Liu
  38. Peer effects, self-selection and dishonesty By Liza Charroin; Bernard Fortin; Marie Claire Villeval
  39. The Determinants of Provincial Public Health Expenditures in Turkey: Evidence from a Spatial Data Analysis By Julide Yildirim; Nadir Öcal; Barış Alpaslan
  40. When Reality Bites: Local Deaths and Vaccine Take-up By Giulietti, Corrado; Vlassopoulos, Michael; Zenou, Yves
  41. Crime victimisation surveys in Indian criminal justice system reform By Renuka Sane; Ajay Shah
  42. Development under Spatial Equilibrium for the Great Lakes Region By Gong, Ziqian; Cai, Yongyang
  43. The long-term effects of financial aid and career education: Evidence from a randomized experiment By Renée, Laëtitia

  1. By: Joshua Angrist; Guthrie Gray-Lobe; Clemence M. Idoux; Parag A. Pathak
    Abstract: School assignment in Boston and New York City came to national attention in the 1970s as courts across the country tried to integrate schools. Today, district-wide choice allows Boston and New York students to enroll far from home, perhaps enhancing integration. Urban school transportation is increasingly costly, however, and has unclear integration and education consequences. We estimate the causal effects of non-neighborhood school enrollment and school travel on integration, achievement, and college enrollment using an identification strategy that exploits partly-random assignment in the Boston and New York school matches. Instrumental variables estimates suggest distance and travel boost integration for those who choose to travel, but have little or no effect on test scores and college attendance. We argue that small effects on educational outcomes reflect modest effects of distance and travel on school quality as measured by value-added.
    JEL: D47 I20
    Date: 2022–07
  2. By: Harald Bathelt; Michael Storper
    Abstract: Evolutionary approaches have contributed substantially to the growing knowledge body about regional development processes and their underlying mechanisms. They have advanced our understanding particularly by going beyond case study methods, using empirical, mostly regression- based statistical analyses. One key concept that underlies evolutionary economic geography (EEG) is that of “related variety†. In EEG studies, regional industry structure is represented through its level of related variety, which in turn is found to be positively associated with favorable types of regional economic development. In this paper, we raise questions regarding the internal logic of the concept, its spatial expressions, measurement specifics, empirical regularities and biases, and the short- and long- term effects of related variety on regional development. Based on this examination, we make suggestions for future research.
    Keywords: Economic geographies of places; evolutionary economic geography (EEG); regional development; regional specialization; related variety
    JEL: L23 R11
    Date: 2022–08
  3. By: Corinth, Kevin (Harris School, University of Chicago); Dante, Hugo (George Mason University)
    Abstract: Following popular discourse, we abuse economic terminology by defining the “housing shortage” in the United States as the difference between the number of homes that would be built in the absence of supply constraints and the actual number of homes. The magnitude of the housing shortage is important to policymakers, who use it to measure the scope of the housing supply problem and the extent to which proposed policies would solve it. However, previous studies understate the housing shortage because they estimate how many more homes would have been built if historical building or household formation trends prevailed today, even though historical trends were also affected by supply constraints. We are the first to use a supply and demand framework to estimate the full housing shortage in the United States. Using county-level data on land shares of home prices, we estimate that the U.S. housing shortage was 20.1 million homes in 2021, 14.1 percent of the national housing stock. Our housing shortage estimate is 4 to 5 times as large as previous estimates, and 13 times as high as the shortage cited by the White House to contextualize the effects of policies intended to close the gap. Consistent with predictions of economic theory, our estimated housing shortage is uniformly low in areas with low regulation but varies in areas with high regulation, since a housing shortage requires both stringent regulations and strong housing demand.
    Keywords: housing, regulation, land use, supply constraints, shortage
    JEL: R31 R38 R52
    Date: 2022–07
  4. By: Benjamin W. Arold; Paul Hufe; Marc Stoeckli
    Abstract: Genetic endowments are fixed at conception and matter for the educational attainment of individuals. Do investments in schooling environments mitigate or magnify the outcomes of this genetic lottery? Using data from a representative sample of US adolescents, we analyse the interdependent associations of genetic endowments, teacher quality and teacher quantity with educational attainment. Our results suggest that higher-quality teachers act as substitutes for genetic endowments: a 1 SD increase in teacher quality reduces the positive association between educational attainment and a 1 SD increase in the relevant polygenic score from 0.37 to 0.30 years—a decrease of 20%. In particular, high-quality teachers increase the probability that genetically disadvantaged students complete college. This increase is underpinned by gains in health, language ability, patience, and risk aversion.
    Keywords: polygenic scores, school resources, skill formation
    JEL: I29 I21 J24
    Date: 2022
  5. By: Ismail, Mohammad (Department of Real Estate and Construction Management, Royal Institute of Technology); Wilhelmsson, Mats (Department of Real Estate and Construction Management, Royal Institute of Technology)
    Abstract: Stockholm is constantly changing. New buildings are built, new infrastructure replaces old infrastructure, and the city grows with the addition of new areas. We ask whether specific changes impact surrounding areas in desirable ways. Using difference-in-difference methodology, we have analysed several new construction projects in Stockholm, Sweden, from 2009 to 2014. The outcome variables that we are most interested in are whether the projects themselves affected the socio-economic background of the residents (gentrification) and whether they have affected, or even impaired, affordability. Our results indicate a limited effect of new housing investments on the proportion of people with higher education and on the proportion of younger people. However, we found a positive effect on income and affordability, which may result in more significant gentrification and population displacement over time.
    Keywords: housing investment; gentrification; affordability; difference-in-difference; Stockholm
    JEL: C21 R30 R58
    Date: 2022–08–16
  6. By: Capuno, Joseph (University of the Philippines Diliman); Corpuz, Jose (University of Warwick); Samuel Lordemus (University of Lucerne)
    Abstract: This paper examines how natural disasters affect low public finances and their interplay with intergovernmental transfers and external resources. We document the causal effect of a natural disaster on the allocation of local public resources the local government fiscal dynamics by exploiting the random nature of the 2013 Typhoon Haiyan, one of the most devastating natural disasters in recent history. Combining data on local government finance with reports on the level of damages caused by the typhoon, we employ several estimation strategies: we first rely on difference-in-differences and event study designs, and we further address a potential endogeneity concern by instrumenting the intensity exposure to the typhoon with distance to the storm path. We show that local revenue and public expenditures remain largely unaffected, except debt service, which are on average 15% lower in affected cities or municipalities. However, we document important heterogeneity in local revenue responses. We find no support for the moral hazard problem : our results indicate that external aid leads to higher local expenditures, particularly general public services, socioeconomic expenditures, including education and social services, and debt payments. These results highlight the crucial role of central government transfers in supporting local governments and mitigating the geographical economic disparities in the aftermath of exogenous shocks such as natural disasters.
    Keywords: Natural disasters ; local government finance ; Haiyan/Yolanda
    Date: 2022
  7. By: Kim, Yeorim (Vrije Universiteit Amsterdam); Mastrogiacomo, Mauro (De Nederlandsche Bank); Hochguertel, Stefan (Vrije Universiteit Amsterdam); Bloemen, Hans (Vrije Universiteit Amsterdam)
    Abstract: We test whether households that face prospective home equity losses during a house price downturn use divorce to shed debt. We study the Dutch context, where qualifying homeowners can buy into a mortgage guarantee scheme that insures the lender against borrower default and transfers the risk to the public. Divorce is one of the major events that obliges the guarantor to repay outstanding residual debt after (foreclosure) sale. We argue in this paper that divorce is endogenous to holding underwater mortgages, and hence constitutes a choice that can be used for strategic use of the insurance. Using administrative data, we find a significant, 44% increase in the probability to divorce for households with an underwater mortgage. This effect is causal to being insured. The identification relies on a regression discontinuity design, that exploits the fact that the insurance is only available for properties with values below a legislated qualification threshold. The house price crisis (2008-2013) provides an unexpected shock to house values, leaving about 40% of owners with an underwater mortgage. Their home equity averages to about €-50.000. Couples with similar characteristics just above the qualification threshold experienced significantly less often a divorce than couples just below the threshold. We interpret this behavioral response as moral hazard, also because the induced divorcees reunite at a higher rate than other divorcees.
    Keywords: moral hazard, mortgage insurance, divorce
    JEL: D10 G21 G52 J12
    Date: 2022–07
  8. By: Brilé Anderson; Jorge Eduardo Patiño Quinchía; Rafael Prieto Curiel
    Abstract: The next few decades will bring an era of rapid urbanisation and unprecedented climate stress in African cities. Green spaces can boost the resilience of cities to heat waves, floods, landslides, and even coastal erosion, in addition, to enhancing sustainability by improving air quality, protecting biodiversity, and absorbing carbon. All of which can enhance well-being. Yet, data on the availability of green spaces in African urban agglomerations is scarce. This analysis fills the gap by combining new and novel data sources to estimate the availability of green spaces in 5 625 urban agglomerations with 10 000 inhabitants and above. The rest of the report then uses this novel dataset to first evaluate the dynamics between urbanisation and green spaces, and second, explore the potential of green spaces to boost the resilience and sustainability of cities in the future. The results show that as urban agglomerations become larger and more compact, green spaces disappear, exacerbating their vulnerability to climate change and deteriorating liveability. However, building taller buildings (i.e., growing vertically), offers a way for cities to grow whilst minimising loss of green space. Results show that more green space can boost sustainability by significantly lowering air pollution in African cities, which could be vital for public health in the future since outdoor air pollution is rising. The potential for green spaces to enhance resilience to climate events, like heat waves, depends on the location of green spaces throughout the city and the percentage of the population that lives close to a green space (i.e., within 300 metres). Green spaces may play a limited role in coping with heat waves in a city like Khartoum where only 3% of the population lives close to a green space, but could be a nature-based solution to heat waves in a city like Abuja, where 55% of the population can benefit from its cooling effects. Moving forward, local actors have clear evidence of the power of green spaces to build a sustainable and resilient future. Still, the report reveals that local actors need support from regional and national actors to realise the potential of green spaces.
    Keywords: Africa, Cities, Ecosystem-services, Green spaces, Nature-based solutions, Resilience, Sustainability
    JEL: Q53 Q54 Q56 Q57 R14 R15 R52
    Date: 2022–07–31
  9. By: Vincent Meisner; Jonas von Wangenheim
    Abstract: Evidence suggests that participants in strategy-proof matching mechanisms play dominated strategies. To explain the data, we introduce expectation-based loss aversion into a school-choice setting and characterize choice-acclimating personal equilibria. We find that non-truthful preference submissions can be strictly optimal if and only if they are top-rank monotone. In equilibrium, inefficiency or justified envy may arise in seemingly stable or efficient mechanisms. Specifically, students who are more loss averse or less confident than their peers obtain suboptimal allocations.
    Date: 2022–07
  10. By: Berbée, Paul; Braun, Sebastian; Franke, Richard
    Abstract: This paper shows that 19th-century industrialization is an important determinant of the significant changes in Germany's economic geography observed in recent decades. Using novel data on economic activity in 163 labor market regions in West Germany, we establish that nearly half of them experienced a reversal of fortune between 1926 and 2019, i.e., they moved from the lower to the upper median of the income distribution or vice versa. Economic decline is concentrated in North Germany, economic ascent in the South. Exploiting plausibly exogenous variation in access to coal, we show that early industrialization turned from an advantage for economic development to a burden after World War II. The dominant position of heavy industry, supported by the local political-administrative system, limited regional adaptability when the old industries fell into crisis. Today, the early industrialized regions suffer from low innovation and deindustrialization. The (time-varying) effect of industrialization explains most of the decline in regional inequality observed in the 1960s and 1970s and about half of the current north-south gap in economic development.
    Keywords: industrialization,economic development,regional inequality
    JEL: N91 N92 O14 R12
    Date: 2022
  11. By: Julia Skretting
    Abstract: I construct a novel dataset to investigate the effects of oil income in regions of Russia. My data combines regional level data on oil endowments and a wide range of economic series for 85 geographical regions of Russia. Focusing on exogenous oil windfall gains induced by movements in oil prices, I compare outcomes in oil endowed regions to outcomes in other areas. In doing so, I show that oil resources do not seem to benefit regional economic growth. Indeed, I provide evidence that oil windfalls lead to an expansion of the local public sector and a contraction of the private sector, resulting in lower profitability and a decline in economic growth. Overall, my results indicate that only a small share of revenues benefits the local population and that there are signs of missing money.
    Keywords: Natural Resource Curse, Rent Seeking, Dutch Disease, Regional Windfalls
    Date: 2022–08
  12. By: Paul, Saumik (Newcastle University); Raju, Dhushyanth (World Bank)
    Abstract: Intersectoral linkages can act as shock propagation channels and shape the pattern of structural transformation. To our knowledge, no research has examined how subnational differences in intersectoral linkages impact such spillover effects. We hypothesize that regional differences in local economic shocks diversify intersectoral linkages, and, consequently, produce divergent patterns of structural transformation across regions. Using novel regional input-output tables and existing enterprise censuses for Ghana, we test and find support for four predictions related to this hypothesis: (1) a recent, positive mining output shock that occurred in the south of Ghana leads to growing differences in intersectoral linkages between the north and the south of the country, (2) the effect of the mining output shock on output and productivity growth in other sectors differs across regions in line with changes in the patterns of intersectoral linkages, (3) the elasticity of employment in other sectors with respect to the change in employment in mining closely follows the regional patterns of intersectoral linkages, and (4) variation in the mining output shock across time and space explains the variation in the rate of firm entry and average firm-level employment in sectors (such as heavy manufacturing) that largely depend on mining for intermediate inputs.
    Keywords: structural transformation, intersectoral linkages, propagation of productivity shock, subnational areas, mining, Ghana
    JEL: D24 F15 F43 N10 O11 O14 O47 D57 E32 L14 Q54
    Date: 2022–07
  13. By: Neri, Lorenzo (Queen Mary, University of London); Pasini, Elisabetta (Alma Economics); Silva, Olmo (London School of Economics)
    Abstract: Although school autonomy is often advocated as a way to improve student achievement, many countries are experiencing a counterbalancing trend: the emergence of ‘chains’ that bind schools together into structures with varying degrees of centralization. Despite their prominence, no evidence exists on the determinants and effects of differences in the organizational set-up of school chains. Our work aims to fill this gap. We use some of the key insights of the organizational economics of firms to study the organization of school chains. We match survey information on decentralization decisions of procurement activities for approximately 400 chains and 2,000 schools in England to student-, school and market-level administrative records. We find that chains with a larger share of schools whose leadership background is aligned with the chain board’s expertise, younger chains, and chains that are closer to the market value-added (productivity) frontier decentralize more. We find instead no association between the value-added heterogeneity of the markets in which chains operate and their decision to delegate. We also investigate the link between the structures of chains and their students’ performance. We find no association between decentralization and performance. This is consistent with the intuition that chains choose their organization in ways that maximize output (i.e., students’ learning) and so the equilibrium relationship between performance and organizational set-up is flat.
    Keywords: school chains, school autonomy, organizational economics, incomplete contracts
    JEL: I2 L2 D8
    Date: 2022–07
  14. By: Loukas Karabarbounis; Jeremy Lise; Anusha Nath
    Abstract: Using merged administrative datasets from Minnesota, we bring new evidence on the labor market effects of large minimum wage increases by examining the policy changes implemented by Minneapolis and Saint Paul. We begin by using synthetic difference-in-differences methods to estimate counterfactual outcomes at the zip code level from Minnesota and at the city level from the rest of the country. The minimum wage did not affect employment in most industries but exerted a negative impact on restaurants' employment, with an elasticity of -0.8. Next, using variation in exposure to the minimum wage across establishments and workers within the Twin Cities, we find employment effects that are half as large as those from the time series. The cross-sectional estimates difference out employment effects from the pandemic or civil unrest that could confound the time series comparisons, but they do not include potential effects of the minimum wage operating through equilibrium adjustments such as entry. We quantify a model of establishment dynamics to reconcile the different estimates and argue that they plausibly reflect lower and upper bounds of employment losses. We use the model to show that our estimates are consistent with an establishment elasticity of labor demand of -1 and illustrate how they can inform deeper parameters characterizing product and labor market competition, factor substitution, and establishment dynamics.
    Keywords: Wages; Hours; Jobs; Minimum wage
    JEL: J23 J08 J38
    Date: 2022–07–07
  15. By: Mohiuddin, Hossain; Fitch, Dillon; Handy, Susan
    Abstract: Bike-share services provide an affordable and environmentally sustainable transportation option. Research has shown that bike-share use can reduce car dependence and facilitate access to public transit. Expanding the use of these services can help cities meet environmental goals and, if done right, better serve transportation-disadvantaged residents. Researchers at the University of California, Davis surveyed households and bike-share users in the Sacramento region and used both behavioral modeling and market segmentation approaches to identify opportunities for increasing demand while improving access for low-income groups. The results can inform cities’ efforts to expand bike-share services. View the NCST Project Webpage
    Keywords: Social and Behavioral Sciences, Bicycles, Market segmented groups, Surveys, Transportation disadvantaged persons, Travel behavior, Vehicle sharing
    Date: 2022–08–01
  16. By: Parag Mahajan
    Abstract: Prior literature on the economic impact of immigration has largely ignored changes to the composition of labor demand. In contrast, this paper uses a comprehensive collection of survey and administrative data to show that heterogeneous establishment entry and exit drive immigrant-induced job creation and a rightward shift of the productivity distribution in U.S. local industries. High-productivity establishments are more likely to enter and less likely to exit in high immigration environments, whereas low-productivity establishments are more likely to exit. These dynamics result in productivity growth. A general equilibrium model proposes a mechanism that ties immigrant workers to high-productivity firms and shows how accounting for changes to the employer distribution can yield substantially larger estimates of immigrant-generated economic surplus than canonical models of labor demand.
    Keywords: immigration, business dynamics, productivity, firm heterogeneity
    JEL: J23 J61 L11 F22
    Date: 2022
  17. By: Koppensteiner, Martin Foureaux (University of Surrey); Oliveira, Tania (University of Leicester); Rohith, Nikitha (Coventry University)
    Abstract: In this paper we provide novel insights on discrimination against immigrants in the UK rental market. We conducted a randomized-controlled trial close to a real-world setting where inquiries to view a property were made via phone inquiries with rental agencies and immigration background was signalled through non-UK accents. We document substantial discrimination against non-UK applicants with non-UK applicants having a 13 percent lower chance of securing a viewing for a rental. We also document substantial heterogeneous effects, with much more pronounced effects in local areas with a lower share of immigrants. We find that the background of agency managers or the composition of agency staff does not attenuate the effects.
    Keywords: discrimination, rental market, immigration, right-to-rent, UK
    JEL: J15 K37 R30
    Date: 2022–07
  18. By: Raj Chetty; Matthew O. Jackson; Theresa Kuchler; Johannes Stroebel; Nathaniel Hendren; Robert B. Fluegge; Sara Gong; Federico Gonzalez; Armelle Grondin; Matthew Jacob; Drew Johnston; Martin Koenen; Eduardo Laguna-Muggenburg; Florian Mudekereza; Tom Rutter; Nicolaj Thor; Wilbur Townsend; Ruby Zhang; Mike Bailey; Pablo Barberá; Monica Bhole; Nils Wernerfelt
    Abstract: Low levels of social interaction across class lines have generated widespread concern and are associated with worse outcomes, such as lower rates of upward income mobility. Here, we analyze the determinants of cross-class interaction using data from Facebook, building upon the analysis in the first paper in this series. We show that about half of the social disconnection across socioeconomic lines—measured as the difference in the share of high-socioeconomic status (SES) friends between low- and high-SES people—is explained by differences in exposure to high- SES people in groups such as schools and religious organizations. The other half is explained by friending bias—the tendency for low-SES people to befriend high-SES people at lower rates even conditional on exposure. Friending bias is shaped by the structure of the groups in which people interact. For example, friending bias is higher in larger and more diverse groups and lower in religious organizations than in schools and workplaces. Distinguishing exposure from friending bias is helpful for identifying interventions to increase cross-SES friendships (economic connectedness). Using fluctuations in the share of high-SES students across high school cohorts, we show that increases in high-SES exposure lead low-SES people to form more friendships with high-SES people in schools that exhibit low levels of friending bias. Hence, socioeconomic integration can increase economic connectedness in communities where friending bias is low. In contrast, when friending bias is high, increasing cross-SES interaction among existing members may be necessary to increase economic connectedness. To support such efforts, we release privacy-protected statistics on economic connectedness, exposure, and friending bias for each ZIP code, high school, and college in the U.S. at
    JEL: J0 R0
    Date: 2022–07
  19. By: Daniel Goller; Andrea Diem; Stefan C. Wolter
    Abstract: We investigate the impact of the presence of university dropouts on the academic success of first-time students. Our identification strategy relies on quasi-random variation in the proportion of returning dropouts. The estimated average zero effect of dropouts on first-time students’ success masks treatment heterogeneity and non-linearities. First, we find negative effects on the academic success of their new peers from dropouts re-enrolling in the same subject and, conversely, positive effects of dropouts changing subjects. Second, using causal machine learning methods, we find that the effects vary nonlinearly with different treatment intensities and prevailing treatment levels.
    Keywords: university dropouts, peer effects, better prepared students, causal machine learning
    JEL: A23 C14 I23
    Date: 2022
  20. By: Alexandre Sollaci
    Abstract: I investigate the aggregate effects of R&D tax credits in the US. Because it subsidizes R&D activity and because credit rates vary between states, this policy has both spatial and dynamic effects on the economy. To address this issue, I construct an endogenous growth model with spatial heterogeneity and agglomeration spillovers in innovation. Aggregate outcomes in this model are thus affected by the spatial distribution of the population in the economy, which is itself endogenous and reacts to policy. I use this framework to identify a set of local R&D subsidies that maximize aggregate welfare.
    Keywords: agglomeration; innovation; R&D tax credits
    Date: 2022–07–01
  21. By: KUME Koichi; TSURU Kotaro; SANO Shinpei; YASUI Kengo
    Abstract: This paper empirically analyzes the factors and outcomes related to the choice of extracurricular activities in elementary school. Specifically, we analyzed the experience of physical and musical activities by gender. A father's education level has particularly influence on his child's participation in physical and musical activities. The choice of physical activity is related to social capital such as strength of friendship and participation in local events, and the choice of musical activity is related to cultural capital, which includes lifestyle and experiences such as going to concerts with family and reading books. In terms of academic performance, non-cognitive ability, educational background, and wages, the group who chose either physical or musical activity was more successful than the group who neither did physical nor musical activity. In addition, physical activity and musical activity were associated with different outcomes depending on gender and achievement measures. For example, wages were higher in the group who chose physical activity for both men and women, but the academic performance in elementary school was better in the group who chose musical activity for both men and women. Regarding non-cognitive abilities, the result suggests that women who chose physical activity had a higher extroversion and preference for competition than those who chose musical activity, both of which may be linked to effects on current wages. We also confirmed that those who chose both physical activity and musical activity had a higher workload, which may result in lower achievement scores than that of those who chose only one of the two activities.
    Date: 2022–08
  22. By: Yu, Lamont Bo (University of Macau); Tran, Trang My (Monash University); Lee, Wang-Sheng (Monash University)
    Abstract: China’s Belt and Road Initiative was introduced in 2013 to revitalise the Silk Road and promote economic development and integration. This paper investigates the economic effects of the opening of the only high-speed rail (HSR) line in northwest China which connects China’s northwestern provinces along this Silk Road land route. We use a recently developed machine-learning extended nightlight data series from 2000 to 2019 and employ the ridge augmented synthetic control method (Ben-Michael et al., 2021) to assess the effects of the HSR line connection on economic activity along this Silk Road land route. We further propose an algorithm that helps automate the donor pool selection process while ensuring optimal pre-treatment fitness. Our results show that there are winners and losers from the opening of the Lanzhou–Urumqi HSR line. While there is some indication of the role that HSR can help play in making progress towards breaking through the Hu Huanyong Line, a geographical demarcation in China that is of vast economic significance, not all counties benefited from the opening of the HSR line.
    Keywords: high-speed railway, augmented synthetic control, Hu Huanyong Line
    JEL: O22 R11 R58
    Date: 2022–07
  23. By: Eric Brunner (University of Connecticut); Shaun Dougherty (Boston College); Stephen L. Ross (University of Connecticut)
    Abstract: We examine the effect of attending stand-alone technical high schools on the industry of employment choices and within industry earnings premiums of young adults using a regression discontinuity design. Our analysis is based on the universe of students that applied to the Connecticut Technical Education and Career System (CTECS) between 2006 and 2011. Admission to a CTECS school shifts male applicants towards working in higher paying industries that align with CTECS course work and programs of study. Admission to a CTECS school has a much more modest impact on the industry of employment for female applicants. Further, key industry effects observed for females shift these applicants towards lower paying industries. Surprisingly, both the overall industry earnings premiums and the treatment effects of CTECS on earnings premiums are similar and sometimes larger for female applicants in traditionally male dominated industries like manufacturing and construction. However, the number of females in these industries is too small to contribute substantially to female earnings in aggregate. Our mechanism analysis suggests that treatment effects on industry specific earnings premium vary across industries. In particular, for male applicants, treatment effects in the manufacturing and construction industry depend in part on work experience while in high school and as a young adult. Finally, we find that in the professional and office support industries CTECS treatment effects on earnings arise due to the selection into these industries of students with high 8th grade tests scores because these industries offer a higher direct return to cognitive skills for young adults.
    Keywords: technical high school, earnings premiums, young adults, regression discontinuity design
    JEL: I25 I26 I24 J30
  24. By: Raj Chetty; Matthew O. Jackson; Theresa Kuchler; Johannes Stroebel; Nathaniel Hendren; Robert B. Fluegge; Sara Gong; Federico González; Armelle Grondin; Matthew Jacob; Drew Johnston; Martin Koenen; Eduardo Laguna-Muggenburg; Florian Mudekereza; Tom Rutter; Nicolaj Thor; Wilbur Townsend; Ruby Zhang; Mike Bailey; Pablo Barberá; Monica Bhole; Nils Wernerfelt
    Abstract: In this paper—the first in a series of two papers that use data on 21 billion friendships from Facebook to study social capital—we measure and analyze three types of social capital by ZIP code in the United States: (i) connectedness between different types of people, such as those with low vs. high socioeconomic status (SES); (ii) social cohesion, such as the extent of cliques in friendship networks; and (iii) civic engagement, such as rates of volunteering. These measures vary substantially across areas, but are not highly correlated with each other. We demonstrate the importance of distinguishing these forms of social capital by analyzing their associations with economic mobility across areas. The fraction of high-SES friends among low-SES individuals—which we term economic connectedness—is among the strongest predictors of upward income mobility identified to date, whereas other social capital measures are not strongly associated with economic mobility. If children with low-SES parents were to grow up in counties with economic connectedness comparable to that of the average child with high-SES parents, their incomes in adulthood would increase by 20% on average. Differences in economic connectedness can explain well-known relationships between upward income mobility and racial segregation, poverty rates, and inequality. To support further research and policy interventions, we publicly release privacy-protected statistics on social capital by ZIP code at
    JEL: R0
    Date: 2022–07
  25. By: Waddell, Glen R. (University of Oregon); McDonough, Robert (University of Oregon)
    Abstract: While comparing students across large differences in GPA follows one's intuition that higher GPAs correlate positively with higher-performing students, this need not be the case locally. Grade-point averaging is fundamentally a combinatorics problem, and thereby challenges inference based on local comparisons—this is especially true when students have experienced only small numbers of classes. While the effect of combinatorics diminishes in larger numbers of classes, mean convergence then has us jeopardize local comparability as GPA better delineates students of different ability. Given these two characteristics in decoding GPA, we discuss the advantages of machine-learning approaches to identifying treatment in educational settings.
    Keywords: GPA, grades, program evaluation, random forest, regression discontinuity
    JEL: I21 I26 C21
    Date: 2022–07
  26. By: Kekezi, Orsa (Swedish Institute for Social Research, Stockholm University)
    Abstract: This paper studies how labor market pooling, calculated as regional concentrations of employment in related industries and related occupations, affects the job outcomes of displaced workers. Using matched employer-employee data for displaced workers between 2003-2009 in Sweden, the results show that all workers experience a drop in earnings after displacement. However, the earning losses of workers who lose their jobs in markets with higher labor market pooling are lower. Two mechanisms are highlighted to why this is the case - (1) better job match and (2) higher probability of getting a better job than the pre-displacement one.
    Keywords: job matching; labor market pooling; displaced workers; occupational upgrade
    JEL: J24 J62 J65
    Date: 2022–08–12
  27. By: Luca Casolaro (Bank of Italy); Marco Gallo (Bank of Italy); Iconio Garrí (Bank of Italy)
    Abstract: This paper investigates the determinants of the territorial divides in the riskiness of loans to firms. In the period 2006-19, the South of Italy exhibited consistently worse credit quality than the Centre-North, with a wider gap during the recession that followed the 2011 sovereign debt crisis. Credit demand and supply factors explain only forty percent of this difference, while one third is due to different trends in economic activity in the two areas. The residual gap appears to be attributable to external factors in Southern Italy (organized crime, an inefficient judicial system and a lack of social capital), whose negative externalities are greater in periods of more intense crisis and affect mainly smaller and riskier firms.
    Keywords: credit quality, geographical disparities
    JEL: G21 R19
    Date: 2022–06
  28. By: Ben Yahmed, Sarra; Berlingieri, Francesco; Brüll, Eduard
    Abstract: Employment responses to the COVID-19 crisis differed widely across German local labour markets at the beginning of the pandemic, with differences in short-time work rates of up to 20 percentage points. We show that digital capital, and to a lesser extent working-from-home, were essential for the resilience of local labour markets. Using an empirical strategy that combines a difference-in-differences approach with propensity score weighting, we find that local exposure to digital capital reduced short-time work usage by up to 4 percentage points and the effect lasted for about 8 months. Working-from-home potential lowered short-time work rates, but only in local labour markets exposed to digital capital, and in the first four months of the pandemic when a strict lockdown was in place. Differences in unemployment rates across local labour markets were at most 2 percentage points and did not depend on digital capital or working-from-home potential.
    Keywords: COVID-19 crisis,Digitalisation,Employment,Information and communication technologies,Local labour markets,Short-time work,Working-from-home
    JEL: J21 O3 R12 R23
    Date: 2022
  29. By: Berliant, Marcus
    Abstract: Workers generally commute on a daily basis, so we model commuting as a repeated game. The folk theorem implies that for sufficiently large discount factors, the repeated commuting game has as a Nash equilibrium any feasible strategy that is uniformly better than the minimax strategy payoff for a commuter in the one shot game, repeated over the infinite horizon. This includes the efficient equilibria. An example where the efficient payoffs strictly dominate the one shot Nash equilibrium payoffs is provided. Our conclusions pose a challenge to congestion pricing in that equilibrium selection could be at least as effective in improving welfare. We examine evidence from St. Louis to determine what equilibrium strategies are actually played in the repeated commuting game.
    Keywords: Repeated game; Nash equilibrium; Commuting; Folk theorem
    JEL: R41
    Date: 2022–07–23
  30. By: Granlund, David (Department of Economics, Umeå University); Meens-Eriksson, Sef (Department of Economics, Umeå University)
    Abstract: We derive a theoretical model predicting that firms should mark down input prices more the longer distance a supplier has to a competitor’s plant relative to their own plant. We test this prediction using contract-level data on prices of waste burned at energy plants. To the best of our knowledge, we are the first to study whether firms price discriminate based on relative distance to the closest competitor. The empirical results confirm that longer relative distances to competitors’ plants lead to lower prices and show no evidence of additional effects of the distance to the chosen plant.
    Keywords: auction; market power; oligopsony; price discrimination; procurement; spatial competition; transport cost; waste incineration
    JEL: D43 D44 L11 L13 Q53
    Date: 2022–08–17
  31. By: Alvaro Pina Stranger (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique); Germán Varas (ISTIC - Institut des Sciences et Technologies de l'Information et de la Communication - UNILIM - Université de Limoges); Gaelle Mobuchon (ISTIC - Institut des Sciences et Technologies de l'Information et de la Communication - UNILIM - Université de Limoges)
    Abstract: The COVID-19 lockdown induced a sudden migration of traditionally presential learning activities to online domains, as was the case of inter-institutional summer schools. This research corresponds to a case study in which our organization had to reformulate, in less than three months, one of its traditional summer schools while trying to keep the original goals. Through qualitative and quantitative surveys, we aimed at identifying the impact of our reformulation through students' perception of gained or lost value regarding four topics: (a) online teaching, (b) pre-recorded business cases, (c) online social events, and (d) technical solutions. By analyzing these four topics with emphasis on participants' knowledge and learning experience, we identified some "tensions" leading to loss of value (i.e., belonging, performing, and organizing). These tensions suggest that future reformulations should be conducted considering students' backgrounds and motivations.
    Keywords: perception of value,assessment,learning organization,online learning,COVID-19,innovation education
    Date: 2022
  32. By: International Monetary Fund
    Abstract: The current area-based property tax system in Romania is inefficient, producing revenue below its potential, while the taxable value determination is inequitable and complex. Indeed, the property tax only generated 0.6 percent of GDP in 2021 vs. the average of 1.8 percent of GDP in the OECD economies, or 0.9 percent of GDP in EU-27. Meanwhile, significant scope for improving both buoyancy and efficiency of the property tax system exists, not least through the elimination of multiple exemptions, addressing the current inadequate and fragmented self-declaration system of residential buildings that translates into incomplete fiscal cadasters.
    Keywords: property tax reform; real property; VALUE-BASED property tax; tax rate; property tax exemption; property tax system; property tax basis; Property tax; Land tax; Real estate prices; Asset valuation; Africa; Eastern Europe
    Date: 2022–06–29
  33. By: Abbas Moosvi (Pakistan Institute of Development Economics)
    Abstract: Vicky Zhuang Yi-Yin, Co-founder and Director Olomopolo Media, Lahore Olomopolo started as a short-term project on theater performances, which came to a standstill due to lack of finances – which prompted us to take a step back and organize small, weekly events in our rented space.
    Date: 2022
  34. By: Miriam Bruhn; Gabriel Garber; Sergio Koyama; Bilal Zia
    Abstract: In 2011, the impact of a comprehensive financial education program was studied through a randomized controlled trial with 892 high schools in six Brazilian states. Using administrative data, this paper follows 16,000 students for the next nine years. The short-term findings were that the treatment students used expensive credit and were behind on payments. By contrast, in the long-term treatment, students were less likely to borrow from expensive sources and to have loans with late payments than control students. Treatment students were also more likely to own microenterprises and less likely to be formally employed than control students.
    Date: 2022–07
  35. By: Luttmann, Alexander; Gaggero, Alberto A
    Abstract: We offer a comprehensive empirical study on hidden-city ticketing (HCT), a pricing phenomenon in the airline industry that occurs when the fare for a nonstop trip from A to B is more expensive than a connecting trip from A to B and B to C. Exploiting a unique panel of over 772 thousand fares for flights departing between October 1st, 2019 and February 29th, 2020, we find that HCT depends on route competition (both on A-B and A-C routes), largely occurs in the last week to departure, and primarily occurs on carriers that operate large hub-and-spoke networks (e.g., American, Delta, and United).
    Keywords: advance-purchase, airline pricing, competition, hidden-city ticketing, price discrimination.
    JEL: D40 L11 L13 L93
    Date: 2022–07–26
  36. By: Dave Donaldson
    Abstract: This article describes methods used in the field of spatial economics that combine insights from economic theory and evidence from data in order to answer counter- factual questions. I outline a general framework that emphasizes three elements: a specific question to be answered, a set of empirical relationships that can be identified from exogeneity assumptions, and a theoretical model that is used to extrapolate from such empirical relationships to the answer that is required. I then illustrate the application of these elements via a series of twelve examples drawn from the fields of international, regional, and urban economics. These applications are chosen to illustrate the various techniques that researchers use to minimize the theoretical assumptions that are needed to traverse the distance between identified empirical patterns and the questions that need to be answered.
    JEL: B4 C1 F0 O0 R0
    Date: 2022–07
  37. By: Marit Hinnosaar; Elaine M. Liu
    Abstract: How malleable is alcohol consumption? Specifically, how much is alcohol consumption driven by the current environment versus individual characteristics? To answer this question, we analyze changes in alcohol purchases when consumers move from one state to another in the United States. We find that if a household moves to a state with a higher (lower) average alcohol purchases than the origin state, the household is likely to increase (decrease) its alcohol purchases right after the move. The current environment explains about two-thirds of the differences in alcohol purchases. The adjustment takes place both on the extensive and intensive margins.
    JEL: D12 I12 I18 L66
    Date: 2022–07
  38. By: Liza Charroin (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Bernard Fortin (ULaval - Université Laval [Québec]); Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique, IZA - Forschungsinstitut zur Zukunft der Arbeit - Institute of Labor Economics)
    Abstract: If individuals tend to behave like their reference group, is it because of peer effects, selfselection, or both? Using a peer effect model allowing for conformity and link formation, we designed a real-effort laboratory experiment in which individuals could misreport their performance and select their peers. Our results reveal both a preference for conformity and homophilous link formation, but only among individuals cheating in isolation. This suggests that such link formation was not motivated by a taste for similarity but by acquiring self-serving information. Importantly, we reject the presence of a self-selection bias in the peer effect estimates by showing that the size of peer effects is similar when identical peers were randomly assigned and when individuals selected them.
    Keywords: Peer effects,Self-selection,Homophily,Dishonesty,Experiment
    Date: 2022
  39. By: Julide Yildirim; Nadir Öcal; Barış Alpaslan
    Abstract: This paper assesses the determinants of provincial public health expenditures for Turkey, taking spatial dimension into account. A general-to-specific approach has been adopted where spatial variations in the relationships have been examined, using the panel data at NUTS3 level for the period 2009-2019. Descriptive spatial exploratory analysis indicates the existence of a significant positive spatial association for provincial GDP per capita, health expenditures, and other explanatory variables. However, the traditional East-West divide shows persistence in income and health indicators. Our empirical results indicate that there is positive spatial interaction with regard to provincial health expenditures. This result corroborates the externality effect of government expenditures. Our results also show the presence of strong path dependency, implying long-term policy stability. According to our findings, it seems that age structure, education level, and urbanization are important determinants of public health expenditures with significant spatial effects. Overall, our empirical results do not support the supply-induced demand theory, but rather indicate that demand side factors are more prominent determinants of central public health expenditures.
    Keywords: Provincial public health expenditures; Turkey; Spatial models; Externality hypothesis; Regional governance.
    JEL: C23 H51 H75 I10
    Date: 2022–08
  40. By: Giulietti, Corrado (University of Southampton); Vlassopoulos, Michael (University of Southampton); Zenou, Yves (Monash University)
    Abstract: We investigate whether COVID-19 deaths that occurred before vaccination rollouts impact subsequent vaccination take-up. We use data on local vaccination rates and COVID-19-related deaths from England measured at high geographic granularity. We find that vaccination take-up as of November 2021 is positively associated with pre-vaccine COVID-19-related deaths, controlling for demographic, economic, and health-related characteristics of the localities, while including geographic fixed effects. In addition, the share of ethnic minorities in a locality is negatively associated with vaccination rates, and localities with a larger share of ethnic minorities increase their vaccination rates if they are exposed to more COVID-related-deaths. Further evidence on vaccination intention at the individual level from a representative sample corroborates these patterns. Overall, our evidence suggests that social proximity to victims of the disease triggers a desire to take protective measures against it.
    Keywords: vaccination hesitancy, COVID-19, social interactions, information, behavior change
    JEL: H51 I12
    Date: 2022–07
  41. By: Renuka Sane (NIPFP); Ajay Shah (XKDR Forum)
    Abstract: A primal goal in state building is the establishment of conditions of safety for residents. This creates conditions for individuals to explore the world, and engage in creativity and leadership, across all walks of life from economics to politics, thus positively impacting upon the culture. The criminal justice system is the state-run institutional arrangement which is tasked with creating these conditions of safety of individuals. Traditionally, policy thinking on the criminal justice system has emphasised inputs (expenditures, recruitment) and outputs(trials, prisoners). As with other elements of public policy, it is important to measure outcomes: the safety as seen by residents. Crime victimisation surveys are the fundamental building block of the criminal justice system which deliver outcomes measurement. A regular program of such measurement can feed back into improved working of the criminal justice system, and the analysis of the causes and consequences of personal safety. In this paper we review developments on this measurement program in India of recent years.
    JEL: H41 C81 K42
    Date: 2022–08
  42. By: Gong, Ziqian; Cai, Yongyang
    Keywords: Environmental Economics and Policy, Risk and Uncertainty, Resource/Energy Economics and Policy
    Date: 2022–08
  43. By: Renée, Laëtitia
    Abstract: I study the effects of the Future to Discover Project, a randomized experiment in which Canadian high school students were either invited to participate in career planning workshops or were made eligible for an $8,000 college grant. By matching the experimental data to post-secondary institution records and income tax files, I am able to examine the effects of the interventions on college enrollment, graduation, and earnings in adulthood. I show that the career education intervention greatly improved students' outcomes in the long run by improving academic matching. In contrast, the college grant had no long-term monetary benefits despite increasing college enrollment, which is consistent with classical models of human capital investment in the absence of credit constraints. My findings suggest that informational frictions and behavioral obstacles-rather than financial constraints-represent the primary barrier to four-year college enrollment faced by low-income students. And that they explain a large part of the gap in four-year college enrollment between high- and low-income students.
    JEL: I22 I23 I24 D8 D31
    Date: 2022

This nep-ure issue is ©2022 by Steve Ross. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.