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on Urban and Real Estate Economics |
| By: | Tarek Mostafa (LEST - Laboratoire d'économie et de sociologie du travail - CNRS : UMR6123 - Université de Provence - Aix-Marseille I - Université de la Méditerranée - Aix-Marseille II); Saïd Hanchane (LEST - Laboratoire d'économie et de sociologie du travail - CNRS : UMR6123 - Université de Provence - Aix-Marseille I - Université de la Méditerranée - Aix-Marseille II) |
| Abstract: | In this paper, we develop a multicommunity model where public mixed finance and private schools coexist. Students are differentiated by income, ability and social capital. Schools maximize their profits under a quality constraint; the pricing function is dependent on the cost of producing education and on the position of an individual relatively to mean ability and mean social capital. Income plays an indirect role since it determines the type of schools and communities that can be afforded by a student given his ability and social capital.<br /><br />Three dimensional stratification results from schools’ profit maximization and individuals’ utility maximization. We study majority voting over tax rates; property tax is used to finance education not only in pure public schools but also in mixed finance schools. We provide the necessary conditions for the existence of a majority voting equilibrium determined by the median voter. Finally, we analyze the consequences of introducing public school choice. |
| Keywords: | Education market; Majority voting equilibrium; Peer group effects; Social Capital; Students; Formation of communities; School choice |
| Date: | 2007–10–08 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00177630_v2&r=ure |
| By: | Thesia I. Garner (U.S. Bureau of Labor Statistics); Randal Verbrugge (U.S. Bureau of Labor Statistics) |
| Abstract: | This paper constructs, for the five largest cities in the United States, user costs and rents for the same structure, in levels (i.e., measured in dollars). The levels formulation is a major advantage over indexes since one can answer questions like "Is it cheaper to rent or to own?" or "Are houses overvalued?" because such questions are essentially about the levels of rents and house prices and their fundamentals. These new measures are constructed using Consumer Expenditure Survey (CE) Interview data from 1982 to 2002, along with house price appreciation forecasts from Verbrugge (2007a). Characteristics, current market value, and rental equivalence of owner-occupied housing are used in a regression framework to predict the rent associated with a structure with median characteristics in each city. The property value of this median house is used to construct a user cost estimate for this structure. We find that, for the median structure in each city, estimated user costs and rents diverge to a surprising degree, in keeping with the previously noted findings of Verbrugge (2007a). It is not always cheaper to own: user costs sometimes lie well above rents. Finally, the dynamics of the estimated price-to-rent ratio are generally similar to those found in conventional estimates based upon indexes, suggesting that the present study might be useful for scaling or normalizing other estimates. |
| Keywords: | User Costs, Arbitrage, Transaction Costs, House Price Appreciation, Consumer Expenditure Survey, Forecasting, Inflation Stickiness, Rental Equivalence, CPI |
| JEL: | E21 E22 R31 R21 E31 C81 C82 O47 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:bls:wpaper:ec070080&r=ure |
| By: | Samuel Berlinski (University College London and Institute for Fiscal Studies); Sebastian Galiani (Washington University); Marco Manacorda (Queen Mary, University of London, CEP (LSE) and CEPR) |
| Abstract: | We study the effect of pre-primary education on children's subsequent school outcomes by exploiting a unique feature of the Uruguayan household survey (ECH) that collects retrospective information on preschool attendance in the context of a rapid expansion in the supply of pre-primary places. Using a within household estimator, we find small gains from preschool attendance at early ages that magnify as children grow up. By age 15, treated children have accumulated 0.8 extra years of education and are 27 percentage points more likely to be in school compared to their untreated siblings. Instrumental variables estimates that control for non random selection of siblings into pre-school lead to similar results. We speculate that early grade repetition harms subsequent school progression and that pre-primary education appears as a successful policy option to prevent early grade failure and its long lasting consequences. |
| Keywords: | Preschool, Pre-primary education, Primary school performance |
| JEL: | I2 J1 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:wp618&r=ure |
| By: | Harry Cominos; Alicia Rambaldi; D.S. Prasada Rao (CEPA - School of Economics, The University of Queensland) |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uqcepa:24&r=ure |
| By: | Thiess Buettner (Ifo Institute) |
| Abstract: | A large panel of German municipalities is employed in order to investigate the dynamic fiscal policy adjustment of local jurisdictions using a VEC model which explicitly takes account of the intertemporal budget constraint. The results confirm that a substantial part of adjustment takes place by offsetting changes in intergovernmental transfers, in particular, in ‘fiscal equalization’ transfers: in present value terms about 34 cents of a one euro decrease in own revenue is compensated by subsequent changes in equalization transfers. The contribution of intergovernmental transfers to restoring fiscal balance, therefore, is about two to three times higher, compared to the case of US municipalities investigated by Buettner and Wildasin (2006). Nevertheless, budget components such as own revenues and general expenditures display larger fluctuations in the German case. This is consistent with the view that fiscal equalization transfers create a moral-hazard problem. |
| Keywords: | Fiscal balance; Intergovernmental transfers; Local governments; Fiscal equalization |
| JEL: | H74 H72 H77 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:ifr:wpaper:2007-07&r=ure |
| By: | Jeffrey Lin |
| Abstract: | Where does adaptation to innovation take place? The supply of educated workers and local industry structure matter for the subsequent location of new work–that is, new types of labor-market activities that closely follow innovation. Using census 2000 microdata, the author shows that regions with more college graduates and a more diverse industrial base in 1990 are more likely to attract these new activities. Across metropolitan areas, initial college share and industrial diversity account for 50% and 20%, respectively, of the variation in selection into new work unexplained by worker characteristics. He uses a novel measure of innovation output based on new activities identified in decennial revisions to the U.S. occupation classification system. New work follows innovation, but unlike patents, it also represents subsequent adaptations by production and labor to new technologies. Further, workers in new activities are more skilled, consistent with skill-biased technical change. |
| Keywords: | Human capital |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:07-25&r=ure |
| By: | Marius BRÜLHART; Mario JAMETTI |
| Abstract: | We study the impact of tax competition on equilibrium taxes and welfare, focusing on the jurisdictional fragmentation of federations. In a representative-agent model of fiscal federalism, fragmentation among jurisdictions with benevolent tax-setting authorities unambiguously reduces welfare. If, however, tax-setting authorities pursue revenue maximization, fragmentation, by pushing down equilibrium tax rates, may under certain conditions increase citizen welfare. We exploit the highly decentralized and heterogeneous Swiss fiscal system as a laboratory for the estimation of these effects. While for purely direct-democratic jurisdictions (which we associate with benevolent tax setting) we find that tax rates increase in fragmentation, fragmentation has a moderating effect on the tax rates of jurisdictions with some degree of delegated government. Our results thereby support the view that tax competition can be second-best welfare enhancing by constraining the scope for public-sector revenue maximization. |
| Keywords: | tax competition; optimal taxation; government preferences; fiscal federalism; direct democracy |
| JEL: | H2 H7 D7 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:lau:crdeep:07.09&r=ure |
| By: | Changhui Kang (Department of Economics, National University of Singapore) |
| Abstract: | The causal relationship between educational investments and student outcomes continues to attract attention. The majority of studies have examined the effectiveness of public school expenditures or private school attendance on student outcomes. This paper contributes to the literature by examining the effectiveness of an unexplored dimension of educational inputs—private tutoring expenditures of South Korean parents. In the face of difficulties in causal estimation, the paper employs a nonparametric bounding method that is recently gaining popularity. With the method we show that the true effect of private tutoring remains at most modest. The tightest bounds suggest that a 10 percent increase in expenditure raises a student's test score by 0.764 percent at the largest. Such a modest effect remains similar across male and female students, and across students of different ability levels. |
| Keywords: | Private Tutoring, Test Scores, Nonparametric Bounds, South Korea |
| JEL: | I20 C30 |
| URL: | http://d.repec.org/n?u=RePEc:nus:nusewp:wp0707&r=ure |
| By: | John Smith (Rutgers University-Camden); Olugbenga Ajilore (University of Toledo) |
| Abstract: | We present evidence that more ethnically fragmented communities spend, all else equal, more on police services than less fragmented communities. We introduce a model of spending on police services which we use to interpret the data. In this model, we assume that the decision to commit a crime is a rational consideration of the costs and benefits and that spending on police services reduces the attractiveness of committing a crime. We also assume that being a victim of crime affects a loss in utility. However this victimization cost, if victim and perpetrator are a different ethnicity, is greater than or equal to that if the perpetrator is the same ethnicity. A consequence of the model is that a higher level of spending on police services is associated with more ethnically fragmented communities only when agents suffer this differential cost of victimization. These results contribute to our understanding of the stylized fact that spending on police services is increasing at a time in which crime rates are falling. Further, our results provide empirical support for the contention that people have a larger cost of victimization when the perpetrator is a different ethnicity. |
| Keywords: | Ethnic Fragmentation, Police, Crime, Social Identity, Public Goods |
| JEL: | D70 H76 H41 |
| Date: | 2007–10–11 |
| URL: | http://d.repec.org/n?u=RePEc:rut:rutres:200708&r=ure |
| By: | Edward L. Glaeser |
| Abstract: | Why do levels of entrepreneurship differ across America's cities? This paper presents basic facts on two measures of entrepreneurship: the self-employment rate and the number of small firms. Both of these measures are correlated with urban success, suggesting that more entrepreneurial cities are more successful. There is considerable variation in the self-employment rate across metropolitan areas, but about one-half of this heterogeneity can be explained by demographic and industrial variation. Self-employment is particularly associated with abundant, older citizens and with the presence of input suppliers. Conversely, small firm size and employment growth due to unaffiliated new establishments is associated most strongly with the presence of input suppliers and an appropriate labor force. I also find support for the Chinitz (1961) hypothesis that entrepreneurship is linked to a large number of small firms in supplying industries. Finally, there is a strong connection between area-level education and entrepreneurship. |
| JEL: | R0 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13551&r=ure |
| By: | Landvoigt, Tim; Muehler, Grit; Pfeiffer, Friedhelm |
| Abstract: | This paper investigates the relationship between kindergarten attendance and secondary school track choice in West-Germany. Our analysis is based on a panel of 12 to 14-year olds with information from age two on, drawn from the German SocioEconomic Panel (GSOEP) 1984–2005. We estimate binary probit models to assess the impact of the duration (in years) and the intensity (half-day or full-day) of kindergarten attendance. Our results indicate that kindergarten non-attendance is associated with a significantly lower probability to attend the highest secondary school track (“Gymnasium”). Further, full-day attendance is associated with a decreasing probability of attending the highest secondary school track for every duration of preschool child care. Thus, intensity seems to matter more than duration. |
| Keywords: | kindergarten, preschool education, school placement |
| JEL: | I21 J12 J13 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:6354&r=ure |
| By: | Nicholas Z. Muller |
| Abstract: | The hedonic literature has established that public water bodies provide external benefits that are reflected in the value of nearby residential real estate. The literature has employed several approaches to quantify these nonmarket services. With a residential hedonic model, this paper tests whether model specification affects resource valuation using an actively managed reservoir in Indiana and a passively managed lake in Connecticut. The results indicate that valuation is quite sensitive to model specification,and that omitting either the waterview or waterfront variables from the hedonic function likely results in a misspecified model. The findings from this study are important for researchers and public agencies charged with managing water resources to bear in mind as the external benefits from existing or man-made lakes anr reservoirs are estimated. Therefore, while it requires considerably more effort to determine which properties are in waterfront locations and which properties have a view, the potential misspecification of distance-only models likely justifies these extra research costs. Further, the findings in this analysis callinto question results from distance-only models in the literature. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:mdl:mdlpap:0721&r=ure |
| By: | Robert J. Shiller (Cowles Foundation, Yale University) |
| Abstract: | There has been a widespread perception in the past few years that long-term asset prices are generally high because monetary authorities have effectively kept long-term interest rates, which the market uses to discount cash flows, low. This perception is not accurate. Long-term interest rates have not been especially low. What has changed to produce high asset prices appears instead to be changes in popular economic models that people actually rely on when valuing assets. The public has mostly forgotten the concept of "real interest rate." Money illusion appears to be an important factor to consider. |
| Keywords: | Long-term interest rates, Stock prices, Housing prices, Real interest rates, Liquidity, Money illusion |
| JEL: | G12 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:1632&r=ure |
| By: | Iragaël Joly (LET - Laboratoire d'économie des transports - CNRS : UMR5593 - Université Lumière - Lyon II - Ecole Nationale des Travaux Publics de l'Etat) |
| Abstract: | The paper exams the relationships between travel and activity times, in 7 travel surveys from 4 French and 3 Swiss cities, observed at two different periods. First, we test proportional assignment of total daily available time to activities (including transport). Second, proportionality is tested between (1) daily travel time of a given purpose with respect of the daily activity duration and (2) the trip time associated to the duration of the activity at destination. Only daily leisure time and daily travel time are fixed proportion of total daily available time. At disaggregated level, the trip duration do not show proportionality with activity duration. Finally questioning the proportionality and the linear adjustment, we regress the travel time budgets using duration models. This methodology is particularly adapted to the duration analysis and leads to non-linear relation between travel time and activity times. Leisure and shopping activities exhibit increasing and convex travel time intensities. |
| Keywords: | activity-based analysis - time use - travel time |
| Date: | 2007–06–24 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00181425_v1&r=ure |
| By: | Giulio Fella (Queen Mary, University of London, UK and The Rimini Centre for Economics Analysis, Rimini, Italy.); Giovanni Gallipoli (University of British Columbia, Canada.) |
| Abstract: | In this paper we ask whether policies targeting a reduction in crime rates through changes in education outcomes can be considered an effective and cost-viable alternative to interventions based on harsher punishment alone. In particular we study the effect of subsidizing high school completion. Most econometric studies of the impact of crime policies ignore equilibrium effects and are often reduced-form. This paper provides a framework within which to study the equilibrium impact of alternative policies. We develop an overlapping generation, life-cycle model with endogenous education and crime choices. Education and crime depend on different dimensions of heterogeneity, which takes the form of differences in innate ability and wealth at birth as well as employment shocks. PSID, NIPA and CPS data are used to estimate the parameters of a production function with different types of human capital and to approximate a distribution of permanent heterogeneity. These estimates are used to pin down some of the modelÕs parameters. The model is calibrated to match education enrolments, aggregate (property) crime rate and some features of the wealth distribution. In our numerical experiments we find that policies targeting crime reduction through increases in high school graduation rates are more cost-effective than simple incapacitation policies. Furthermore, the cost-effectiveness of high school subsidies increases significantly if they are targeted at the wealth poor. We also find that financial incentives to high school graduation have radically different implications in general and partial equilibrium (i.e. the scale of the programmes can substantially change its outcomes). |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:15-07&r=ure |
| By: | Karl Littlejohn (LASUR - Laboratoire de sociologie urbaine - École Polytechnique Fédérale de Lausanne); Iragaël Joly (LET - Laboratoire d'économie des transports - CNRS : UMR5593 - Université Lumière - Lyon II - Ecole Nationale des Travaux Publics de l'Etat) |
| Abstract: | This paper combines both quantitative and qualitative methods to provide supplemental information and results that clarify the reasons that individuals devote ample time to travel.<br />Through a quantitative analysis of travel-time budgets (TTB) in seven cities (Zurich, Bern, Geneva, Rennes, Lyon, Strasbourg, and Grenoble), the research initially establishes the relationship between the amount of daily travel time allocated and socio-demographic characteristics of individuals and households. The application of a duration model method additionally highlights the influence of diverse types of activities at the destination on TTB. Our analysis confirms that the overall TTB of individuals has increased over roughly the past ten years, with Swiss cities possessing higher travel times than French ones. In many cities, around 20% of our samples also devote excessive amounts of time to travel. The duration model therefore indicates an atypical individual behavior not explained by the covariates of the model. Conversely, other dimensions could certainly explain the choices or obligations that influence these high TTB.<br /> Accordingly, in-depth interviews are given to individuals that travel during the week for longer than 2 hours a day. Their profiles provide several explanations to the reasons behind their choice (or obligation) to spend major amounts of time in daily travel. Consequently, the allocation of travel time of a person is not solely determined by the activities at a destination, but also by individual aspects. Additionally, travel time is perceived as time when other activities can be performed simultaneously (ex. working on the train, listening to music, etc.). |
| Keywords: | Travel-time budgets, duration model, in-depth interview, perceptions of travel time, societal influences |
| Date: | 2007–09–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00181407_v1&r=ure |
| By: | Robert Poole (U.S. Bureau of Labor Statistics); Randal Verbrugge (U.S. Bureau of Labor Statistics) |
| Abstract: | Between 1999 and 2006, there were two episodes during which inflation in the Rent index in the CPI diverged markedly from inflation in the index for Owner’s Equivalent Rent (OER); early in 2007, these series began to diverge again. Such divergence often prompts many to question CPI methods. A key difference between these two series is that OER indexes are based upon rents which have received a utilities adjustment – an adjustment which is necessary because the OER index is intended to track pure rent-of-shelter, not shelter-plus-utilities. Critics have claimed that the Rent-OER inflation divergences stem from an inappropriate utilities adjustment. This claim is false. In this paper, we decompose the Rent-OER inflation differential into its various determinants, and explore the multiple causes of this divergence over time. There is only one divergence episode – of only six months duration – which is primarily attributable to the utilities adjustment procedure. Indeed, the utilities adjustment sometimes reduced potential divergence between the two series. Instead, the main culprit is rental market segmentation; that is, different rent inflation rates were experienced by different parts of the rental market. Before 2003, the Rent-OER inflation divergence mainly resulted from divergent rental inflation rates within metropolitan areas: areas with a higher proportion of renters experienced higher rental inflation. After 2004, similar divergent inflation across metropolitan areas resulted in higher Rent inflation. Compared to other units, rent control units experienced higher inflation in 2004 (and, to a lesser extent, before mid-2001 and in 2006), which increased Rent inflation but not OER inflation. Finally, in early 2007, there was a sizable divergence between OER and Rent inflation, driven mostly by divergent rental inflation rates within metropolitan areas; the extent of the divergence only becomes evident once the effect of the utilities adjustment is accounted for. |
| Keywords: | Owners' Equivalent Rent, Utilities Adjustment, Rental Market Segmentation, Rent Control, Inflation Measurement, Core Inflation |
| JEL: | R31 R21 E31 C81 C82 O47 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:bls:wpaper:ec070090&r=ure |
| By: | Hoyt Bleakley; Jeffrey Lin |
| Abstract: | Using U.S. Census microdata, the authors show that, on average, workers change occupation and industry less in more densely populated areas. The result is robust to standard demographic controls, as well as to including aggregate measures of human capital and sectoral mix. Analysis of the displaced worker surveys shows that this effect is present in cases of involuntary separation as well. On the other hand, the authors actually find the opposite result (higher rates of occupational and industrial switching) for the subsample of younger workers. These results provide evidence in favor of increasing-returns-to-scale matching in labor markets. Results from a back-of-the-envelope calibration suggest that this mechanism has an important role in raising both wages and returns to experience in denser areas. |
| Keywords: | Labor market |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:07-23&r=ure |
| By: | Bover, Olympia; Jimeno, Juan Francisco |
| Abstract: | Over the last decade house prices increased remarkably in many countries. However, while in several countries there was an employment boom in the construction sector, in others the share of employment in this sector did not significantly change. In this paper we estimate a model of labour demand in the construction sector, featuring building constraints, which explains many of the international differences in the response of sectoral reallocation of employment to house prices. Countries with more building possibilities (Spain, Sweden and the US) have a high sectoral reallocation of employment, and display larger elasticities of labour demand in the construction sector with respect to house prices than countries that seem to have fewer building possibilities (Belgium, the Netherlands, and the UK). Nevertheless, our estimates imply that, for the whole economy, the elasticity of labour demand with respect to house prices is broadly similar across countries. |
| Keywords: | House prices; labour demand; sectoral reallocation of labour |
| JEL: | J23 R32 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6543&r=ure |
| By: | Timothy J. Halliday (Department of Economics, University of Hawaii at Manoa); Sally Kwak (Department of Economics, University of Hawaii at Manoa) |
| Abstract: | Recent research in the New England Journal of Medicine (NEJM) purports to show the existence of peer effects in the spread of obesity. Using a dataset of 5124 residents from Framingham, Massachusetts spanning the years 1971 to 2003, the authors show correlations between own weight gain and friends’ and relatives’ weight gain over this period. They find, furthermore, that these results are strongest for males and weaker for females. We use the Adolescent Health Survey, a nationally representative dataset of seventh through twelfth graders in 1994 and 1996 to examine the effect of peers on weight gain. Despite the differences in the samples, we are able to replicate the pattern of results in the NEJM study. However the results are not robust to alternative definitions of the outcome variable. Furthermore, due to the various identification issues that are unresolved in both this and the NEJM paper, we conclude that the evidence for contagion effects in the spread of obesity is only suggestive at best. |
| Keywords: | Peer effects, obesity, adolescent health |
| JEL: | I10 I12 J01 |
| Date: | 2007–10–22 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:200727&r=ure |
| By: | Fernando A. Broner; Alberto Martin; Jaume Ventura |
| Abstract: | There is a large and growing literature that studies the effects of weak enforcement institutions on economic performance. This literature has focused almost exclusively on primary markets, in which assets are issued and traded to improve the allocation of investment and consumption. The general conclusion is that weak enforcement institutions impair the workings of these markets, giving rise to various inefficiencies. But weak enforcement institutions also create incentives to develop secondary markets, in which the assets issued in primary markets are retraded. This paper shows that trading in secondary markets counteracts the effects of weak enforcement institutions and, in the absence of further frictions, restores efficiency. |
| JEL: | F34 F36 G15 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13559&r=ure |