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on Urban and Real Estate Economics |
| By: | Jan K. Brueckner; Paul S. Calem; Leonard I. Nakamura |
| Abstract: | This paper explores the link between the house-price expectations of mortgage lenders and the extent of subprime lending. It argues that bubble conditions in the housing market are likely to spur subprime lending, with favorable price expectations easing the default concerns of lenders and thus increasing their willingness to extend loans to risky borrowers. Since the demand created by subprime lending feeds back onto house prices, such lending also helps to fuel an emerging housing bubble. The paper, however, focuses on the reverse causal linkage, where subprime lending is a consequence rather than a cause of bubble conditions. These ideas are illustrated in a theoretical model, and empirical work tests for a connection between price expectations and the extent of subprime lending. |
| Keywords: | Subprime mortgage ; Global financial crisis |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:11-12&r=ure |
| By: | Stephen Gibbons; Henry G. Overman; Guilherme Resende |
| Abstract: | This report estimates housing-cost-earnings differentials across labour market areas in Britain. We show that quality-adjusted housing costs rise on average, one for one with the skill-adjusted earnings of the average working household. However, the relationship is Ushaped, with relatively high housing costs in places at the bottom and top ends of the wage distribution. This variation in housing costs means nominal wages are uninformative about real income disparities. If we assume spatial equilibrium and treat the cost-earnings differentials as estimates of the value of amenities, we can rank cities in terms of quality of life and estimate the value of different amenities. Our work improves on previous research by using longitudinal data on workers to estimate skill-adjusted labour market earnings differentials (net of taxes), using micro data on housing transactions, and by considering the implications of capital gains for housing user cost calculations. |
| Keywords: | Britain, spatial equilibrium, labour market, housing market |
| JEL: | J60 R23 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0065&r=ure |
| By: | Richard Harris |
| Abstract: | This paper uses methods of spatial analysis to show that lower and higher attaining pupils are separating from each other as they make the transition from primary to secondary schools in London. The observation is not simply a function of geography – that some places are more affluent, with a link between wealth and educational advantage – because separations emerge between locally competing secondary schools: those that are drawing their intakes from the same primary schools. Whilst the separations are partly exacerbated by selective and by faith schools, in all but one year during the period 2003‐8 they remain statistically significant even when those schools are omitted. However, there is no evidence to suggest the separation of lower and higher attaining pupils is getting worse or better, suggesting the geographical determinants of “choice” are strong and not easily changed. |
| Keywords: | primary school, secondary school, transition, London, spatial analysis |
| JEL: | I28 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:bri:cmpowp:10/257&r=ure |
| By: | Fougère, Denis (CREST-INSEE); Kramarz, Francis (CREST-INSEE); Rathelot, Roland (CREST); Safi, Mirna (CREST-INSEE) |
| Abstract: | Our study examines the empirical links between social housing policy and location choices of immigrants in France. More specifically, we characterize the main individual and contextual determinants of the probability for immigrants to live in a HLM (habitations à loyer modéré, dwelling with a moderate rent), which is the main public housing policy in France. For that purpose, we use individual information coming from large (one-fourth) extracts of the French population censuses conducted by INSEE (Paris) in 1982, 1990, and 1999. Our estimates show that, in general, migrants live more frequently in social housing than French natives, other observables being equal. In particular, this probability is higher for migrants from Turkey, Morocco, Southeast Asia, Algeria, Tunisia and Sub-Saharan Africa (in descending order). We find also that migrants of all origins live less often in a HLM when the city has plenty of social housing and when the fraction of natives is high. |
| Keywords: | social magnets, migration, social housing |
| JEL: | J61 I38 R38 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5557&r=ure |
| By: | Andrew Jenkins; Dylan Kneale; Ruth Lupton; Rebecca Tunstall |
| Abstract: | This study draws on the Millennium Cohort Study to explore the housing and neighbourhood circumstances of children born in England in 2000 at the age of 5 in 2006. The majority of children experienced good housing conditions. Those in social rented homes, and to a lesser extent in private rented homes too, were markedly disadvantaged in terms of family circumstances and neighbourhood deprivation, while housing conditions and other neighbourhood characteristics also varied somewhat between tenures. Links were found between children's housing tenure and test scores. These were largely explained by a combination of family characteristics and neighbourhood deprivation. |
| Keywords: | Millennium Cohort Study, housing conditions, neighbourhood conditions, housing tenure effects, neighbourhood effects |
| JEL: | I30 |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sticas:/143&r=ure |
| By: | Gabriel Ahlfeldt |
| Abstract: | In this study I develop a partial equilibrium approach for the prediction of property price effects of transport network extensions. It combines a gravity-type labor market accessibility indicator with a transport decision model that takes into account the urban rail network architecture, allows for mode switching and relaxes the assumption that stations represent perfect substitutes. The model is calibrated to the Greater London Area and is used to predict property price effects of the 1999 Jubilee Line and DLR extension. A considerable degree of heterogeneity is predicted both in terms of the magnitude as well as the spatial extent of price effects around new stations. A quasi-experimental property price analysis reveals that the model performs well in predicting the observed average accessibility effect. Relative transport costs associated with distinct transport modes are identified from the data by calibrating the model of observed property price adjustments. |
| Keywords: | property prices, hedonic analysis, transport innovations, gravity equation |
| JEL: | H43 R40 R58 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0075&r=ure |
| By: | Zenou, Yves (Stockholm University) |
| Abstract: | This article consists in three parts. The first part deals with theory. We evaluate the pros and cons of government involvement in urban housing and of renting versus ownership. In the second part, we summarize the different housing policies that have been implemented in the United States, Europe, and Asia. We draw some conclusions. In particular, we show that there is a tradeoff between encouraging home ownership and social housing since countries that have favor the former have neglected the latter (like Japan, Spain, etc.). In the third part, we use the theory and the international policy parts to address housing policy issues in China. One of the main concerns in Chinese cities is the raise of poverty mainly by "illegal" migrants (who are Chinese rural residents) living in "urban villages". We propose two steps to fight against poverty in Chinese cities. The first one is to require that the Chinese government recognizes these "illegal" migrants by helping them becoming "legal". The second step is to encourage social housing that directly or indirectly subsidizes housing for the poor. In that case, to fight against poverty, one can either implement place-targeted policies (like the enterprise zone programs in the US and Europe and/or housing projects in the US, UK, or France) or people-targeted policies (like the MTO programs in the US). We also discuss other issues related to poverty. In particular, we suggest that the government could also try to keep migrants in rural areas by attracting firms there and/or introduce a microfinance system that helps them become entrepreneurs. |
| Keywords: | urban villages, social housing, poverty, place-targeted policies, people-targeted policies, China |
| JEL: | H5 O53 |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp24&r=ure |
| By: | Janine Aron; John Muellbauer |
| Abstract: | This paper presents new quarterly panel data models for county court claims and orders for mortgage possession for seven regions of England plus Wales. Different types of data on mortgage possessions are compared. The innovations include the treatment of difficult to observe variations in loan quality and shifts in forbearance policy by lenders, by common indicators based on dummy variables. |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0070&r=ure |
| By: | Cynthia A. Bansa; Martha A. Starr |
| Abstract: | In considering whether asset-price bubbles should be offset through policy, an important issue is who pays the price when the bubble bursts. A bust that reduces the wealth of well-off households only may have small welfare costs, but costs may be sizable if broad swaths of households are affected. This paper uses micro data from the American Community Survey to examine how the recent housing bust affected households' employment, homeownership, home values, and housing costs. To separate dynamics of the housing bust from those of the aggregate downturn, we differentiate between metropolitan areas that did and did not experience bubbles. We find that, for most measures, deteriorations in well-being were more severe in bubble metros than elsewhere, and for several measures, differential effects on less-educated households were also more severe. This underscores the importance of keeping housing markets from overheating, as burdens of adjustment fall differentially on people not well prepared to bear them. |
| Keywords: | JEL classification: R21, D31, D12, E32 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:amu:wpaper:2011-04&r=ure |
| By: | Luisa Corrado; Bernard Fingleton |
| Abstract: | Spatial econometrics has been criticized by some economists because some model specifications have been driven by data-analytic considerations rather than having a firm foundation in economic theory. In particular this applies to the so-called W matrix, which is integral to the structure of endogenous and exogenous spatial lags, and to spatial error processes, and which are almost the sine qua non of spatial econometrics. Moreover it has been suggested that the significance of a spatially lagged dependent variable involving W may be misleading, since it may be simply picking up the effects of omitted spatially dependent variables, incorrectly suggesting the existence of a spillover mechanism. In this paper we review the theoretical and empirical rationale for network dependence and spatial externalities as embodied in spatially lagged variables, arguing that failing to acknowledge their presence at least leads to biased inference, can be a cause of inconsistent estimation, and leads to an incorrect understanding of true causal processes. |
| Keywords: | Spatial econometrics, endogenous spatial lag, exogenous spatial lag, spatiallydependent errors, network dependence, externalities, the W matrix, panel data with spatialeffects, multilevel models with spatial effects |
| JEL: | C21 C31 R0 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0071&r=ure |
| By: | Max Nathan |
| Abstract: | British cities are becoming more culturally diverse, with migration a main driver. Is this growing diversity good for urban economies? This paper explores, using a new 16-year panel of UK cities. Over time, net migration affects both local labour markets and the wider economy. Average labour market impacts appear neutral. Dynamic effects may be positive on UK-born workers' productivity and wages (via production complementarities for higher skill workers) or negative on employment (if migrants progressively displace lower-skill natives from specific sectors). The results, which survive causality checks, suggest both processes are operating in British cities. Long-term industrial decline and casualisation of entry-level jobs help explain the employment findings. |
| Keywords: | cities, migration, cultural diversity, labour markets, productivity, urban economics |
| JEL: | D24 J15 J61 O18 R11 R23 |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0067&r=ure |
| By: | Diaz-Serrano, Luis (Universitat Rovira i Virgili); Raya, Josep M. (Universitat Pompeu Fabra) |
| Abstract: | In this paper, we investigate whether evidence of discriminatory treatment against immigrants in the Spanish mortgage market exists. More specifically, we test whether, ceteris paribus, immigrant borrowers tend to be charged with higher interest rates on their mortgages than their Spanish born counterparts. To do so, we use a unique dataset on granted mortgages that contains information not only regarding the conditions of the loan but also the socio-economic characteristics of the mortgagors. We observe that immigrants are systematically charged with higher interest rates. We apply the well known Oaxaca-Blinder decomposition to measure the extent to which this disparate treatment of lenders in mortgage pricing against immigrants is due to discrimination. Our results indicate that approximately two thirds of the gap in the interest rate between Spanish born and immigrant borrowers can be attributed to discriminatory treatment. |
| Keywords: | immigration, discrimination, mortgage pricing, housing market |
| JEL: | R21 G21 J14 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5578&r=ure |
| By: | Steve Gibbons; Susana Mourato; Guilherme Resende |
| Abstract: | Using a hedonic property value price approach, we estimate the amenity value associated with proximity to habitats, designated areas, domestic gardens and other natural amenities in England. There is a long tradition of studies looking at the effect of a wide range of environmental amenities and disamenities on property prices. But, to our knowledge, this is the first nationwide study of the value of proximity to a large number of natural amenities in England. We analysed 1 million housing transactions over 1996- 2008 and considered a large number of environmental characteristics. Results reveal that the effects of many of these environmental variables are highly statistically significant, and are quite large in economic magnitude. Gardens, green space and areas of water within the census ward all attract a considerable positive price premium. There is also a strong positive effect from freshwater and flood plain locations, broadleaved woodland, coniferous woodland and enclosed farmland. Increasing distance to natural amenities such as rivers, National parks and National Trust sites is unambiguously associated with a fall in house prices. Our preferred regression specifications control for unobserved labour market and other geographical factors using Travel to Work Area fixed effects, and the estimates are fairly insensitive to changes in specification and sample. This provides some reassurance that the hedonic price results provide a useful representation of the values attached to proximity to environmental amenities in England. Overall, we conclude that the house market in England reveals substantial amenity value attached to a number of habitats, designations, private gardens and local environmental amenities. |
| Keywords: | amenity value, hedonic price method (HPM), environmental amenities |
| JEL: | R11 R29 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0074&r=ure |
| By: | Nathan, Max |
| Abstract: | British cities are becoming more culturally diverse, with migration a main driver. Is this growing diversity good for urban economies? This paper explores, using a new 16-year panel of UK cities. Over time, net migration affects both local labour markets and the wider economy. Average labour market impacts appear neutral. Dynamic effects may be positive on UK-born workers’ productivity and wages (via production complementarities for higher skill workers) or negative on employment (if migrants progressively displace lower-skill natives from specific sectors). The results, which survive causality checks, suggest both processes are operating in British cities. Long-term industrial decline and casualisation of entry-level jobs help explain the employment findings. |
| Keywords: | cities; migration; cultural diversity; labour markets; productivity; urban economics |
| JEL: | O18 J61 J15 R11 D24 R23 |
| Date: | 2011–02–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:29465&r=ure |
| By: | Matthew Roskruge (University of Waikato); Arthur Grimes (Motu Economic and Public Policy Research); Philip McCann (University of Groningen); Jacques Poot (University of Waikato) |
| Abstract: | Does homeownership affect individual social capital and thereby influence local outcomes? Following DiPasquale and Glaeser, a body of literature suggests that homeownership is positively related to social capital formation. Homeowners have an incentive to engage in the local community in order to preserve or enhance the value of their housing asset. Moreover, homeownership creates barriers to geographic mobility, which increases the present value of the expected stream of benefits from local community social capital. We test the homeownership hypothesis alongside other individual, household and locational determinants of social capital using unique data created by merging the 2006 and 2008 samples of the New Zealand Quality of Life survey. The measures of social capital used in our analysis include trust in others, participation in social networks, attitude towards local governance and sense of community. Since homeownership is not randomly assigned, we complement our regression models with propensity score matching to control for selection effects. The results confirm that homeownership exerts considerable positive impact in the formation of social capital in New Zealand communities. In raising accountability of local government it does, however, lead to reduced satisfaction by homeowners in the performance of local councils. |
| Keywords: | social capital, homeownership, New Zealand, matching methods |
| JEL: | H54 R11 Z13 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:mtu:wpaper:11_02&r=ure |
| By: | Toshihiro Okubo (Research Institute for Economics and Business Administration, Kobe University) |
| Abstract: | This paper studies anti-agglomeration subsidies in a core-periphery setting when firms are heterogeneous in labour productivity, focusing on the effects of relocation subsidy on firm location in various tax-financing schemes (local versus global). We discuss how subsidy can enhance welfare in periphery. As a result we find that subsidy proportional to profits can induce the relocation of high productivity firms and that a subsidy can increase welfare in periphery. Concerning tax-financing schemes, local tax financing scheme has an optimal level of subsidy. |
| Keywords: | heterogeneous firms, anti-agglomeration relocation subsidy, global/local tax-financing scheme. |
| JEL: | F21 H32 H25 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2011-11&r=ure |
| By: | Max Nathan |
| Abstract: | British cities have a surprisingly long history of cultural diversity. Recently they have become significantly more multicultural, with 'super-diversity' emerging in many urban neighbourhoods. Public interest in these changes is high, but there has been little research assessing their impacts. This paper makes two contributions to the field. First, it assembles new data on UK urban areas 2001-6, using an innovative cultural-ethno-linguistic (CEL) measure of cultural diversity alongside more traditional measures. Second, it tests links between diversity, wages and employment rates at the urban level. As suggested by theory and international evidence, I find some positive associations between super-diversity and UK urban economic performance. |
| Keywords: | cities, demography, migration, culture, cultural diversity, super-diversity, urbaneconomies, growth |
| JEL: | J15 J61 O18 R11 R23 |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0068&r=ure |
| By: | Neil Lee; Max Nathan |
| Abstract: | London is one of the world's major cities, and one of its most diverse. London's cultural diversity is widely seen as a social asset, but there is little hard evidence on its importance for the city's businesses. Theory and evidence suggest various links between urban cultural diversity and innovation, at individual, firm and urban level. This paper uses a sample of 7,400 firms to investigate, exploiting the natural experiment of A8 accession. The results, which are robust to most endogeneity challenges, suggest there is a small but significant 'diversity bonus' for London firms. Diverse management teams are particularly important for ideas generation, reaching international markets and serving London's cosmopolitan population. |
| Keywords: | cities, innovation, entrepreneurship, cultural diversity, migration, London |
| JEL: | J61 L21 M13 O11 O31 R23 |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0069&r=ure |
| By: | Toshihiro Okubo (Research Institute for Economics and Business Administration, Kobe University); Eiichi Tomiura (Department of Economics, Yokohama National University) |
| Abstract: | This paper empirically examines how productivity distributions of firms vary across regions based on Japan's manufacturing census data. We find that firm productivity is distributed with wide dispersions, especially in core regions. Our firm-level estimates demonstrate that the productivity distribution of firms tends to be noticeably left-skewed, deviating from the normal distribution, especially in regions with weak market potential but also in agglomerated or urbanized regions. These findings suggest that agglomeration economies are likely to accommodate heterogeneous firms that co-exist in the same region. |
| Keywords: | agglomeration; productivity; gamma distribution; heterogeneity; firm-level data |
| JEL: | L11 R12 |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2011-06&r=ure |
| By: | Croce, Giuseppe; Ghignoni, Emanuela |
| Abstract: | According to a recent strand of literature this paper highlights the relevance of spatial mobility as an explanatory factor of the individual risk of being overeducated. To investigate the causal link between spatial mobility and overeducation we use individual information about daily home-to-work commuting time and choices to relocate in a different local area to get a job. In our model we also take into account relevant local labour markets features. We use a probit bivariate model to control for selective access to employment, and test the possibility of endogeneity of the decision to migrate. Separate estimations are run for upper-secondary and tertiary graduates. The results sustain the appropriateness of the estimation technique and show a significantly negative impact of the daily commuting time for the former group, as well as, negative impact of the decision to migrate and of the migration distance for the latter one. |
| Keywords: | Overeducation; Spatial flexibility; Local labour markets; Sample selection bias |
| JEL: | J62 J21 J61 |
| Date: | 2011–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:29670&r=ure |
| By: | Romain Houssa (Center for Research in the Economics of Development, University of Namur) |
| Abstract: | This paper develops a Spatial Vector Auto-Regressive (SpVAR) model that takes into account both the time and the spatial dimensions of economic shocks. We apply this framework to analyze the propagation through space and time of macroeconomic (inflation, output gap and interest rate) shocks in Europe. The empirical analysis identifies an economically and statistically significant spatial component in the transmission of macroeconomic shocks in Europe. |
| Keywords: | Macroeconomics, Spatial Models, VAR |
| JEL: | E3 E43 E52 C51 C33 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:nam:wpaper:1009&r=ure |
| By: | Kurt Geppert; Anne Neumann |
| Abstract: | We use a large micro-dataset to assess the importance of intangible capital - organisation, R&D and ICT capital - for the economic performance of establishments and regions in Germany. In 2003 self-produced intangible capital accounted for more than one fifth of the total capital stock of estab-lishments. More than half of the intangible capital is R&D capital. This high proportion is mainly due to a relatively strong and research-intensive manufacturing sector in Germany. At the regional level, we find descriptive evidence for a positive relationship between intangible capital and the economic performance of regions. This is true both for the level of economic activities and for growth. The results of cross-sectional regressions for the years from 1999 to 2003 indicate that dou-bling the intangible capital intensity of establishments increases the average wage levels by one percent. Regarding the regional economic environment of establishments, we find that the substan-tial net advantages of agglomeration have more to do with broad knowledge and diversity than with regional clustering and specialisation. Separate regressions for the wage levels of non-intangible workers show very similar results. These workers can share the rents of the activities of intangible workers. Thus, intangible capital generates positive externalities not only at the regional level, but also at the level of establishments. |
| Keywords: | Firm productivity, intangible capital, agglomeration, local spillovers |
| JEL: | J24 M40 O33 R30 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1112&r=ure |
| By: | Cervero, Robert; Adkins, Arlie; Sullivan, Cathleen |
| Abstract: | Just as land-use environments vary throughout suburban America, so should parking policies. Parking ordinances should be more flexible for projects situated near rail stops. Based on our research, for example, developers of relatively dense apartments with adjoining retail shops and short, direct walking connections to rail stations should have the option of supplying fewer parking spaces than the norm. Flexibility might also take the form of unbundling the cost of parking from the cost of renting housing or providing residents with the option of choosing transit eco-passes rather than paying for an on-site space. And in light of the fact that TOD residents were found to commute by transit proportionately more than they shed cars or reduced parking, car-sharing should be provided in as many rail-served neighborhoods as possible. Putting shared-cars in and around TODs could relieve many households from owning a second car or a vehicle altogether, which would result in not only considerably lower trip generation rates, but considerably less parking demand as well. |
| Date: | 2009–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:uctcwp:1883251&r=ure |
| By: | Debra L. Shepherd (Department of Economics, University of Stellenbosch) |
| Abstract: | The poor state of quality education in South Africa is confirmed by the weak performance of South African students on international tests, even when compared to countries with comparatively poorer education systems. This paper aims to shed light on this issue through the use of the PIRLS 2006 dataset and education production function techniques. A unique feature of this dataset is that schools were able to choose the language in which the test was conducted. This provided a proxy for former school department, a feature that has not been captured in international survey datasets. A clear distinction between the historically black and the historically white, coloured and Indian school systems is needed in order to identify the different data generating processes at work. The regression model results reveal that family and student characteristics are undoubtedly important for performance within both school samples. At the level of the school, quite divergent school factors and classroom processes were found to have significant impacts on student performance across the two school systems. It is concluded that a lack of enabling conditions such as effective leadership, flexibility and autonomy, and a capable teaching force may contribute to certain school and classroom processes not playing a significant role in determining performance in the less affluent black school system. |
| Keywords: | South Africa, Education, Education production function, Educational Achievement, Educational Inequality |
| JEL: | C20 C21 I20 I21 I30 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:sza:wpaper:wpapers133&r=ure |
| By: | Stefan P.T. de Groot (VU University Amsterdam); Henri L.F. de Groot (VU University Amsterdam); Martijn Smit (VU University Amsterdam) |
| Abstract: | Based on micro-data on individual workers for the period 2000-2005, we show that wage differentials in the Netherlands are small but present. A large part of these differentials can be attributed to individual characteristics of workers. Remaining effects are partially explained by variations in employment density, with an elasticity of about 3.8 percent and by Marshall-Arrow-Romer externalities, where doubling the share of a (2-digit NACE) industry results in a 2.4 percent higher productivity. We find evidence for a negative effect of competition (associated with Porter externalities) and diversity (associated with Jacobs externalities). |
| Keywords: | regional labour markets; wage differentials; agglomeration externalities |
| JEL: | J24 O12 R11 R23 |
| Date: | 2011–03–07 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20110050&r=ure |
| By: | Andrea Morrison; Roberta Rabellotti; Florian Lorenzo Zirulia |
| Abstract: | Recent studies have stressed the role played by global pipelines in fostering cluster growth and innovativeness. This paper develops a formal model investigating when global pipelines contribute to increase local knowledge, depending on various cluster characteristics such as size, knowledge endowment and ease of internal knowledge transmission. This model is an extension of Cowan and JonardÕs 2004 model in which we introduce the concept of cluster and a role for spatial proximity in knowledge diffusion. We find that there is a natural tendency of actors within global pipelines to act as external stars rather than knowledge gatekeepers. Global pipelines are beneficial for cluster knowledge accumulation only if the cluster is either characterized by a high quality local buzz or is small and weakly endowed in terms of knowledge. |
| Keywords: | knowledge gatekeepers, clusters, knowledge diffusion |
| JEL: | R11 O33 D83 C63 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1105&r=ure |
| By: | Yasusada Murata (Advanced Research Institute for the Sciences and Humanities, Nihon University); Ryo Nakajima (Department of Economics, Yokohama National University); Ryosuke Okamoto (National Graduate Institute for Policy Studies); Ryuichi Tamura (Graduate School of Humanities and Social Sciences, University of Tsukuba) |
| Abstract: | We develop a new approach to localized knowledge spillovers by incorporating the concept of control patents (Jaffe, Trajtenberg and Henderson 1993) into the distancebased test of localization (Duranton and Overman, 2005). Using microgeographic data, we identify localization distance while allowing for cross-boundary spillovers, unlike the existing literature where the extent of localized knowledge spillovers is detected at the state or metropolitan statistical area level. We revisit the recent debate by Thompson and Fox-Kean (2005) and Henderson, Jaffe and Trajtenberg (2005) on the existence of localized knowledge spillovers, and find solid evidence supporting localization, even when finer controls are used. |
| Keywords: | localized knowledge spillovers; distance-based tests; microgeographic data; K-density; patent citations; control patents |
| JEL: | O31 R12 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:kyo:wpaper:763&r=ure |
| By: | Kurzrock, Björn-Martin; Mokinski, Frieder; Schindler, Felix; Westerheide, Peter |
| Abstract: | This paper analyzes whether predominantly non-listed corporations in the residential property industry systematically adjust their capital structure to changing financing requirements. Since previous research almost exclusively focused on listed companies, little is known about the considerations that drive the choice of capital structure of nonlisted companies. We therefore adopt established testing approaches for the pecking order theory and the trade-off theory from the finance literature, which we then apply to a sample of 1,300 German residential property companies. These companies are characterized by various legal forms and large differences in size. We find that capital structure adjustment behavior differs largely among property companies of different legal forms. While housing cooperatives behave in line with the trade-off theory, the behavior of stock companies and corporations with limited liability is more in line with the pecking order theory. -- |
| Keywords: | Financial Leverage,Capital Structure,Property Companies,Real Estate Finance |
| JEL: | G32 C20 L85 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:11014&r=ure |
| By: | Andy Pike; Andrés Rodríguez-Pose; John Tomaney; Gianpiero Torrisi; Vassilis Tselios |
| Abstract: | This paper deals with the relationship between fiscal and political decentralisation, regional economic development, and income inequality within regions. Using Moderated Multiple Regression analysis applied to more than 100,000 individuals in the European Union (EU), it addresses two main questions. First, whether decentralisation in western Europe has an effect on within regional interpersonal inequality. Second, whether this possible relationship is mediated by the level of economic development of the region. The results of the analysis show that greater fiscal and political decentralisation is associated with lower interpersonal income inequality, but that this relationship is far from linear. As regional income rises, further decentralisation is connected to a lower decrease or even to an increase in inequality. This finding is robust to the measurement and definition of income inequality, as well as to the weighting of the spatial units by their population size. |
| Keywords: | Income inequality, income per capita, fiscal and political decentralisation,interaction, regions, Europe |
| JEL: | R51 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0076&r=ure |
| By: | Martin Gustafsson (Department of Economics, University of Stellenbosch) |
| Abstract: | South African and international household and education datasets are analysed to characterise patterns of dropping out, grade repetition, academic under-performance and under-preparedness for post-school life in South African secondary schools. A number of measurement error problems are moreover discussed and in some cases remedied. The proportion of South African youths entering upper secondary schooling is above the trend found in comparable middle income countries, the proportion entering the last grade (Grade 12) is about average, but the proportion successfully completing secondary schooling (40%) is below average. The data suggest improving quality should be a greater planning priority than increasing enrolments. A what-if subject choice analysis using examination data moreover suggests that successful completion could be greatly enhanced by guiding students to more appropriate subject choices, possibly through a more standardised set of assessments in Grade 9. Any attempt to reduce dropping out must pay close attention to financial constraints experienced by students with respect to relatively low-cost inputs such as books. Teenage pregnancies must be reduced as these explain half of female dropping out. The quality problem in schools underlined by the fact that income returns and test score gains associated with each additional year of secondary schooling are well below those associated with a year of post-school education. |
| Keywords: | Human capital, Unemployment, Earnings function, South Africa, Secondary schools, Examinations, Education policy |
| JEL: | E24 I28 J31 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:sza:wpaper:wpapers137&r=ure |
| By: | Megha Mukim |
| Abstract: | This paper studies the determinants of firm location choice at the district-level in India to gauge the relative importance of agglomeration economies vis-à-vis good business environment. A peculiar characteristic of the Indian economy is that the unorganised nonfarm sector accounts for 43.2% of NDP and employs 71.6% of the total workforce. I analyse National Sample Survey data that covers over 4.4 million firms, in both unorganised sectors - manufacturing and services. The empirical analysis is carried out using count models, and I instrument with land revenue institutions to deal with possible endogeneity bias. I find that buyer-suppler linkages and industrial diversity make a district more attractive to economic activity, whilst the quality and level of infrastructure are also important. I conclude that public policy may be limited in its ability to encourage relocation of informal firms. |
| Keywords: | Agglomeration economies, informal sector, location choice |
| JEL: | R12 R3 O17 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0072&r=ure |
| By: | Rajashri Chakrabarti |
| Abstract: | While there is a rich literature that investigates whether accountability regimes induce schools to manipulate their test-taking population by strategically excluding weaker students, no study thus far investigates whether voucher programs induce schools to engage in similar strategic behavior. This paper analyzes a Florida program that embedded vouchers in an accountability regime. Specifically, it investigates whether the threat of vouchers and the stigma associated with the Florida program induced schools to strategically manipulate their test-taking population. Under Florida rules, scores of students in several special-education and limited-English-proficient (LEP) categories were not included in the computation of school grades. Did this rule induce the threatened schools to reclassify some of their weaker students into these “excluded” categories so as to remove them from the effective test-taking pool? Using a regression discontinuity strategy, I find evidence in favor of strategic reclassification into the excluded LEP category in high-stakes grade 4 and entry-grade 3. In contrast, I find no evidence that the program led to reclassification into excluded special-education categories, which is consistent with the substantial costs of classifying into special-education categories during this period. These findings have important policy implications. |
| Keywords: | Educational vouchers ; Education - Economic aspects |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:486&r=ure |
| By: | Raveh, Ohad |
| Abstract: | Natural resource abundance is a blessing for some countries, yet is a curse for others. The degree of fiscal decentralization may account for this divergent outcome. Resources tend to locate in remote, non-agglomerated, and sparsely populated areas; a high degree of fiscal decentralization gives a resource abundant region an advantage in the inter-regional tax competition over capital so that it attracts some capital from agglomerated and densely populated regions. Given a sufficiently high agglomeration level, any such movement of capital would bring a loss of output in the agglomerated region that outweighs the sum of gains from resource income and increased output in the remote region – so that aggregate product in the economy drops. This theory is empirically tested -and confirmed- building on Sachs and Warner’s influential works on the resource curse, employing the World Bank’s Fiscal Decentralization Indicators, and taking the United States as a case study. |
| Keywords: | Natural Resources; Economic Growth; Resource Curse; Fiscal Decentralization; Agglomeration Economies; Tax Competition |
| JEL: | O18 O57 O13 Q33 C21 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:29664&r=ure |
| By: | Ashot Tsharakyan; Petr Zemcik |
| Abstract: | We study a natural experiment in the Czech Republic where the maximum regulated rent appreciation has depended explicitly on the price of real estate since 2007. We track the tenure choice of households from consumption surveys for subsequent years. Rent deregulation makes households in regulated apartments more likely to own real estate while the opposite is true for other renters and owners. The net present value of buying property vs renting is an increasing function of the real estate price appreciation for renters in regulated apartments. We use their tenure choice to generate the distribution of property price expectations. |
| Keywords: | Czech Republic; expectations; rent regulation and deregulation; real estate prices; tenure choice |
| JEL: | C25 R21 R31 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp430&r=ure |
| By: | Richard Harris; John Moffat |
| Abstract: | This paper examines the determinants of total factor productivity (TFP) using a GB plant-level dataset. Using a systems-GMM approach, it considers the role of the following four plant characteristics: internal and external knowledge; foreign ownership, multi-plant economies of scale and competition; and spatial spillovers and 'place' effects. The sample is disaggregated into manufacturing and services and by technology to show any differences across sectors. |
| Keywords: | productivity, plant level TFP, spatial ‘place’ effects, foreign-owned plants |
| JEL: | C23 D24 R12 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0064&r=ure |
| By: | Giorgio Canarella (Department of Economics, University of Nevada, Las Vegas); Stephen M. Miller (Department of Economics, University of Nevada, Las Vegas); Stephen K. Pollard (Department of Economics, California State University, Los Angeles) |
| Abstract: | This paper employs unit-root tests that allow for two endogenous breaks as suggested by Lumdaine and Papell (1997) and Lee and Strazicich (2003) to investigate the returns on the S&P/Case-Shiller Home Price Indices. The tests that assume structural stability provide no evidence against the unit-root hypothesis in all returns series. Conversely, the Lumdaine-Papell and Lee-Strazicich tests indicate that significant structural breaks exist. Only the Lee-Strazicich test, however, which incorporates structural changes under the null hypothesis, finds that the returns to houses exhibit trend stationarity with structural breaks, in most cases, rather than a random walk. Following Meen (1999), we also investigate the stationarity of the metropolitan house-price ratios. The findings of the Lumsdaine-Papell test provide no evidence against the unit-root hypothesis in all house-price ratio series. Conversely, the Lee-Strazicich test finds broken-trend stationarity of the metropolitan house-price ratios for Boston, Miami, and New York. |
| Keywords: | House-price indexes, Time-series properties, “Ripple” effects. |
| JEL: | G10 C30 C50 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:nlv:wpaper:1004&r=ure |
| By: | Mühlenweg, Andrea M.; Blomeyer, Dorothea; Laucht, Manfred |
| Abstract: | We identify effects of age at school entry (ASE) on the development of child temperament. Our analysis is based on psychometric measures from a longitudinal cohort study of children in the Rhine-Neckar region in central Germany. In children with a higher ASE due to a birthday late in the year, we find more favorable outcomes with respect to several temperamental dimensions: These children are more persistent and less often hyperactive. The findings are robust if we control for the respective temperamental dimension before entering school. We also show that the ASE effect on persistence is stable over time by comparing the children at age eight and age eleven, after the children have entered Germany's segregated secondary-school tracks. At age eleven, we additionally find significant ASE effects on adaptability to change. Overall, the results point to a high degree of malleability in the considered non-cognitive skills after school entrance. -- |
| Keywords: | Education,identification,instrumental variables,age at school entry (ASE) |
| JEL: | I21 I28 J24 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:11017&r=ure |
| By: | Martha A. Starr |
| Abstract: | After the bursting of the housing-price bubble in 2006 and ensuing financial crisis, there has been much discussion of what economists could have done differently to help avert the crisis and "Great Recession" that followed. One dimension of this concerns information supplied by economists to the general public about causes of high appreciation in home prices and their likely future course, as good information could have helped the public hedge their finances against downside risks while bad information may have encouraged them to take on too much risk. This paper analyzes data from 24 California newspapers on assessments and predictions offered by economists as to whether bubbles were forming in the state's housing markets. In brief, we find that the California public was fairly decently served by economists offering their views via the media -- although with some significant problems of biased forecasts not made in good faith, and of inattention to concerns about "harm avoidance" that ought to apply when economists share their opinions in this way. |
| Keywords: | JEL classification: R21, D31, D12, E32 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:amu:wpaper:2011-03&r=ure |
| By: | Lisa Grazzini (Università degli Studi di Firenze, Dipartimento di Scienze Economiche); Alessandro Petretto (Università degli Studi di Firenze, Dipartimento di Scienze Economiche) |
| Abstract: | We analyse how vertical or horizontal fiscal equalization affects the overprovision of local public goods due to vertical fiscal externality, when there is tax evasion. The regional governments overspending incentive is examined both in case of a fiscal equalization based on pretax earned income and reported taxable income. |
| Keywords: | Fiscal federalism; Equalization; Marginal Cost of Public Funds, Tax evasion |
| JEL: | H2 H41 H71 H77 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:frz:wpaper:wp2011_06.rdf&r=ure |
| By: | Budy Resosudarmo; Daniel Suryadarma |
| Abstract: | Developing countries are experiencing unprecedented levels of urbanization. Although most of these movements are motivated by economic reasons, they could affect the human capital accumulation of the children who follow their parents to the cities. This paper estimates the causal effect of permanently migrating as a child from a rural area to an urban area on human capital outcomes. To our knowledge, this paper is one of only several papers, especially in the context of a developing country, which is able to estimate the causal effect of migration. We utilize a recent survey of urban-rural migrants in Indonesia and merge it with a nationally representative survey to create a dataset that contains migrants in urban areas and non-migrants in rural areas who were born in the same rural districts. We then employ a measure of district-level propensity to migrate, calculated from the Indonesian intercensal survey, as an instrument. We find that childhood migration to urban areas increase education attainment by about 4.5 years by the time these individuals are adults. In addition, the childhood migrants face a lower probability to be underweight by about 15 percentage points as adults. However, we find no statistically significant effect on height, which is a measure of long-term nutritional intake, and we only find a weak effect on the probability to be obese. Therefore, our results suggest a permanent, positive, and large effect of childhood migration on education attainment and some health measures. In addition, our results can rule out any negative effect on health. |
| Keywords: | migration, education, health |
| JEL: | I12 I21 O15 R23 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2011-02&r=ure |
| By: | Luisa Lambertini (Chair of International Finance, Ecole Polytechnique Federale de Lausanne (EPFL), Switzerland); Caterina Mendicino; Maria Teresa Punzi |
| Abstract: | This paper studies the potential gains of monetary and macro-prudential policies that lean against news-driven boom-bust cycles in housing prices and credit generated by expectations of future macroeconomic developments. First, we find no trade-off between the traditional goals of monetary policy and leaning against boom-bust cycles. An interest-rate rule that completely stabilizes inflation is not optimal. In contrast, an interest-rate rule that responds to financial variables mitigates macroeconomic and financial cycles and is welfare improving relative to the estimated rule. Second, counter-cyclical Loan-to-Value rules that respond to credit growth do not increase inflation volatility and are more effective in maintaining a stable provision of financial intermediation than interest-rate rules that respond to financial variables. Heterogeneity in the welfare implications for borrowers and savers make it difficult to rank the two policy frameworks. |
| Keywords: | Expectations-driven cycles, Macro-prudential policy, Monetary policy, Welfare analysis |
| JEL: | E32 E44 E52 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:cif:wpaper:201101&r=ure |
| By: | Paul Cheshire; Christian A. L. Hilber; Ioannis Kaplanis |
| Abstract: | Few studies conceive of land as a productive factor but British land use policies may lower total factor productivity (TFP) in the retailing industry by (i) restricting the total availability of land for retail, thereby increasing space costs (ii) directly limiting store size and (iii) concentrating retail development on specific central locations. We use unique store-specific data to estimate the impact of space on retail productivity and the specific effects of planning restrictiveness and micromanagement of store locations. We use the quasi natural experiment generated by the variation in planning policies between England, Wales, Scotland and Northern Ireland to isolate the impact of town centre first policies. We find that TFP rises with store size and that planning policy directly reduces productivity both by reducing store sizes and forcing retail onto less productive sites. Our results, while they strictly only apply to the supermarket group whose data we analyse, are likely to be representative of supermarkets in general and suggest that since the late 1980s planning policies have imposed a loss of TFP of some 25%. |
| Keywords: | Land use regulation, regulatory costs, firm productivity, retail |
| JEL: | D2 L51 L81 R32 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0066&r=ure |
| By: | Raghbendra Jha; Woojin Kang; Hari K. Nagarajan |
| Abstract: | In India an important policy initiative has been the devolution of financial responsibilities to village level local governments called the Panchayats. The Preamble to this initiative is two fold. First such devolution would not only lead to increased public expenditure but also such expenditures being targeted in a manner consistent with the preferences and needs of the local population. Second, the local tax base would widen, thereby reducing the magnitude of the equalization transfers. However, the incentive structures behind the granting of such additional financial powers have been inadequately articulated. The results have been in the form of reduction in taxes collected, as well as a perceived shrinking of the tax base. These outcomes are posited by us to be due to ignoring the impact of cost of collecting taxes, as well as perverse impacts of devolution of expenditure decisions on local wages and profits. The extant literature has been so far unable to adequately explain the perverse outcomes of devolution especially where reactions to local tax efforts to transfers from the higher level governments are concerned. This paper has attempted to fill this gap. It models and measures the cost of taxation and uses this and the ratio of transfers that augment the local wage rate to those that do not, after controlling for a number of other village level characteristics, to explain tax collected at the local level within a framework that allows for mutual endogeneity of tax collected and transfers. We find that both the cost of tax collection and the ratio of transfers that augment the local wage rate to those that do not have a significant negative effect on tax collection, thus validating the conclusions of the theoretical model developed in this paper. Several policy conclusions are derived. |
| Keywords: | Devolution, Incentive Effects, Equalizing transfers, Panchayats and Local Government |
| JEL: | H71 H77 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:pas:asarcc:2011-01&r=ure |
| By: | Ugo Albertazzi (Bank of Italy); Ginette Eramo (Bank of Italy); Leonardo Gambacorta (Bank for International Settlements); Carmelo Salleo (European Systemic Risk Board Secretariat) |
| Abstract: | A growing number of studies on the US subprime market indicate that, due to asymmetric information, credit risk transfer activities have perverse effects on banks’ lending standards. We investigate a large part of the market for securitized assets (“prime mortgages”) in Italy, a country with a regulatory framework analogous to the one prevalent in Europe. Information on over a million mortgages consists of loan-level variables, characteristics of the originating bank and, most importantly, contractual features of the securitization deal, including the seniority structure of the ABSs issued by the Special Purpose Vehicle and the amount retained by the originator. We borrow a robust way to test for the effects of asymmetric information from the empirical contract theory literature (Chiappori and Salanié, 2000). Overall, our evidence suggests that banks can effectively counter the negative effects of asymmetric information in the securitization market by selling less opaque loans, using signaling devices (i.e. retaining a share of the equity tranche of the ABSs issued by the SPV) and building up a reputation for not undermining their own lending standards. |
| Keywords: | securitization, asymmetric information, signaling, reputation |
| JEL: | D82 G21 |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_796_11&r=ure |
| By: | Pfeiffer, Friedhelm; Schulz, Nico Johannes |
| Abstract: | Gregariousness is an important aspect of human life with implications for labour market outcomes. The paper examines, to the best of our knowledge for the first time for Germany, gregariousness and social interaction at the workplace and associated wage differentials. Our empirical findings with samples from the German Socio-Economic Panel (SOEP) demonstrate that gregarious people more often work in jobs with social interaction. Furthermore, females tend to work more often in interactive jobs compared to males. There is evidence that working in an interactive job is associated with a compensating negative wage differential of 7 percent for women and non for men. Implications for wage policy are discussed. -- |
| Keywords: | Gregariousness,social interactions,labour markets,sorting,wage differentials |
| JEL: | J01 J24 J31 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:11001&r=ure |