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on Urban and Real Estate Economics |
| By: | Brahim Boualam |
| Abstract: | Does a better cultural milieu make a city more livable for residents and improve its business environment for firms? To address this question, I compute a measure of cultural specialization based on detailed occupational data for 362 U.S. metropolitan areas. I then estimate hedonic wage and rent equations and ask if differences in the cultural environment across cities capitalize into housing price and wage differentials. Simple correlations replicate standard results from the literature: cities that are more specialized in cultural and artistic occupations enjoy higher factor prices. Using time-series data, controlling for observable and unobservable city characteristics and implementing alternative specifications strongly alter this result. Even though the arts and culture might be appealing for some people and firms, such determinants are not strong enough to affect factor prices at the metropolitan level. |
| Keywords: | Urban economics, location choice, local amenities, culture. |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:gen:geneem:13031&r=ure |
| By: | Combes, Pierre-Philippe; Démurger, Sylvie; Li, Shi |
| Abstract: | We evaluate the role that cities play on individual productivity in China. First, we show that location explains a large share of nominal wage disparities. Second, even after controlling for individual and firms characteristics and instrumenting city characteristics, the estimated elasticity of wage with respect to employment density is about three times larger than in Western countries. Land area and industrial specialisation also play a significant role whereas the access to external markets does not. Therefore, large agglomeration economies prevail in China and they are more localised than in Western countries. Third, we find evidence of a large positive impact of the local share of migrants on local workers' wages. Overall, these results strongly support the productivity gains that can be expected from further migration and urbanisation in China. |
| Keywords: | agglomeration economies; China; migration; urban development; wage disparities |
| JEL: | J31 O18 O53 R12 R23 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9352&r=ure |
| By: | Fatih Karahan; Serena Rhee |
| Abstract: | This paper quantitatively evaluates the hypothesis that the housing bust in 2007 decreased geographical reallocation and increased the dispersion and level of unemployment during the Great Recession. We construct an equilibrium model of multiple locations with frictional housing and labor markets. When house prices fall, the amount of home equity declines, making it harder for homeowners to afford the down payment on a new house after moving. Consequently, the decline in house prices reduces migration and causes unemployment to rise differently in different locations. The model accounts for 90 percent of the increase in geographical dispersion of unemployment and the entire decline in net migration. However, despite large effects on migration and geographical dispersion of unemployment, the effect on aggregate unemployment is moderate: Our findings suggest that, absent the housing bust, aggregate unemployment would have been 0.5 percentage point lower. |
| Keywords: | Housing - Prices ; Unemployment ; Geography ; Labor market ; Labor mobility |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:605&r=ure |
| By: | Kline, Patrick; Moretti, Enrico |
| Abstract: | Many countries have policies aimed at creating jobs in depressed areas with high unemployment rates. In standard spatial equilibrium models with perfectly competitive labor and land markets, local job creation efforts are distortionary. We develop a stylized model of frictional local labor markets with the goal of studying the efficiency of unemployment differences across areas and the potential for place based policies to correct local market failures. Our model builds on the heavily studied Diamond - Mortensen - Pissarides framework, adapted to a local labor market setting with a competitive housing market. The result is a simple search analogue of the classic Roback (1982) model that provides a tractable environment for studying the effects of local job creation efforts. In the model, workers are perfectly mobile and the productivity of worker-firm matches may vary across metropolitan areas. In equilibrium, higher local productivity results in higher nominal wages, higher housing costs, and lower unemployment rates. Although workers can move freely to arbitrage away differences in expected utility across metropolitan areas, equilibrium unemployment rates are not equalized across space. We find that if hiring costs are excessive, firms may post too few vacancies. This problem may be offset via local hiring subsidies of the sort found in many place based policies. The optimal hiring subsidy is city specific in the sense that it depends upon the local productivity level. |
| Keywords: | cities; spatial equilibrium |
| JEL: | J6 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9330&r=ure |
| By: | Elizabeth Ananat (Duke University); Shihe Fu (Xiamen University); Stephen L. Ross (University of Connecticut) |
| Abstract: | We demonstrate a striking but previously unnoticed relationship between city size and the black-white wage gap, with the gap increasing by 2.5% for every million-person increase in urban population. We then look within cities and document that wages of blacks rise less with agglomeration in the workplace location, measured as employment density per square kilometer, than do white wages. This pattern holds even though our method allows for non-parametric controls for the effects of age, education, and other demographics on wages, for unobserved worker skill as proxied by residential location, and for the return to agglomeration to vary across those demographics, industry, occupation and metropolitan areas. We find that an individual’s wage return to employment density rises with the share of workers in their work location who are of their own race. We observe similar patterns for human capital externalities as measured by share workers with a college education. We also find parallel results for firm productivity by employment density and share college-educated using firm racial composition in a sample of manufacturing firms. These findings are consistent with the possibility that blacks, and black majority firms, receive lower returns to agglomeration because such returns operate within race, and blacks have fewer same-race peers and fewer highly-educated same-race peers at work from whom to enjoy spillovers than do whites. Data on self-reported social networks in the General Social Survey provide further evidence consistent with this mechanism, showing that blacks feel less close to whites than do whites, even when they work exclusively with whites. We conclude that social distance between blacks and whites preventing shared benefits from agglomeration is a significant contributor to overall black-white wage disparities. |
| Keywords: | Black White Wage Gap, Agglomeration Economies, Human Capital Externalities, Information Networks, Total Factor Productivity |
| JEL: | J15 J24 J31 R23 R32 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2013-08&r=ure |
| By: | Nicole Aregger; Martin Brown; Enzo Rossi |
| Abstract: | Motivated by the search for instruments to contain future housing bubbles, we examine the impact of transaction taxes and capital gains taxes on residential house price growth. We exploit the variation in taxation across Swiss cantons, as well as within-canton changes in taxation over time. We relate these taxes to house price growth observed for 92 regions of the country during the period 1985 - 2009. Our results suggest that higher taxes on capital gains exacerbate house price dynamics while transaction taxes have no impact on house price growth. These findings support the existence of a lock-in effect of capital gains taxes on housing supply. They further suggest that taxes on real estate capital gains and transaction values are not suitable measures to prevent excessive house price growth. |
| Keywords: | House prices, Transaction tax, Capital gains tax, Macroprudential policy |
| JEL: | E32 H24 R21 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:snb:snbwpa:2013-02&r=ure |
| By: | Tsangyao Chang (Department of Finance, Feng Chia University, Taichung, Taiwan); Beatrice D. Simo-Kengne (Department of Economics, University of Pretoria); Rangan Gupta (Department of Economics, University of Pretoria) |
| Abstract: | This paper analyses the causal relationship between housing activity and growth in nine provinces of South Africa for the period 1995-2011, using panel causality analysis, which accounts for cross-section dependency and heterogeneity across provinces. Our empirical results support unidirectional causality running from housing activity to economic growth for most of the provinces studied; bi-directional causality between housing activity and economic growth for Gauteng; and no causality in any direction between housing activity to economic growth in Eastern Cape and KwaZulu-Natal. Our findings provide important insights for housing policies and strategies for South Africa. Specifically, housing sector might be an efficient growth-led instrument for all the provinces except Eastern Cape and KwaZulu-Natal. |
| Keywords: | House Prices, Economic Growth, Dependency and Heterogeneity, Panel Causality Test |
| JEL: | C33 R11 R12 R31 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201317&r=ure |
| By: | Lalive, Rafael; Luechinger, Simon; Schmutzler, Armin |
| Abstract: | Many governments subsidize regional rail service as an alternative to road traffic. This paper assesses whether increases in service frequency reduce road traffic externalities. We exploit differences in service frequency growth by procurement mode following a railway reform in Germany to address endogeneity of service growth. Increases in service frequency reduce the number of severe road traffic accidents, carbon monoxide, nitrogen monoxide, nitrogen dioxide pollution and infant mortality. Placebo regressions with sulfur dioxide and ozone yield no effect. Service frequency growth between 1994 and 2004 improves environmental quality by an amount that is worth approximately 28-40 % of total subsidies. An analysis of household behavior shows that the effects of railway services on outcome variables are driven by substitution from road to rail. |
| Keywords: | Pollution; Public Transport; Railways; Road Accidents |
| JEL: | Q53 R41 R48 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9335&r=ure |
| By: | Duranton, Gilles; Morrow, Peter; Turner, Matthew A |
| Abstract: | We estimate the effect of interstate highways on the level and composition of trade for us cities. Highways within cities have a large effect on the weight of city exports with an elasticity of approximately 0.5. We find little effect of highways on the total value of exports. Consistent with this, we find that cities with more highways specialize in sectors producing heavy goods. |
| Keywords: | interstate highways; trade and specialisation; transport costs |
| JEL: | F14 R41 R49 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9393&r=ure |
| By: | Oberst, Christian (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Oelgemöller, Jens (Institute for Spatial and Housing Economics) |
| Abstract: | The inverse relationship between economic growth and labor market developments in the form of changes in the unemployment rate is known in economic literature as Okun’s law. The objectives of this paper are to estimate a regionalized Okun coefficient and its associated (regional) unemployment thresholds. The suitability and limitations of Okun’s law as a rule of thumb for regional economic growth and labor market policy are also discussed. Motivated by “Germany’s Jobs Miracle” in face of the economic crisis of 2008 and 2009, the existence of an uncoupling effect between economic and unemployment growth is questioned and whether regional economic growth is a driving force for regional labor market development. A regional dataset for the years 2002 to 2009 is employed for this study. The spatial dimension is pursued in two ways: a non-parametric approach using functionally defined labor markets as study areas and the application of spatial econometric panel data models, in particular the Spatial Durbin Error Model. The rationale is that functionally defined regional study areas are the appropriate spatial reference level for the analysis. It is found that, without accounting for spatial dependence, regionalized Okun coefficients are likely to be overestimated. The empirical results confirm a positive impact of economic growth on labor market performance; however, the estimated effect of regional economic growth is far lower than would have been expected. The paper illustrates the limited transferability of Okun’s law as a rule of thumb for growth dynamics on a regional level as well as limitations of regional growth dynamics for regional labor market development. |
| Keywords: | Okun’s Law; Spatial Econometrics; Regional Labor Markets; Regional Growth |
| JEL: | C21 C23 E24 E32 R12 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:ris:fcnwpa:2013_005&r=ure |
| By: | Janet Currie; Lucas Davis; Michael Greenstone; Reed Walker |
| Abstract: | A ubiquitous and largely unquestioned assumption in studies of housing markets is that there is perfect information about local amenities. This paper measures the housing market and health impacts of 1,600 openings and closings of industrial plants that emit toxic pollutants. We find that housing values within one mile decrease by 1.5 percent when plants open, and increase by 1.5 percent when plants close. This implies an aggregate loss in housing values per plant of about $1.5 million. While the housing value impacts are concentrated within ½ mile, we find statistically significant infant health impacts up to one mile away. |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:13-14&r=ure |
| By: | Grossmann, Volker; Schäfer, Andreas; Steger, Thomas M. |
| Abstract: | We investigate the effects of interregional labor market integration in a twosector,overlapping-generations model with land-intensive production in the nontradable goods sector (housing). To capture the response to migration on housing supply, capital formation is endogenous, assuming that firms face capital adjustment costs. Our analysis highlights heterogeneous welfare effects of labor mark etintegration. Whereas individuals without residential property lose from immigration due to increased housing costs, landowners may win. Moreover, we show how the relationship between migration and capital formation depends on initial conditions at the time of labor market integration. Our model is also capable to explain the reversal of migration during the transition to the steady state, like observed in East Germany after unification in 1990. It is also consistent with a gradually rising migration stock and house prices in high-productivity countries like Switzerland. -- |
| Keywords: | Capital formation,House prices,Land distribution,Migration,Welfare |
| JEL: | D90 F20 O10 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:leiwps:116&r=ure |
| By: | Michaels, Guy; Rauch, Ferdinand; Redding, Stephen J. |
| Abstract: | We develop a new methodology for quantifying the tasks undertaken within occupations using 3,000 verbs from around 12,000 occupational descriptions in the Dictionary of Occupational Titles (DOTs). Using micro-data from the United States from 1880-2000, we find an increase in the employment share of interactive occupations within sectors over time that is larger in metro areas than non-metro areas. We provide evidence that this increase in the interactiveness of employment is related to the dissemination of improvements in transport and communication technologies. Our findings highlight a change in the nature of agglomeration over time towards an increased emphasis on human interaction. |
| Keywords: | economic development; human interaction; urbanization |
| JEL: | N92 O18 R12 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9308&r=ure |
| By: | Kerwin Kofi Charles; Erik Hurst; Matthew J. Notowidigdo |
| Abstract: | We assess the extent to which manufacturing decline and housing booms contributed to changes in U.S. non-employment during the 2000s. Using a local labor market design, we estimate that manufacturing decline significantly increased non-employment during 2000-2007, while local housing booms decreased non-employment by roughly the same magnitude. The effects of manufacturing decline persist through 2011, but we find no persistent non-employment effects of local housing booms, most plausibly because housing booms were associated with subsequent busts of similar magnitude. We also find that housing booms significantly reduce the likelihood that displaced manufacturing workers remain non-employed, suggesting that housing booms "mask" non-employment growth that would have otherwise occurred earlier in the absence of the booms. Applying our estimates to the national labor market, we find that housing booms reduced non-employment growth by roughly 30 percent during 2000-2007 and that roughly 40 percent of the aggregate increase in non-employment during 2000-2011 can be attributed to manufacturing decline. Collectively, our results suggest that much of the non-employment growth during the 2000s can be attributed to manufacturing decline and these effects would have appeared in aggregate statistics earlier had it not been for the large, temporary increases in housing demand. |
| JEL: | E24 E32 J21 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18949&r=ure |
| By: | Liu, Xiaodong; Patacchini, Eleonora; Zenou, Yves |
| Abstract: | We develop an unified model embedding different behavioral mechanisms of social interactions and design a statistical model selection test to discriminate between them in empirical applications. This framework is applied to study peer effects in education and delinquent behavior for adolescents in the United States. We find that there are strong social multiplier effects in crime while, for education, social norms matter the most. This suggests that, for crime, individual-based policies are more appropriate while, for education, group-based policies are more effective. |
| Keywords: | group-based policy.; individual-based policy; Social networks; spatial autoregressive model |
| JEL: | A14 D85 Z13 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9366&r=ure |
| By: | Liliana Araújo (Faculdade de Economia, Universidade do Porto); Sandra T. Silva (CEF.UP, Faculdade de Economia, Universidade do Porto); Aurora A.C. Teixeira (CEF.UP, Faculdade de Economia, Universidade do Porto; INESC Porto, OBEGEF) |
| Abstract: | Extensive literature on the contribution of knowledge spillovers to growth and development at the regional level exists but these studies mainly features regions characterised by a high level of economic development. This paper assesses the importance of knowledge spillovers for firms located in relatively small, peripheral and economically depressed areas. Based on both primary (direct surveys to 257 firms) and secondary data, we concluded that the more relevant knowledge spillovers for firms located in a depressed region of northern Portugal (Vale do Ave) are inter-regional and international. This suggests that the contacts established with sources of knowledge from outside the region under analysis and abroad are crucial for the performance of firms. Despite the innovative intra-industry environment impacts positively on the economic performance of firms, our results convey that in such peripheral and depressed region geographical proximity is not critical for the firms’ economic performance. |
| Keywords: | Depressed areas; Evolutionary Economic Geography; Knowledge Spillovers, Innovation. |
| JEL: | R11 B52 D80 O3 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:por:fepwps:488&r=ure |
| By: | Guido Ascari (Department of Economics and Management, University of Pavia); Nicolò Pecora (Department of Economics and Social Sciences, Università Cattolica del Sacro Cuore); Alessandro Spelta (Department of Economics and Management, University of Pavia) |
| Abstract: | We study the housing market using a partial "dis"-equilibrium dynamic model in which the rational expectations hypothesis is relaxed in favor of chartist-fundamentalist mechanism to allows for the endogenous development of bubbles. Our model is able to replicate the recent house price dynamics in the US, with the preference shock being the main forcing variable. We also analyze the role of the interest rate policy. Our model supports the view that anchoring the interest rate to the change in house price would have reduced the volatility and the distortion in the price dynamics. |
| Keywords: | Heterogeneous agents, house price, agent-based model |
| JEL: | E3 E4 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:pav:demwpp:036&r=ure |
| By: | Philipp vom Berge; Hanna Frings; Alfredo R. Paloyo |
| Abstract: | We estimate the effects on wage and employment growth rates of the introduction and subsequent increases of a substantial minimum wage in the main construction industry of Germany. Using a regional dataset constructed from individual employment histories, we exploit the spatial dimension and border discontinuities of the regional data to account for spillovers between districts and unobserved heterogeneity at the local level. The results indicate that the minimum wage increased the wage growth rate for East Germany but did not have a significant impact on the West German equivalent. The estimated eff ect on the employment growth rate reveals a contraction in the East of about 2.6 to 3.1 percentage points for a one-standard-deviation increase in the minimum-wage bite, amounting to roughly half of the overall decline in the growth rate, but no significant change is observed for the West. |
| Keywords: | Construction sector; Germany; minimum wage; spatial heterogeneity; spatial panel data |
| JEL: | J31 J38 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0408&r=ure |
| By: | David H. Autor; David Dorn; Gordon H. Hanson |
| Abstract: | This paper explores the geographic overlap of trade and technology shocks across local labor markets in the United States. Regional exposure to technological change, as measured by specialization in routine task-intensive production and clerical occupations, is largely uncorrelated with regional exposure to trade competition from China. While the impacts of technology are present throughout the United States, the impacts of trade tend to be more geographically concentrated, owing in part to the spatial agglomeration of labor-intensive manufacturing. Our findings suggest that it should be possible to separately identify the impacts of recent changes in trade and technology on U.S. regional economies. |
| JEL: | F16 O3 R1 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18940&r=ure |
| By: | Becker, Sascha O.; Hvide, Hans K |
| Abstract: | In the large literature on firm performance, economists have given little attention to entrepreneurs. We use deaths of more than 500 entrepreneurs as a source of exogenous variation, and ask whether this variation can explain shifts in firm performance. Using longitudinal data, we find large and sustained effects of entrepreneurs at all levels of the performance distribution. Entrepreneurs strongly affect firm growth patterns of both very young firms and for firms that have begun to mature. We do not find significant differences between small and larger firms, family and non-family firms, nor between firms located in urban and rural areas, but we do find stronger effects for founders with high human capital. Overall, the results suggest that an often overlooked factor -- individual entrepreneurs -- plays a large role in affecting firm performance. |
| Keywords: | entrepreneurship; firm performance; human capital |
| JEL: | D21 D24 G39 J23 L11 L25 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9295&r=ure |
| By: | Campante, Filipe; Do, Quoc-Anh; Guimarães, Bernardo |
| Abstract: | Motivated by a novel stylized fact -- countries with isolated capital cities display worse quality of governance -- we provide a framework of endogenous institutional choice based on the idea that elites are constrained by the threat of rebellion, and that this threat is rendered less effective by distance from the seat of political power. In established democracies, the threat of insurgencies is not a binding constraint, and the model predicts no correlation between isolated capitals and misgovernance. In contrast, a correlation emerges in equilibrium in the case of autocracies. Causality runs both ways: broader power sharing (associated with better governance) means that any rents have to be shared more broadly, hence the elite has less of an incentive to protect its position by isolating the capital city; conversely, a more isolated capital city allows the elite to appropriate a larger share of output, so the costs of better governance for the elite, in terms of rents that would have to be shared, are larger. We show evidence that this pattern holds true robustly in the data. We also show that isolated capitals are associated with less power sharing, a larger income premium enjoyed by capital city inhabitants, and lower levels of military spending by ruling elites, as predicted by the theory. |
| Keywords: | Capital Cities; Democracy; Governance; Institutions; Insurgencies; Population Concentration; Power sharing |
| JEL: | D02 D74 R12 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9284&r=ure |
| By: | Driscoll, Áine; Lyons, Sean; Morgenroth, Edgar; Nolan, Anne |
| Abstract: | This paper considers travel mode choice for a range of journey purposes in Ireland using micro-data for 2009. Results suggest that demographic and socio-economic variables, location and public transport availability are important determinants of mode choice. The results also indicate an attachment to the car as a mode of transport for non-commuting journeys when available, and especially when used regularly for work journeys. Importantly, the determinants of mode choice are found to differ across journey purposes suggesting that it is not valid to generalise the results from studies considering only one journey purpose. |
| Keywords: | Mode choice; travel purpose; model comparison |
| JEL: | C25 D12 R22 R41 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:46034&r=ure |
| By: | Desmet, Klaus; Rappaport, Jordan |
| Abstract: | This paper studies the long run development of U.S. counties and metro areas from 1800 to 2000. In earlier periods smaller counties converge whereas larger counties diverge. Over time, due to changes in the age composition of locations and net congestion, convergence dissipates and divergence weakens. Gibrat's law emerges gradually without fully attaining it. Our findings suggest that orthogonal growth is a consequence of reaching a steady state population distribution, rather than an explanation of that distribution. A simple one-sector model, with entry of new locations, a growth friction, and decreasing net congestion closely matches these and related dynamics. |
| Keywords: | Gibrat's law; growth across space; long-term development; settlement of US; spatial distribution of population |
| JEL: | N91 N92 O18 R11 R12 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9353&r=ure |
| By: | Ludovica Gambaro; Kitty Stewart; Jane Waldfogel |
| Abstract: | This paper examines how the quality of formal early childhood education and care is associated with children's background. By using different indicators of quality, the research also explored how the relationship varies depending on the way quality is measured. The analysis combines information from three administrative datasets - the Early Years Census, the Schools Census and the Office for Standards in Education, Children's Services and Skills (Ofsted) dataset on inspections (2010-11). The results suggest that children from disadvantaged background have access to better qualified staff. However, services catering for more disadvantaged children are more segregated and receive poorer quality ratings from Ofsted, the national inspectorate. |
| Keywords: | Early childhood, Pre-school, Child care, Quality, Disadvantaged families |
| JEL: | I24 I38 J13 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sticas:case171&r=ure |
| By: | Nieswand, Maria; Walter, Matthias |
| Abstract: | This paper examines the impact of endogenous deficit-balancing subsidies on the cost efficiency of local public bus companies by using alternative frontier cost models for panel data. Thereby, the multidimensional performance estimation incorporates the subsidy variable directly. The empirical analysis relies on a unique dataset of 33 German companies observed over a period of up to twelve years. We find a positive effect of endogenous subsidies on the standard deviation of cost inefficiency implying that the range of companies’ cost inefficiency increases with the level of subsidies relative to total costs. Further, we find that non-subsidized firms perform better. |
| Keywords: | cost efficiency; endogenous subsidies; heteroscedasticity; local public bus transportation; panel data; stochastic cost frontier |
| JEL: | C13 D24 L92 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9346&r=ure |
| By: | Forslid, Rikard; Okubo, Toshihiro |
| Abstract: | This paper introduces scale economies or density economies in transportation in a trade and geography model with heterogeneous firms. This relatively small change to the standard model produces a new pattern of spatial sorting among firms. Contrary to the existing literature, our model produces the result that firms of intermediate productivity relocate to the large core region, whereas high and low productivity firms remain in the periphery. Trade liberalisation leads to a gradual relocation to the core, with the most productive firms remaining in the periphery. |
| Keywords: | heterogeneous firms; scale economies in transportation |
| JEL: | F12 F15 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9413&r=ure |
| By: | Nicola Gennaioli; Rafael La Porta; Florencio Lopez de Silanes; Andrei Shleifer |
| Abstract: | We use a newly assembled sample of 1,503 regions from 82 countries to compare the speed of per capita income convergence within and across countries. Regional growth is shaped by similar factors as national growth, such as geography and human capital. Regional convergence is about 2.5% per year, not more than 1% per year faster than convergence between countries. Regional convergence is faster in richer countries, and countries with better capital markets. A calibration of a neoclassical growth model suggests that significant barriers to factor mobility within countries are needed to account for the evidence. |
| JEL: | O43 O47 R11 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18937&r=ure |
| By: | Alejandro Justiniano; Giorgio E. Primiceri; Andrea Tambalotti |
| Abstract: | U.S. households' debt skyrocketed between 2000 and 2007, and has been falling since. This leveraging (and deleveraging) cycle cannot be accounted for by the liberalization, and subsequent tightening, of credit standards in mortgage markets observed during the same period. We base this conclusion on a quantitative dynamic general equilibrium model calibrated using macroeconomic aggregates and microeconomic data from the Survey of Consumer Finances. From the perspective of the model, the credit cycle is more likely due to factors that impacted house prices more directly, thus affecting the availability of credit through a collateral channel. In either case, the macroeconomic consequences of leveraging and deleveraging are relatively minor, because the responses of borrowers and lenders roughly wash out in the aggregate. |
| JEL: | E21 E44 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18941&r=ure |
| By: | Small, Kenneth A.; Ng, Chen Feng |
| Keywords: | Engineering, Natural Resources and Conservation, Social Sciences, slower roads, faster travel, traffic congestion |
| Date: | 2012–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:uctcwp:qt3xm6v0gm&r=ure |
| By: | Algan, Yann; Mayer, Thierry; Thoenig, Mathias |
| Abstract: | This paper aims at studying how economic incentives influence cultural transmission. We do so in the context of naming decisions, a crucial expression of cultural identity. Our focus is on Arabic versus Non-Arabic names given by parents to their newborn babies in France over the 2003-2007 period. Our model of cultural transmission disentangles between three determinants: (i) vertical transmission of parental culture; (ii) horizontal influence from the neighborhood; (iii) economic penalty associated with names that sound culturally distinctive. Our identification is based on the sample of households being exogenously allocated across public housings dwellings. We find that economic incentives largely influence naming choices: In the absence of economic penalty, the annual number of babies born with an Arabic name would have been more than 50 percent larger. Our theory-based estimates allow us to perform a welfare analysis where we gauge the strength of cultural attachment in monetary units. We find that the vertical transmission of an Arabic name provides the same shift in parents' utility as a 3\% rise in lifetime income of the child. |
| Keywords: | Culture; Social Interaction |
| JEL: | D19 Z10 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9416&r=ure |
| By: | Hodur, Nancy M.; Bangsund, Dean A. |
| Keywords: | Community/Rural/Urban Development, Public Economics, |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:nddaae:146661&r=ure |
| By: | Haqu, Adnan ul |
| Abstract: | “This research paper discusses the basic fundamentals of local government in theoretical perspective. The aim of this paper is to critically evaluate the conceptual framework of local government with its significance in the modern era. Various approaches of local government are discussed in the light of previous empirical researches. The paper also attempts to explore the role of good governance in the development of society’s infrastructure. In developing countries the role of LG (local government) is unlike in the developed countries but to great extent its essentiality is widely accepted by large number of researches and legal experts in order to build strong foundation therefore the role, approaches and its significance are undertaken in this paper to evaluate local government in depth. On the basis of identified notions, the framework to build strong governance is developed”. |
| Keywords: | Local Government, Theoretical perspective, Good governance, decentralization, concerntration |
| JEL: | H7 H70 H79 |
| Date: | 2012–05–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:45868&r=ure |
| By: | Gayah, Vikash V. |
| Keywords: | Engineering, Natural Resources and Conservation, Social Sciences, two-way streets, one-way streets, downtown, urban planners |
| Date: | 2012–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:uctcwp:qt6sx0q4kg&r=ure |
| By: | Ceren Ozgen (Department of Spatial Economics, VU University Amsterdam and bTinbergen Institute, Amsterdam,); Thomas de Graff (aDepartment of Spatial Economics, VU University Amsterdam) |
| Abstract: | An increasing amount of research in the migration literature shows a positive association between migrant diversity and rm productivity. However, the potential bias due to unobserved heterogeneity remains a challenge. In this paper we analyse the impact of cultural diversity on firm innovativeness, while using finite mixture modeling to control for observed and unobserved heterogeneity. Recent availability of microdata has enabled us to construct a linked employee- employer dataset through merging datasets on both workers and firms. We explore the possible ways of firm-level knowledge exchange among the employees with different cultural backgrounds and its impact on firms' product and process innovations. We find that workforce diversity is beneficial for innovativeness in capital-intensive sectors. It also positively impacts large firms that operate in high-level services, manufacturing, mining and R&D sectors, that are predominantly located in the non-urban areas in the Netherlands. In labour and land intensive sectors, the impact of cultural diversity on innovativeness is inconclusive. |
| Keywords: | Cultural diversity, innovativeness, (un-)observed heterogeneity, finite mixture modeling, migration |
| JEL: | J15 J21 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:nor:wpaper:2013012&r=ure |
| By: | Nicholas Arcidiacono; Larry Cordell; Andrew Davidson; Alex Levin |
| Abstract: | The Agency CMO market, an often overlooked corner of mortgage finance, has experienced tremendous growth over the past decade. This paper explains the rationale behind the construction of Agency CMOs, quantifies risks embedded in Agency CMOs using a traditional and a novel approach, and offers valuable lessons learned when interpreting these risk measures. Among these lessons is that to fully understand the risks in Agency CMOs a full bond-by-bond analysis is necessary and that interest rate risk is not the only risk that needs to be considered when conducting risk management with CMOs. |
| Keywords: | Mortgage-backed securities ; Risk management |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:13-08&r=ure |
| By: | Dias, Victor Pina; Diniz, Érica; Issler, João Victor |
| Abstract: | Housing is an important component of wealth for a typical household in manycountries. The objective of this paper is to investigate the effect of real-estate pricevariation on welfare, trying to close a gap between the welfare literature in Braziland that in the U.S., the U.K., and other developed countries. Our first motivationrelates to the fact that real estate is probably more important here than elsewhere asa proportion of wealth, which potentially makes the impact of a price change biggerhere. Our second motivation relates to the fact that real-estate prices boomed inBrazil in the last five years. Prime real estate in Rio de Janeiro and São Paulohave tripled in value in that period, and a smaller but generalized increase has beenobserved throughout the country. Third, we have also seen a recent consumptionboom in Brazil in the last five years. Indeed, the recent rise of some of the poor tomiddle-income status is well documented not only for Brazil but for other emergingcountries as well. Regarding consumption and real-estate prices in Brazil, one cannotimply causality from correlation, but one can do causal inference with an appropriatestructural model and proper inference, or with a proper inference in a reduced-formsetup. Our last motivation is related to the complete absence of studies of this kindin Brazil, which makes ours a pioneering study.We assemble a panel-data set for the determinants of non-durable consumptiongrowth by Brazilian states, merging the techniques and ideas in Campbell and Cocco(2007) and in Case, Quigley and Shiller (2005). With appropriate controls, and panel-data methods, we investigate whether house-price variation has a positive effect on non-durable consumption. The results show a non-negligible significant impact ofthe change in the price of real estate on welfare (consumption), although smaller thenwhat Campbell and Cocco have found. Our findings support the view that the channelthrough which house prices affect consumption is a financial one. |
| Date: | 2013–04–05 |
| URL: | http://d.repec.org/n?u=RePEc:fgv:epgewp:739&r=ure |
| By: | J.W. Fedderke and T.E. Kaya |
| Abstract: | This paper explores the impact of some key infrastructure measures in transportation, telecommunication and electricity production sectors on labor productivity, using data on two-digit sectors for the Turkish economy for the years 1987 to 2006. We find both statistical and economic significance of infrastructure on productivity growth, for road, port and air transport, telecommunications and electricity production. In the railway sector, only measures of actual freight carried are consistently statistically significanctly associated with productivity growth, while other measures of infrastructure are insignificantly or perversely associated with productivity growth. Given that the railway transport sector is the only infrastructure sector that remains closed to competition and private participation, this raises the issue of the significance of private sector involvement in infrastructure provision. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:333&r=ure |