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on Urban and Real Estate Economics |
| By: | Richard Disney; John Gathergood |
| Abstract: | We examine the impact of housing wealth on labor supply decisions using data on exogenous local variation in house prices merged into household panel data for Britain. Our estimates are conditioned on variations in local labor demand and income expectations as these may co-determine housing wealth and labor supply. We use renters as a control group and test for the potential endogeneity of tenure and location. We find significant housing wealth effects on labor supply among young married / co-habiting female owners and older male owners, consistent with leisure being a normal good. The size of these effects is economically important. Our estimates imply housing wealth effects have stronger effects then local labor market conditions upon participation decisions for these workers. |
| Keywords: | Labor supply; Wealth effects; House prices |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcfc:15/19&r=ure |
| By: | Edward L. Glaeser; Giacomo A. M. Ponzetto; Yimei Zou |
| Abstract: | Should China build mega-cities or a network of linked middle-sized metropolises? Can Europe’s mid-sized cities compete with global agglomeration by forging stronger inter-urban links? This paper examines these questions within a model of recombinant growth and endogenous local amenities. Three primary factors determine the trade-off between networks and big cities: local returns to scale in innovation, the elasticity of housing supply, and the importance of local amenities. Even if there are global increasing returns, the returns to local scale in innovation may be decreasing, and that makes networks more appealing than mega-cities. Inelastic housing supply makes it harder to supply more space in dense confines, which perhaps explains why networks are more popular in regulated Europe than in the American Sunbelt. Larger cities can dominate networks because of amenities, as long as the benefits of scale overwhelm the downsides of density. In our framework, the skilled are more likely to prefer mega-cities than the less skilled, and the long-run benefits of either mega-cities or networks may be quite different from the short-run benefits. |
| JEL: | F15 O18 R10 R58 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21794&r=ure |
| By: | Hanming Fang; You Suk Kim; Wenli Li |
| Abstract: | We present a dynamic structural model of subprime adjustable-rate mortgage (ARM) borrowers making payment decisions taking into account possible consequences of different degrees of delinquency from their lenders. We empirically implement the model using unique data sets that contain information on borrowers' mortgage payment history, their broad balance sheets, and lender responses. Our investigation of the factors that drive borrowers' decisions reveals that subprime ARMs are not all alike. For loans originated in 2004 and 2005, the interest rate resets associated with ARMs, as well as the housing and labor market conditions were not as important in borrowers' delinquency decisions as in their decisions to pay off their loans. For loans originated in 2006, interest rate resets, housing price declines, and worsening labor market conditions all contributed importantly to their high delinquency rates. Counterfactual policy simulations reveal that even if the Libor rate could be lowered to zero by aggressive traditional monetary policies, it would have a limited effect on reducing the delinquency rates. We find that automatic modification mortgage designs under which the monthly payment or the principal balance of the loans are automatically reduced when housing prices decline can be effective in reducing both delinquency and foreclosure. Importantly, we find that automatic modification mortgages with a cushion, under which the monthly payment or principal balance reductions are triggered only when housing price declines exceed a certain percentage may result in a Pareto improvement in that borrowers and lenders are both made better off than under the baseline, with a lower delinquency and foreclosure rates. Our counterfactual analysis also suggests that limited commitment power on the part of the lenders to loan modification policies may be an important reason for the relatively small rate of modifications observed during the housing crisis. |
| JEL: | D12 D14 G2 G21 G33 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21810&r=ure |
| By: | Katherine Eriksson |
| Abstract: | A large gap in incarceration rates between black and white men has been evident since the early 20th century. This paper examines the effect of access to primary schooling on black incarceration in this period. I use the construction of 5,000 schools in the US South, funded by philanthropist Julius Rosenwald, as a quasi-natural experiment that increased the educational attainment of southern black students. I link individuals across Census waves in order to assign exposure to a Rosenwald school during childhood and to measure adult incarceration. I find that one year of access to a Rosenwald school decreased the probability of being a prisoner by 0.1 percentage points (seven percent of the mean). Using other data from archival and government sources, I find that Rosenwald schools affected juvenile crime and all categories of adult crime. I argue that most of the reduction in incarceration comes from increased opportunity costs of crime through higher educational attainment but also investigate school quality and migration responses. Effects are largest in counties which have less racist attitudes and which have a more literate population. These results contribute to a broader literature on racial gaps in social outcomes in the US throughout the 20th century. |
| JEL: | I20 N32 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21727&r=ure |
| By: | Philip Inyeob Ji (Department of Economics, Dongguk University Seoul); Glenn Otto (School of Economics, UNSW Business School, UNSW) |
| Abstract: | Using recently developed econometric procedures (Phillips, Wu and Yu, 2011; Phillips, Shi and Yu, 2015), we find evidence of temporary episodes of explosive behaviour in price-torent ratios for established houses, in five of Australia’s largest cities. One interpretation of our results is that stochastic, rational bubbles were a feature of Australia’s major housing markets; particularly during the early to mid-2000s. However, further analysis of each city’s price-to-rent ratio indicates a very different pattern of behaviour in Sydney and Perth to that experienced in Brisbane, Adelaide and Canberra. For the latter three cities, we present evidence suggesting the explosive root tests are likely capturing the effects of a one-time structural break in their respective price-to-rent ratios. In any event, based on the estimated timing of the explosive episodes in Australia’s housing markets, there is little evidence that what might be identified as house price bubbles had any important negative consequences for the wider economy. Despite the ability of the econometric procedures to provide a real-time signal of explosive behaviour, results from Australian housing markets, suggest policymakers need to be cautious in responding too aggressively to a positive signal from the tests. |
| Keywords: | Housing markets, price-to-rent ratio, rational bubbles, explosive roots |
| JEL: | C22 G12 R30 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:swe:wpaper:2015-27&r=ure |
| By: | Uwe Cantner (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Holger Graf (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Susanne Hinzmann (School of Economics and Business Administration, Friedrich-Schiller-University Jena) |
| Abstract: | The role of geographical proximity in fostering connections and knowledge flows between innovative actors ranks among the most controversial themes in the research of innovation systems, regional networks and new economic geography. While there is ample empirical evidence on the constituent force of co-location for the formation of research alliances, little attention has been paid to the actual consequences of geographical concentration of alliance partners for the subsequent performance of these linkages. In this paper we address this underexplored issue and aim to complement the rare examples of studies on the relevance of geographical proximity for research outputs. We utilize original and unique survey data from collaborative R&D projects that were funded within the "Leading-Edge Cluster Competition" - the main national cluster funding program in Germany in recent years. We find that the perception of the necessity of spatial proximity for project success is rather heterogeneous among the respondents of the funded projects. Moreover, the relationship between geographical distance and project success is by no means univocal and is mediated by various technological, organizational and institutional aspects. Our findings strongly support the assumption that the nature of knowledge involved determines the degree to which collaborators are reliant on being closely located to each other. The relevance of spatial proximity increases in exploration contexts when knowledge is novel and the innovation endeavor is more radical while this effect is less pronounced for projects with a stronger focus on basic research. Moreover, geographical proximity and project satisfaction foster cross- fertilization effects of LECC projects. |
| Keywords: | geographical proximity, collaboration, performance, innovation policy |
| JEL: | O3 O38 L14 R1 |
| Date: | 2015–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2015-025&r=ure |
| By: | Fredriksson, Peter (Stockholm University, IZA, IFAU, and Uppsala Center for Labor Studies (UCLS)); Ockert, Bjorn (Institute for Evaluation of Labor Market and Education Policy (IFAU) and UCLS); Oosterbeek, Hessel (University of Amsterdam) |
| Abstract: | We study differential parental responses to variation in class size induced by a maximum class size rule in Swedish schools. In response to an increase in class size: (i) only high- income parents help their children more with homework; (ii) all parents are more likely to move their child to another school; and (iii) only low-income children find their teachers harder to follow when taught in a larger class. These findings indicate that public and private investments in children are substitutes, and help explain why the negative effect of class size on achievement in our data is concentrated among low-income children. |
| Keywords: | Class size; parental responses; social background; regression discontinuity |
| JEL: | C31 I21 I28 J24 |
| Date: | 2015–12–16 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sunrpe:2015_0009&r=ure |
| By: | Ferdinand Rauch; Adriana Kocornik-Mina; Thomas K.J. McDermott; Guy Michaels |
| Abstract: | Abstract Does economic activity relocate away from areas that are at high risk of recurring shocks? We examine this question in the context of floods, which are among the costliest and most common natural disasters. Over the past thirty years, floods worldwide killed more than 500,000 people and displaced over 650,000,000 people. This paper analyzes the effect of large scale floods, which displaced at least 100,000 people each, in over 1,800 cities in 40 countries, from 2003-2008. We conduct our analysis using spatially detailed inundation maps and night lights data spanning the globe's urban areas. We find that low elevation areas are about 3-4 times more likely to be hit by large floods than other areas, and yet they concentrate more economic activity per square kilometre. When cities are hit by large floods, the low elevation areas also sustain more damage, but like the rest of the flooded cities they recover rapidly, and economic activity does not move to safer areas. Only in more recently populated urban areas, flooded areas show a larger and more persistent decline in economic activity. Our findings have important policy implications for aid, development and urban planning in a world with rising urbanization and sea levels. |
| Keywords: | Urbanization, Flooding, Climate change, Urban recovery |
| JEL: | R11 Q54 |
| Date: | 2015–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:772&r=ure |
| By: | Su Liangjun (Singapore Management University); Xi Qu (Shanghai Jiao Tong University) |
| Abstract: | This paper considers a simple test for the correct specification of linear spatial autoregressive models, assuming that the choice of the weight matrix is true. We derive the limiting distributions of the test under the null hypothesis of correct specification and a sequence of local alternatives. We show that the test is free of nuisance parameters asymptotically under the null and prove the consistency of our test. To improve the finite sample performance of our test, we also propose a residual-based wild bootstrap and justify its asymptotic validity. We conduct a small set of Monte Carlo simulations to investigate the finite sample properties of our tests. Finally, we apply the test to two empirical datasets: the vote cast and the economic growth rate. We reject the linear spatial autoregressive model in the vote cast example but fail to reject it in the economic growth rate example. |
| Keywords: | Generalized method of moments; Nonlinearity; Spatial autoregression; Spatial dependence; Specification test |
| JEL: | C12 C14 C21 |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:siu:wpaper:10-2015&r=ure |
| By: | Joshua Angrist; Peter Hull; Parag A. Pathak; Christopher Walters |
| Abstract: | Conventional value-added models (VAMs) compare average test scores across schools after regression-adjusting for students’ demographic characteristics and previous scores. The resulting VAM estimates are biased if the available control variables fail to capture all cross-school differences in student ability. This paper introduces a new test for VAM bias that asks whether VAM estimates accurately predict the achievement consequences of random assignment to specific schools. Test results from admissions lotteries in Boston suggest conventional VAM estimates may be misleading. This finding motivates the development of a hierarchical model describing the joint distribution of school value-added, VAM bias, and lottery compliance. We use this model to assess the substantive importance of bias in conventional VAM estimates and to construct hybrid value-added estimates that optimally combine ordinary least squares and instrumental variables estimates of VAM parameters. Simulations calibrated to the Boston data show that, bias notwithstanding, policy decisions based on conventional VAMs are likely to generate substantial achievement gains. Estimates incorporating lotteries are less biased, however, and yield further gains. |
| JEL: | I20 J24 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21748&r=ure |
| By: | Edward L. Glaeser; Scott Duke Kominers; Michael Luca; Nikhil Naik |
| Abstract: | New, “big” data sources allow measurement of city characteristics and outcome variables higher frequencies and finer geographic scales than ever before. However, big data will not solve large urban social science questions on its own. Big data has the most value for the study of cities when it allows measurement of the previously opaque, or when it can be coupled with exogenous shocks to people or place. We describe a number of new urban data sources and illustrate how they can be used to improve the study and function of cities. We first show how Google Street View images can be used to predict income in New York City, suggesting that similar image data can be used to map wealth and poverty in previously unmeasured areas of the developing world. We then discuss how survey techniques can be improved to better measure willingness to pay for urban amenities. Finally, we explain how Internet data is being used to improve the quality of city services. |
| JEL: | C18 C80 C83 R10 R11 R23 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21778&r=ure |
| By: | Aleksandra Majchrowska (University of Lodz; National Bank of Poland,); Paweł Strawiński (Faculty of Economic Sciences, University of Warsaw) |
| Abstract: | The paper aims to estimate the adjusted gender wage gaps in Poland and in each of the 16 NUTS2 Polish regions using the new harmonised dataset of wages of individuals in 2010. The results show that the total gender wage gap in Poland, estimated with new dataset, amounts to 15.7% and indicate that the previous estimates based on the Polish Labour Force Survey data are upward biased and the estimates based on the Structure of Wages and Salaries data are downward biased. Moreover, the authors show that part of the differences in wages between men and women in Poland is due to differences in the employment structure. Gender wage gap corrected for the segregation bias decreases to 14.3%. There is significant variation among regions – estimates of corrected gender wage gap vary from 24% in Opolskie to 1% in Swietokrzyskie region. The differences in gender wage gap across regions are mainly due to different employment structure by ownership sector and occupational groups. |
| Keywords: | gender wage gap, Poland, regional labour markets |
| JEL: | J31 R23 J16 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2015-40&r=ure |
| By: | Atila Abdulkadiroglu; Joshua D. Angrist; Yusuke Narita; Parag A. Pathak |
| Abstract: | A growing number of school districts use centralized assignment mechanisms to allocate school seats in a manner that reflects student preferences and school priorities. Many of these assignment schemes use lotteries to ration seats when schools are oversubscribed. The resulting random assignment opens the door to credible quasi-experimental research designs for the evaluation of school effectiveness. Yet the question of how best to separate the lottery-generated variation integral to such designs from non-random preferences and priorities remains open. This paper develops easily-implemented empirical strategies that fully exploit the random assignment embedded in the widely-used deferred acceptance mechanism and its variants. We use these methods to evaluate charter schools in Denver, one of a growing number of districts that integrate charter and traditional public schools in a unified assignment system. The resulting estimates show large achievement gains from charter school attendance. Our approach expands the scope for impact evaluation by maximizing the number of students and schools that can be studied using random assignment. We also show how to use DA to identify causal effects in models with multiple school sectors. |
| JEL: | C26 I20 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21705&r=ure |
| By: | Ana Hidalgo-Cabrillana; Cristina Lopez-Mayan |
| Abstract: | Using data from a Spanish assessment program of fourth-grade pupils, we analyze to what extent using traditional and modern teaching styles in class is related to achievement in maths and reading. As a novelty, we measure in-class work using two different sources of information -teacher and students. Our identifcation strategy relies on between-class within-school variation of teaching styles. We find that modern practices are related to better achievement, especially in reading, while traditional practices, if anything, are detrimental. There are dif- ferences depending on the source of information: the magnitude of coefficients is larger when practices are reported by students. These findings are robust to considering alternative defini- tions of teaching practices. We obtain heterogeneous effects of teaching styles by gender and type of school but only when using students' answers. Our findings highlight the importance of the source of information, teacher or students, to draw adequate conclusions about the effect of teaching style on achievement. |
| JEL: | I20 I21 J24 |
| Date: | 2015–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:aub:autbar:958.15&r=ure |
| By: | Luigi Maria Solivetti |
| Abstract: | This study purpose is to verify if there is an association between foreign immigration and crime. In doing this, the study investigates also some satellite questions revolving around this possible association: the range of offences affected by immigration, the relationship between immigrant and native crime, and whether the immigration impact on crime is direct or indirect. These issues have been addressed through both a cross-sectional and a cross-sectional/time analysis. This double approach intends to find out whether variations over time in immigration and in crime confirm the synchronic analysis results, which could be biased by non-observed factors. The research is based on data of the Italian provinces. Italy represents a critical case for studying the migration-crime relationship, because in this country the rise in foreign immigration has been sudden and its pace feverish. The cross-sectional analysis findings show that crime rates are related to time-invariant factors and only marginally to immigration. On the contrary, the cross-sectional/time analysis shows that variations in immigration have had a positive impact on both the most serious and the most common offences. There is no evidence of indirect effects of immigration on crime or of a link with native crime. In contrast to previous literature regarding the U.S., Canada, and Australia, these results suggest that a tumultuous rise in immigration can affect crime rates. |
| Keywords: | Immigration; natives; crime; crime determinants; longitudinal analysis. |
| JEL: | I25 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:saq:wpaper:8/15&r=ure |
| By: | OKUBO Toshihiro; OKAZAKI Tetsuji |
| Abstract: | In 2001, the Ministry of Economy, Trade and Industry (METI) launched the Industrial Cluster Policy, which aimed at promoting innovations and vitalizing regional economies by creating firm networks. The model envisioned by METI in drawing up this policy was the Silicon Valley in the United States. For that purpose, METI designated 19 industrial clusters and their members, including local small and medium-sized firms and universities, and supported the network creation of the members. In this paper, we identified the member firms from the original information provided by METI and matched it with the Tokyo Shoko Research (TSR) database. We used the dataset to evaluate how participation in the industrial cluster affected the transaction network, sales, and employment of each member firm.It was revealed that participation in the industrial cluster has a positive impact on the extent of transaction networks, especially that with firms in Tokyo. Also, participation in the industrial cluster increases the sales and employment of each member firm. It is remarkable that the cluster policy contributes to expanding the extensive margin of the local firms with transactions with firms in Tokyo. This extensive margin effect is larger for firms whose main banks are the first-tier regional banks. |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rdpsjp:15063&r=ure |
| By: | Patrick J. Walsh; Charles Griffiths; Dennis Guignet; Heather Klemick |
| Abstract: | The Chesapeake Bay and its tributaries provide a range of recreational and aesthetic amenities, such as swimming, fishing, boating, wildlife viewing, and scenic vistas. Living in close proximity to the Bay improves access to these amenities and should be capitalized into local housing markets. We investigate these impacts in the largest hedonic analysis of water quality ever completed, with over 200,000 property sales across 14 Maryland counties. We use a spatially explicit water quality dataset, along with a wealth of landscape, economic, geographic, and demographic variables. These data allow a comprehensive exploration of the value of water quality, while controlling for a multitude of other influences. We also estimate several variants of the models most popular in current literature, with a focus on the temporal average of water quality. In comparing 1 year and 3 year averages, the 3 year averages generally have a larger implicit price. Overall, results indicate that water quality improvements in the Bay, such as those required by EPA’s Total Maximum Daily Load, could yield significant benefits to waterfront and near-waterfront homeowners. |
| Keywords: | water quality, hedonic property value analysis, Chesapeake Bay, valuation |
| JEL: | Q51 Q53 Q57 Q58 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:nev:wpaper:wp201507&r=ure |
| By: | Bulat Sanditov (TELECOM Ecole de Management, Institut Mines-T´el´ecom, France); Saurabh Arora (Science Policy Research Unit, University of Sussex, UK) |
| Abstract: | Using a simple model with interdependent utilities, we study how social networks influence individual voluntary contributions to the provision of a public good. Departing from the stan- dard model of public good provision, we assume that an agent’s utility has two terms: (a) ‘ego’-utility derived from the agent’s consumption of public and private goods, and (b) a so- cial utility which is the sum of utility spillovers from other agents with whom the agent has social relationships. We establish conditions for the existence of a unique interior Nash equi- librium and describe the equilibrium in terms of network characteristics. We show that social network always has a positive effect on the provision of the public good. We also find that, in networks with “small world”-like modular structures, ‘bridging’ ties connecting distant parts of social network play an important role inducing the agent’s contribution to public good. Assumptions and results of the model are discussed in relation to the role of social capital in community-level development projects and to the effect of innovation networks on firms’ R&D investments. |
| Keywords: | public goods, interrelated utilities, social capital, R&D networks |
| JEL: | H41 D85 O31 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:sru:ssewps:2015-35&r=ure |
| By: | Andrea Eisfeldt; Andrew Demers |
| Abstract: | Single family rentals have a market value of $2.3 trillion. We believe our study is the first to consider the total returns to this large, unique asset class over a long time period and in a broad and granular cross section, down to the house level. Single-family rental investments pay dividends of rental payments and capital gains from house price appreciation (HPA). We show that a portfolio of US homes benefitted equally from dividends and capital gains. Nominal annual HPA and net rental yields both averaged about 4.4% since 1986. Across MSAs, rental yields decline with prices, while HPA increases with prices. As a result, "total returns" are approximately equated across MSA's. By contrast, across zip codes within cities, both rental yields and HPA decline with prices. Thus, total returns appear to be highest, within MSA's, in the lowest price tiers. |
| JEL: | G0 G11 R0 R30 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21804&r=ure |
| By: | Evan Herrnstadt; Erich Muehlegger |
| Abstract: | A large and growing literature documents the adverse impacts of pollution on health, productivity, educational attainment and socioeconomic outcomes. This paper provides the first quasi-experimental evidence that air pollution causally affects criminal activity. We exploit detailed location data on over two million serious crimes reported to the Chicago police department over a twelve-year period. We identify the causal effect of pollution on criminal activity by comparing crime on opposite sides of major interstates on days when the wind blows orthogonally the direction of the interstate and find that violent crime is 2.2 percent higher on the downwind side. Consistent with evidence from psychology on the relationship between pollution and aggression, the effect is unique to violent crimes – we find no effect of pollution on the commission of property crime. |
| JEL: | K42 Q53 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21787&r=ure |
| By: | Lena Edlund; Cecilia Machado; Maria Micaela Sviatschi |
| Abstract: | In 1980, housing prices in the main US cities rose with distance to the city center. By 2010, that relationship had reversed. We propose that this development can be traced to greater labor supply of high-income households through reduced tolerance for commuting. In a tract-level data set covering the 27 largest US cities, years 1980-2010, we employ a city-level Bartik demand shifter for skilled labor and find support for our hypothesis: full-time skilled workers favor proximity to the city center and their increased presence can account for the observed price changes, notably the rising price premium commanded by centrality. |
| JEL: | R21 R30 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21729&r=ure |
| By: | Thomas Michielsen; Remco Mocking; Sander van Veldhuizen |
| Abstract: | We study the effect of home equity and indebtedness on financial portfolio choices of Dutch households during the period 2006-2012. Using a large administrative dataset at the household level we estimate how home equity and the outstanding mortgage amount influence the share of liquid assets held in stocks. We apply different econometric methods to take selection and endogeneity into account. In our preferred specifications both home equity and the household’samount of mortgage debt have a non-significant impact on the risky asset share. |
| JEL: | G11 D14 R31 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:318&r=ure |
| By: | Richard W. Carney (Australian National University, Australia); Travers Barclay Child (VU University Amsterdam, the Netherlands) |
| Abstract: | Do political ties, family-business group affiliation, and professional connections collectively matter for firm performance? By exploiting a new dataset for 1,290 large East Asian firms during the 2008 financial crisis, we offer a holistic comparison of these different networks. We find that professional networks buoyed performance; political and family networks did not. This suggests information access is a key benefit of business networks. A one standard deviation improvement to a firm's professional network position cushioned quarterly ROA by 2/5 of a percentage point during the crisis. |
| Keywords: | networks; political connections; interlocking directorates; family ownership; corporate governance |
| JEL: | G3 G14 L14 |
| Date: | 2015–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20150135&r=ure |
| By: | Christophe André (Economics Department, Organisation for Economic Co-operation and Development (OECD), 75775 Paris, Cedex 16, France); Lumengo Bonga-Bonga (Faculty of Economic and Financial Sciences, University of Johannesburg, P.O. Box 524, Auckland Park 2006, South Africa); Rangan Gupta (Department of Economics, University of Pretoria) |
| Abstract: | This paper analyzes whether a news-based measure of economic policy uncertainty (EPU) helps predict movements in real housing returns. We find evidence of structural breaks and nonlinearity in the relationship between real housing returns and EPU. Hence, we employ a k-th order non-parametric Granger causality test, which is robust to such features. We find strong evidence that economic policy uncertainty affects both real housing returns and their volatility. This suggests that investors in property or related securities can gain information from EPU, not only for predicting future returns, but also in assessing related risks. |
| Keywords: | Economic policy uncertainty, real housing returns, volatility, non-parametric causality |
| JEL: | C32 C58 G10 G17 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201582&r=ure |
| By: | Eric A. Hanushek; Jens Ruhose; Ludger Woessmann |
| Abstract: | There is limited existing evidence justifying the economic case for state education policy. Using newly-developed measures of the human capital of each state that allow for internal migration and foreign immigration, we estimate growth regressions that incorporate worker skills. We find that educational achievement strongly predicts economic growth across U.S. states over the past four decades. Based on projections from our growth models, we show the enormous scope for state economic development through improving the quality of schools. While we consider the impact for each state of a range of educational reforms, an improvement that moves each state to the best-performing state would in the aggregate yield a present value of long-run economic gains of over four times current GDP. |
| JEL: | I21 J24 O47 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21770&r=ure |
| By: | Adrien Bouguen (PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - Institut national de la recherche agronomique (INRA) - École des Ponts ParisTech (ENPC) - CNRS - Centre National de la Recherche Scientifique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Kamilla Gumede (Aarhus University [Aarhus]); Marc Gurgand (PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - Institut national de la recherche agronomique (INRA) - École des Ponts ParisTech (ENPC) - CNRS - Centre National de la Recherche Scientifique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics) |
| Abstract: | This article investigates the role of parents by looking at the effect of a parental involvement program implemented in poor primary school in South Africa. Based on a random variation of the program assignment and on a partial population design, it allows to rigorously identify impacts on parental involvement, on the relationship between parents and teachers and on student outcomes. We find mixed results suggesting that parents who volunteer to attend the meetings changed their behavior toward more involvement at home and at school. Such behavioral change appears stronger for a subgroup of parents whose children is enrolled in the facilitating teacher's class, suggesting positive interactions between parents and teachers. Yet, no cognitive or non cognitive impact on students can be detected. We interpret these disappointing results as evidence that in a developing country context, parents face constraints that makes such program unable to have significant effects on student performances |
| Keywords: | Education,parental involvement,Development |
| Date: | 2015–12–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-01241957&r=ure |
| By: | Sneha Elango; Jorge Luis García; James J. Heckman; Andrés Hojman |
| Abstract: | This paper organizes and synthesizes the literature on early childhood education and childcare. In it, we go beyond meta-analysis and reanalyze primary data sources in a common framework. We consider the evidence from means-tested demonstration programs, large-scale means-tested programs and universal programs without means testing. We discuss which programs are beneficial and whether they are cost-effective for certain populations. The evidence from high-quality demonstration programs targeted toward disadvantaged children shows beneficial effects. Returns exceed costs, even accounting for the deadweight loss of collecting taxes. When proper policy counterfactuals are constructed, Head Start has beneficial effects on disadvantaged children compared to home alternatives. Universal programs benefit disadvantaged children. |
| JEL: | C93 I28 J13 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21766&r=ure |
| By: | Tobias Ebert (Philipps-University of Marburg, Economic Geography and Location Analysis, Deutschhausstrasse 10, 35032 Marburg, Germany); Thomas Brenner (Philipps-University of Marburg, Economic Geography and Location Analysis, Deutschhausstrasse 10, 35032 Marburg, Germany); Udo Brixy (Institute of Employment Research (IAB), Nuremberg, Germany and Department of Geography, Ludwig-Maximilians University, Munich, Germany) |
| Abstract: | This paper provides evidence that the effect of agglomeration externalities on survival is moderated by the start-up’s innovative behavior. It is shown that localization externalities are prevalent particularly in non-high-tech environments and unfold a positive influence on survival for less innovative companies, while their highly innovative counterparts do not benefit or even suffer from spatial concentration. On the contrary, highly innovative high-tech start-ups benefit from a diverse economic structure which enhances their likelihood for survival by fostering the emergence of beneficial inter-industry spill-overs. |
| Keywords: | Firm survival, Innovation, Externalities |
| JEL: | D22 L26 O33 R11 |
| Date: | 2015–12–16 |
| URL: | http://d.repec.org/n?u=RePEc:pum:wpaper:2015-05&r=ure |
| By: | Bart Cockx (Ghent University (SHERPPA), Université catholique de Louvain (IRES), IZA and CESifo); Stijn Baert (Ghent University (SHERPPA), University of Antwerp, Université catholique de Louvain (IRES) and IZA); Matteo Picchio (Department of Economics and Social Sciences, Marche Polytechnic University; CentER, Tilburg University; Sherppa, Ghent University; IZA) |
| Abstract: | A dynamic discrete choice model is set up to estimate the effects of grade retention in high school, both in the short- (end-of-year evaluation) and long-run (drop-out and delay). In contrast to regression discontinuity designs, this approach captures treatment heterogeneity and controls for grade-varying unobservable determinants. A method is proposed to deal with initial conditions and with partial observability of the track choices at the start of high school. Forced track downgrading is considered as an alternative remedial measure. In the long-run, grade retention and its alternative have adverse effects on schooling outcomes and, more so, for less able pupils. |
| Keywords: | Education, grade retention, track mobility, dynamic discrete choice models, heterogeneous treatment effects |
| JEL: | C33 C35 I21 |
| Date: | 2015–12–12 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2015023&r=ure |
| By: | John Gathergood; Joerg Weber |
| Abstract: | The decision to buy a home is one of the most important choices faced by a household. Most households who purchase a home do so using a mortgage. But mortgages are complex financial instruments and this complexity may be a barrier to less sophisticated households becoming homeowners. Using survey data from a sample of English and Welsh households we measure household financial literacy related to mortgages, including concepts such as loan duration, interest compounding and amortization. We also measure time preference and risk attitude. We find that in the population mortgage financial literacy is generally low, as on average only two out of four questions are answered correctly. Among renters, mortgage financial literacy is substantially worse than among homeowners and this difference is not explained by socio-economic factors. Econometric estimates suggest mortgage financial literacy predicts home ownership, but instrumental variable estimates show that mortgage financial literacy is acquired endogenously with housing tenure choices. |
| Keywords: | home ownership, financial literacy, mortgage |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcfc:15/16&r=ure |
| By: | Dennis Guignet; Rachel Northcutt; Patrick J. Walsh |
| Abstract: | There are few studies examining the impacts of groundwater quality on residential property values. Using a unique dataset of groundwater well tests, we link residential transactions to home-specific contamination levels and undertake a hedonic analysis of homes in Lake County, Florida; where groundwater pollution concerns stem primarily from agricultural runoff. We find that testing and contamination yield a 2% to 6% depreciation, an effect that diminishes after the situation is resolved. Focusing specifically on nitrogen-based contamination, we find prices decline mainly at concentrations above the regulatory health standard, suggesting up to a 15% deprecation at levels twice the standard. |
| Keywords: | drinking water, groundwater, hedonic, nitrate, potable water, property value, water quality |
| JEL: | Q51 Q53 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:nev:wpaper:wp201505&r=ure |
| By: | LIU Yang; KAWATA Keisuke |
| Abstract: | By developing a model based on recent wage theories, we examine workers' wage determination, considering not only human-capital related factors but also the labor market. We also consider the price level using a city-specific consumer price index. Data come from a national survey in China, while unlike previous studies that examine temporary rural-urban migrants in China, we concentrate on permanent rural migrants who have obtained an urban household registration. We find that considering the effects of the labor market is important in examining workers' wage determination. The decomposition result shows that different effects of market tightness and unemployment benefits are the two primary reasons for the wage differential between the two groups, whereas education does not contribute to the wage gap. As a policy implication, our results indicate that supporting the workers' ability to adapt to the labor markets could reduce wage inequality. |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:15142&r=ure |
| By: | Li Chen; Juan Sebastian Pereyra Barreiro |
| Keywords: | school choice; incomplete information; self-selection; serial dictatorship; mechanism; strategy-proofness |
| JEL: | C40 C78 D63 I20 I21 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:eca:wpaper:2013/222320&r=ure |
| By: | Ferdinando Monte; Stephen J. Redding; Esteban Rossi-Hansberg |
| Abstract: | Many changes in the economic environment are local, including policy changes and infrastructure investments. The effect of these changes depends crucially on the ability of factors to move in response. Therefore a key object of interest for policy evaluation and design is the elasticity of local employment to these changes in the economic environment. We develop a quantitative general equilibrium model that incorporates spatial linkages between locations in goods markets (trade) and factor markets (commuting and migration). We find substantial heterogeneity across locations in local employment elasticities. We show that this heterogeneity can be well explained with theoretically motivated measures of commuting flows. Without taking into account this dependence, estimates of the local employment elasticity for one location are not generalizable to other locations. We also find that commuting flows and their importance cannot be accounted for with standard measures of size or wages at the county or commuting zone levels. |
| JEL: | F16 J6 J61 R0 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21706&r=ure |
| By: | TESTA, Giuseppina (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy) |
| Abstract: | The growing competition from the euro, the Eastern enlargement, and the BRIC nations has attracted increasing attention by governments in Europe like in Italy. In this paper we have investigated the effects that such scenario has on innovation decision of Italian manufacturing firms. Using data from UniCredit Surveys conducted in Italy over the period 1995-2006 we explore the influence of the euro competition on innovation decisions controlling for a set of variables, ranging from export behaviour, family management and size. We find the euro competition to significantly affect innovation decisions. Such effects are different for high-tech firms and low-tech firms and for family-managed and non-family-managed firms. |
| Keywords: | Euro; Innovation; Italian manufacturing |
| JEL: | L25 L60 O32 |
| Date: | 2015–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:sal:celpdp:0135&r=ure |
| By: | McGinnity, Frances; Darmody, Merike; Murray, Aisling |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp512&r=ure |
| By: | Maryna Tverdostup; Jaan Masso |
| Abstract: | This paper extends the earlier literature on the effects of return migration by studying selection and labour market performance in terms of the wages of young returnees in particular. The topic is motivated by young people’s various labour market issues and their high exposure to the consequences of the recent financial crisis. We use the Estonian Labour Force Survey data and the Estonian Population and Housing Census 2011 data in combination with the Estonian Tax and Customs Office data on individual payroll taxes. The econometric analysis focuses on the selection to temporary migration and estimation of wage premium to return, along with the decomposition of the returnee-stayer wage gap using the Oaxaca-Blinder approach and an investigation of wage premium dynamics over time after the return. The results generally show higher returns from temporary labour migration for young people relative to older people, and among youth the share of the unexplained fraction of the wage premium is also higher. These results imply a stronger role of experience gained abroad on earnings for youth. |
| Keywords: | return migration, labour market outcomes, Central and Eastern Europe |
| JEL: | F22 J31 J61 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:mtk:febawb:98&r=ure |
| By: | Uwe Cantner (School of Economics and Business Administration, Friedrich-Schiller-University Jena, and University of Southern Denmark, Odense); Holger Graf (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Stefan Töpfer (School of Economics and Business Administration, Friedrich-Schiller-University Jena) |
| Abstract: | We study the effects of a German national cluster policy on the structure of collaboration networks. The empirical analysis is based on original data that was collected in fall 2011 and late summer 2013 with cluster actors (firms and public research organizations) who received government funding. Our results show that over time the program was effective in initiating new cooperation between cluster actors and in intensifying existing linkages. Newly formed linkages are to a substantial amount among actors who did not receive direct funding for a joint R&D project, which indicates an additional, mobilisation effect of the policy. Furthermore, we observe differential developments regarding clusters' spatial embeddedness. Some clusters tend to increase their localisation, whereas others increase their connectivity to international partners. The centrality of large firms increased over time, indicating their prominent role as preferred partners for R&D cooperation within the clusters while it is the opposite case for public actors. |
| Keywords: | Cluster, Innovation Policy, Evaluation, Social Network Analysis |
| JEL: | O38 L14 R10 |
| Date: | 2015–12–21 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2015-026&r=ure |
| By: | Sebastián Fleitas; Price Fishback; Kenneth Snowden |
| Abstract: | During the Great Depression, Building and Loans (B&Ls), the leading home lenders, had a structure that mitigated the crisis. Borrowers were owners of the B&L and dissolution of the institution required a two-thirds majority vote. Using panel data from New Jersey in the 1930s, we find that this voting rule delayed dissolution by about one year. The year delay allowed one-fourth of the borrowers in the at-risk B&L to pay off their loans, but nonborrowers lost share value. The net loss was roughly -0.67 percent of the value of all New Jersey B&L assets in the mid-1930s. |
| JEL: | G23 N22 R31 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21786&r=ure |
| By: | Kaivan Munshi; Mark Rosenzweig |
| Abstract: | We examine the role of ethnic politics at the local level in supplying public goods within a framework that incorporates two sides to ethnic groups: an inclusionary side associated with internal cooperation and an exclusionary side associated with the disregard for others. The inclusionary aspect of ethnic politics results in the selection of more able political representatives who exert more effort, resulting in an increased supply of non-excludable public goods. The exclusionary aspect of ethnic politics results in the capture of targetable public resources by insiders; i.e. the representative's own group, at the expense of outsiders. Using newly available Indian data, covering all the major states over three election terms at the most local (ward) level, we provide empirical evidence that is consistent with both sides of ethnic politics. Counterfactual simulations using structural estimates of the model are used to quantify the impact of alternative policies that, based on our theory and the empirical results, are expected to increase the supply of public goods. |
| JEL: | H11 H4 H41 H42 O1 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21720&r=ure |
| By: | Luigi Guiso; Luigi Pistaferri; Fabiano Schivardi |
| Abstract: | We document that individuals who grew up in areas with high density of firms are more likely, as adults, to become entrepreneurs, controlling for the density of firms in their current location. Conditional on becoming entrepreneurs, the same individuals are also more likely to be successful entrepreneurs, as measured by business income or firm productivity. Strikingly, firm density at entrepreneur’s young age is more important than current firm density for business performance. These results are not driven by better access to external finance or intergenerational occupation choices. They are instead consistent with entrepreneurial capabilities being at least partly learnable through social contacts. In keeping with this interpretation, we find that entrepreneurs who at the age of 18 lived in areas with a higher firm density tend to adopt better managerial practices (enhancing productivity) later in life. |
| JEL: | J24 M13 R11 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21775&r=ure |
| By: | Uluc, Arzu (Bank of England); Wieladek, Tomasz (Bank of England) |
| Abstract: | We study the effect of changes to bank-specific capital requirements on mortgage loan supply with a new loan-level data set containing all mortgages issued in the United Kingdom between 2005 Q2 and 2007 Q2. We find that a rise of a 100 basis points in capital requirements leads to a 5.4% decline in individual loan size by bank. Loans issued by competing banks rise by roughly the same amount, which is indicative of credit substitution. Borrowers with an impaired credit history (verified income) are not (most) affected. This is consistent with origination of riskier loans to grow capital by raising retained earnings. No evidence for credit substitution of non-bank finance companies is found. |
| Keywords: | Capital requirements; loan-level data; mortgage market; credit substitution. |
| JEL: | G21 G28 |
| Date: | 2015–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:0572&r=ure |
| By: | Siobhan Austen (School of Economics and Finance, Curtin University); Rachel Ong (Bankwest Curtin Economics Centre, Curtin University) |
| Abstract: | This paper identifies the broad issues associated with the use of home equity to fund the consumption needs of retirees by reviewing the relevant international literature.The specific literature that examines the role of home equity in the retirement income system deals with attempts by government to shift a greater share of latelife costs onto households. An important part of this literature examines the broad economic consequences of shifting away from a public retirement income system, which features, for example, a partially funded age pension. Other relevant literature considers the decisions older households make about the use of their home equity and other financial assets to fund their consumption needs in retirement. This paper’s review highlights important issues that must be considered in a policy change directed toward increasing the use of housing assets to fund consumption needs in retirement. These include the need to obtain a clear picture of the capacity of households to achieve meaningful improvements in their retirement income by accessing their housing, acknowledging the preference of elderly households to hold onto their home equity rather than draw down on it, and accounting for the risks and costs of encouraging households to access their home equity to fund their general consumption needs in retirement. |
| Keywords: | Home equity, consumption, retirement income, annuities, risks |
| JEL: | J14 D31 |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:ozl:bcecwp:wp1505&r=ure |
| By: | Pablo D. Fajgelbaum; Eduardo Morales; Juan Carlos Suárez Serrato; Owen M. Zidar |
| Abstract: | We study state taxes as a potential source of spatial misallocation in the United States. We build a spatial general-equilibrium model in which the distribution of workers, firms, and trade flows across states responds to state taxes and public-service provision. We estimate firm and worker mobility elasticities and preferences for public services using data on the distribution of economic activity and state taxes from 1980 to 2010. A revenue-neutral tax harmonization leads to aggregate real-GDP and welfare gains of 0.7%. Tax cuts by individual states lower own-state tax revenues and economic activity, and generate cross-state spillovers depending on trade linkages. |
| JEL: | E6 F12 H71 R13 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21760&r=ure |
| By: | Gianluca, Cassese |
| Abstract: | We prove results concerning the representation of a given distribution by means of a given random quantity. The existence of a solution to this problem is related to the notion of conglomerability, originally introduced by Dubins. We show that this property has many interesting applications in probability as well as in analysis. Based on it we prove versions of the extremal representation theorem of Choquet and of Skhorohod theorem. |
| Keywords: | Choquet integral representation, Conglomerability, Distribution, Riesz representation, Skhorohod representation, Vector lattice |
| JEL: | C02 C69 |
| Date: | 2015–12–16 |
| URL: | http://d.repec.org/n?u=RePEc:mib:wpaper:318&r=ure |
| By: | Eleonora Fichera; John Gathergood |
| Abstract: | We exploit wealth shocks arising from housing wealth gains to examine the relationship between wealth and health. In UK household panel data positive housing wealth gains lower the likelihood of home owners exhibiting a range of non-chronic health conditions with no effect on renters. For owners housing wealth gains change health behaviours: increasing use of private health care, reducing hours of work (especially for women) and increasing time dedicated to exercise. Housing wealth gains, unlike income gains, do not increase risky health behaviours such as smoking and drinking. Furthermore, house prices highly pro-cyclical. The positive health effects of housing wealth gains on home owner health over the business cycle offset the negative health effects of labour market conditions and work intensity. |
| Keywords: | health, wealth, housing wealth, house prices |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcfc:15/20&r=ure |
| By: | Tiziana D'Alfonso (Department of Computer, Control and Management Engineering Antonio Ruberti (DIAG), University of Rome La Sapienza, Rome, Italy); Valentina Bracaglia (Department of Computer, Control and Management Engineering Antonio Ruberti (DIAG), University of Rome La Sapienza, Rome, Italy); Yulai Wan (Department of Logistics and Maritime Studies, Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong) |
| Abstract: | We study multiproduct pricing of core and side goods in the case of a (monopoly) airport city. The consumption of the side services is not conditional on the consumption of the core service, i.e., travellers as well as non-travellers may demand side goods but derive different benefits. We obtain several results in two different settings. The first one depicts the case in which individuals make decisions about buying core and side goods independently. In this case, non-traveller demand induces the facility to increase the core price with respect to the case in which only travellers may purchase side services. In the second one, individuals make decisions simultaneously, depending on their degree of foresight over the surplus that they anticipate to obtain from the consumption of side goods. In this case, the non-passenger demand might incentivizes the transport facility to charge lower core price, with respect to the case in which only travellers may purchase side services. Manipulating the side products mix in order to enrich the shopping experience of travellers (i.e., to increase the benefit that they derive from the joint consumption of core and side goods) may be welfare-enhancing. Traveller surplus would certainly increase, but such positive effects occur to the detriment of non-travellers, who find themselves to pay a higher price for side products, whatever is the level of consumer foresight. |
| Keywords: | monopoly; multiproduct pricing; complementarity effect; demand effect; hierarchical demands; airport city |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:aeg:report:2015-14&r=ure |