|
on Urban and Real Estate Economics |
| By: | Gabor Pinter (Bank of England); Angus Foulis (Bank of England); Saleem Bahaj (Bank of England) |
| Abstract: | We present evidence on a new macroeconomic channel which we call the residential collateral channel. Through this channel, an increase in real estate prices expands firm activity by enabling company directors to utilise their residential property as a source of funds for their business. This channel is a key determinant of investment and job creation, with a £1 increase in directors’ residential collateral estimated to increase investment by £0.07 and total wage costs by £0.10. To show this, we use a unique combination of UK datasets including firm-level accounting data matched with transaction-level house price data and loan-level residential mortgage data. The aggregate value of residential collateral held by company directors suggests that this channel has important macroeconomic effects. We complement this with further evidence on the corporate collateral channel whereby an increase in real estate prices directly expands firm activity by enabling businesses to borrow more against their corporate real estate. A simple general equilibrium model with collateral constrained firms is used to quantify the aggregate effects of both channels. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed016:502&r=ure |
| By: | Neil Bhutta |
| Abstract: | Print{{p}}December 7, 2015{{p}}The Ins and Outs of Mortgage Debt: An Update{{p}}Neil Bhutta{{p}}Real household mortgage debt has been flat over the past two years (figure 1). However, as described in more detail below, new data on{{p}}credit flows reveal that mortgage inflows have picked up for the first time since before the financial crisis, including to individuals with{{p}}lower credit scores. At the same time, outflows have contracted, largely reflecting fewer mortgage defaults. Still, because inflows remain{{p}}weak, inflows and outflows have offset each other and aggregate mortgage debt has not yet begun to rise.{{p}}Figure 1: Real Household Mortgage Debt Outstanding{{p}} Source: FRBNY CCP/Equifax.{{p}} Notes: Graph shows the stock of mortgage each year as of the end of the 2nd quarter since 1999, as estimated from a five percent sample of the CCP,{{p}}adjusted to avoid double-counting balances of jointly-held mortgages.{{p}}Accessible version{{p}}In a recent paper (Bhutta 2015), I constructed new measures of mortgage credit flows using the Federal Reserve Bank of New York's{{p}}(FRBNY) Consumer Credit Panel (CCP). In this note, I update some of these mortgage flow measures through the second quarter of{{p}}2015. The CCP is a nationally representative, quarterly longitudinal dataset consisting of detailed, anonymous consumer credit report{{p}}data maintained by Equifax. The CCP provides quarter-end snapshots of individuals' debt holdings, payment history, credit risk scores{{p}}and geographic location down to the census block.1 Regarding personal mortgage debt, CCP coverage is comprehensive, including first{{p}}and junior liens, closed- and open-end loans, loans held in a bank's portfolio or sold into mortgage-backed securities, and loans secured{{p}}by principal residences, second homes or investment properties.2{{p}}Using the CCP, I measure mortgage "inflows" ("outflows") as the total change in mortgage debt among individuals who increased{{p}}(reduced) such debt over a given period. Because inflows and outflows reflect changes in mortgage debt balances, they do not{{p}}necessarily reflect the volume of mortgage originations. For example, years with high refinance volume will not necessarily generate{{p}}large inflows, unless there is also a significant amount of "cash-out" refinance activity where borrowers increase their balances at the{{p}}time of the transaction.{{p}}The individual-level details in the CCP allow inflows and outflows to be finely disaggregated into various groups of interest to better{{p}} FRB: FEDS Notes: The Ins and Outs of Mortgage Debt: An Update http://www.federalreserve.gov/econresdata/notes/feds-notes/2015/the-ins...{{p}}1 of 4 12/8/2015 3:29 PM{{p}}understand the sources of inflows and outflows. In this note, I only present a few disaggregations; more detailed disaggregations and{{p}}additional results across geographic areas are available in Bhutta (2015) using data only through 2013:Q3.{{p}}Figure 2 presents inflation-adjusted inflows and outflows for eight two-year periods spanning 1999:Q2 through 2015:Q2, with inflows and{{p}}outflows divided into six and four groups, respectively.3 In the most recent two-year period--(the end of) 2013:Q2 through 2015:Q2--total{{p}}inflows were about $1.6 trillion while total outflows were slightly higher at almost $1.7 trillion, generating a slight decline in the stock of{{p}}real mortgage debt of about $100 billion in the period.{{p}}Figure 2: Inflows and Outflows, 1999:Q2-2015:Q2{{p}} Source: FRBNY CCP/Equifax.{{p}} Notes: Top and bottom panels show mortgage inflows and outflows divided into six and four mutually exclusive groups, respectively (see text for definitions) for{{p}}eight two-year periods. Credit score refers to the Equifax risk score measured at the start of a given period. Low score is defined as under 680 and includes{{p}}those without a credit score at the start of the period. Those entrants for whom first-time borrower status cannot be inferred are included not-first-time group.{{p}}Accessible version{{p}}As noted earlier, inflows expanded in the most recent period for the first time since the financial crisis, but still stand below inflows in the{{p}}earliest observed period of 1999-01, and far below peak inflows in 2005-07. In contrast, despite record numbers of defaults and some{{p}}indications that households have been aggressively trying to reduce debt, changes in outflows since 2005-07 have not been nearly as{{p}}dramatic as the changes in inflows, and outflows in the most recent period were fairly similar to those in 2005-07.{{p}}Turning to the different categories of flows, on the inflow side, "entrants" are those going from zero to positive mortgage debt during a{{p}}given period, and are further divided into four groups by credit score and first-time borrowing status. "Increasers" refers to those who add{{p}}to their mortgage debt during a period, and are split into "investors" and all other increasers.4 In this analysis, the term "investor" refers{{p}} FRB: FEDS Notes: The Ins and Outs of Mortgage Debt: An Update http://www.federalreserve.gov/econresdata/notes/feds-notes/2015/the-ins...{{p}}2 of 4 12/8/2015 3:29 PM{{p}}to anyone inferred to have more than one mortgaged property at the end of a given period, and in many cases these investor inflows{{p}}reflect purchases of an additional property such as a second home (not shown here). Other increasers have only one mortgaged{{p}}property and, for example, might increase their debt by extracting home equity through a cash-out refinance.5 Overall, these data{{p}}indicate that the recent rise in inflows reflects incremental increases in inflows for all groups, including lower-score (less than 680){{p}}entrants.{{p}}Two other features of the top panel of figure 2 are striking. First, during the housing boom, inflow growth was driven by investors and{{p}}other increasers (shades of red), consistent with equity extraction and purchases of second homes and investment properties being key{{p}}drivers of debt growth.6 In contrast, growth in inflows from entrants, including lower-score first-time borrowers, was relatively modest.{{p}}Second, since the financial crisis, inflows from lower-score entrants have declined sharply and are below the level in the 1999-01 period.{{p}}For example, inflows from lower-score first-time borrowers were only about half of what they were in 1999-01, even though home prices{{p}}are now considerably higher.7 The relatively sharp decline in first-time borrowing by lower-score individuals is consistent with tightened{{p}}credit supply since the financial crisis, but it could also be the case that lower-score individuals' demand for owner-occupied housing{{p}}(and thus mortgage debt) may have declined more than high-score individuals. Indeed, those with lower scores tend to be younger and{{p}}less well educated--groups that were harder hit by the recession. However, as shown in my previous paper, a much stronger decline in{{p}}first-time borrowing remains even after controlling for possibly differential effects of local unemployment shocks on lower-score{{p}}individuals, as well as potential time-varying effects specific to certain demographic groups that might be correlated with time-varying{{p}}credit score effects. These findings support an interpretation where the observed differential decline in first-time borrowing by credit{{p}}score largely reflects tightened credit supply.{{p}}On the outflow side, "exiters" refers to those whose mortgage debt drops to zero during a given period, and are split into those with and{{p}}without at least one mortgage default (defined as being at least 90 days past due) during the period. "Decreasers" refers to those whose{{p}}mortgage balances decline (but remain positive) during a given period, including borrowers who simply make scheduled mortgage{{p}}payments.8{{p}}Total outflows have contracted since the 2009-11 period, with outflows associated with mortgage defaults subsiding significantly (darker{{p}}shades of yellow and green). As the housing crisis unfolded, outflows peaked in the 2009-11 period, and borrowers with a mortgage{{p}}default accounted for an increasing share of outflows. Prior to the 2007-09 period, defaults were far less prevalent and outflows from{{p}}such borrowers were only a small component of total outflows.{{p}}Finally, there is little indication of an increase in outflows in recent years due to borrowers paying down debt more aggressively.{{p}}Although, as some anecdotes suggest, aversion to debt may have increased in recent years and prompted some homeowners to{{p}}accelerate principal payments or payoff their mortgages, outflows other than from those with a mortgage default never expanded{{p}}appreciably. In fact, despite the rise in defaults since 2007, total outflows as a share of mortgage debt outstanding have basically been{{p}}flat over time (see Bhutta 2015). If many borrowers were paying down their loans at a faster rate than before the crisis, total outflows as{{p}}a share of debt should have expanded significantly rather than remaining almost constant.9{{p}}In sum, new data on mortgage credit flows indicate that mortgage inflows have picked up for the first time since before the financial{{p}}crisis, including to individuals with lower credit scores, while outflows have contracted as mortgage defaults have subsided. Although{{p}}there has been no net change in mortgage debt over the past couple of years (outflows have offset inflows) as inflows remain weak, if{{p}}the trends in inflows and outflows continue, real mortgage debt will begin to rise again in the coming quarters.{{p}}References{{p}}Bhutta, N. 2015. The Ins and Outs of Mortgage Debt during the Housing Boom and Bust. Journal of Monetary Economics, 76,{{p}}pp.284-298.{{p}}Bhutta, N., Keys, B.J., forthcoming. Interest Rates and Equity Extraction during the Housing Boom. American Economic Review.{{p}}Chinco, A., Mayer, C., 2012. Distant Speculators and Asset Bubbles in the Housing Market. Working paper.{{p}}Greenspan, A., Kennedy, J., 2008. Sources and Uses of Equity Extracted from Homes, Oxford Review of Economic Policy, 24(1), pp.{{p}}120-144.{{p}}Haughwaut, A., Lee D., Tracy, J., VanderKlaauw, W., 2011. Real Estate Investors, the Leverage Cycle, and the Housing Market Crisis.{{p}}Federal Reserve Bank of New York Staff Report no. 514.{{p}}Lee, D., VanderKlaauw W., 2010. An Introduction to the FRBNY Consumer Credit Panel. Federal Reserve Bank of New York Staff{{p}}Report No. 479.{{p}}Mian, A., Sufi, A., 2011. House Prices, Home Equity-Based Borrowing, and the US Household Leverage Crisis. American Economic{{p}}Review, 101: 2132-2156.{{p}}1. Credit scores for each individual are based on the Equifax 3.0 model, which is similar conceptually and numerically to the FICO score. The Equifax score{{p}}ranges from 280 to 850, with higher scores associated with a lower expected likelihood of default. Return to text{{p}}2. For more information on the CCP, see Lee and van der Klaauw (2010). Note that all individuals in the data are anonymous: names, street addresses and{{p}}social security numbers have been suppressed by Equifax. Individuals are distinguished and can be linked over time through a unique, anonymous consumer{{p}} FRB: FEDS Notes: The Ins and Outs of Mortgage Debt: An Update http://www.federalreserve.gov/econresdata/notes/feds-notes/2015/the-ins...{{p}}3 of 4 12/8/2015 3:29 PM{{p}}Accessibility Contact Us Disclaimer Website Policies FOIA PDF Reader{{p}}identification number assigned by Equifax. Return to text{{p}}3. Inflation is measured using price index data from the Bureau of Economic Analysis on personal consumption expenditures. Return to text{{p}}4. First-time borrowers are those with no mortgage debt at the start of the period and no record of ever having a mortgage in the past. Return to text{{p}}5. For more details on these classifications and other definitions, see Bhutta (2015). Return to text{{p}}6. See Bhutta and Keys (forthcoming) and Mian and Sufi (2011) for more on equity extraction patterns during the housing boom, and how extraction responded{{p}}to interest rates and house price growth. Also see Greenspan and Kennedy (2008) for other estimates of equity extraction volume. See Chinco and Mayer{{p}}(2012) and Haughwaut et al. (2011) for studies focusing on real estate investor activity during the housing boom. Return to text{{p}}7. For example, the S&P/Case-Shiller National Home Price Index, adjusted for inflation in personal consumption expenditures, was about 27 percent higher by{{p}}mid-2014 relative to mid-2000. Return to text{{p}}8. Decreasers also includes those whose balances remain the same over a two-year period. Return to text{{p}}9. The bottom panel of figure 2 indicates that other-exiter outflows (i.e. not associated with any mortgage defaults) declined as the crisis unfolded, significantly{{p}}offsetting the rise in outflows associated with a mortgage default. One possible interpretation of this finding is many borrowers who were observed to both exit{{p}}and default in the post-crisis periods would have exited even in the absence of a mortgage default. However, it is also possible that in the absence of rising{{p}}defaults, outflows as a share of debt would have declined in the post-crisis periods. More work is needed to distinguish between these alternatives. Return to{{p}}text{{p}} Disclaimer: FEDS Notes are articles in which Board economists offer their own views and present analysis on a range of topics in{{p}}economics and finance. These articles are shorter and less technically oriented than FEDS Working Papers.{{p}}Last update: December 7, 2015{{p}}Home | Economic Research & Data{{p}} FRB: FEDS Notes: The Ins and Outs of Mortgage Debt: An Update http://www.federalreserve.gov/econresdata/notes/feds-notes/2015/the-ins...{{p}}4 of 4 12/8/2015 3:29 PM |
| Date: | 2015–12–07 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfn:2015-12-07&r=ure |
| By: | Gianni La Cava |
| Abstract: | Piketty (2014) documents how the share of aggregate income going to capital in the United States has risen in the post-war era. Rognlie (2015) has since shown that this is largely due to the housing sector. This paper explores the determinants of the secular rise in the share of housing capital income (or 'rental income') in the US economy. I first decompose the aggregate national accounts by geographic region and also by type of housing. I then exploit variation across US states in factors that could explain housing capital income, such as interest rates, housing prices and income growth. The analysis shows that the long-run increase in the aggregate share of housing capital income is mainly due to higher imputed rental income going to owner-occupiers. I also find evidence that the rise in the share of housing capital income over recent decades reflects a combination of: 1) lower real interest rates; 2) lower consumer price inflation; and 3) constraints on the supply of new housing in some large US cities. In effect, the paper documents that the fall in nominal interest rates over the 1980s and 1990s raised the demand for housing and pushed up housing prices and rents (relative to non-housing prices) in supply-constrained areas. I estimate that the long-term decline in interest rates can explain more than half the increase in the share of nominal income spent on housing since the early 1980s. |
| Keywords: | interest rates, housing prices, housing supply, imputed rent, inequality |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:572&r=ure |
| By: | West, Jens (KTH); Börjesson, Maria (KTH) |
| Abstract: | This paper performs an ex-post cost- benefit and equity analysis of the Gothenburg congestion charges introduced in 2013. We base the analysis on observed effects transport model that is able to predict the effect of the charges on travel times and traffic volumes with high accuracy. We find that the net social benefit of the charge is positive. However, we also show that the system is regressive. Low income citizens pay a larger share of their income for three reasons. First, all income classes are highly car dependent in Gothenburg, due to the relatively low public transport share. Second, workers in the highest income class have considerably higher access to company cars, and are therefore either exempt from paying the charge, or can deduce the charge from their income tax. Third, high income individuals have higher values of time. Moreover, the revenue is spent mainly on a rail tunnel, which primarily benefits commuters residing far out in the region. |
| Keywords: | Congestion charges; Cost-benefit analysis; Welfare analysis; Equity; Transport policy; Decision support |
| JEL: | R41 R42 R48 |
| Date: | 2016–08–29 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ctswps:2016_017&r=ure |
| By: | Surico, P.; Trezzi, R. |
| Abstract: | A major change of the property tax system in 2011 generated significant variation in the amount of housing taxes paid by Italian households. Using new questions added to the Survey on Household Income and Wealth (SHIW), we exploit this variation to provide an unprecedented analysis of the effects of property taxes on consumer spending. A tax on the main dwelling leads to large expenditure cuts among households with mortgage debt and low liquid wealth but generates only small revenues for the government. In contrast, higher tax rates on other residential properties reduce private savings and yield large tax revenues. |
| Keywords: | Fiscal consolidation, marginal propensity to spend, mortgage debt, residential property taxes |
| JEL: | E21 E62 H31 |
| Date: | 2016–08–24 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1648&r=ure |
| By: | Bryan S. Graham |
| Abstract: | Residential segregation by race and income are enduring features of urban America. Understanding the effects of residential segregation on educational attainment, labor market outcomes, criminal activity and other outcomes has been a leading project of the social sciences for over half a century. This paper describes techniques for measuring the effects of neighborhood of residence on long run life outcomes. |
| JEL: | C23 J01 J1 R23 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22575&r=ure |
| By: | Sebastian Klüsener (Max Planck Institute for Demographic Research, Rostock, Germany); Martin Dribe; Francesco Scalone |
| Abstract: | Most existing studies on the fertility transition focus either on macro-level trends or on micro-level patterns with limited geographic scope. Much less attention has been given to the interplay between individual characteristics and contextual conditions, including geographic location. This paper contributes to closing this research gap. We investigate the relevance of geography and socioeconomic status (SES) for understanding fertility variation in the initial phase of the fertility decline in Sweden. Spatially-sensitive multi-level analyses are applied to study fertility trends by SES and parish, using full-count individual-level census data for 1880, 1890, and 1900. Our results show that the elite not only constituted the vanguard group in the fertility decline, but that the shift in fertility behavior occurred quickly among this social class in virtually all parts of Sweden. Other social classes experienced the decline with some delay in both central and peripheral areas, and their patterns of decline were more clustered in and around the early centers of the decline compared to the pattern of the elite. Long-distance migrants, who were disproportionately represented among the elite and who initially had higher fertility, were among the pioneers in the process. This suggests that factors such as social connectedness through space and local social embeddedness were important in determining the early adoption of changes in fertility behavior. Our results confirm the view that social status and social class boundaries were of considerable relevance in structuring the fertility transition. The importance of space for understanding variation in the fertility decline seems to be negatively correlated with social status, with the pattern of decline among the elite showing the lowest degree of spatial variation. |
| Keywords: | Sweden, fertility decline, geography, social classes, spatial analysis |
| JEL: | J1 Z0 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:dem:wpaper:wp-2016-009&r=ure |
| By: | Coll Martínez, Eva; Moreno Monroy, Ana Isabel; Arauzo Carod, Josep Maria |
| Abstract: | The aim of this paper is to analyse the spatial patterns of agglomeration and coagglomeration of Creative Industries (CIs) in the Metropolitan Area of Barcelona (MAB). We compare agglomeration patterns of CIs to non-creative ones (Non-CIs) in order to identify specificities in their location patterns at an intra-metropolitan level. We use firms’ geo-located data for 2012 to calculate the distance-based M and m cumulative and density functions of agglomeration and coagglomeration. Our main results show that CIs and Non-CIs have different agglomeration patterns. Concretely, whilst CIs tend to cluster at very small distances, Non-CIs have a more dispersed pattern. Concerning the results of coagglomeration, these reveal that micro CIs and Non-CIs seem to be coagglomerated. Regarding agglomeration patterns of subgroups of CIs, we find that these sectors display high levels of agglomeration individually, and that there is a clear coagglomeration among them in the MAB. Finally, our results emphasise Barcelona’s centre as a magnet for Cultural and CIs. Keywords: creative industries, agglomeration, M function, intra-metropolitan analysis, Barcelona |
| Keywords: | Creativitat en els negocis -- Barcelona, Economia del coneixement -- Barcelona, Barcelona (Catalunya : Àrea metropolitana) -- Condicions econòmiques, 332 - Economia regional i territorial. Economia del sòl i de la vivenda, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:urv:wpaper:2072/266575&r=ure |
| By: | Stefania Albanesi (The Ohio State University) |
| Abstract: | A broadly accepted explanation for the 2007-09 financial crisis emphasizes the growth in lending to subprime households during the preceding boom. According to this view, the resulting rise in insolvencies and foreclosures caused the financial crisis, leading to a decline in housing values and a broad contraction in credit. This paper studies the evolution of household borrowing and delinquency between 1999 and 2013, using a large administrative panel of credit file data. Our findings suggest an alternative narrative that challenges the large role of subprime credit. We show that credit growth between 2001 and 2007 is concentrated in the middle and high quartiles of the credit score distribution. Borrowing by individuals with low credit score is virtually constant for all debt categories during the boom. We also find that the rise in defaults during the financial crisis is concentrated in the middle and upper quartiles of the credit score distribution, and the fraction of defaults to the lowest quartile of of the credit score distribution sizably drops during the crisis. We discuss the broader implications of these findings for the role of housing collateral in the propagation of the crisis. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed016:575&r=ure |
| By: | Trezzi, R.; Porcelli, F. |
| Abstract: | A law issued to allocate reconstruction grants following the 2009 "Aquilano" earthquake has resulted in a large and unanticipated discontinuity across municipalities with comparable damages. Using diff-in-diff analysis we estimate the "local spending" and the "local tax" multipliers--according to the composition of the stimulus--controlling for the negative supply shock generated by the event. The stimulus prevented a fall in economic activity and the multiplicative effects of tax cuts are estimated much higher than those of spending. Our results underline the importance of countercyclical fiscal interventions and suggest the most effective composition of such a stimulus. |
| Keywords: | Natural disasters, fiscal multipliers, Mercalli scale |
| JEL: | C36 E62 H70 |
| Date: | 2016–08–24 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1649&r=ure |
| By: | Wang, J. (University of Amsterdam) |
| Abstract: | Similar to the patterns of stock market prices, housing prices also exhibit temporary bubbles and bursts. One possible explanation for such abrupt changes is the catastrophe model. However, due to the deterministic nature of catastrophe theory, applications to social science are rare. It remains a question whether the catastrophe model can be used to explain and predict the dynamics of housing markets. Our paper fits a stochastic cusp catastrophe model to empirical housing market data in different countries for the first time. Two estimation approaches are discussed – Cobb’s Method and Euler Discretization. The analysis shows that Euler Discretization provides better short-run predictions while Cobb’s better describes the long term invariant density. Moreover, the results using Euler Discretization suggest that the dynamics of housing markets could be explained and predicted by a multiple equilibria cusp catastrophe model. In particular, this paper yields important insights on interest rate policy regarding the stability of economic system. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ams:ndfwpp:15-12&r=ure |
| By: | Hashmat U. Khan (Department of Economics, Carleton University); Jean-François Rouillard (Département d'économique, Université de Sherbrooke) |
| Abstract: | Why does residential investment lead output in the US and Canada but it is coincident in eurozone countries? In this paper we explore the role of home-equity loans used to boost consumption as a channel that affects residential investment. We consider a multi-agent model where some home-owning households face borrowing constraints that reflect home-equity loans or refinancing constraints. The main contribution of our paper is to highlight that the severity of the households' borrowing constraints in an economy can generate both stylized facts of residential investment dynamics. In US and Canada, a greater proportion of households rely on home-equity loans relative to eurozone countries. This difference matters for the distinct residential investment dynamics observed across countries. |
| Keywords: | Home-Equity Loans, Borrowing Constraints, Residential Investment, Business Cycles. |
| JEL: | E22 E32 R21 R31 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:shr:wpaper:16-04&r=ure |
| By: | Andrietti, Vincenzo (University of Chieti-Pescara); Su, Xuejuan (University of Alberta, Department of Economics) |
| Abstract: | This paper proposes a theory of education curriculum and analyzes its distributional impact on student learning outcomes. Different curricula represent horizontal differentiation in the education technology, thus a curriculum change has distributional effects across students. We test the model using the quasi-natural experiment of the G8 reform in Germany. We find evidence of heterogeneous reform effects consistent with our theory. While the reform improves student test scores on average, such benefits are more pronounced for well-prepared students. In contrast, less-prepared students do not benefit from the reform. |
| Keywords: | Education curriculum; horizontal differentiation; distributional effects; difference-in-differences; quantile analysis |
| JEL: | D04 I21 I28 |
| Date: | 2016–08–29 |
| URL: | http://d.repec.org/n?u=RePEc:ris:albaec:2016_012&r=ure |
| By: | Bet Caeyers; Marcel Fafchamps |
| Abstract: | We formalize a noted [Guryan et al., 2009] but unexplored source of bias in peer effect estimation, arising because people cannot be their own peer. We derive, for linear-in-means models with non-overlapping peer groups, an exact formula of the bias in a test of random peer assignment. We demonstrate that, when estimating endogenous peer effects, the negative exclusion bias dominates the positive reflection bias when the true peer effect is small. We discuss conditions under which exclusion bias is aggravated by adding cluster fixed effects. By imposing restrictions on the error term, we show how to consistently estimate, without the need for instruments, all the structural parameters of an endogenous peer effect model with an arbitrary peer-group or network structure. We show that, under certain conditions, 2SLS do not suffer from exclusion bias. This may explain the counter-intuitive observation that OLS estimates of peer effects are often larger than their 2SLS counterpart. |
| JEL: | C31 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22565&r=ure |
| By: | Spencer, Nekeisha (University of the West Indies, Mona); Polachek, Solomon (Binghamton University, New York); Strobl, Eric (Aix-Marseille University) |
| Abstract: | This study examines whether hurricanes have any impact on performance in standardized examinations. The analysis uses a panel of thirteen Caribbean countries and over 800 schools for the period 1993 through 2010. In particular, the effect on subjects in the humanities and sciences are examined. A generalized difference-in-difference technique is utilized to study the relationship at the school, parish, year and country level. The results show a negative and significant effect on performance in the sciences if hurricanes strike when school is in session and a positive or no effect when school is not in session. In addition, subjects in the humanities remain unaffected. |
| Keywords: | human capital, rate of return, hurricanes |
| JEL: | I2 Q54 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10169&r=ure |
| By: | Jackson, Matthew O.; Rogers, Brian; Zenou, Yves |
| Abstract: | We discuss social network analysis from the perspective of economics. We organize the presentation around the theme of externalities: the effects that one's behavior has on others' welfare. Externalities underlie the interdependencies that make networks interesting to social scientists. We discuss network formation, as well as interactions between peoples' behaviors within a given network, and the implications in a variety of settings. Finally, we highlight some empirical challenges inherent in the statistical analysis of network-based data. |
| Keywords: | economic networks; externalities; Game theory; network formation; network games; Networks; peer effects; Social Networks |
| JEL: | C72 D85 L14 Z13 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11452&r=ure |
| By: | Ryan Niladri Banerjee; Kristian S Blickle |
| Abstract: | We investigate the importance of the housing-based collateral lending channel on firm borrowing, investment and employment. We focus on small firms in France, Italy, Spain and the United Kingdom. To identify a credit supply effect, as opposed to a home-equity driven demand effect, we compare activity in similar firms that differ by the degree of financial opacity, and therefore the degree of their reliance on collateral to overcome borrowing constraints. We find that changing house prices have a more pronounced effect on borrowing, investment and employment in financially more opaque firms. This relationship is particularly strong in southern Europe (Italy and Spain), where financial frictions are larger and the use of collateral more important. |
| Keywords: | firm financing, capital structure, housing collateral, employment |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:575&r=ure |
| By: | Asadullah, Niaz (University of Malaya) |
| Abstract: | This study presents new evidence on individual and community-specific determinants of social trust using data from 96 villages in Bangladesh. We find perceived institutional trust to be positively correlated with stated inter-personal trust. At the same time, there is significant social distance among various faith groups in our data: both Hindus and Muslims trust their coreligionists more than they trust those from other religions. Hindus in districts bordering India trust non-Hindus significantly less, compared to those in interior regions, which suggests that the results do not simply capture the effect of minority/majority status. Trust towards non-Muslims is negatively correlated with Islamic school attendance among Muslim respondents, while religiosity tends not to play any role. Compared to religion, the effects of institutional trust and local economic development are modest. These findings are robust to control for a range of individual- and community-level correlates, and enumerator fixed-effects. |
| Keywords: | Bangladesh, Hindu, institutions, religion, trust |
| JEL: | O12 Z1 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10176&r=ure |
| By: | Ubarevičienė, Rūta (Lithuanian Social Research Centre); van Ham, Maarten (Delft University of Technology) |
| Abstract: | Since the 1990s, Lithuania lost almost a quarter of its population, and some regions within the country lost more than 50% of their residents. Such a sharp population decline poses major challenges to politicians, policy makers and planners. This study aims to get more insight into the recent processes of socio-spatial change and the role of selective migration in Lithuania. The main focus is on understanding who lives in those regions which are rapidly losing population, and who is most likely to leave these regions. This is one of the first studies to use individual level Lithuanian census data from 2001 and 2011. We found that low socio-economic status residents and older residents dominate the population of shrinking regions, and unsurprisingly we found that the most "successful" people are the most likely to leave such regions. This process of selective migration reinforces the negative downward spiral of declining regions. As a result, socio-spatial polarisation is growing within the country, where people with higher socio-economic status are increasingly overrepresented in the largest city-regions, while the elderly and residents with a lower socioeconomic status are overrepresented in declining rural regions. This paper provides empirical evidence of selective migration and increasing regional disparities in Lithuania. While the socio-spatial changes are obvious in Lithuania, there is no clear strategy on how to cope with extreme population decline and increasing regional inequalities within the country. |
| Keywords: | population decline, shrinking regions, internal migration, socio-spatial polarisation, Lithuania |
| JEL: | R23 O15 J11 P20 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10160&r=ure |
| By: | Yi Huang (The Graduate Institute, Geneva); Marco Pagano (Università di Napoli Federico II, CSEF, EIEF, CEPR and ECGI); Ug Panizza (The Graduate Institute, Geneva); Tano Santos |
| Abstract: | In China, local public debt issuance between 2006 and 2013 crowded out investment by private manufacturing firms by tightening their funding constraints, while it did not affect state-owned and foreign firms. Using novel data for local public debt issuance, we establish this result in three ways. First, local public debt is inversely correlated with the city-level investment ratio of domestic private manufacturing firms. Instrumental variable regressions indicate that this link is causal. Second, local public debt has a larger negative effect on investment by private firms in industries more dependent on external funding. Finally, in cities with high government debt, firm-level investment is more sensitive to internal funding, also when this sensitivity is estimated jointly with the firm’s likelihood of being credit-constrained. Altogether, these results suggest that, by curtailing private investment, the massive public debt issuance associated with the post-2008 fiscal stimulus sapped long-term growth prospects in China. |
| Keywords: | Investment, Local public debt, Crowding out, Credit constraints, China |
| JEL: | E22 H63 H74 L60 O16 |
| Date: | 2016–07–30 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:450&r=ure |
| By: | Wayne Passmore; Shane M. Sherlund |
| Abstract: | Print{{p}}April 12, 2016{{p}}Government-Backed Mortgage Insurance Promoted a Speedier Recovery from the Great{{p}}Recession{{p}}Wayne Passmore and Shane M. Sherlund 1{{p}}The United Sates government has a long history of involvement in mortgage finance. During the 1930s, the government created the{{p}}Federal Home Loan Banks (FHLB), the Federal Housing Administration (FHA), and the Federal National Mortgage Association (Fannie{{p}}Mae). Since then, these programs grown in size and scope, and the government has introduced additional programs including the{{p}}Federal Home Loan Mortgage Corporation (Freddie Mac) and the Government National Mortgage Association (Ginnie Mae).{{p}}During the most recent financial crisis, most of the government focus concerning mortgage finance was on mortgage debt relief and{{p}}mortgage refinancing for households that had experienced large declines in house values. The housing programs created during the{{p}}Great Depression were taken as background fixtures during the Great Recession. As a result, the Great Recession provides an{{p}}opportunity to empirically assess the impacts of the Great Depression housing programs during significant economic downturns. Most of{{p}}these programs were created with the objective of limiting the damage to households during the Great Depression and speeding the{{p}}economic recovery. We address the empirical question: Did they perform this role during the Great Recession?{{p}}This note outlines some results from our recent FEDS paper, "Government-Backed Mortgage Insurance, Financial Crisis, and the{{p}}Recovery from the Great Recession." Here, we establish the substantial impacts of government mortgage insurance programs during{{p}}the financial crisis and economic recovery.{{p}}We characterize the mortgage market structure of a county via four mortgage origination channels: the proportion of mortgages that flow{{p}}into bank portfolios (portfolio share), the proportion that flow into private-label securities (PLS share), the proportion that are securitized{{p}}by Fannie Mae or Freddie Mac (GSE share), and the proportion that are insured by the FHA or VA (FHA/VA share).{{p}}The frequency distributions shown in figure 1 demonstrate the significant variation in the county distributions of government program use{{p}}prior to the financial crisis. GSE securitization ranged from nearly 25 percent to over 75 percent of the proportion of originations in a{{p}}county, where use of the FHA was much lower, ranging from close to zero to over 35 percent (top two panels). The share of mortgage{{p}}originations flowing into bank portfolios ranged from 6 percent to 33 percent (bottom left). PLS, even at their heyday prior to the financial{{p}}crisis, accounted for a relatively smaller proportion of the flow of mortgage originations from a county, ranging from 8 percent to just{{p}}under 45 percent (bottom right).{{p}}Figure 1: Mortgage Market Share Density Functions{{p}} Source: Calculations based on data provided by McDash Analytics, LLC, a wholly owned subsidiary of Lender Processing Services, Inc., and data provided by{{p}}CoreLogic.{{p}} FRB: FEDS Notes: Government-Backed Mortgage Insurance Promoted ... http://www.federalreserve.gov/econresdata/notes/feds-notes/2016/gover...{{p}}1 of 4 4/13/2016 7:45 AM{{p}}Accessible Version{{p}}In this note, we estimate how the intensity of GSE, FHA, PLS, and portfolio exposures influence the state of the real economy across{{p}}counties. However, the use of such securitization outlets and the prevalent of bank portfolio alternatives may not be independent from{{p}}the same conditions that create relatively high economic performance in a county. Thus, we control for the "propensity" of particular{{p}}counties to use or select into various mortgage financing alternatives, conditional on economic fundamentals such as average incomes,{{p}}house prices, and unemployment rates. By controlling for counties' propensities to select into GSE, FHA, PLS, and portfolio treatments,{{p}}we can directly estimate the effect of financing alternatives on economic activity within a county.{{p}}Our identification strategy relies on the variation in government involvement in mortgage markets across counties. Counties with{{p}}significant government involvement are subject to underwriting and credit risk pricing standards that are set at a national level. In{{p}}contrast, counties with little government involvement are subject to underwriting and credit risk pricing standards set more by local{{p}}banks, thrifts, mortgage banks, and private-sector mortgage securitization conduits (whose underwriting standards may or may not be{{p}}set at the national level, and whose underwriting standards are likely more varied and responsive to current market conditions).{{p}}We envision each county containing a set of mortgage financing structures that changes only slowly over time and reflects the economic{{p}}characteristics of the population that lives in those counties. As the securitization outlets are provided by national entities, their relative{{p}}usage in a county reflects the underlying county characteristics. Thus, we model the extent of banks' participation in securitization outlets{{p}}on the basis of observed census characteristics that are unrelated to the availability of the securitization outlets.{{p}}As shown in Figure 2, we see a clear downward trend in how much unemployment rates changed, relative to 2005, for counties with{{p}}higher levels of GSE securitization for both the crisis and post-crisis periods. Similarly, there is a distinct downward trend for counties{{p}}that made more use of the FHA. By the end of 2008, unemployment rates had increased by 26 percent in counties that had low FHA{{p}}shares in 2005, relative to a 4 percent increase in unemployment rates in counties that had high FHA shares in 2005. By the end of{{p}}2009, unemployment rates had increased by 106 and 58 percent for the same groups of counties. What is clear is that the financial crisis{{p}}was a substantial negative shock which influenced all counties, but the effects were much larger in counties with lower government{{p}}mortgage use prior to the financial crisis. By the end of 2012, unemployment rates had fallen across the board, but remained 79 percent{{p}}higher in low FHA-share counties--and 49 percent higher in high FHA-share counties. By the end of 2014, unemployment rates retraced{{p}}further, but remained 30 and 19 percent higher than in 2005 for the same groups of counties.2 Here, it is evident that the effects of the{{p}}financial crisis still remain, and that those effects are larger for lower FHA- and GSE-share counties---i.e., counties with low government{{p}}involvement.{{p}}Figure 2: Mortgage Market Share Density Functions{{p}} FRB: FEDS Notes: Government-Backed Mortgage Insurance Promoted ... http://www.federalreserve.gov/econresdata/notes/feds-notes/2016/gover...{{p}}2 of 4 4/13/2016 7:45 AM{{p}}Accessible Version{{p}}In contrast, counties that were more reliant on either PLS or bank portfolios in 2004-2007 experienced much larger increases in their{{p}}unemployment rates. By the end of 2008, unemployment rates had increased by 7 percent in counties that had low PLS shares in 2005,{{p}}relative to a 25 percent increase in unemployment rates in counties that had high PLS shares. By the end of 2009, unemployment rates{{p}}had increased by 69 and 106 percent for the same groups of counties. Again, the financial crisis had adverse effects in all counties, but{{p}}had the effects were larger in counties with higher private funding use prior to the financial crisis. By the end of 2012, unemployment{{p}}rates had fallen across the board, but remained 45 percent higher in low PLS-share counties--and 76 percent higher in high PLS-share{{p}}counties--relative to before the crisis. By the end of 2014, unemployment rates remained 17 and 31 percent higher than in 2005 for the{{p}}same groups of counties. The effects of the financial crisis are still apparent across counties, but the effects remained larger for higher{{p}}PLS- and portfolio-share counties--i.e., counties with low government involvement.{{p}}We find similar results for other housing indicators. Greater exposure to GSE or FHA activity prior to the financial crisis tended to be{{p}}associated with smaller declines in home sales and house prices both during and after the financial crisis. In contrast, greater exposure{{p}}to PLS or portfolio lending tended to be associated with larger declines in home sales and house prices. Delinquency rates and{{p}}foreclosure completions tended to rise the most in counties with high exposure to PLS or portfolio lending and/or low exposure to GSE{{p}}or FHA lending.{{p}}Overall, our results suggest that counties more reliant on some form of government funding for mortgages were more insulated from the{{p}}financial crisis. These effects were still apparent in 2014, though the effects of the financial crisis had decayed substantially. The{{p}}persistence of better outcomes with government programs is consistent with a view that less pro-cyclical government underwriting and{{p}}credit risk pricing standards can create additional economic activity during and after a financial crisis.{{p}}1. Wayne Passmore is a Senior Advisor and Shane M. Sherlund is an Assistant Director in the Division of Research and Statistics at the Board of Governors of{{p}}the Federal Reserve System. The views expressed are the authors' and should not be interpreted as representing the views of the FOMC, its principals, the{{p}}Board of Governors of the Federal Reserve System, or any other person associated with the Federal Reserve System. We thank Della Cummings…. Wayne{{p}}Passmore's contact information is: Mail Stop 66, Federal Reserve Board, Washington, DC 20551, phone: (202) 452-6432, e-mail: Wayne.Passmore@frb.gov.{{p}}Shane Sherlund's contact information is: Mail Stop 93, Federal Reserve Board, Washington, DC 20551, phone: (202) 452-3589, e-mail:{{p}}Shane.M.Sherlund@frb.gov. Return to text{{p}}2. If we showed our charts in levels, rather than benchmarked relative to 2005, the interpretation of our results might be even stronger. The results for GSE,{{p}}PLS and portfolio channels are similar, but for FHA, the effects are more dramatic. Prior to the crisis, counties with higher FHA shares tended to also have{{p}} FRB: FEDS Notes: Government-Backed Mortgage Insurance Promoted ... http://www.federalreserve.gov/econresdata/notes/feds-notes/2016/gover...{{p}}3 of 4 4/13/2016 7:45 AM{{p}}Accessibility Contact Us Disclaimer Website Policies FOIA PDF Reader{{p}}higher unemployment rates. During the crisis, however, this relationship flipped: Counties with higher pre-crisis FHA shares tended to have lower{{p}}unemployment rates. By 2014, counties with higher pre-crisis FHA shares again tended to have higher unemployment rates, restoring the pre-crisis{{p}}relationship. Return to text{{p}}Please cite this note as:{{p}}Passmore, Wayne, and Shane M. Sherlund (2016). "Government-Backed Mortgage Insurance Promoted a Speedier Recovery from the{{p}}Great Recession," FEDS Notes. Washington: Board of Governors of the Federal Reserve System, April 12, 2016, http://dx.doi.org{{p}}/10.17016/2380-7172.1742{{p}} Disclaimer: FEDS Notes are articles in which Board economists offer their own views and present analysis on a range of topics in{{p}}economics and finance. These articles are shorter and less technically oriented than FEDS Working Papers.{{p}}Last update: April 12, 2016{{p}}Home | Economic Research & Data{{p}} FRB: FEDS Notes: Government-Backed Mortgage Insurance Promoted ... http://www.federalreserve.gov/econresdata/notes/feds-notes/2016/gover...{{p}}4 of 4 4/13/2016 7:45 AM |
| Date: | 2016–04–12 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfn:2016-04-12&r=ure |
| By: | Mariesa Herrmann; Christine Ross |
| Abstract: | This report examines the principal evaluation measures used in the first year of statewide implementation of New Jersey’s principal evaluation system. Variation in ratings across principals, the year-to-year stability, and correlations among these measures and with school populations can inform system improvements and district guidance. |
| Keywords: | educator performance evaluation, school leaders evaluation or effectiveness, school leaders, education professionals, descriptive statistics, correlational, New Jersey |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:5f9c12f1d7404636aaf2e98e5abfaf6f&r=ure |
| By: | B. Sudhakara Reddy (Indira Gandhi Institute of Development Research); Arpit Tiwari (Tata Institute of Social Sciences) |
| Abstract: | This study provides a snapshot of the sustainability of selected Indian cities by employing 57 indicators in four dimensions to develop an overall city sustainability index. In recent years, its complexity has made 'urban sustainability' a prominent concept. Urban areas propel growth and at the same time pose a lot of ecological, social and infrastructural problems and risks. High population density and continuous in-migration among developing countries created the highest risk in natural and man-made disasters. These issues and the inability of policy-makers in providing basic services make the cities unsustainable. The objective of the paper is to develop a city performance index (CPI) to measure and evaluate the urban regions in terms of sustainable performance. The paper uses benchmark approach to measure the cumulative performance of the 25 largest Indian cities based on economic, environmental social and institutional dimensions. The CPI, consisting of four dimensions disaggregates into 12 categories and ultimately into 53 indicators. The data are obtained from public and non-governmental organizations, as also from city officials and experts. By ranking a sample of diverse cities on a set of specific dimensions the study can serve as a baseline of current conditions and a marker for referencing future results. The benchmarks and indices presented in the study provide a unique resource for the government and the city authorities to learn about the positive and negative attributes of their a city and prepare plans for sustainable urban development. |
| Keywords: | City, Benchmark, Index, Performance, Sustainability, Urban |
| JEL: | P28 Q41 Q42 Q48 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:ind:igiwpp:2016-021&r=ure |
| By: | Midori Otani (Ph.D. Candidate, Osaka School of International Public Policy (OSIPP)) |
| Abstract: | Parental involvement is essential for children's education. Several studies have examined relationships between parental involvement and parents' socioeconomic status. However, less attention has been placed on school influences on parental involvement even though schools play an important role in children's education, and can also, in turn, affect the parents as well. This study addressed the question: how informative school outreach influence parents of children in different school levels to get involved in their children's education? The present study examined a nationally represented sample of elementary and middle school children in Japan (3,939 fourth grade students from 140 schools and 4,143 eighth grade students from 133 schools) from Trends International Mathematics and Science Study (TIMSS) 2011. Findings revealed that different types of informative school outreach have different effects depending on the school level. |
| Keywords: | Parental Involvement, School Outreach, TIMSS |
| JEL: | I21 I24 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:osp:wpaper:16e008&r=ure |
| By: | Ryohei Hisano (The University of Tokyo); Tsutomu Watanabe (The University of Tokyo); Takayuki Mizuno (National Institute of Informatics); Takaaki Ohnishi (The University of Tokyo); Didier Sornette (Swiss Federal Institute of Technology) |
| Abstract: | Buyer-seller relationships among firms can be regarded as a longi- tudinal network in which the connectivity pattern evolves as each firm receives productivity shocks. Based on a data set describing the evolu- tion of buyer-seller links among 55,608 firms over a decade and structural equation modeling, we find some evidence that interfirm networks evolve reflecting a firm's local decisions to mitigate adverse effects from neigh- bor firms through interfirm linkage, while enjoying positive effects from them. As a result, link renewal tends to have a positive impact on the growth rates of firms. We also investigate the role of networks in aggregate fluctuations. |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:cfi:fseres:cf389&r=ure |
| By: | Papageorge, Nicholas W. (Johns Hopkins University); Gershenson, Seth (American University); Kang, Kyungmin (Johns Hopkins University) |
| Abstract: | We develop and estimate a joint model of the education and teacher-expectation production functions that identifies both the distribution of biases in teacher expectations and the impact of those biases on student outcomes via self-fulfilling prophecies. The identification strategy leverages insights from the measurement-error literature and a unique feature of a nationally representative dataset: two teachers provided their educational expectations for each student. We provide novel, arguably causal evidence that teacher expectations affect students' educational attainment. Estimates suggest that the elasticity of the likelihood of college completion with respect to teachers' expectations is about 0.12. On average, teachers are overly optimistic about students' ability to complete a four-year college degree. However, the degree of over-optimism of white teachers is significantly larger for white students than for black students. This highlights a nuance that is frequently overlooked in discussions of biased beliefs: unbiased (i.e., accurate) beliefs can be counterproductive if there are positive returns to optimism or if there are socio-demographic gaps in the degree of teachers' over-optimism, both of which we find evidence of. We use the estimated model to assess the effects of two policies on black students' college completion: hiring more black teachers and "de-biasing" white teachers so that they are similarly optimistic about black and white students. |
| Keywords: | education, educational attainment, teachers, subjective expectations, human capital accumulation |
| JEL: | I2 D84 J15 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10165&r=ure |
| By: | Welteke, Clara (DIW Berlin); Wrohlich, Katharina (DIW Berlin) |
| Abstract: | This paper analyzes to what extent parental leave decisions of mothers with young children depend on the decisions made by their coworkers. The identification of peer effects, which are defined as indirect effects of the behavior of a social reference group on individual outcomes, bears various challenges due to correlated characteristics within social groups and endogenous group membership. We overcome these challenges by exploiting quasi-random variation in the costs of parental leave during a narrow window around a cutoff date, induced by a parental leave benefit reform in Germany. The reform encourages mothers to remain at home during the first year following childbirth. Administrative linked employer-employee panel data enable us to assign a peer group to all individuals who work in the same establishment and occupational group. While there is a growing literature on peer effects, few studies look at peer effects in the context of parental leave decisions. We argue, however, that mothers with young children are particularly susceptible to peer behavior at the workplace due to preferences for conformity with peer group behavior as well as the career-related uncertainty that mothers face. Our results suggest that maternal decisions regarding the length of parental leave are significantly influenced by coworker decisions, in particular in situations with high uncertainty. |
| Keywords: | peer effects, social interaction, labor supply, family policy |
| JEL: | C31 J22 D04 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10173&r=ure |
| By: | Marta Bisztray (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences) |
| Abstract: | I estimate the impact of foreign-owned large plant closures on local firms. I identify 41 such events in Hungary and assign comparable control cities with foreign-owned large plants operating in the same industry and not closing. I use a firm-level panel database of Hungarian firms between 1992 and 2012. I do a difference-in-differences estimation comparing outcomes of firms in the treated and control areas, before and after the plant closure. I find that after the foreign-owned large plant closures sales of nearby firms decreased by 6 percentage points and employment decreased by 3 percentage points on average. Firms operating in local services were hurt even more, suggesting that reduced local purchasing power due to the layoffs is a significant channel of the local plant closure effect. Firms operating in the supplier industry of the closing plant also decreased employment more than average, suggesting that input-output linkages play an important role in the propagation of negative shocks. In contrast, firms in the industry of the closing plant increased their employment, suggesting that they could benefit from the increased local labor supply. I also find that low-productivity firms were hurt more by the plant closures than high-productivity firms. |
| Keywords: | plant closure, agglomeration, local labor market, demand effect, input-output links, propagation of shocks, FDI |
| JEL: | F23 R12 R23 R58 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:has:discpr:1623&r=ure |
| By: | Gabrielle Wills (Department of Economics, University of Stellenbosch); Debra Shepherd (Department of Economics, University of Stellenbosch); Janeli Kotze (Department of Economics, University of Stellenbosch) |
| Abstract: | The Western Cape, one of South Africa’s better performing provinces in terms of educational outcomes, has a relatively well-run education bureaucracy when compared not only within South Africa but also with other middle-income country education systems. Nevertheless, questions have been raised about whether bureaucratic competence has translated into higher levels of student learning in the province. In this paper, we consider how well primary school students perform in the Western Cape when compared with their peers in other systems within and across Southern and Eastern Africa after we control for differences in the socio-economic profiles of students and schooling inputs. Primarily relying on SACMEQ 2007 data, we use both descriptive and multivariate estimation with propensity score matching to explore performance differentials. In particular, we use an internationally calibrated measure of socio-economic status to compare test scores across equally poor students in different systems before drawing naïve conclusions about performance differentials. We find that while the Western Cape is a relatively efficient education system within South Africa, particularly in serving the poorest students, a less-resourced country such as Kenya produces higher levels of grade 6 student achievement across the student socio-economic profile. We also identify that observed differences in resourcing, teacher and other school inputs are typically not able to explain away performance differentials across different systems. |
| Keywords: | Student achievement, Western Cape, Southern and Eastern Africa, comparative education |
| JEL: | I20 I21 I24 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:sza:wpaper:wpapers270&r=ure |
| By: | Jason Allen; Timothy Grieder; Brian Peterson; Tom Roberts |
| Abstract: | This paper combines loan-level administrative data with household-level survey data to analyze the impact of recent macroprudential policy changes in Canada using a microsimulation model of mortgage demand of first-time homebuyers. Policies targeting the loan-to-value ratio are found to have a larger impact than policies targeting the debt-service ratio, such as amortization. This is because there are more wealth-constrained borrowers than income-constrained borrowers entering the housing market. |
| Keywords: | Financial system regulation and policies |
| JEL: | D14 G28 C63 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:16-41&r=ure |
| By: | Ifcher, John (Santa Clara University); Zarghamee, Homa (Barnard College); Graham, Carol Lee (Brookings Institution) |
| Abstract: | U.S. income inequality has risen dramatically in recent decades. Researchers consistently find that greater income inequality measured at the state or national level is associated with diminished subjective well-being (SWB) in the U.S. We conduct the first multi-scale analysis (i.e., at the ZIP-code, MSA, and state levels) of the inequality-SWB relationship using SWB data from the U.S. Gallup Healthways Well-Being Index and income inequality data from the American Community Survey. We use the rich set of well-being measures afforded by the dataset (evaluative, positive- and negative-affective hedonic, and health measures) to examine the consistency of the relationship. We find that the relationship is both scale-dependent and measure-dependent: income inequality is SWB-diminishing in large regions for all measures, SWB-diminishing in small regions for negative-affective hedonic measures, and SWB-improving in small regions for most other measures. Lastly, we find that taking all regions together, the net relationship between income inequality and SWB is negative. |
| Keywords: | subjective well-being, income inequality, happiness, distribution of income, health, scale-dependence, measure-dependence |
| JEL: | D3 I14 D6 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10155&r=ure |
| By: | Carey, Mark S.; Gordy, Michael B. |
| Abstract: | We offer a model and evidence that private debtholders play a key role in setting the endogenous asset value threshold below which corporations declare bankruptcy. The model, in the spirit of Black and Cox (1976), implies that the recovery rate at emergence from bankruptcy on all of the firm's debt taken together is increasing in the pre-bankruptcy share of private debt in all debt. Empirical evidence supports this and other implications of the model. Indeed, debt composition has a more economically material empirical influence on recovery than all other variables we try taken together. |
| Keywords: | Bankruptcy ; Credit risk ; Debt default ; Recovery rates |
| JEL: | G12 G33 G32 |
| Date: | 2016–07–06 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2016-69&r=ure |
| By: | Francesco Vona (OFCE-SciencesPo, Sophia Antipolis); Giovanni Marin (IRCrES-CNR, Milan); Davide Consoli (INGENIO CSIC-UPV, Valencia) |
| Abstract: | This paper explores the nature and the key empirical regularities of green employment in US local labor markets between 2006 and 2014. We construct a new measure of green employment based on the task content of occupations. Descriptive analysis reveals the following: 1. the share of green employment oscillates between 2 and 3 percent, and its trend is strongly pro-cyclical; 2. green jobs yield a 4 percent wage premium; 3. despite moderate catching-up across areas, green jobs remain more geographically concentrated than similar non-green jobs; and 4. the top green areas are mostly high-tech. As regards the drivers, changes in environmental regulation are a secondary force compared to the local endowment of green knowledge and resilience in the face of the great recession. To assess the impact of moving to greener activities, we estimate that one additional green job is associated with 4.2 (2.4 in the crisis period) new jobs in non-tradable activities in the local economies. |
| Keywords: | Green Employment, Local Labor Markets, Environmental Regulation, Environmental Technologies, Local Multipliers |
| JEL: | J23 O33 Q52 R23 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2016.48&r=ure |
| By: | Demet Yilmazkuday (Department of Economics, Florida International University); Hakan Yilmazkuday (Department of Economics, Florida International University) |
| Abstract: | Effects of direct flights on trade costs are investigated using micro price data at the city level. After controlling for local retail/distribution costs, traded input prices are obtained to be further used in the measurement of trade costs across cities through arbitrage conditions. The existence of a direct flight enters trade costs regressions negatively and significantly. The results are shown to be robust to the consideration of many control variables, nonlinearities in the effects of distance on trade costs, possible endogeneity of having direct flights between cities and alternative definitions of the data. The direct flights that are shown to be determined by bilateral air services agreements are further shown to reduce trade costs through an endogeneity analysis; the main policy implications are twofold: (i) international trade policies through aviation services, such as Open Skies Agreements of the U.S., are alternative trade policy tools to reduce international trade barriers; (ii) direct flights facilitate the integration of internal markets as in the case of European Union. |
| Keywords: | Market Integration, Trade Costs, Direct Flights, Border Effects |
| JEL: | F15 F31 L93 L98 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:fiu:wpaper:1604&r=ure |
| By: | Arauzo Carod, Josep Maria; Segarra Blasco, Agustí, 1958-; Teruel, Mercedes |
| Abstract: | This paper aims to contribute to understanding the role played by Science and Technology Parks in fostering firm growth. Public policies have given such parks a central role but empirical research has not come to a consensus on whether there is a link between in†park location and firm growth. Applying a matching procedure to our mercantile register data we obtain a database of 286 in†park firms, together with 268 out†park firms. Our results show that in†park firms show greater growth rates and volatility than their counterparts, but we do not find evidence of their capacity to obtain larger long†term debts. Keywords: science and technology parks, firm location, firm growth. JEL codes: L25, O30, R11, R58 |
| Keywords: | Parcs tecnològics, Localització industrial, Economia regional, Empreses -- Creixement, Innovacions tecnològiques -- Aspectes econòmics, 332 - Economia regional i territorial. Economia del sòl i de la vivenda, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:urv:wpaper:2072/266576&r=ure |
| By: | van der Leij, M. (University of Amsterdam); in 't Veld, D. (University of Amsterdam); Hommes, C.H. (University of Amsterdam) |
| Abstract: | Recent empirical evidence suggests that financial networks exhibit a core-periphery network structure. This paper aims at giving an explanation for the emergence of such a structure using network formation theory. We propose a simple model of the overnight interbank lending market, in which banks compete for intermediation benfits. Focusing on the role of bank heterogeneity, we find that a core-periphery network cannot be unilaterally stable when banks are homogeneous. A core-periphery network structure can form endogenously, however, if we allow for heterogeneity among banks in size. Moreover, size heterogeneity may arise endogenously if payoffs feed back into bank size. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ams:ndfwpp:16-07&r=ure |