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on Urban and Real Estate Economics |
| By: | Ouazad, Amine; Rancière, Romain |
| Abstract: | The price-amenity arbitrage is a cornerstone of spatial economics, as the response of land and house prices to shifts in the quality of local amenities and public goods is typically used to reveal households' willingness to pay for amenities. With informational, time, and cash constraints, households' ability to arbitrage across locations with different amenities (demographics, crime, education, housing) depends on their ability to compare locations and to finance the swap of houses. Arbitrageurs with deep pockets and better search and matching technology can take advantage of price dispersions and unexploited trade opportunities. We develop a disaggregated search and matching model of the housing market with endogenously bargained prices, identified on transaction-level data from the universe of deeds for 6,400+ neighborhoods of the Chicago metropolitan area, matched with school-level test scores and geocoded criminal offenses. Price-amenity gradients reflect preferences and the capitalization of trading opportunities, which are arbitraged away in the frictionless limit. Thus the time-variation in hedonic pricing coefficients partly reflects the time variation in search and credit frictions. Our model is able to explain that, between the peak of the housing boom and its trough, the sign of the price-amenity gradient flipped, due to the decline in trading opportunities in lower-amenity neighborhoods and due to the lower capitalization of trading opportunities in house prices. |
| Keywords: | Dynamic Housing Choices; Limits of arbitrage; Market Friction; Mortgage Crisis; Pricing of Amenities |
| JEL: | G12 G21 R21 R3 R31 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13689&r=all |
| By: | Tobias Seidel; Jan Wickerath |
| Abstract: | We use a spatial general equilibrium model with potential commuting of workers between their place of work and their place of residence to analyze the effects of rush hours on the spatial allocation of employment and population, average labor productivity and the housing market. Abolishing traffic congestion during rush hours leads to a more urbanized economy as households move from the low-density countryside to the commuter belts of cities rather than from the city centers to the periphery. Employment, however, becomes more agglomerated in high-density large cities. This adjustment implies an increase of average labor productivity of 7.2 percent and higher inequality of housing costs. |
| Keywords: | urbanization, commuting, traffic, congestion, spatial general equilibrium |
| JEL: | R12 R13 R41 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7587&r=all |
| By: | Tomomi Miyazaki (Graduate School of Economics, Kobe University); Motohiro Sato (Graduate School of Economics, Hitotsubashi University) |
| Abstract: | It is often said that farmland conservation in urban areas (i.e., cities and inner suburbs) is not desirable because it hinders converting farmland into residential areas, thereby deterring urbanization. If the preferential treatment of property taxes on farmland is rectified, these problems can be solved. In this paper, we study two property tax preferential treatment reforms that took place in Japan during the 1990s. We examine the effects of these reforms by theoretical and empirical investigation. The econometric results are consistent with our theoretic model’s main predictions; the proportion of farmland in the major cities in the three metropolitan areas (Tokyo, Chubu, and Kansai) decreased following the reforms. However, since landlords did not replace all the farmland with housing lots, the problem of obstructed urbanization remains to be solved. |
| Keywords: | Property tax; Land use in urban area; preferential treatment on farmland; urbanization |
| JEL: | H22 H71 R52 R58 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:181905&r=all |
| By: | Ihlanfeldt, Keith; Yang, Cynthia Fan |
| Abstract: | Neighborhood racial and class segregation continue to be major social problems within America’s metropolitan areas. Segregation has been linked to a whole host of racial and class inequalities, including access to jobs, schooling and single parenthood, and future earnings. One factor accounting for segregation is the inability of black and lower income households to afford housing in white neighborhoods, where housing units historically have been largely owner-occupied single-family homes. In recent years there has been a shift in the housing makeup of many of these neighborhoods, with rentals and foreclosures increasing in share. This has made housing more affordable in these neighborhoods. In this paper we investigate the impact that foreclosures and three types of rentals (single-family, condominium, and apartments) have on neighborhood racial and income integration using data from Miami-Dade County, Florida. We find that neighborhoods have become more racially and socially integrated as rentals have increased as a share of the housing stock. |
| Keywords: | racial segregation, income segregation, rental housing |
| JEL: | J15 R21 R23 R31 |
| Date: | 2019–04–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:93485&r=all |
| By: | Leung, Charles Ka Yui; Ng, Joe Cho Yiu; Tang, Edward Chi Ho |
| Abstract: | The house price in Hong Kong is well-known to be "unaffordable." This paper relates the macroeconomy and the housing market of Hong Kong and argues that the housing supply plays a vital role in explaining the phenomenon. This paper also shows that there are some practical challenges in understanding the housing supply of Hong Kong, including the potentially complicated ownership structure of real estate development. While the discussion centers on the situation of Hong Kong, its lesson may also apply to the housing markets in other small open economies. |
| Keywords: | new housing supply, oligopolistic market structure, ownership structure of real estate development, real estate developers |
| JEL: | L10 R30 R31 |
| Date: | 2019–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:93510&r=all |
| By: | Koşar, Gizem (Federal Reserve Bank of New York); Ransom, Tyler (University of Oklahoma); van der Klaauw, Wilbert (Federal Reserve Bank of New York) |
| Abstract: | Residential mobility rates in the U.S. have fallen considerably over the past three decades. The cause of the long-term decline remains largely unexplained. In this paper we investigate the relative importance of alternative drivers of residential mobility, including job opportunities, neighborhood and housing amenities, social networks and housing and moving costs, using data from two waves of the NY Fed's Survey of Consumer Expectations. Our hypothetical choice methodology elicits choice probabilities from which we recover the distribution of preferences for location and mobility attributes without concerns about omitted variables and selection biases that hamper analyses based on observed mobility choices alone. We estimate substantial heterogeneity in the willingness-to-pay (WTP) for location and housing amenities across different demographic groups, with income considerations, proximity to friends and family, neighbors' shared norms and social values, and monetary and psychological costs of moving being key drivers of migration and residential location choices. The estimates point to potentially important amplifying roles played by family, friends, and shared norms and values in the decline of residential mobility rates. |
| Keywords: | migration, geographic labor mobility, neighborhood characteristics |
| JEL: | J61 R23 D84 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12271&r=all |
| By: | Marchand, Joseph (University of Alberta, Department of Economics); Weber, Jeremy (University of Pittsburgh) |
| Abstract: | Whether improved local economic conditions lead to better student outcomes is theoretically ambiguous and will depend on how schools use additional revenues and how students and teachers respond to rising private sector wages. The Texas boom in shale oil and gas drilling, with its large and localized effects on wages and the tax base, provides a unique opportunity to address this question that spans the areas of education, labor markets, and public finance. An empirical approach using variation in shale geology across school districts shows that the boom reduced test scores and student attendance, despite tripling the local tax base and creating a revenue windfall. Schools spent additional revenue on capital projects and debt service, but not on teachers. As the gap between teacher wages and private sector wages grew, so did teacher turnover and the percentage of inexperienced teachers, which helps explain the decline in student achievement. Changes in student composition did not account for the achievement decline but instead helped to moderate it. The findings illustrate the potential value of using revenue growth to retain teachers in times of rising private sector wages. |
| Keywords: | local labor markets; local school finances; resource booms; student achievement; teacher quality |
| JEL: | H70 I22 J31 J40 Q33 R23 |
| Date: | 2019–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:albaec:2019_007&r=all |
| By: | Steve Bradley; Giuseppe Migali; Maria Navarro Paniagua |
| Abstract: | We investigate the ‘determinants’ of spatial variations in youth unemployment and NEET rates, and the presence of spatial clusters, for Italy, Spain and the UK. Using Labour Force Survey data for the period 1993-2011 at a ‘regional’ level we obtain broadly consistent measures of quarterly youth unemployment and NEET rates. Our findings suggest that youths are sensitive to aggregate labour market conditions with older youths being more cyclically sensitive than are teenagers. We find a discouraged worker effect, again larger for older youths than for teenagers. In the UK and Spain, temporary jobs are preferred to part-time jobs, perhaps as a way of avoiding unemployment, whereas in Italy the opposite occurs. There is evidence of spatial clustering of youth unemployment and NEET rates. Our paper concludes with a discussion of the implications for regional and labour market policies. |
| Keywords: | Youth unemployment, Regions, NEET, Clusters |
| JEL: | R11 R23 J40 J60 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:lan:wpaper:262342718&r=all |
| By: | Morris A. Davis (Department of Finance and Economics, Rutgers Business School, Rutgers University); William D. Larson (Federal Housing Finance Agency); Stephen D. Oliner (American Enterprise Institute for Public Policy Research); Benjamin Smith (American Enterprise Institute for Public Policy Research) |
| Abstract: | This paper provides a comprehensive account of the evolution of default risk for newly originated home purchase loans since 1990. We bring together several data sources to produce this history, including loan-level data for the entire Enterprise (Fannie Mae and Freddie Mac) book. We use these data to track a large number of loan characteristics and a summary measure of risk, the stressed default rate. Among the many results in the paper, we show that mortgage risk had already risen in the 1990s, planting the seeds of the financial crisis well before the actual event. Our results also cast doubt on explanations of the crisis that focus on low-credit-score borrowers. |
| Keywords: | mortgage risk, housing boom, default, foreclosure, house price, leverage |
| JEL: | E32 G21 G28 H22 R31 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:hfa:wpaper:19-02&r=all |
| By: | Calin Arcalean; Gerhard Glomm; Ioana Cosmina Schiopu |
| Abstract: | We study decentralized and optimal urbanization in a simple multi-sector model of a rural-urban economy focusing on productivity differences and internal trade frictions. We show that even in the absence of the typical externalities studied in the literature, such as agglomeration, congestion or public goods, the decentralized city size can be either too large or too small relative to that chosen by a planner. In particular, optimal urbanization exceeds decentralized levels when productivity differences in location specific non-traded goods is small, a case typically arising in developed economies. In contrast, developing countries are likely to display overurbanization. A numerical exercise calibrated to Brazilian data suggests that the wedges can be quantitatively important. Urban biased policies - placing a higher weight on the welfare of city dwellers - are closer to optimal policies than decentralized allocations whenever productivity differences in non-traded sectors are either very small or very large. For intermediate productivity differences, the urban bias leads to larger cities even relative to decentralized policies. |
| Keywords: | city size, productivity differences, multi-sector models, trade costs, welfare |
| JEL: | R12 R13 O18 J61 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7609&r=all |
| By: | Benetton, Matteo (Haas School of Business); Bracke, Philippe (Financial Conduct Authority); Cocco, João F (London Business School); Garbarino, Nicola (Bank of England) |
| Abstract: | Academics have proposed hybrid products with equity features for the financing of housing. In spite of their risk-sharing benefits these products have not become mainstream. This paper studies an important exception, a UK government scheme which in the five years since its inception has provided almost £10 billion of equity financing. The analysis of the origination and prepayment behavior of households who have used the scheme highlights housing affordability constraints. A difference-in-difference analysis of an increase in the maximum government equity limit shows that households took advantage of the increase to buy more expensive properties, and not to reduce their mortgage debt and house price risk exposure. A counterfactual study of homebuyers who, instead of using the equity available, relied on high loan-to-value mortgages shows that their financing choices can be rationalized by an expected rate of house price appreciation of 7.7% per year. We draw general implications for how households approach their house purchase and financing decisions, taking advantage of the fact that the shared equity mortgages that we study allow the separation of the consumption and investment dimensions of housing. |
| Keywords: | Housing; consumption; investment; affordability; macro-prudential policy; expectations |
| JEL: | D14 R21 R31 |
| Date: | 2019–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:0790&r=all |
| By: | Hornbeck, Richard (Harris School, University of Chicago); Moretti, Enrico (University of California, Berkeley) |
| Abstract: | We estimate direct and indirect effects of total factor productivity growth in manufacturing on US workers' earnings, housing costs, and purchasing power. Drawing on four alternative instrumental variables, we consistently find that when a city experiences productivity gains in manufacturing, there are substantial local increases in employment and average earnings. For renters, increased earnings are largely offset by increased cost of living; for homeowners, the benefits are substantial. Strikingly, local productivity growth in manufacturing reduces local inequality, as it raises earnings of local less-skilled workers more than the earnings of local more-skilled workers. This is due, in part, to lower geographic mobility of less-skilled workers. However, local productivity growth also has important indirect effects through worker mobility. We estimate that 38% of the overall increase in workers' purchasing power occurs outside cities directly affected by local TFP growth. The indirect effects on worker earnings are substantially greater for more-skilled workers, due to greater geographic mobility of more-skilled workers, which increases inequality in other cities. Neglecting these indirect effects would both understate the overall magnitude of benefits from productivity growth and misstate their distributional consequences. Overall, US workers benefit substantially from manufacturing productivity growth. Summing direct and indirect effects, we find that manufacturing TFP growth from 1980 to 1990 increased purchasing power for the average US worker by 0.5-0.6% per year from 1980 to 2000. These gains do not depend on a worker's education; rather, the benefits from productivity growth mainly depend on where workers live. |
| Keywords: | local labor markets |
| JEL: | J20 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12277&r=all |
| By: | Boeri, Tito (Bocconi University); Ichino, Andrea (European University Institute); Moretti, Enrico (University of California, Berkeley); Posch, Johanna (European University Institute) |
| Abstract: | In many European countries, wages are determined by collective bargaining agreements intended to improve wages and reduce inequality. We study the local and aggregate effects of collective bargaining in Italy and Germany. The two countries have similar geographical differences in firm productivity – with the North more productive than the South in Italy and the West more productive than the East in Germany – but have adopted different models of wage bargaining. Italy sets wages based on nationwide contracts that allow for limited local wage adjustments, while Germany has moved toward a more flexible system that allows for local bargaining. We find that, as a consequence, Italy exhibits limited geographical wage differences in nominal terms and almost no relationship between local productivity and local nominal wages, while Germany has larger geographic wage differences and a tighter link between local wages and local productivity. While the Italian system is successful at reducing nominal wage inequality, it also creates costly geographic imbalances. In Italy, low productivity provinces have significantly higher non-employment rates than high productivity provinces, because employers cannot lower wages, while in Germany the relationship between non-employment and productivity is significantly weaker. In Italy, the relationship between real wages and productivity is negative, with lower real wages in the North compared to the South, since the latter has low housing costs but similar nominal wages. Thus, conditional on having a job, Italian workers have higher purchasing power in the South, but the probability of having a job is higher in the North. We conclude that the Italian system has significant costs in terms of forgone aggregate earnings and employment because it generates a spatial equilibrium where workers queue for jobs in the South and remain unemployed while waiting. If Italy adopted the German system, aggregate employment and earnings would increase by 11.04% and 7.45%, respectively. Our findings are relevant for several other European countries with systems similar to Italy's. |
| Keywords: | local labor markets |
| JEL: | J20 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12279&r=all |
| By: | Briole, Simon (Paris School of Economics); Maurin, Eric (Paris School of Economics) |
| Abstract: | In France, secondary school teachers are evaluated every six or seven years by senior experts of the Ministry of education. These external evaluations mostly involve the supervision of one class session and a debriefing interview, but have nonetheless a direct impact on teachers' career advancement. In this paper, we show that these evaluations contribute to improving students' performance, especially in math. This effect is seen not only for students taught by teachers the year of their evaluations but also for students taught by the same teachers the subsequent years, suggesting that evaluations improve teachers' core pedagogical skills. These positive effects persist over time and are particularly salient in education priority schools, in contexts where teaching is often very challenging. Overall, a system of light touch evaluations appears to be much more cost-effective than more popular alternatives, such as class size reduction. |
| Keywords: | teacher quality, evaluation, feedback, teaching practices, supervision, education |
| JEL: | I20 I28 J24 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12307&r=all |
| By: | Corneo, Giacomo; Neidhöfer, Guido |
| Abstract: | We analyze the effects of governmental redistribution of income on migration patterns using an Italian administrative dataset that includes almost every Italian citizen living abroad. Since Italy takes a middle ground in terms of redistribution, both the welfare-magnet effect from more redistributive countries and the propensity of the high-skilled to settle in countries with lower taxes can be empirically studied. Our findings confirm the hypothesis that destination countries with more redistribution receive a negative selection of Italian migrants. Policy simulations are run in order to gauge the magnitude of those migration effects. Based on estimated elasticities, we find that sizable increases in the amount of redistribution in Italy have small effects on the skill composition of the resident population. |
| Keywords: | redistribution; Roy model |
| JEL: | D31 H23 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13694&r=all |
| By: | Olga Filippova; Cuong Nguyen; Ilan Noy; Michael Rehm |
| Abstract: | Globally, the single-most observable, predictable, and certain impact of climate change is sea level rise. Using a case study from the Kapiti Coast District in New Zealand, we pose a simple question: Do people factor in the warnings provided by scientists and governments about the risk of sea-level rise when making their investment decisions? We examine the single most important financial decision that most people make – purchasing a home, to see whether prices of coastal property change when more/less information becomes available about property-specific consequences of future sea level rise. The Kapiti Coast District Council published detailed projected erosion risk maps for the district’s coastline in 2012 and was forced to remove them by the courts in 2014. About 1,800 properties were affected. We estimate the impact of this information on home prices using data from all real estate transactions in the district with a difference-in-differences framework embedded in a hedonic pricing model. We find that the posting of this information had a very small and statistically insignificant impact on house prices, suggesting people do not care much about the long-term risks of sea-level rise as they do not incorporate these risks in their investment decisions. |
| Keywords: | house price, sea level rise, climate change, erosion |
| JEL: | Q54 R38 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7595&r=all |
| By: | José G. Montalvo (Universitat Pompeu Fabra-ICREA, BGSE); Amedeo Piolatto (Universitat Autònoma de Barcelona, Institut d’Economia de Barcelona (IEB), BGSE, MOVE); Josep Raya (Universitat Pompeu Fabra, ESCSE (Tecnocampus)) |
| Abstract: | We model the behaviour of a buyer trying to evade the real estate transfer tax. We identify over-appraisal as a key, easily-observable element that is inversely related with tax evasion. We conclude that the tax authority could focus auditing efforts on low-appraisal transactions. We include ‘behavioural’ components (shame and stigma) allowing to introduce buyers' (education) and societal (social capital) characteristics that explain individual and idiosyncratic variations. Our empirical analysis confirms the predictions using a unique database, where we directly observe: real payment, value declared to the authority, appraisal, buyers' educational level and local levels of corruption and trust. |
| Keywords: | Transfer tax, tax evasion, second-hand housing market, overappraisal, Loan-To-Value, corruption, social capital, stigma, shame, education |
| JEL: | G21 H26 R21 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:doc2019-03&r=all |
| By: | Dauth, Wolfgang (University of Würzburg); Findeisen, Sebastian (University of Mannheim); Moretti, Enrico (University of California, Berkeley); Suedekum, Jens (Heinrich Heine University Düsseldorf) |
| Abstract: | In most countries, average wages tend to be higher in larger cities. In this paper, we focus on the role played by the matching of workers to firms in explaining geographical wage differences. Using rich administrative German data for 1985-2014, we show that wages in large cities are higher not only because large cities attract more high-quality workers, but also because high-quality workers are significantly more likely to be matched to high-quality plants. In particular, we find that assortative matching—measured by the correlation of worker fixed effects and plant fixed effects—is significantly stronger in large cities. The elasticity of assortative matching with respect to population has increased by around 75% in the last 30 years. We estimate that in a hypothetical scenario in which we keep the quality and location of German workers and plants unchanged, and equalize within-city assortative matching geographical wage inequality in Germany would decrease significantly. Overall, assortative matching magnifies wage differences caused by worker sorting and is a key factor in explaining the growth of wage disparities between communities over the last three decades. If high-quality workers and firms are complements in production, moreover, increased assortative matching will increase aggregate earnings. We estimate that the increase in within-city assortative matching observed between 1985 and 2014 increased aggregate labor earnings in Germany by 2.1%, or 31.32 billion euros. We conclude that assortative matching increases earnings inequality across communities, but it also generates important efficiency gains for the German economy as a whole. |
| Keywords: | local labor markets, agglomeration |
| JEL: | J20 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12278&r=all |
| By: | Gaffney, Edward; McCann, Fergal |
| Abstract: | Banks must make forward-looking provisions for loan losses under new international accounting standards introduced in 2018. In Europe, banks will assign performing exposures to a new “Stage 2” category with a higher provisioning penalty, if they have experienced significant increase in credit risk (SICR). We use a loan-level credit risk model and Irish residential mortgage panel data to assign performing loans into the appropriate stage. Using this technique, we characterise approximately 30 per cent of the performing Irish mortgage portfolio at end-2015 as Stage 2.We then calculate backward-looking, static estimations of Stage 2 mortgages between 2008 and 2015. This exercise suggests that loan stage assignment can be highly pro-cyclical. The share of Stage 2 among performing mortgages rises during the economic downturn to peak in 2013, after which large transitions are assigned from Stage 2 into lower-risk performing loans, as the economy improves. JEL Classification: G21 |
| Keywords: | credit risk, loan provisioning, mortgage defaults, stress testing |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:srk:srkwps:201992&r=all |
| By: | Leung, Charles Ka Yui; Ng, Joe Cho Yiu |
| Abstract: | This paper aims to achieve two objectives. First, we demonstrate that with respect to business cycle frequency (Burns and Mitchell, 1946), there was a general decrease in the association between macroeconomic variables (MV) and housing market variables (HMV) following the global financial crisis (GFC). However, there are macro-finance variables that exhibited a strong association with the HMV following the GFC. For the medium-term business cycle frequency (Comin and Gertler, 2006), we find that while some correlations exhibit the same change as the business cycle counterparts, others do not. These “new stylized facts” suggest that a reconsideration and refinement of existing “macro-housing” theories would be appropriate. We also provide a review of the recent literature, which may enhance our understanding of the evolving macro-housing-finance linkage. |
| Keywords: | Stylized facts, macro-housing-finance linkage, global financial crisis, business cycle frequency, housing market variables |
| JEL: | E30 G10 R30 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:93512&r=all |
| By: | David Abrams (University of Pennsylvania (Penn)); Roberto Galbiati (Département d'économie); Emeric Henry (Département d'économie); Arnaud Philippe |
| Abstract: | In this paper, we show that sentencing norms vary widely even across geographically close units. By examining North Carolina’s unique judicial rotation system, we show that judges arriving in a new court gradually converge to local sentencing norms. We document factors that facilitate this convergence and show that sentencing norms are predicted by preferences of the local constituents. We build on these empirical results to analyze theoretically the delegation trade-off faced by a social planner: the judge can learn the local norm, but only at the cost of potential capture. |
| Keywords: | justice; sentences; welfare |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/3sb2i4b2r694sqks71jbjihput&r=all |
| By: | Ahlfeldt, Gabriel M.; Feddersen, Arne |
| Abstract: | We analyze the economic impact of the German high-speed rail (HSR) connecting Cologne and Frankfurt, which provides plausibly exogenous variation in access to surrounding economic mass. We find a causal effect of about 8.5% on average of the HSR on the GDP of three counties with intermediate stops. We make further use of the variation in bilateral transport costs between all counties in our study area induced by the HSR to identify the strength and spatial scope of agglomeration forces. Our most careful estimate points to an elasticity of output with respect to market potential of 12.5%. The strength of the spillover declines by 50% every 30 minutes of travel time, diminishing to 1% after about 200 minutes. Our results further imply an elasticity of per-worker output with respect to economic density of 3.8%, although the effects seem driven by worker and firm selection. |
| Keywords: | accessibility; agglomeration; density; high-speed rail; market potential; transport policy; productivity |
| JEL: | R12 R38 R48 |
| Date: | 2018–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:69763&r=all |
| By: | Niknami, Susan (SOFI, Stockholm University); Schröder, Lena (SOFI, Stockholm University); Wadensjö, Eskil (Stockholm University) |
| Abstract: | This paper uses administrative data to in detail document how the share of youths not in employment, education or training has evolved over time in the Scandinavian countries. We study both first- and second-generation immigrant youths as well as natives to explore whether the pattern differ depending on the region of origin. We show that the NEET rates are higher among youths with an immigrant background compared to youths with a native background in all countries. Even when controlling for youth background characteristics, first- and second-generation immigrant youths have significantly higher probability of being in NEET compared to native youths. |
| Keywords: | ethnic minority youths, NEET, Nordic countries |
| JEL: | J15 J13 J61 J64 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12274&r=all |
| By: | Antonio Andrés Bellofatto; Martin Besfamille |
| Abstract: | In assessing the desirability for tax decentralization reforms, a dilemma between efficiency and redistribution emerges. By limiting the ability of the central government to redistribute resources towards regions in financial needs, decentralization curbs incentives for excessive subnational spending and enhances fiscal discipline, but may also widen interregional disparities by triggering tax competition for mobile tax bases. We provide a formal treatment of this trade-off, and shed light on the optimal degree of fiscal decentralization. We find that tax decentralization can be optimal even under Rawlsian social preferences which only weight the welfare of the poorest region in the federation. |
| Keywords: | fiscal federalism, tax competition, regional disparities |
| JEL: | H77 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7607&r=all |
| By: | Acciari, Paolo (Ministry of Economy and Finance of Italy); Polo, Alberto (New York University); Violante, Giovanni L. (New York University) |
| Abstract: | We link administrative data on tax returns across two generations of Italians to study the degree of intergenerational mobility. We estimate that a child with parental income below the median is expected to belong to the 44th percentile of its own income distribution as an adult, and the probability of moving from the bottom to the top quintile of the income distribution within a generation is 0.10. The rank-rank correlation is 0.25, and rank persistence at the top is significantly higher than elsewhere in the income distribution. Upward mobility is higher for sons, first-born children, children of self-employed parents, and for those who migrate once adults. The data reveal large variation in child outcomes conditional on parental income rank. Part of this variation is explained by the location where the child grew up. Provinces in Northern Italy, the richest area of the country, display upward mobility levels 3-4 times as large as those in the South. This regional variation is strongly correlated with local labor market conditions, indicators of family instability, and school quality. |
| Keywords: | intergenerational mobility, inequality, Italy, geographical variation |
| JEL: | J31 J61 J62 R1 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12273&r=all |
| By: | Martin F. Koppensteiner (University of Surrey); Lívia Menezes (University of Leicester) |
| Abstract: | In this paper, we investigate the effect of exposure to homicides on the educational performance and human capital investments of students in Brazil. We combine extremely granular information on the location and timing of homicides with a number of very large administrative educational datasets, to estimate the effect of exposure to homicides around schools, students' residence, and on their way to school on these outcomes. We show that violence has a detrimental effect on school attendance, on standardised test scores in math and Portuguese language and increases dropout rates of students substantially. The effects are particularly pronounced for boys, indicating important heterogeneous effects of violence. We use exceptionally rich information from student- and parent-background questionnaires to investigate the effect of violence on the aspirations and attitudes towards education. In line with the effects on dropout and the longer-term human capital accumulation of students, we find that boys systematically report lower educational aspiration towards education. Making use of the very rich information from the homicides and education data, we explore a number of underlying transmission channels, including mechanisms related to school supply, bereavement and incentives for human capital investments. |
| JEL: | I25 K42 O12 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:sur:surrec:1019&r=all |
| By: | Analia Schlosser; Zvika Neeman; Yigal Attali |
| Abstract: | We study how different demographic groups respond to incentives by comparing their performance in “high” and “low” stakes situations. The high stakes situation is the GRE examination and the low stakes situation is a voluntary experimental section of the GRE. We find that Males exhibit a larger drop in performance between the high and low stakes examinations than females, and Whites exhibit a larger drop in performance compared to minorities. Differences between high and low stakes tests are partly explained by the fact that males and whites exert lower effort in low stakes tests compared to females and minorities. |
| Keywords: | high stakes, low stakes, GRE, incentives, experiment, performance, gender gap, race gap |
| JEL: | C93 I23 I24 J15 J16 J24 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7590&r=all |
| By: | Serhan Cevik |
| Abstract: | Literature on whether government spending crowds out or crowds in the private sector is large, but still without an unambiguous conclusion. Using firm-level data from Ukraine, this paper provides a granular empirical investigation to disentangle the impact of state-owned enterprises (SOEs) on private firm investment in Ukraine—a large transition economy. Controlling for firm characteristics and systematic differences across sectors, the results indicate that the SOE concentration in a given sector has a statistically significant negative effect on private fixed capital formation, and that the impact of SOEs is stronger in those industries in which SOEs have a more dominant presence. These findings imply that private firms operating in sectors with a high level of SOE concentration invest systematically less than businesses that are not competing directly with SOEs. |
| Date: | 2019–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:19/80&r=all |
| By: | Allcott, Hunt (New York University and NBER); Diamond, Rebecca (Stanford GSB and NBER); Dube, Jean-Pierre (Chicago Booth and NBER); Handbury, Jessie (Wharton and NBER); Rahkovsky, Ilya A. (U.S. Department of Agriculture); Schnell, Molly (Stanford) |
| Abstract: | We study the causes of “nutritional inequality†: why the wealthy eat more healthfully than the poor in the United States. Exploiting supermarket entry, household moves to healthier neighborhoods, and purchasing patterns among households with identical local supply, we reject that neighborhood environments contribute meaningfully to nutritional inequality. Using a structural demand model, we find that exposing low-income households to the same products and prices available to high-income households reduces nutritional inequality by only nine percent, while the remaining 91 percent is driven by differences in demand. These findings counter the common notion that policies to reduce supply inequities, such as “food deserts,†could play an important role in reducing nutritional inequality. By contrast, the structural results predict that means-tested subsidies for healthy food could eliminate nutritional inequality at a fiscal cost of about 15 percent of the annual budget for the U.S. Supplemental Nutrition Assistance Program. |
| JEL: | D12 I12 I14 L81 R20 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:3750&r=all |
| By: | Caffera, Marcelo; Vásquez Lavín, Felipe; Rodríguez Anza, Daniel; Carrasco-Letelier, Leonidas; Hernández, José Ignacio; Buonomo, Mariela |
| Abstract: | Abstract: We estimate the implicit market price of soil erosion, fitting a spatio-temporal hedonic price model using quarterly data of 3,563 agricultural farms traded in Uruguay between 2000 and 2014. A unique feature of our estimation is that we allow for possible spatial spillovers. We find evidence of a negative and statistically significant association between erosion and land values. A 1% increase in own topsoil loss due to own erosion is associated with a decrease of 0.22% in the per-hectare price of agricultural land (p-value: 0.013, 95% CI: -0.0039, -0.0005). This is equivalent to a decrease of 7.7 USD in the average price per hectare and USD 1,040 in the price of the average farm (134 hectares). This value increases to USD 1,277 when we add the average cross marginal effect of erosion in nearby farms. Our estimates are sensitive to our measure of erosion and our specification of the spatio-temporal weighting matrix. We also find evidence consistent with our hypothesis that farms entering a governmental erosion control plan sent a valuable signal to the market regarding soil management. An indicator of whether the farm has at least one parcel under the government erosion control plans is associated with a 29% increase in the farm´s per-hectare price (p-value: 0.000, 95% CI: 16.26%, 41.53%) higher than those with no parcel under these plans. The average total marginal effect (own plus cross effects) of the erosion control plans is 35.37% (p-value: 0.000, 95% CI: 20.33%, 50.40%). |
| Keywords: | spatial spillovers, spatio-temporal hedonic model, soil erosion, farmland values, Uruguay |
| JEL: | Q1 Q12 Q15 |
| Date: | 2019–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:93589&r=all |
| By: | Ait Ali, Abderrahman (Swedish National Road & Transport Research Institute (VTI)); Warg, Jennifer (KTH); Eliasson, Jonas (Linköping University) |
| Abstract: | On deregulated railway markets, efficient capacity allocation is important. We study the case where commercial trains and publicly controlled traffic (“commuter trains”) use the same railway infrastructure and hence compete for capacity. We develop a method that can be used by an infrastructure manager trying to allocate capacity in a socially efficient way. The method calculates the loss of social benefits incurred by changing the commuter train timetable to accommodate a commercial train path request and based on this calculates a reservation price for the train path request. If the commercial operator’s willingness-to-pay for the train path exceeds the loss of social benefits, its request is approved. The calculation of social benefits takes into account changes in commuter train passengers’ travel times, waiting times, transfers and crowding, and changes in operating costs for the commuter train operator(s). The method is implemented in a microscopic simulation program, which makes it possible to test the robustness and feasibility of timetable alternatives. We show that the method is possible to apply in practice by demonstrating it in a case study from Stockholm, illustrating the magnitudes of the resulting commercial train path prices. We conclude that marginal societal costs of railway capacity in Stockholm are considerably higher than the current track access charges. |
| Keywords: | Train timetables; Societal costs; Commuter trains; Commercial trains; Train path pricing |
| JEL: | R40 |
| Date: | 2019–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:vtiwps:2019_002&r=all |
| By: | Stark, Oded (University of Bonn); Budzinski, Wiktor (University of Warsaw) |
| Abstract: | We study how the work effort and output of non-migrants in a village economy are affected when a member of the village population migrates. Given that individuals dislike low relative income, and that migration modifies the social space of the non-migrants, we show why and how the non-migrants adjust their work effort and output in response to the migration-generated change in their social space. When migration is negatively selective such that the least productive individual departs, the output of the non-migrants increases. While as a consequence of this migration statically calculated average productivity rises, we identify a dynamic repercussion that compounds the static one. |
| Keywords: | social preferences, distaste for low relative income, work effort, per capita output, migration |
| JEL: | D01 D31 J24 O15 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12283&r=all |
| By: | Chad Fourie (Department of Economics, Stellenbosch University); Debra Shepherd (Department of Economics, Stellenbosch University) |
| Abstract: | Effective schooling remains a challenge in many countries, including South Africa. In addressing this challenge, a focal area is often neglected: student emotional wellbeing. Self-concept is defined as the perception of one’s ability, as well as motivation and academic enjoyment, and is a multi-dimensional concept used in studies of individual’s behaviour. One such dimension is academic self-concept (ASC), the process by which students perform social and academic comparison within and between classrooms. ASC is associated with the social context and comparative nature embedded in schools and classrooms. It is for this reason that ASC is often used to explain the Big-Fish-Little-Pond effect (BFLPE). The BFLPE hypothesizes that higher-achieving students’ academic self-concept can be negatively influenced when surrounded by similarly high-achieving peers, but positively influenced when surrounded by lower-achieving peers. This paper adds to the literature on the BFLPE in assessing the relationship between ASC and South African Grade 9 achievement in mathematics and science using the 2015 wave of the Trends in International Mathematics and Sciences Study (TIMSS). This dataset was chosen as it makes use of standardized assessments in mathematics and science, with the addition of a student questionnaire making use of Likert-type response questions related to student perceptions on relative standing and ability, subject enjoyment, as well as student motivation. These responses were captured using polychoric principal component analysis (PCA) to allow for the construction of three separate self-concept constructs: subject self-concept, extrinsic motivation, and subject-specific enjoyment. A multilevel modelling approach was adopted to capture the relationship between self-concept and achievement at a within- and across-classroom level. In addition to estimating random intercept and slope models, a cross-level interaction model was estimated to allow for the within-classroom relationship to differ by school socio-economic status. The results of the model indicate moderate-to-strong positive correlations between the three constructs, with all three were being positively related to achievement in mathematics and science. Concurrent with existing findings, this paper finds that each of the three constructs present varying degrees or relation to academic achievement in the wealthier and poorer subset of schools. |
| Keywords: | BFLPE, big-fish-little-pond effect, self-concept, academic self-concept, TIMSS, pca, multi-level modelling, mathematics, science |
| JEL: | I21 I24 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:sza:wpaper:wpapers319&r=all |
| By: | Mathematica Policy Research |
| Abstract: | This fact sheet highlights key findings from four publications that describe the progress of nine states that received Round 1 Race to the Top—Early Learning Challenge (RTT-ELC) grants in implementing systems that rate early learning and development programs on quality and help them improve. |
| Keywords: | TQRIS, QRIS, quality rating, RTT, Race to the Top, ELC, Early Learning Challenge, early childhood, child care |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:f156af04b51c4349b0331beda59dc5f7&r=all |