ECONOMIC FUNDAMENTALS IN LOCAL HOUSING MARKETS: EVIDENCE FROM U.S. METROPOLITAN REGIONS

ABSTRACT.  This paper investigates the effects of national and regional economic conditions on outcomes in the single-family housing market: housing prices, vacancies, and residential construction activity. Our three-equation model confirms the importance of changes in regional economic conditions, income, and employment on local housing markets. The results also provide the first detailed evidence on the importance of vacancies in the owner-occupied housing market on housing prices and supplier activities. The results also document the importance of variations in materials, labor and capital costs, and regulation in affecting new supply. Simulation exercises, using standard impulse response models, document the lags in market responses to exogenous shocks and the variations arising from differences in local parameters. The results also suggest the importance of local regulation in affecting the pattern of market responses to regional income shocks.     

Public policy,local labor demand,and migration in Sweden, 1979-84

"A model of private local labor demand and interjurisdictional migration is presented and estimated using data from Swedish counties and municipalities for 1979-84. Our goal is to compare the effects on local labor markets of distinctive public-sector programs with those of traditional market variables. We find that local income taxes and tax-equalization grants have important effects on local labor markets; regional development policy measures and geographical-mobility subsidies do not. Thus, recent efforts scaling back some of these programs may not materially alter the regional economy's performance. Wages and other traditional market variables are also often found to influence significantly local labor markets."     

THE EXCHANGEABILITY OF HEDONIC PROPERTY PRICE STUDIES*

ABSTRACT. Observations drawn from multiple markets are essential to the construction of indices of housing costs and to measures of demand for housing attributes. It is not evident when multiple markets exist or whether such markets exist for some attributes but not for others. We test for multiple markets by using Bayesian methods to assess the transferability (random exchangeability) of entire hedonic price expressions from one site and time to another, the transferability of hedonic price functions for particular attributes, and the degrees of similarity that hedonic price functions must have in order to be transferable. In our illustrations, price functions for structural housing attributes are generally transferable; prices for neighborhood attributes are not. Therefore, in our illustrations, the desired price indices and demand functions should be estimable for neighborhood attributes, but not for structural ones.     

Capital Assistance for Small Firms: Some Implications for Regional Economic Welfare

This paper analyzes the role of finance capital in regional economic development. A cost‐benefit approach is invoked in order to estimate the welfare impacts of a regional loan and guarantee program for small firms in Israel. Program‐created employment is treated as a benefit and an employment account that separates net from gross employment, is presented. An estimate of net wage benefits is then derived. This involves adjusting wages across different earnings classes in order to account for the variation in opportunity costs of labor at different levels. The estimation of costs includes the opportunity costs of capital, administration, default, and tax‐raising costs. Results point to substantial regional welfare effects. We stress the need to account for changing regional economic structure in this kind of evaluation framework.     

THE EFFECT OF PROPERTY TAX RATE DIFFERENTIALS ON SINGLE-FAMILY HOUSING STARTS IN WISCONSIN, 1978–1989*

ABSTRACT. A pooled cross-section time-series approach is used to test the hypothesis that differences in property tax rates between and across regions exert an excise-tax impact on housing starts. Synthesizing the research regarding property tax incidence on housing markets and residential location with that of regional housing studies, an empirical model that allows for inter- and intraregional influences on housing starts is developed. Using county data from Wisconsin over a twelve-year span, I find that property tax rate differentials have a negative effect on the construction of single-family houses.     

THE LAW OF ONE PRICE IN A NETWORK: ARBITRAGE AND PRICE DYNAMICS IN NATURAL GAS CITY GATE MARKETS*

ABSTRACT. In this paper we develop a model of the law of one price in a network where many markets are linked with a structure of paths. We show that arbitrage-free prices depend on the structure of the network and so do price dynamics. Our estimates indicate that local bypass and open access pipeline transportation were instrumental in opening arbitrage paths to natural gas city markets and causing their prices to converge. Spot markets in the city gates, pipeline hubs, and production fields, that are scattered over distant points in the vast pipeline network in the United States, now form a single market.     

A Measure of Competitive Access to Destinations for Comparing Across Multiple Study Regions

Accessibility is now a common way to measure the benefits provided by transportation–land use systems. Despite its widespread use, few measurement options allow for the comparison of accessibility across multiple urban systems, and most do not adequately control for market competition between demand-side actors and supply-side facilities in localized markets. In this article, we develop a measure of competitive access to destinations that can be used to accurately compare accessibility between regions. This measure stems from spatial interaction modeling and accounts for competition at both the supply and demand sides of analysis, regional differences in transportation networks and travel behavior, and any imbalance between the size of the population and the number of opportunities. We use this method to compute access to employment for Canada's eight largest cities to comparatively examine inequalities in accessibility, both within and between cities, and by travel mode.     

RETAIL AMENITIES AND URBAN SPRAWL

This paper examines the interaction between local retail markets and population density in cities. We demonstrate that welfare costs of urban sprawl need not come only from road congestion or environmental externalities, as often suggested in the literature. A city also forgoes potential agglomeration economies in retail when it settles into a spatially sprawling equilibrium. Our theory predicts an additional spatial equilibrium where the city is inefficiently dense, characterized by strong retail agglomeration economies within the core.     

Innovation and the Entrepreneurial State in Asia: Mechanisms of Bond Market Development

Abstract

Bond markets have expanded rapidly in emerging East Asian economies in recent years. Asian policymakers have played a pivotal role in this development. This process presents an interesting challenge to the developmental state literature associated with bank-based financial systems. We argue that it is best to understand the role of the state as an entrepreneurial state in the construction of these markets, focusing on institutional innovation in three mechanisms of state-led market infrastructure: national or local credit rating agencies, mortgage corporations and bond pricing agencies. National credit rating agencies rate the creditworthiness of debt in local currency. Mortgage corporations create markets in securitised housing loans. Bond pricing agencies put a value on illiquid debt instruments to enable mark-to-market portfolio management. Together, these three mechanisms constitute the core determinants of the market (demand for creditworthy products, supply of tradeable assets, and the fixing of a price to those assets). In so doing they influence the nature of market operations, producing outcomes very different from the free market ideal type. We also consider cross-country commonalities and variations in this general pattern.     

SOMETIMES CLOSE IS GOOD ENOUGH: THE VALUE OF NEARBY ENVIRONMENTAL AMENITIES*

ABSTRACT An extensive empirical literature exists, showing that variations in region‐specific amenities can account for persistent differences in real wages across regions. However, this literature has considered only amenities in the same location as the household. This paper argues that environmental amenities at some distance from but accessible to urban areas may lead to negative compensating wage differentials. We use a general equilibrium framework and data from the 1995 Current Population Survey to calculate implicit amenity prices based on measures of distance to environmental amenities. Our results suggest that amenities outside the metropolitan area do generate compensating wage differentials, as workers are willing to accept lower wages to live in accessible proximity to “nice” places. This implies that these places provide a positive externality to those communities that find them accessible. The estimated effects are quantitatively important, suggesting that these externalities should be taken into account in policy making.     

Globalization of the animation industry: multi-scalar linkages of six animation production centers

This paper examines the change in animation production over time and analyzes the different scales of internal and external linkages among six animation production centers. Four types of producers were identified based on their roles in the animation industry and their multi-scalar linkages were investigated for similarities and differences. Several factors including production costs, local skills, government policy and domestic markets were found to affect the growth of new production centers. High value-capture occurs mostly in production centers where tacit knowledge is created. The governance of each animation production center was found to have evolved based on its unique development path within the industry’s global value chain.     

IF YOU CANNOT TAKE THE HEAT,GET OUT OF THE CERRADO … RECOVERING THE EQUILIBRIUM AMENITY COST OF NONMARGINAL CLIMATE CHANGE IN BRAZIL*

ABSTRACT This paper presents an empirical technique for valuing large changes in nonmarketed local attributes (e.g., climate amenities) without data describing prices of locally traded commodities like housing. A model of endogenous sorting is used to identify individuals' indirect utility functions, from which the value of the change in the local attribute is recovered while accounting for equilibrium impacts on markets for labor and locally traded commodities. Annual amenity costs of Brazilian climate change are estimated to be between $1.6 and $8.1 billion for a moderate climate change scenario, depending upon the role of migration costs.     

THE EFFECTS OF TRADE WITH DEVELOPING COUNTRIES ON THE REGIONAL DEMAND FOR SKILL IN THE U.S.: EVIDENCE FROM COUNTY DATA*

ABSTRACT Using county‐level data from the 1980s and 1990s and a county‐level trade measure that incorporates the county's industrial mix and patterns of international trade across industries, I provide new evidence that trade with developing countries raises the demand for skill and the skill premium in the U.S. Consistent with Heckscher–Ohlin, I find that trade driven by differences in factor endowments has an economically significant impact on local labor markets. The evidence suggests that when trade with developing countries rises, counties with higher skill endowment and greater employment in industries with larger trade shares experience greater relative demand for high‐skilled labor.     

Are the most productive regions necessarily the most successful? Local effects of productivity growth on employment and earnings

Economists typically celebrate productivity growth as the chief way to improve living standards. Productivity growth may reduce costs, improve quality, or lead to innovation and new products, but if demand is insufficiently elastic, productivity growth can lead to weakening of labor markets. We study county‐level effects of productivity growth and productivity levels on growth in employment, income, and earnings. The results suggest that productivity growth generally suppresses job growth but has boosting effects on earnings and, to a lesser degree, on per‐capita income, although there is considerable variation across geographies and specific outcomes.     

Transport Rate Uncertainty and the Optimal Location of the Firm: Some New Conclusions

This paper presents standard microeconomic models that are designed to be used in the cost-benefit analysis of local land use decisions. The models connect these allocation decisions to outcomes in the urban land and labor markets so that costs and benefits can be measured. Benefits to the local jurisdiction of allocating land to industrial use exist if unemployed workers are employed, land values increase, or local tax revenues increase beyond the amount needed to provide the additional public services required.     

Cost-Benefit Analysis of Local Land Use Allocation Decisions

This paper presents standard microeconomic models that are designed to be used in the cost-benefit analysis of local land use decisions. The models connect these allocation decisions to outcomes in the urban land and labor markets so that costs and benefits can be measured. Benefits to the local jurisdiction of allocating land to industrial use exist if unemployed workers are employed, land values increase, or local tax revenues increase beyond the amount needed to provide the additional public services required.     

The Social Regulation of Markets: Why Microcredit Fails to Promote Jobs in Rural South India

There is growing evidence that microcredit does little to support self‐employment. Two main explanations are typically emphasized: from a microeconomic perspective, the poor have been argued to lack the skills, resources and motivation to start their own businesses; from a macroeconomic perspective, local markets are often saturated. This article uses first‐hand data from rural South India to explore a third explanation which focuses on the social regulation of markets. Drawing on a household survey, the authors show that self‐employment and microcredit are uncorrelated, and that women and lower castes have a significantly lower chance of starting up a business. The businesses they do start tend to be smaller, less profitable and based in very specific sectors. Qualitative insights into the workings of local economies show that caste and gender‐based social regulations influence local markets determining who can produce or sell what, to whom, and at what price. The authors observe that real markets are affected by power relations and structured through social institutions rather than being the sum of interactions between free and competitive individuals. These findings show the importance of integrating self‐employment programmes into broader policies for transforming the social regulation of markets and for eradicating discrimination against women and lower castes.     

Collaboration for Local Economic Development: Business Networks,Politics and Universities in Two Swedish Cities

In this article we want to show how conceptions about collaboration for local eocnomic development in Sweden are constructed on national and local levels. We also show how these conceptions have been realized in two different company networks; in the city of Östersund (“Odenskog företagsstaden”) and in the city of Karlskrona (“Telecom City”). In politics and research, local collaboration or cluster formation are viewed as important tools and levers for local economic development. However, we argue that the local labour markets and unemployment rates in our case studies do not differ significantly, despite very different strategies for collaboration. Therefore, we suspect that the political focus on collaboration is a way of legitimizing the change in regional policy rather than a delegation of real power to the local level. If this continues, we fear that the current regional policy is reduced to a discourse of popular concepts rather than a real instrument for local economic development.     

Between Desire and Routine: Assembling Environment and Finance in Carbon Markets

Abstract: This article contributes to emerging research on the social construction of carbon markets by focusing on the mobilisation of desire amongst carbon market actors, and on the routinisation of financial practices within such markets. We examine specifically the markets that have emerged around the Clean Development Mechanism. First, we look at the stories market actors tell each other in advertising and at Carbon Expo. Second, we look at the routinisation of carbon finance through the borrowing of ideas and tools from traditional financial markets. We suggest that the former animates the markets while the latter enables the markets to become “normalised” for financiers. We also suggest that the two aspects however also work in tension with each other, and that the character of this tension is one way of understanding the distinctiveness of carbon markets.