Uptown
House price dynamics with dispersed information
Giovanni Favara & Zheng (Michael) Song
Journal of Economic Theory, forthcoming
Abstract:
We use a user-cost model to study how dispersed information affects the equilibrium house price. In the model, agents are disparately informed about local economic conditions, consume housing services, and speculate on price changes. Optimists, who expect high house price growth, buy in anticipation of capital gains; pessimists, who expect capital losses, prefer to rent. Because of short-selling constraints on housing, pessimistic expectations are not incorporated in the price of owned houses and the equilibrium price is higher and more volatile relative to the benchmark case of common information. We present evidence supporting the modelʼs predictions in a panel of US cities.
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Long-Term Neighborhood Effects on Low-Income Families: Evidence from Moving to Opportunity
Jens Ludwig et al.
American Economic Review, May 2013, Pages 226-231
Abstract:
We examine long-term neighborhood effects on low-income families using data from the Moving to Opportunity (MTO) randomized housing-mobility experiment. This experiment offered to some public-housing families but not to others the chance to move to less-disadvantaged neighborhoods. We show that ten to 15 years after baseline, MTO: (i) improves adult physical and mental health; (ii) has no detectable effect on economic outcomes or youth schooling or physical health; and (iii) has mixed results by gender on other youth outcomes, with girls doing better on some measures and boys doing worse. Despite the somewhat mixed pattern of impacts on traditional behavioral outcomes, MTO moves substantially improve adult subjective well-being.
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Measuring the External Benefits of Homeownership
Edward Coulson & Herman Li
Journal of Urban Economics, forthcoming
Abstract:
The subsidization of homeownership is justified on efficiency grounds only to the extent that it provides benefits to people other than the homeowner. We use the clustered neighborhoods subsample in the American Housing Survey to measure that benefit in the form of higher housing prices in neighborhoods with higher ownership rates (and lower vacancies). We attempt to account for unobservable neighborhood and house attributes that may be correlated with occupancy and ownership through instrumental variables, switching regressions and panel methods. Estimates indicate that a housing transition from renting to owning creates approximately $1300 in measured benefits.
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Stephan Whitaker & Thomas Fitzpatrick
Journal of Housing Economics, forthcoming
Abstract:
In this empirical analysis, we estimate the impacts of property-tax delinquency, vacancy, and foreclosures on the value of neighboring homes. We demonstrate that these externalities differ in high- and low-poverty submarkets. Numerous studies have estimated the externality of foreclosures. These papers theorize that the foreclosure impact works partially through creating vacant and neglected homes. To our knowledge, this is only the second attempt to estimate the impact of vacancy itself and the first to use tax-delinquency as a measure of property neglect. We link vacancy observations from Postal Service data with property-tax delinquency and sales data from Cuyahoga County, Ohio. We find that an additional property within 500 feet that is vacant or delinquent reduces a home's selling price by 1 to 2 percent. In low-poverty submarkets, the negative impact of a home that is both vacant and delinquent is -4.6 percent. Low-poverty submarkets penalize a sale near a tax-current recent foreclosure by 4 to 8 percent. In high-poverty submarkets, we observe positive correlations of sale prices with vacant foreclosures. This may reflect lenders selectively foreclosing only on relatively well-maintained properties.
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Road-building and network efficiency in poly-centric Pittsburgh 1980-2010
Donald Buckwalter
Applied Geography, July 2013, Pages 158-167
Abstract:
Current research on urban structure says little about the aggregate efficiency of transportation systems in a metropolitan region. This paper addresses the problem by analyzing synoptic indexes of the controlled access highway network. Recent road building in the Pittsburgh MSA has intensified network infrastructure, but efficiency has diminished. The Pittsburgh MSA is the case study because, as an aging one, it exemplifies issues facing other American cities. The analysis uses direct connectivity, gamma (γ), and characteristic path length (CPL) indexes calculated over a 30 year period. The progressively less efficient network for each decade implies that some combination of the political process, land use inertia, and financial limitations preclude consideration of urban structure in decisions about construction priorities. Applied geographers can gain relevance by integrating the precision of state-of-the-art technology with the comprehensive capabilities and lucidity of seminal analytical methods.
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Running for the Exit: Community Cohesion and Bank Panics
Henrich Greve & Ji-Yub (Jay) Kim
Organization Science, forthcoming
Abstract:
Bank panics attract scholarly interest because they reflect distrust of each bank that experiences a run as a result of diffusion of information; rumors about such bank runs trigger additional runs elsewhere. However, the contagion of bank runs is highly selective for reasons that are unrelated to the financial strength of the individual banks. This presents a puzzle that extant theories on institutions and reputations cannot fully explain. To solve this puzzle, we turn to the characteristics of the community in which the banks operate. We develop theory on how communities with diverse affiliation structures and economic inequality have weaker community cohesion and communication, making such communities less likely to experience widespread distrust and hence bank runs. We test hypotheses on the effects of community ethnic diversity, national origin diversity, religious diversity, and wealth inequality using data from the great bank panic of 1893, and we find strong community effects on bank runs. These findings suggest that the contagion of distrust in organizations following adverse events is channeled by community differences as well as organizational differences.
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Yes, Raise My Taxes: Property Tax Cap Override Elections
Douglas Roscoe
Social Science Quarterly, forthcoming
Objectives: Although public opinion generally is opposed to tax increases, voters frequently choose to raise their own taxes in property tax cap override elections. This study sought to uncover the factors that are associated with successful attempts to increase local property taxes.
Methods: This phenomenon was studied in Massachusetts towns, where over 1,200 overrides were successful from 1990 to 2007. Multivariate analysis was used to assess the relative importance of variables related to two theoretical perspectives: voting as utility maximization and voting as symbolic action.
Results: The results show that override support reflects the fiscal condition of the town, the context of the particular override request, and, most importantly, the socioeconomics of the community. Overrides were more successful in communities that had higher levels of education, lower levels of affluence, and smaller nonwhite populations. In addition, overrides were more successful in towns with lower existing tax rates and where the particular override was less salient and narrower in scope.
Conclusions: On balance, the results are supportive of a symbolic theory of override voting in which voters are expressing their general views about government, rather than choosing in a way reflective of individual utility maximization.
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The Airport City Phenomenon: Evidence from Large US Airports
Stephen Appold et al.
Urban Studies, May 2013, Pages 1239-1259
Abstract:
As air transport for leisure trips, business travel and goods shipment increased rapidly over the past several decades, the emergence of airport cities has been hypothesised. Busy commercial airports may be emerging as central transport nodes in large metropolitan areas, much as ports and rail terminals were in the past, anchoring employment servicing passengers, facilitating frequent travellers and providing a spatial focus for unrelated firms. An analysis of small-area employment data for the areas surrounding 25 major US airports and the related central cities reveals the concentration of employment within 2.5 miles of these airports to be substantial - approximately half that within 2.5 miles of the central point of the corresponding CBDs - and growing. The analysis refocuses a question about the nature of spatial differentiation within metropolitan regions supporting multiple employment nodes.
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Social Isolation of Disadvantage and Advantage: The Reproduction of Inequality in Urban Space
Lauren Krivo et al.
Social Forces, forthcoming
Abstract:
In this article, we extend research on neighborhood social isolation by (1) examining residents of disadvantaged and advantaged communities and (2) considering the character of neighborhoods where people conduct routine activities away from home. We contend that social isolation is experienced by residents of both highly disadvantaged and highly advantaged neighborhoods because the two groups spend time in largely nonoverlapping parts of the city. Individual and neighborhood race-ethnic dynamics exacerbate such social isolation. Data from the Los Angeles Family and Neighborhood Survey show that social isolation is experienced by residents of all areas of the city, whether highly disadvantaged or advantaged. African Americans, Latinos and residents of areas with many Latinos suffer additional penalties in the social isolation of disadvantage in where they conduct routine activities.
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Wage Premia in Employment Clusters: How Important Is Worker Heterogeneity?
Shihe Fu & Stephen Ross
Journal of Labor Economics, April 2013, Pages 271-304
Abstract:
This article tests whether the correlation between wages and concentration of employment can be explained by unobserved worker productivity. Residential location is used as a proxy for unobserved productivity, and average commute time to workplace is used to test whether location-based productivity differences are compensated away by longer commutes. Analyses using confidential data from the 2000 Decennial Census find that estimates of agglomeration wage premia within metropolitan areas are robust to comparisons within residential location and that estimates do not persist after controlling for commuting costs, suggesting that the productivity differences across locations are due to location, not individual unobservables.
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House Price Risk and the Hedging Benefits of Home Ownership
Martijn Dröes & Wolter Hassink
Journal of Housing Economics, forthcoming
Abstract:
Using a repeat-sales methodology, this paper finds that estimates of house price risk based on aggregate house price indices substantially underestimate the true size of house price risk. This is the result of the fact that aggregate house price indices average away the idiosyncratic volatility in house prices. Additional results show that the idiosyncratic risk exceeds the hedging benefits of home ownership. These results imply that for many home owners, owning a house may well add more price risk than it hedges away. These findings are based on a detailed dataset of individual housing transactions in the Netherlands.
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Housing Supply Elasticity and Rent Extraction by State and Local Governments
Rebecca Diamond
Harvard Working Paper, November 2012
Abstract:
It is possible government workers can extract rent from private sector workers by charging high tax rates and paying themselves high wages. Using a spatial equilibrium model where private sector workers are free to migrate across government jurisdictions, I show that private sector workers' migration elasticity with respect to local taxes determines the magnitude of rent extraction by rent seeking state and local governments. Since private sector workers "vote with their feet" by migrating out of rent extractive areas, governments trade off the benefits a higher tax rate with the cost of a smaller population to tax. Variation in areas' housing supply elasticities differentially restrains governments' abilities to extract rent from private sector workers. The incidence of a tax increase falls more on local housing prices in a less housing elastic area, leading to less out-migration. Thus, governments in less housing elastic areas can charge higher taxes without worry of shrinking their tax bases. I test the model's predictions using worker wage data from the CPS-MORG. I find the public-private sector wage gap is higher in areas with less elastic housing supplies. This fact holds both within state across metropolitan areas for local government workers and between states for state government workers.
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High-speed Internet Growth and the Demand for Locally Accessible Information Content
Anton Bekkerman & Gregory Gilpin
Journal of Urban Economics, September 2013, Pages 1-10
Abstract:
Proximity to information resources has repeatedly been shown to affect urban development. However, individuals' increased abilities to access information content electronically may have dampened urban areas' comparative advantage of proximity-driven knowledge flows. We investigate the effects of increased high-speed Internet access on the role of information proximity by modeling changes in the demands for locally-based information resources, exploiting variation in the use of U.S. public libraries - the most common low-cost providers of locally accessible information content. Data describing a nearly comprehensive set of U.S. public libraries during 2000-2008 provide empirical evidence of complementary growth in Internet access and the use of public library resources, suggesting that Internet access increases the value of locally accessible information content and overall information demand. Moreover, the complementarity is found to be largest in metropolitan areas, indicating that improved Internet access in locations with greatest proximity and information spillover effects are likely to experience more substantial economic impacts.
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Megan Gilster
Journal of Urban Affairs, forthcoming
Abstract:
Neighborhood-focused activism is one way residents enact their vision for their community. This study examines the neighborhood socioeconomic antecedents of participation in neighborhood-focused activism in a diverse sample of residents of Chicago neighborhoods to test three theories of neighborhood socioeconomic context and participation: (1) affluence affords participation, (2) activism addresses neighborhood needs associated with disadvantage, and (3) socioeconomic inequality creates contention that necessitates participation. Measuring neighborhood socioeconomic status as two unique dimensions - neighborhood affluence and neighborhood disadvantage - and accounting for both individual and neighborhood characteristics, I find support for each theory. Neighborhood socioeconomic context matters for participation, regardless of individual socioeconomic characteristics. Only when these three perspectives are considered jointly can they fully capture the socioeconomic context of participation in neighborhood-focused activism.
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Urban Scaling and the Production Function for Cities
José Lobo et al.
PLoS ONE, March 2013
Abstract:
The factors that account for the differences in the economic productivity of urban areas have remained difficult to measure and identify unambiguously. Here we show that a microscopic derivation of urban scaling relations for economic quantities vs. population, obtained from the consideration of social and infrastructural properties common to all cities, implies an effective model of economic output in the form of a Cobb-Douglas type production function. As a result we derive a new expression for the Total Factor Productivity (TFP) of urban areas, which is the standard measure of economic productivity per unit of aggregate production factors (labor and capital). Using these results we empirically demonstrate that there is a systematic dependence of urban productivity on city population size, resulting from the mismatch between the size dependence of wages and labor, so that in contemporary US cities productivity increases by about 11% with each doubling of their population. Moreover, deviations from the average scale dependence of economic output, capturing the effect of local factors, including history and other local contingencies, also manifest surprising regularities. Although, productivity is maximized by the combination of high wages and low labor input, high productivity cities show invariably high wages and high levels of employment relative to their size expectation. Conversely, low productivity cities show both low wages and employment. These results shed new light on the microscopic processes that underlie urban economic productivity, explain the emergence of effective aggregate urban economic output models in terms of labor and capital inputs and may inform the development of economic theory related to growth.
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Supply Constraints and Housing Market Dynamics
Andrew Paciorek
Journal of Urban Economics, September 2013, Pages 11-26
Abstract:
Although the volatility of house prices is often ascribed to demand-side factors, constraints on housing supply have important and little-studied implications for housing dynamics. I illustrate the strong relationship between the volatility of house prices and the regulation of new housing supply. I then employ a dynamic structural model of housing investment to investigate the mechanisms underlying this relationship. I find that supply constraints increase volatility through two channels: First, regulation lowers the elasticity of new housing supply by increasing lags in the permit process and adding to the cost of supplying new houses on the margin. Second, geographic limitations on the area available for building houses, such as steep slopes and water bodies, lead to less investment on average relative to the size of the existing housing stock, leaving less scope for the supply response to attenuate the effects of a demand shock. My estimates and simulations confirm that regulation and geographic constraints play critical and complementary roles in decreasing the responsiveness of investment to demand shocks, which in turn amplifies house price volatility.
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Use of neighbourhood parks: Does socio-economic status matter? A four-city study
D.A. Cohen et al.
Public Health, April 2013, Pages 325-332
Objectives: To determine if neighbourhood socio-economic status (SES) is associated with park use and park-based physical activity.
Methods: The use and characteristics of 24 neighbourhood parks in Albuquerque, Chapel Hill/Durham, Columbus and Philadelphia were observed systematically in three seasons (spring, summer and autumn), with nearly 36,000 park users observed. Twelve parks were in high-poverty neighbourhoods and 12 parks were in low-poverty neighbourhoods. In total, 3559 park users and 3815 local residents were surveyed. Park incivilities were assessed and park administrators were interviewed about management practices.
Results: The size and number of facilities in parks in high-poverty neighbourhoods were similar to those in parks in low-poverty neighbourhoods, but the former had more hours of programming. Neighbourhood poverty level, perception of safety and the presence of incivilities were not associated with the number of park users observed. However, programmed activities and the number of activity facilities were strongly correlated with park use and energy expended in the park.
Conclusions: The finding that park programming is the most important correlate of park use and park-based physical activity suggests that there are considerable opportunities for facilitating physical activity among populations of both high- and low-poverty areas.