do better schools matter parental valuation of elementary education the evaluation of numerous school reforms requires an understanding of the value of better schools given the difficulty of calculating the relationship between school quality and student outcomes i turn to another method and use house prices to infer the value parents place on school quality i look within school districts at houses located on attendance district boundaries houses then differ only by the elementary school the child attends i thereby effectively remove the variation in neighborhoods taxes and school spending i find that parents are willing to pay 2 5 percent more for a 5 percent increase in test scores this finding is robust to a number of sensitivity checks

distinctively different a new approach to valuing architectural amenities we propose a method to estimate the capitalized value of the architectural design quality of a neighbourhood our economic design premium is identified by spatially differentiating property prices and design quality within neighbourhoods and comparing the differences across neighbourhoods we apply our method to 47 conservation area neighbourhoods in england in which we analyse around 7900 property transactions and interview more than 500 residents we find a capitalization effect of about 25 4 38 7k associated with a one step increase on a five step scale ranging from not at all distinctive to very distinctive our results suggest that this effect is at least partially driven by an architectural externality

are ghettos good or bad spatial separation of racial and ethnic groups may theoretically have positive or negative effects on the economic performance of those groups we examine the effects of segregation on outcomes for blacks in schooling employment and single parenthood we find that blacks in more segregated areas have significantly worse outcomes than blacks in less segregated areas we control for the endogeneity of location choice using instruments based on political factors topographical features and residence before adulthood a one standard deviation decrease in segregation would eliminate one third of the black white differences in most of our outcomes

the development of nominal wage rigidity in the late 19th century wage price and output indexes suitable for comparing cyclical movements across decades show a decrease in nominal wage flexibility the change in wage inflation associated with output fluctuations after the 1880s following an increase in strike frequency linked to the spread of large scale manufacturing cross sectional data show that firms in industries experiencing more strikes in the 1880s were less likely to cut nominal wages in the depression of 1893 this and other evidence suggests that the nineteenth century decrease in wage flexibility was caused by an increase in workers bargaining power in the absence of binding wage contracts copyright 1993 by american economic association

the segregative properties of endogenous jurisdiction formation with a land market this paper examines the segregative properties of tiebout like endogenous processes of jurisdiction formation in presence of a competitive land market in the model considered a continuum of households with different wealth levels and the same preferences for local public goods private spending and housing choose a location from a finite set each location has an initial endowment of housing that is priced competively and that belongs to absentee landlords each jurisdiction is also endowed with a specific technology for producing public goods households preferences are assumed to be homothetically separable between local public goods on the one hand and private spending and housing on the other public goods provision is financed by a given but unspecified mixture of linear wealth and housing taxes we show that stable jurisdiction structures are always segregated by wealth only if households view any public good conditionally on the quantities of the other public goods as either always a gross substitute or either always a gross complement to private spending we also show that if there are more than one public good this condition is not sufficient for segregation unless households preferences are additively separable since this condition is necessary and sufficient for the segregation of stable jurisdiction structures without land market and with only one public good our results suggests that introducing a land market does not affect the segregative properties of endogenous jurisdiction formation but that increasing the number of public goods mitigates segregation

real and nominal wage rigidities and the rate of inflation evidence from west german micro data the paper examines real and nominal wage rigidities we estimate a switching regime model in which the observed distribution of individual wage changes computed from west german register data for 1976 1997 is generated by simultaneous processes of real nominal or no wage rigidity and measurement error the fraction of workers facing wage increases that are due to nominal but mostly real wage rigidity is substantial the extent of real rigidity rises with inflation whereas the opposite holds for nominal rigidity overall the incidence of wage rigidity which accelerates unemployment growth is most likely minimized in an environment with moderate inflation

wage rigidity in canadian collective bargaining agreements the authors search information on the provisions of 10 947 wage contracts signed in the canadian unionized sector between 1976 and 1999 for evidence of downward nominal wage rigidity the disinclination of wages to fall in nominal dollars below their established level over the sample period real wage reductions were common but nominal wage reductions were rare the probability of downward nominal wage rigidity increased substantially during low inflation periods during such periods apparently there was no reduction in the incidence of real wage cuts but the magnitude of those cuts was modest suggesting a lesser ability of wages to adjust to labor market conditions than at other times

the implications of competition among jurisdictions does tiebout need politics the paper investigates whether compensation among local jurisdiction is by itself sufficient to ensure efficient provision of local public goods jurisdictions have fixed boundaries and each has an entrenched government with the power to tax and supply the public good residents can move costlessly among jurisdictions it is shown that competition among numerous jurisdictions is not sificient to guarantee public sector efficiency though residents can vote with their feet land is immobile hence governments can unsurp some land rents for their own ends increasing the number of jurisdictions limits but cannot completely eliminate the ability to exercise discretionary governmental power

competition between private and public schools vouchers and peer group effects a theoretical and computational model with tax financed tuition free public schools and competitive tuition financed private schools is developed students differ by ability and income achievement depends on own ability and on peers abilities equilibrium has a strict hierarchy of school qualities and two dimensional student sorting with stratification by ability and income in private schools high ability low income students receive tuition discounts while low ability high income students pay tuition premia tuition vouchers increase the relative size of the private sector and the extent of student sorting and benefit high ability students relative to low ability students

the value of trade agreements in the presence of political pressures an argument often heard in favor of trade agreements is that by committing to free trade a government can credibly distance itself from domestic lobbies but several existing models of endogenous protection suggest that governments have no interest in foreclosing interest group pressures since governments derive rents from the political process we develop a small country model in which factors are sector specific in the short run but mobile in the long run we show that in this setting a government may be worse off in the political equilibrium than under commitment to free trade and hence it may value a trade agreement

five hypotheses concerning the fate of the singapore issues in the doha round at the cancun ministerial conference the members of the world trade organization wto disagreed on whether to launch negotiations on multilateral disciplines concerning the four areas of government policy collectively known as the singapore issues this amounted to a decision not to expand the wto s boundaries along these dimensions in this paper five hypotheses concerning the treatment of the singapore issues by the wto s membership are described and assessed the implications of this assessment for the likelihood that at some future date similar proposals can be successfully advanced in the multilateral trade arena are also discussed

new evidence on canadian wage rates 1900 1930 this paper shows there are serious errors in published canadian nominal wage data and presents hourly wage series developed from firm records for machinists helpers and laborers employed by the canadian pacific railway between 1900 and 1930 this new evidence suggests that real wage growth in canada was faster than previously believed and that there were substantial changes in wage inequality

estimating the general equilibrium benefits of large changes in spatially delineated public goods the purpose of this article is to report a new approach for measuring the general equilibrium willingness to pay for large changes in spatially delineated public goods such as air quality we estimate the parameters of a locational equilibrium model and compute equilibria for alternative scenarios characterizing the availability of public goods within a system of communities welfare measures take into consideration the adjustments of households in equilibrium to nonmarginal changes in public goods the framework is used to analyze willingness to pay for reductions in ozone concentrations in southern california between 1990 and 1995

the incidence of nominal and real wage rigidities in great britain 1978 98 this paper analyzes the extent of rigidities in wage setting in great britain over the 1980s and 1990s our estimation strategy which generalizes the work of altonji and devereux 2000 models the notional wage growth distribution the distribution of nominal wage growth that would occur in the absence of rigidities in pay while allowing for the presence of measurement error in the data the model then allows for the possibility that the nominal wage growth of a fraction of the workforce may be subject to a nominal or real downward rigidity our model suggests that real rigidities in wage setting are more prevalent than nominal rigidities although the incidence of these real wage rigidities has fallen gradually over time if firms cannot cut real wages in response to negative demand shocks they may resort to laying off workers our results support this microfoundation of the wage unemployment phillips curve workers who are more likely to be protected from wage cuts are also more likely to lose their jobs

implementation and imbalance dealing with hangover from the uruguay round the uruguay round agreements impose bound obligations to implement but provide only unbound promises of assistance is there a legal solution within the wto legal system i e can implementation assistance be made a legal obligation the author concludes that the doha negotiations on trade facilitation and on aid for trade demonstrate that such a legal arrangement cannot be constructed this is not however a problem the international community has provided extensive trade related assistance through bilateral and multilateral development agencies regarding the overall uruguay round imbalance developing countries gave more than they got failure of the international community to acknowledge that the imbalance stems in major part from the wto agreement on intellectual property trips has retarded a general making up

wage rigidity inflation and institutions we study the possible existence of downward nominal wage rigidity dnwr at wage growth rates different from zero in aggregate data even if dnwr prevails at zero for individual workers compositional effects might lead to falling aggregate wages while changes in relative wages combined with dnwr might lead to positive aggregate wage growth we explore industry data for 19 oecd countries over the 1971 2006 period we find evidence for a floor on nominal wage growth at 6 percent in the 1970s and 1980s at 1 percent in the 1990s and at 0 5 percent in the 2000s furthermore we find that dnwr is stronger in country years with strict employment protection legislation high union density centralized wage setting and high inflation

downward nominal wage rigidity evidence from canada 1901 1950 this paper tests for the presence of downward nominal wage rigidity in canadian wage data for 26 occupations in 38 cities from the first half of the 20th century the sample is of particular interest as it contains periods with average inflation rates that are close to zero as well as two sharp deflations results from a variety of different tests indicate that wage change distributions are consistent with the presence of downward nominal wage rigidity however for two subsamples containing sharp declines in output and prices estimates of the extent of downward nominal wage rigidity are much lower this suggests that downwards adjustments did occur during times of severe depression and deflation

interjurisdictional sorting and majority rule an empirical analysis the goal of this paper is to provide a comprehensive empirical analysis of majority rule and tiebout sorting within a system of local jurisdictions the idea behind the estimation procedure is to investigate whether observed levels of public expenditures satisfy necessary conditions implied by majority rule in a general equilibrium model of residential choice the estimator controls for observed and unobserved heterogeneity among households observed and unobserved characteristics of communities and the potential endogeneity of prices and expenditures as well as the self selection of households into communities of their choice we estimate the structural parameters of the model using data from the boston metropolitan area the empirical findings reject myopic voting models more sophisticated voting models based on utility taking provide a potential explanation of the main empirical regularities

coherence and the wto coherence between the wto and the bretton woods institutions a formal wto objective has achieved some minor goals but has been expensive in terms of direct costs and inefficiencies in policy making and policy debate the so called integrated framework has achieved relatively little and aid for trade has yet to be fully established there is little role for the wto in development and aid policy other than its traditional job of facilitating trade growth and so its role in aid for trade is unclear coherence especially when interpreted as allowing developing countries to avoid trade liberalization in the name of development has confused and weakened the doha round of wto negotiations

estimating neighborhood choice models lessons from a housing assistance experiment we use data from a housing assistance experiment to estimate a model of neighborhood choice the experimental variation effectively randomizes the rents which households face and helps identify a key structural parameter access to two randomly selected treatment groups and a control group allows for out of sample validation of the model we simulate the effects of changing the subsidy use constraints implemented in the actual experiment we find that restricting subsidies to even lower poverty neighborhoods would substantially reduce take up and actually increase average exposure to poverty furthermore adding restrictions based on neighborhood racial composition would not change average exposure to either race or poverty jel i32 i38 r23 r38

wage adjustment under low inflation evidence from u s history data from recent years indicate that employers are especially unlikely to cut the nominal wage rate paid for a job adjustments to real or relative wages that require absolute cuts in money wages are very rare relative to the frequency one might expect to observe based on distributions of wage changes that do not require money wage cuts erica l groshen and mark e schweitzer 1995 1997 david e lebow et al 1999 a worker who remains with the same employer from one year to the next is accordingly unlikely to report an absolute reduction in the nominal wage he receives david card and dean hyslop 1997 shulamit kahn 1997 joseph g altonji and paul j devereux 1999 the existence and causes of downward nominal wage rigidity have implications for macroeconomic outcomes and for practical issues in monetary policy presumably efficient operation of labor markets requires many downward adjustments of relative wages and occasional decreases in the overall wage level relative to product prices if the average rate of wage inflation were close to zero some of these relative or real wage adjustments would be blocked by a floor under current levels of nominal wage rates george a akerlof et al 1996 assert that downward nominal wage rigidity reflects fundamental preferences of workers and argue that it implies a central bank should target a rate of price inflation greater than zero because a target of zero inflation will impose permanent real costs on the economy p 2 the notion that downward nominal wage rigidity is a fundamental constraint so that inflation serves to grease the wheels of the labor market is controversial even among those who accept the possibility of nominal rigidities in general it has been argued that downward nominal wage rigidity as distinct from such phenomena as menu costs which would discourage adjustment of a wage in either direction david romer 1993 may be an artifact of an inflationary monetary regime and would disappear in the absence of persistent inflation nominal wage reductions would no longer be seen as unusual if the average nominal wage was not growing workers would not see them as unfair and firms would not shy away from imposing them robert j gordon 1996 p 62 see also n gregory mankiw 1996 william poole 1998 william b english 2000 to see whether downward nominal wage rigidity would exist in a noninflationary regime it may be useful to examine data from times and places where there was no persistent wage inflation for the united states at least that excludes data from years since the second world war throughout the postwar period price inflation or real wage growth has been sufficient to keep average wage inflation above zero before the second world war on the other hand long run trend rates of price inflation were often close to zero or negative robert b barsky 1987 if wage inflation was correspondingly low u s historical data may offer tests of the proposition that downward nominal wage rigidity exists even in noninflationary

an integrated model of regional and local residential sorting with application to air quality we examine the interconnectedness of demand for regionally and locally varying public goods using a residential sorting model we propose a version of the model that describes household choices at the city msa level and conditional on city the neighborhood census tract level we use a two stage budgeting argument to develop an empirically feasible sorting model that allows us to estimate preferences for regionally varying air quality while accounting for sorting at the local level our conceptual and empirical approach nests previous sorting models as special cases allowing us to assess the importance of accounting for multiple spatial scales in our predictions for the cost of air pollution furthermore our preferred specification connects the city and neighborhood sorting margins to the upper and lower elements of a nested logit model thereby establishing a useful correspondence between two stage budgeting and nested logit estimation empirically we find that estimates from a conventional model of sorting across msas imply a smaller marginal willingness to pay for air quality than estimates from our proposed model we discuss how the difference is attributable in part to the omitted variable problems arising when tract level sorting is ignored

mobility targeting and private school vouchers simulations are derived from a three district model of low middle and highincome school districts calibrated to new york data with housing stocks that vary within and across districts in this model it is demonstrated that school district targeted vouchers are similar in their impact to nontargeted vouchers but vastly different from vouchers targeted to low income households furthermore strong migration effects are shown to significantly improve the likely equity consequences of voucher programs jel 122 128 h73 persistent frustration with the perceived low quality of public education exacerbated by concerns over the inherently unequal levels of public school quality across school districts has caused policy makers courts and researchers to investigate modifications and alternatives to the current public school system one idea that has received increasing academic and public attention is that of private school vouchers with proponents arguing that the competitive pressures of voucher programs would cause improvements in the efficiency of the publicschool system while at the same time addressing equity concerns if vouchers can be targeted to low income households or low income school districts but aside from a few limited experiments in some u s cities our experience with vouchers in the united states remains virtually nonexistent this limits the amount of information researchers can derive from standard empirical analysis in that it forces them to rely on only current nonvoucher induced differences in competition despite important suggestive results such work may not anticipate all the impacts from a large scale policy such as the voucher policies currently under discussion at the same time theoretical models of school finance are also limited in that they often either focus on only one particular aspect of the general equilibrium school finance problem or they are too rich and complex to yield crisp predictions

housing markets and residential segregation impacts of the michigan school finance reform on inter and intra district sorting abstract local financing of public schools in the u s leads to a bundling of two distinct choices residential choice and school choice and has been argued to increase the degree of socioeconomic segregation across school districts a school finance reform aimed at equalization of school finances can in principle weaken this link between housing choice and choice of schools in this paper we study the impacts of the michigan school finance reform of 1994 proposal a on spatial segregation the reform was a state initiative intended to equalize per pupil expenditures between michigan school districts and reduce the role of local financing we find that proposal a led to a decline in neighborhood sorting within education markets as measured by changes in the value of housing stock and several socioeconomic indicators we also find that the reform affected the dispersion of incomes and educational attainment within school districts increasing within district heterogeneity in the lowest spending school districts while decreasing the same in the highest spending districts however there is a continued high demand for residence in the highest spending communities these findings are robust to various alternative definitions of education market and survive several sensitivity checks these spatial segregation patterns are not replicated in neighboring ohio that did not face similar school finance equalization

why is it so difficult trade liberalization under the doha agenda many explanations have been offered for the current difficulties of the world trade organization wto in fact the system appears to have managed many of these challenges reasonably well including the increase in the number of members its mediaeval decision making procedures the changing geopolitical environment the rapid growth of preferential trade arrangements ptas the complexity of its agreements and concerns about erosion of unilateral preferences by contrast the near exhaustion of the traditional fuel of industrial country non agricultural tariffs the increasing importance of non trade concerns and incomplete adjustment to a new multi polar negotiating system appear to be important factors requiring further examination

a behavioral explanation for nominal wage rigidity during the great depression nominal wages in manufacturing were left unchanged by the large decline in nominal demand that marked the first two years of the great depression this rigidity in nominal wages is explained using the tools of the behavioral theory of the firm the emphasis is on the reasons firms changed their decision rules linking fluctuations in final sales to changes in nominal wages

aid and trade this paper surveys the recent theoretical and empirical literature that explores the relations between aid and trade and asks about the complementarity or substitution effects at work we distinguish between the effects of aid on trade flows and on trade policies of the donor as well as the recipient countries special focus is given on trade facilitation or aid for trade

multilateral trade cooperation what next this paper first briefly describes the role of the wto and its history it then lays out a simple bargaining model of international negotiations which can be used for understanding the doha round of talks this simple framework is used to distil and discuss a number of potential explanations for the difficulties that have arisen in concluding these talks as well as a number of systemic questions that confront wto members a key question is whether the wto should concentrate primarily on market access or on further expanding its coverage to deal with regulatory issues or with other domestic policies that may have an impact on trade given the difficulties that arise in agreeing on behind the border disciplines we argue that a continued focus on market access and enforcement of market access commitments is likely to prove most fruitful

downward wage rigidity in italy micro based measures and implications using the 1985 99 whip data we find a sizable amount of downward wage rigidity in italy with a prevalence of real over nominal rigidity the results hold when real rigidity is identified either with reference to collective bargaining dispositions or to price inflation consistently with the labour market reforms of the early 1990s downward rigidities have become less important over time with the reduction in real rigidities more than offsetting the rise in nominal rigidities we also find that downward wage rigidities are positively related to labour reallocation and local unemployment rates hinting at the macroeconomic relevance of our estimates

income taxes sorting and the costs of housing evidence from municipal boundaries in switzerland this paper provides novel evidence on the role of income taxes for residential rents and spatial sorting drawing on comprehensive apartment level data we identify the effects of tax differentials across municipal boundaries in switzerland the boundary discontinuity design bdd corrects for unobservable location characteristics such as environmental amenities or the access to public goods and thereby reduces the estimated response of housing prices by one half compared to conventional estimates we identify an income tax elasticity of rents of about 0 26 we complement this approach with census data on local sociodemographic characteristics and show that about one third of this effect can be traced back to a sorting of high income households into low tax municipalities these findings are robust to a matching approach mbdd which compares identical residences on opposite sides of the boundary and a number of further sensitivity checks

cost of living real wages and real incomes in thirteen canadian cities 1900 1950 price indices for thirteen canadian cities for 1900 to 1950 demonstrate large regional differences in cost of living until 1914 after 1914 regional price levels converged before the war western canadian cities had the highest cost of living after 1920 cities in ontario had the highest cost of living accounting for these trends in regional costs of living reveals that regional real wage and real income structures have been present and stable since at least 1901 thus regional wage and income disparities are long standing and persistent features of the canadian economy cout de la vie salaires reels et revenus reels dans treize villes canadiennes les indices de prix pour treize villes canadiennes entre 1900 et 1950 montrent qu il y avait de fortes differences dans le cout de la vie jusqu en 1914 apres 1914 il y a convergence des niveaux de prix regionaux avant la guerre les villes de l ouest canadien avaient le cout de la vie le plus eleve apres 1920 des villes de l ontario vont avoir le plus haut cout de la vie si l on tient compte de ces tendances regionales dans les niveaux du cout de la vie il appert que des structures de salaires et de revenus reels ont ete en place et stables depuis 1901 donc les disparites regionales de salaires et de revenus sont des caracteristiques deja anciennes et persistantes de l economie canadienne

estimating housing demand with an application to explaining racial segregation in cities we present a three stage nonparametric estimation procedure to recover willingness to pay for housing attributes in the first stage we estimate a nonparametric hedonic home price function in the second stage we recover each consumer s taste parameters for product characteristics using first order conditions for utility maximization finally in the third stage we estimate the distribution of household tastes as a function of household demographics as an application of our methods we compare alternative explanations for why blacks choose to live in center cities while whites suburbanize

a critique of tiebout s theory of local public expenditures the last section of this paper presents a rigorous version of tiebout s theory of local public goods it is shown that equilibria exist and are pareto optimal this rigorous theory follows closely the more rigorous part of tiebout s work this rigorous theory makes a number of very special assumptions which make local public goods essentially private the body of this paper presents a series of examples which show that if one tries to generalize the rigorous version of tiebout s theory in a number of interesting directions then equilibria may no longer exist or may not be pareto optimal the conclusion is that tiebout s idea does not lead to a satisfactory general theory of local public goods the goal of this paper is to point out that tiebout s notion of equilibrium with local governments does not have the nice properties of general competitive equilibrium except under very restrictive assumptions tiebout 39 suggested that there are competitive forces which tend to make local governments allocate resources in a pareto optimal fashion consumers choose to live in those towns with the mix of taxes and public goods they prefer local governments choose this mix so as to attract inhabitants this idea may seem intriguing for it suggests that the invisible hand solves an important part of samuelson s perplexing public goods problem 32 tiebout in fact makes an argument which is nearly rigorous i give a rigorous version of his argument at the end of the paper however in this rigorous version so many restrictive assumptions are made that public goods become essentially private in the body of the paper i give a series of examples with which i try to convince the reader that one is forced to adopt tiebout s restrictive assumptions the idea is that if one changes any of his assumptions then either equilibria may not exist or may not be pareto optimal my examples are presented in the context of a general class of tiebout models i consider several subclasses one of which is the special case considered by tiebout in each of the subclasses except that considered by tiebout i give a counterexample either to the existence of equilibrium or to its pareto optimality the subclasses are so chosen that the difficulties they reveal would be shared by any reasonable tiebout model which differed from his special case i believe that my examples controvert tiebout s suggestion 39 last paragraph that his theory compares favorably with competitive equilibrium theory most of the examples in this paper have already appeared in the literature i cite related work as i go along what is new here is that i assemble the examples in a unified argument

public provision of private goods government may provide a good that can if legally permitted be supplemented by private purchases policy is determined by majority rule under standard assumptions on preferences a majority voting equilibrium exists a regime of positive government provision with no restriction on private supplements is shown to be majority preferred to a regime of either only market provision or only government provision combined public and private expenditure on the good is higher under this dual provision regime than under either of the alternatives under some preference configurations the median income voter is pivotal under others a voter with income below the median is pivotal

assessing the efficiency of local open space provision abstract this paper tests the efficiency of local provision of land conservation i examine how housing prices which capitalize open space amenities and future tax obligations change after municipalities vote on referendums for conservation spending using a dynamic regression discontinuity based on voting outcomes results suggest that average housing prices increase about 0 68 1 12 for every 1000 per household of open space spending authorized which indicates inefficiency and underprovision of conservation i also examine tax capitalization and supply side explanations for estimated capitalization

the political economy of services trade liberalization a case for international regulatory cooperation little progress has been made since the creation of the wto on expanding and deepening the coverage of services liberalization commitments this paper identifies and discusses five hypotheses that may explain the absence of dynamism i technological changes allowing ever more services to be traded cross border unaffected by policy ii strong incentives to pursue liberalization on an autonomous basis unilaterally iii perceptions that bilateral or regional cooperation are a good substitute for the wto iv standard political economy factors such as adjustment costs and resistance by incumbents to erosion of rents and v concerns that the wto will affect the ability of regulators to enforce national norms we argue that all of these explanations play a role and that some of these factors significantly impede the scope for reciprocal exchanges of concessions the engine of wto negotiations copyright the author 2007 published by oxford university press

tiebout sorting and neighborhood stratification tiebout s classic 1956 paper has strong implications regarding stratification across and within jurisdictions predicting in the simplest instance a hierarchy of internally homogeneous communities ordered by income typically urban areas are less than fully stratified and the question arises how much do departures from standard tiebout assumptions contribute to observed within neighborhood mixing this paper quantifies the separate effects of employment geography via costly commuting and preferences for housing attributes on neighborhood stratification it does so using an equilibrium sorting model estimated with rich census micro data simulations based on the model and credible preference estimates show that counterfactual reductions in commuting costs lead to marked increases in racial and education segregation and to a lesser degree increases in income segregation given that households now find it easier to locate in neighborhoods with like households while turning off preferences for housing characteristics increases racial segregation especially for blacks doing so reduces income segregation indicating that heterogeneity in the housing stock serves to stratify households based on ability to pay further we show that differences in housing help to accentuate differences in the consumption of local amenities

land use worker heterogeneity and welfare benefits of public goods we show that investments in public goods change the optimal land use in their vicinity leading to additional welfare benefits this occurs through two sorting mechanisms first availability of public goods leads to higher population densities second population groups sort according to their preferences for public goods we develop a structural spatial general equilibrium model that accounts for these effects the model is estimated using data on transport infrastructure commuting behaviour land use and land rents for some 3000 zip codes in the netherlands and for three levels of education welfare benefits of investments in public transport infrastructure are shown to differ sharply by workers educational attainment welfare gains from changes in land use account for up to 30 of the total benefits of a transport investment

regional free trade areas sorting out the tangled spaghetti as a result of the difficulties in negotiating the liberalization of trade globally countries seek liberalization among smaller groups we describe open regionalism as one such attempt to do this and show why after a decade of success it ran into the ground as a strategy the formation of discriminatory regional free trade areas ftas is sometimes seen as another response to this problem this paper point outs what is wrong with this response that it distorts trade patterns and thereby sets up an unpleasant prisoner s dilemma and suggests some ways forward we propose the formation of open trading arrangements otas and the establishment of a trade transparency commission in each country that is participating in an ota we also suggest global regulation of trade diversions caused by all ftas whether otas or not ultimately the return to health of the global trading system will require expanded understanding of the basic insight of economics that liberalization enhances the welfare of citizens of the liberalizing country

heterogeneity stratification and growth macroeconomic implications of community structure and school finance this paper examines how socioeconomic stratification and alternative systems of education finance affect inequality and growth agents interact through local public goods or externalities school funding neighborhood effects and economywide linkages complementary skills knowledge spillovers sorting families into homogeneous communities often minimizes the costs of existing heterogeneity but mixing reduces heterogeneity faster integration therefore tends to slow down growth in the short run yet raise it in the long run a move to state funding of education presents society with a similar intertemporal trade off local and global complementarities play major roles in determining the efficient social and educational structures copyright 1996 by american economic association

the disintegrating canadian labour market the extent of the market then and now analysis of real wages for three occupations in 13 canadian cities for 1901 50 suggests canada had a national labour market at least until 1950 however analysis of real wages for 10 canadian cities for 1971 2000 yields little evidence favouring integration of canada s regional labour markets the apparent lack of labour market integration reflects a weakness of an approach that assumes markets are in equilibrium unemployment rates after 1970 suggest that some regional markets may be characterized by excess labour supply analysis of relative provincial unemployment rates yields evidence consistent with local labour force adjustment to changing labour market conditions jel classification e24 j61 le marche du travail en desintegration au canada l etendue du marche alors et maintenant les auteurs analysent les salaires reels pour trois occupations dans 13 villes canadiennes au cours de la periode 1901 50 et suggerent que le canada a joui d un marche du travail qui etait national tout au moins jusqu a 1950 toutefois l analyse des salaires reels dans 10 villes canadiennes au cours de la periode 1971 2000 ne fournit pas de resultats supportant l idee d integration des marches regionaux du travail on suggere que le manque apparent d integration du marche du travail est l effet d echo d une approche qui presume que les marches sont en equilibre la periode de l apres 1970 en est une ou les taux de chomage suggerent plutot que certains marches regionaux peuvent etre raisonnablement caracterises comme definis par une offre excedentaire de travail une analyse des taux de chomage provinciaux relatifs revele que la force de travail locale s ajuste aux conditions changeantes du marche du travail