can falling supply explain the rising return to college for younger men a cohort based analysis although the college high school wage gap for younger u s men has doubled over the past 30 years the gap for older men has remained nearly constant in the united kingdom and canada the college high school wage gap also increased for younger relative to older men using a model with imperfect substitution between similarly educated workers in different age groups we argue that these shifts reflect changes in the relative supply of highly educated workers across age groups the driving force behind these changes is the slowdown in the rate of growth of educational attainment that began with cohorts born in the early 1950s in all three countries

on the optimal design of place based policies a structural evaluation of eu regional transfers we quantify general equilibrium effects of place based policies in a multi region framework with population mobility trade and agglomeration economies using detailed data on eu transfers we infer the local effects of different transfer types on productivity income and transportation cost based on these estimates and the general equilibrium model we derive the spatial distribution of economic activity and the resulting aggregate welfare effects if i no transfers were paid and taxes set to zero ii transfers were distributed uniformly iii transfers were welfare optimally distributed characterizing the optimal distributions we reveal complementarities between transfer types and between transfers and local endowments

the effect of the sloping land conversion programme on farm household productivity in rural china abstractthe objective of this paper is to examine the treatment effect on farm household productivity induced by the sloping land conversion program using large balanced household level data from five provinces during 1996 2010 this study shows that the slcp significantly improved the productivity of participants during the first round of funding of the programme until 2008 while the effects decreased gradually in the second round with most years not showing significant differences moreover it is found that there are heterogeneous effects on farm household productivity between the south and north as well as between poor and rich regions

the comparative advantage of cities abstract what determines the distributions of skills occupations and industries across cities we develop a theory to jointly address these fundamental questions about the spatial organization of economies our model incorporates a system of cities their internal urban structures and a high dimensional theory of factor driven comparative advantage it predicts that larger cities will be skill abundant and specialize in skill intensive activities according to the monotone likelihood ratio property we test the model using data on 270 us metropolitan areas 3 to 9 educational categories 22 occupations and 19 industries the results provide support for our theory s predictions

tricks with hicks the easi demand system we invent implicit marshallian demands which combine desirable features of hicksian and marshallian demands we propose and estimate the exact affine stone index easi implicit marshallian demand system like the almost ideal demand aid system easi budget shares are linear in parameters given real expenditures however unlike the aid easi demands can have any rank and its engel curves can have any shape over real expenditures easi error terms equal random utility parameters to account for unobserved preference heterogeneity easi demand functions can be estimated using gmm or three stage least squares and like aid an approximate easi model can be estimated by linear regression

the impact of climate change on internal migration in brazil abstract business as usual climate change forecasts point to sharp temperature rises and agriculture yield losses in many regions of brazil we study the impact of these changes on internal migration and population distribution we employ a spatial equilibrium model in which the climate shapes workers locational choices through the usual amenity value channel and the novel indirect channel via agriculture wages our simulations reveal that migration rates are 9 65 higher and that 0 9 million more people migrate inter regionally under future climate conditions furthermore climate change will likely exacerbate the country s regional inequalities as the most developed regions gain population and welfare while the least developed regions lose

natural amenities neighbourhood dynamics and persistence in the spatial distribution of income we present theory and evidence highlighting the role of natural amenities in neighbourhood dynamics suburbanization and variation across cities in the persistence of the spatial distribution of income our model generates three predictions that we confirm using a novel database of consistent boundary neighbourhoods in u s metropolitan areas 1880 2010 and spatial data for natural features such as coastlines and hills first persistent natural amenities anchor neighbourhoods to high incomes over time secondly naturally heterogeneous cities exhibit persistent spatial distributions of income thirdly downtown neighbourhoods in coastal cities were less susceptible to the widespread decentralization of income in the mid twentieth century and experienced an increase in income more quickly after 1980

accounting for central neighborhood change 1980 2010 abstract after 1980 2000 population decline and economic stagnation downtown neighborhoods in most large us cities experienced 2000 2010 population growth and gentrification stark racial differences in valuations of downtown amenities and suburban labor market opportunities among those with less than college that only emerged after 2000 are the primary drivers of these downtown neighborhood dynamics as college educated whites moved in increases in valuations of downtown amenities encouraged other whites to remain in downtowns a reversal from prior decades continued departures of less than college educated minorities were driven both by relative improvements in suburban employment opportunities for this group and their continued declines in valuations of downtown amenities our evidence highlights the importance of racial differences in valuations of potentially endogenous local amenities for understanding recent downtown gentrification

the economic implications of housing supply in this essay we review the basic economics of housing supply and the functioning of us housing markets to better understand the distribution of home prices household wealth and the spatial distribution of people across markets we employ a cost based approach to gauge whether a housing market is delivering appropriately priced units specifically we investigate whether market prices roughly equal the costs of producing the housing unit if so the market is well functioning in the sense that it efficiently delivers housing units at their production cost the gap between price and production cost can be understood as a regulatory tax the available evidence suggests but does not definitively prove that the implicit tax on development created by housing regulations is higher in many areas than any reasonable negative externalities associated with new construction we discuss two main effects of developments in housing prices on patterns of household wealth and on the incentives for relocation to high wage high productivity areas finally we turn to policy implications

endogenous gentrification and housing price dynamics in this paper we begin by documenting substantial variation in house price growth across neighborhoods within a city during citywide housing price booms we then present a model which links house price movements across neighborhoods within a city and the gentrification of those neighborhoods in response to a citywide housing demand shock a key ingredient in our model is a positive neighborhood externality individuals like to live next to richer neighbors this generates an equilibrium where households segregate based upon their income in response to a citywide demand shock higher income residents will choose to expand their housing by migrating into the poorer neighborhoods that directly abut the initial richer neighborhoods the in migration of the richer residents into these border neighborhoods will bid up prices in those neighborhoods causing the original poorer residents to migrate out we refer to this process as endogenous gentrification using a variety of data sets and using bartik variation across cities to identify city level housing demand shocks we find strong empirical support for the model s predictions

earnings functions when wages and prices vary by location economists generally assume implicitly that the return to schooling is invariant across local labor markets we demonstrate that this outcome pertains if and only if preferences are homothetic a special case that seems unlikely our theory predicts that returns to education will instead be relatively low in expensive high amenity locations our analysis of u s data provides support for this contention returns to college are especially low in such cities as san francisco and seattle our findings call into question standard empirical exercises in labor economics that treat the returns to education as a single parameter

driving to opportunity local rents wages commuting costs and sub metropolitan quality of life we examine variation in local rents wage levels commuting costs household characteristics and amenities within metropolitan areas for 2071 areas covering the united states by density and central city status we demonstrate the sensibility of estimating wage levels by workplace not residence and recover decentralized rent gradients that fall with commuting costs we construct and map a willingness to pay index which indicates the quality of life typical households receive from local amenities when households are similar mobile and informed this index varies considerably within metros and is typically high in areas that are dense suburban sunny mild safe entertaining and have elevated school funding

secular labor reallocation and business cycles we study the eect of mean preserving idiosyncratic industry shocks on business cycle outcomes we develop an empirical methodology using a local area s exposure to industry reallocation based on the area s initial industry composition and employment trends in the rest of the country over a full employment cycle using confidential employment data by local area and industry over the period 1980 2014 we find sharp evidence of reallocation contributing to worse employment outcomes during national recessions but not during national expansions we repeat our empirical exercise in a multi area multi sector search and matching model of the labor market the model reproduces the empirical results subject to inclusion of two key empirically plausible frictions imperfect mobility across industries and downward nominal wage rigidity combining the empirical and model results we conclude that reallocation can generate substantial amplification and persistence of business cycles at both the local and the aggregate level

income distribution and housing prices an assignment model approach we present a framework for studying the relation between the distributions of income and house prices that is based on an assignment model where households are heterogeneous by incomes and houses by quality each household owns one house and wishes to live in one house thus everyone is potentially both a buyer and a seller in equilibrium the distribution of prices depends on both distributions in a tractable but nontrivial manner we show how the impact of increased income inequality on house prices depends on the shapes of the distributions and can be inferred from data in our empirical application we find that increased income inequality between 1998 and 2007 had a negative impact on average house prices in 6 us metropolitan areas jel d31 r21

causes of sprawl a portrait from space we study the extent to which u s urban development is sprawling and what determines differences in sprawl across space using remote sensing data to track the evolution of land use on a grid of 8 7 billion 30 30 meter cells we measure sprawl as the amount of undeveloped land surrounding an average urban dwelling the extent of sprawl remained roughly unchanged between 1976 and 1992 although it varied dramatically across metropolitan areas ground water availability temperate climate rugged terrain decentralized employment early public transport infrastructure uncertainty about metropolitan growth and unincorporated land in the urban fringe all increase sprawl

contemporary echoes of segregationist policy spatial marking and the persistence of inequality the home owners loan corporation holc established in the us during the great depression to provide relief to a failing housing market had a lasting effect through institutionalising the segreg

environmental inequality and economic valuation i study how the economic value of a heterogeneously distributed environmental public good depends on how the endowment with this good and income are distributed i find that the effect of environmental inequality on the societal willingness to pay wtp for the environmental good is determined both by its substitutability and by the correlation of its provision with income specifically environmental inequality decreases societal wtp for substitutes but this effect is reversed if the environmental good is a complement or distributed strongly in favour of richer households moreover i show that richer households living in places where environmental good endowment is high increases decreases societal wtp if and only if the environmental good is a substitute for complement to consumption goods i propose novel adjustment factors for structural benefit transfer to control for differences in the spatial distribution of environmental goods using forest preservation in poland as an empirical example i find that societal wtp is up to 4 higher for equal access to forests and up to 8 higher for an equal distribution of both income and access to forests

the economics of density evidence from the berlin wall this paper develops a quantitative model of internal city structure that features agglomeration and dispersion forces and an arbitrary number of heterogeneous city blocks the model remains tractable and amenable to empirical analysis because of stochastic shocks to commuting decisions which yield a gravity equation for commuting flows to structurally estimate agglomeration and dispersion forces we use data on thousands of city blocks in berlin for 1936 1986 and 2006 and exogenous variation from the city s division and reunification we estimate substantial and highly localized production and residential externalities we show that the model with the estimated agglomeration parameters can account both qualitatively and quantitatively for the observed changes in city structure we show how our quantitative framework can be used to undertake counterfactuals for changes in the organization of economic activity within cities in response for example to changes in the transport network

environmental expenditure spillovers evidence from an estimated multi area dsge model abstract this article constructs and estimates a multi area dynamic stochastic general equilibrium model with a spatial simultaneous equation taking beijing tianjin hebei region in china as an example we explain the dynamic effect of environmental expenditure shock and its spillover effects environmental expenditure has an obvious crowding out effect on consumption and investment in local area but has some positive influences on the economy of external regions over the business cycle environmental expenditure shock in local area can well explain the volatility of real output and social investment in the last 52 quarters however environmental expenditure shocks in external regions have little contribution to the volatility of output and investment in local area one interesting result is that the contribution of environmental expenditure shocks in external regions to the trend of pollution fluctuation is greater than that in local area

should the personal computer be considered a technological revolution evidence from u s metropolitan areas the introduction and diffusion of personal computers are widely viewed as a technological revolution using u s metropolitan area level panel data this paper asks whether links between pc adoption educational attainment and the return to skill conform to a model of technological revolutions in which the speed and extent of adoption are endogenous the model implies that cities will adjust differently to the arrival of a more skill intensive means of production with the returns to skill increasing most where skill is abundant and its return is low we show that the cross city data fit many of the predictions of the model during the period 1980 2000 the pc diffusion era

competition and investment in telecommunications this study examines the relationship between competition and investment by incumbert local exchange carriers ilecs in us telecommunications markets a panel data model and a dynamic panel data model that have not been used in previous studies are applied in this analysis results of the panel data model suggest that investment by ilecs is positively related to the market share of competitive local exchange carriers clecs and negatively to the absolute number of clecs however once the persistence in ilecs investment behaviour is controlled for using the dynamic model our measures of the existing competition from clecs at best have a weak effect on ilecs investment therefore while strengthening competition in the telecom sector may be key to restoring telecom investment it is uncertain that competition spurred by the mandatory sharing policy in this sector stimulates ilecs incentives to invest in new infrastructure

urban population and amenities the neoclassical model of location we develop a neoclassical general equilibrium model to explain cross metro variation in population and density we provide new methods to estimate traded and non traded productivities and elasticities of housing and land supply using density and land area data from wage and housing cost indices the model explains half of u s density and population variation and finds that quality of life determines location choices more than trade productivity productivity and factor substitution in housing matter most but are weak in nicer areas relaxing land use regulations would increase population in the west raising both quality of life and productivity experienced by residents

old homes externalities and poor neighborhoods a model of urban decline and renewal abstract this paper investigates urban decline and renewal in the united states using three panels that follow neighborhoods on a geographically consistent basis over extended periods of time findings indicate that change in neighborhood economic status is common averaging roughly 13 percent per decade roughly two thirds of neighborhoods studied in 1950 were of quite different economic status fifty years later panel unit root tests for 35 msas indicate that neighborhood economic status is a stationary process consistent with long running cycles of decline and renewal in philadelphia county a complete cycle appears to last up to 100 years aging housing stocks and redevelopment contribute to these patterns as do local externalities associated with social interactions lower income neighborhoods appear to be especially sensitive to the presence of individuals that provide social capital many of the factors that drive change at the local level have large and policy relevant effects

does history matter only when it matters little the case of city industry location when will an industry subject to agglomeration economies move from an old high cost site to a new low cost site it is argued that history in the form of sunk costs resulting from the operation of many firms at a site creates a first mover disadvantage that can prevent relocation it is demonstrated that developers of industrial parks can partly overcome this inertia through discriminatory pricing of land over time and empirical evidence is provided that they actually engage in such behavior it is also shown that other aspects of developer land sale strategy can be a source of information on the nature of interfirm externalities

conservation payments liquidity constraints and off farm labor impact of the grain for green program on rural households in china this study evaluates the labor response of rural households participating in the grain for green program in china the largest payments for ecosystem services program in the developing world using a panel data set that we designed and implemented we find that the participating households are increasingly shifting their labor endowment from on farm work to the off farm labor market however the effects vary depending on the initial level of human and physical capital the results support the view that one reason why the participants are more likely to find off farm employment is because the program is relaxing households liquidity constraints

economic inequality and the value of nature abstract understanding what influences the value of nature is crucial for informing environmental policy from a sustainability perspective economic valuation should not only seek to determine a society s willingness to pay for environmental goods to devise an efficient allocation of scarce resources but should also account for distributional effects to ensure justice yet how economic inequality affects the value of non market environmental goods remains understudied combining recently developed theoretical results with empirical evidence this commentary shows that more equal societies have a higher valuation for environmental public goods and that non market benefits of environmental policy accrue over proportionally to poorer households on this ground we discuss implications for environmental valuation management and policy making and identify a number of fruitful areas for future research we conclude that environmental valuation should explicitly account for economic inequality and that encompassing assessments of the distributional effects of environmental policies must consider the distribution of non market environmental benefits

who wins who loses understanding the spatially differentiated effects of the belt and road initiative this paper examines how cities and regions within countries are likely to adjust to trade openness and improved connectivity driven by large transport investments from china s belt and road initiative the paper presents a quantitative economic geography model alongside spatially detailed information on the location of people economic activity and transport costs to international gateways in central asia to identify which places are likely to gain and which places are likely to lose the findings are that urban hubs near border crossings will disproportionately gain while farther out regions with little comparative advantage will be relative losers complementary investments in domestic transport networks and trade facilitation are complementary policies and can help in spatially spreading the benefits however barriers to domestic labor mobility exacerbate spatial inequalities whilst dampening overall welfare

tipping and the dynamics of segregation schelling dynamic models of segregation journal of mathematical sociology 1 1971 143 186 showed that extreme segregation can arise from social interactions in white preferences once the minority share in a neighborhood exceeds a tipping point all the whites leave we use regression discontinuity methods and census tract data from 1970 through 2000 to test for discontinuities in the dynamics of neighborhood racial composition we find strong evidence that white population flows exhibit tipping like behavior in most cities with a distribution of tipping points ranging from 5 to 20 minority share tipping is prevalent both in the suburbs and near existing minority enclaves in contrast to white population flows there is little evidence of nonlinearities in rents or housing prices around the tipping point tipping points are higher in cities where whites have more tolerant racial attitudes

tarnishing the golden and empire states land use restrictions and the u s economic slowdown abstract this paper studies the impact of state level land use restrictions on u s economic activity focusing on how these restrictions have depressed macroeconomic activity since 2000 we use a variety of state level data sources together with a general equilibrium spatial model of the united states to systematically construct a panel dataset of state level land use restrictions between 1950 and 2014 we show that these restrictions have generally tightened over time particularly in california and new york we use the model to analyze how these restrictions affect economic activity and the allocation of workers and capital across states counterfactual experiments show that deregulating existing urban land from 2014 regulation levels back to 1980 levels would have increased us gdp and productivity roughly to their current trend levels california new york and the mid atlantic region expand the most in these counterfactuals drawing population out of the south and the rustbelt general equilibrium effects particularly the reallocation of capital across states account for much of these gains

wages rents and the quality of life this study focuses on the role of wages and rents in allocating workers to locations with various quantities of amenities the theory demonstrates that if the amenity is also productive then the sign of the wage gradient is unclear while the rent gradient is positive the theory is extended to include the housing market and nontraded goods these extensions require little modification of the conclusion the empirical work on wages shows that the regional wage differences can be explained largely by these local attributes with the use of site price data implicit prices are estimated and quality of life rankings for the cities are computed

strategic sharing in regulatory regimes abstract a firm subject to price cap regulation pcr disciplines the regulator s choice of entry accommodation rule through a convex combination of earnings and effort sharing the first best level of cost reducing effort is not achieved in this model even under pure pcr

demand models for direct mail and periodicals delivery services results for a transition economy this article examines the demand for services of the slovenian national postal operator for the direct mail and periodicals market and separately for the direct mail market the main factors of the demand are found to be various price indicators with respect to individual market two income series and the variable of economic environment the results of our empirical analysis suggest that the price elasticity of demand on both markets is below zero the autonomy in price increases is limited due to positive cross price elasticity of demand for direct mail with regard to price fluctuations for tv commercials substitution effects on the direct mail market are even more evident with regard to price fluctuations for advertisements in magazines and daily papers an additional finding is that the demand on both markets varies seasonally in all models estimated by us finally coefficients of income elasticity of demand for direct mail services show that the total number of mail deliveries on the direct mail ma

regulation and investment use newly assembled data on regulation in several sectors of many oecd countries to provide evidence that regulatory reform of product markets is associated with an increase in investment a component of reform that plays a very important role is entry liberalization but privatization also has a substantial effect on investment sensitivity analysis suggests that our results are robust jel e22 l5

firming up inequality earnings inequality in the united states has increased rapidly over the last three decades but little is known about the role of firms in this trend for example how much of the rise in earnings inequality can be attributed to rising dispersion between firms in the average wages they pay and how much is due to rising wage dispersion among workers within firms similarly how did rising inequality affect the wage earnings of different types of workers working for the same employer men vs women young vs old new hires vs senior employees and so on to address questions like these we begin by constructing a matched employer employee data set for the united states using administrative records covering all u s firms between 1978 to 2012 we show that virtually all of the rise in earnings dispersion between workers is accounted for by increasing dispersion in average wages paid by the employers of these individuals in contrast pay differences within employers have remained virtually unchanged a finding that is robust across industries geographical regions and firm size groups furthermore the wage gap between the most highly paid employees within these firms ceos and high level executives and the average employee has increased only by a small amount refuting oft made claims that such widening gaps account for a large fraction of rising inequality in the population

power couples changes in the locational choice of the college educated 1940 1990 college educated couples are increasingly located in large metropolitan areas these areas were home to 32 percent of all college educated couples in 1940 39 percent in 1970 and 50 percent in 1990 we investigate whether this trend can be explained by increasing urbanization of the college educated or the growth of dual career households and the resulting severity of the colocation problem we argue that the latter explanation is the primary one smaller cities may therefore experience reduced inflows of human capital relative to the past and thus become poorer

trickle down consumption abstract we document that nonrich households consume a larger share of their current income when exposed to higher top income and consumption levels permanent income wealth effects and upward local price pressures cannot provide the sole explanation for this finding instead we show that the budget shares that nonrich households allocate to more visible goods and services rise with top income levels consistent with status maintaining explanations for our primary finding nonrich households might have saved up to 3 more annually by the mid 2000s had incomes at the top grown at the same rate as median income since the early 1980s

the sloping land conversion program in china effect on the livelihood diversification of rural households summary through addressing the motivations behind rural households livelihood diversification this paper examines the effect of the sloping land conversion program slcp on livelihood diversification using a longitudinal household survey data set spanning the overall implementation of the slcp our results show that the slcp works as a valid external policy intervention to increase rural livelihood diversification in addition the findings demonstrate that the implementation of the slcp has had heterogeneous effects on livelihood diversification across different rural income groups the lower income group was more affected by the program in terms of income diversification

amenities and regional differences in returns to worker characteristics average wages in regions in the united states vary considerably in trying to explain these differences in the average wage across regions a number of studies have found that differences in the returns to characteristics of workers such as years of schooling are as important as differences in the skill composition of the labor force 4 6 10 141 these differences in returns are generally interpreted as reflecting regional differences in demand for worker characteristics coupled with barriers to factor mobility this interpretation is based on the argument that the presence of at least one perfectly mobile factor with perfect information will cause spatial convergence in characteristic prices as that particular factor exploits any spatial price differential 4 p 2161 this paper suggests an alternative to this demand based explanation for regional differences in the structure of wages one based on regional differences in the supply of worker characteristics this explanation does not rely on impediments to the movement of workers or firms and is consistent with an equilibrium view of wages in which regional wage differentials are viewed as compensation for local amenities the theoretical model presented in the following section assumes capital and labor are perfectly mobile with perfect information implying that in equilibrium the utility of workers with similar characteristics is the same in all locations this convergence of utility however does not necessarily imply convergence of characteristic prices equilibrium differences in the returns to a specific worker characteristic can exist if worker characteristics affect an individual s valuation of an area s amenities relative to the individual s demand for land

why has regional income convergence in the u s declined the past thirty years have seen a dramatic decrease in the rate of income convergence across states and in population flows to wealthy places these changes coincide with 1 an increase in housing prices in productive areas 2 a divergence in the skill specific real returns to living in productive places 3 a redirection of low skilled migration and 4 diminished human capital convergence due to migration we develop a model where falling housing supply elasticity and endogenous labor mobility generates these patterns using a new panel measure of housing supply regulations we demonstrate the importance of this channel income convergence continues in less regulated places while it has stopped in more regulated places

the new economics of labor migration this paper reviews selected theoretical and empirical developments in the field of labor migration economics the migration behavior of individuals differs in accordance with their perceived relative deprivation those who are relatively more deprived tend to have stronger incentive to migrate than those who are relatively less deprived moreover a reference group characterized by more income inequality is likely to generate more relative deprivation highly skilled workers are also more likely to migrate migration decisions are often made jointly by the migrant and nonmigrant with a contractual arrangement regarding the sharing of costs and returns the exchange of commitments to share income provides coinsurance of particular interest are the determinants of the speed of adoption of migration as an innovation and the characteristics associated with the delay in the adoption of innovation new econometric techniques including techniques for the analysis of qualitative dependent variables techniques that correct for sample selection bias and those for the analysis of longitudinal data have substantially benefited empirical research in this area new methods that can correct for the biased estimate of the wages particular individuals would receive at 2 or more locations at the same point in time allow researchers to test locational decsion making models estimates of these structural models of labor migration support the hypothesis that individuals respond to income incentives in making the decsion to migrate further research is needed on the pazzling observation that migrant workers earn less than native born workers with similar characteristics during the 1st few years after migration but more thereafter other topics that need further research include the macroeconomic effects of migration the microeconomic and macroeconomic relationships between aging and labor migration and the migration behavior of dual earner families

the determinants and welfare implications of us workers diverging location choices by skill 1980 2000 abstract from 1980 to 2000 the rise in the us college high school graduate wage gap coincided with increased geographic sorting as college graduates concentrated in high wage high rent cities this paper estimates a structural spatial equilibrium model to determine causes and welfare consequences of this increased skill sorting while local labor demand changes fundamentally caused the increased skill sorting it was further fueled by endogenous increases in amenities within higher skill cities changes in cities wages rents and endogenous amenities increased inequality between high school and college graduates by more than suggested by the increase in the college wage gap alone jel d31 i26 j24 j31 j61 r23

wages rents and amenities differences among workers and regions what explains persistent regional earnings differences this paper argues that regional differences in amenities can account for the wage differences in contrast cost of living variations do not account for wage differences but actually exacerbate them this conclusion results from a model in which variations in rents and wages are equalizing differences for amenity differences empirical results are consistent with the model

shift share designs theory and inference we study inference in shift share regression designs such as when a regional outcome is regressed on a weighted average of sectoral shocks using regional sector shares as weights we conduct a placebo exercise in which we estimate the effect of a shift share regressor constructed with randomly generated sectoral shocks on actual labor market outcomes across u s commuting zones tests based on commonly used standard errors with 5 nominal significance level reject the null of no effect in up to 55 of the placebo samples we use a stylized economic model to show that this overrejection problem arises because regression residuals are correlated across regions with similar sectoral shares independent of their geographic location we derive novel inference methods that are valid under arbitrary cross regional correlation in the regression residuals we show using popular applications of shift share designs that our methods may lead to substantially wider confidence intervals in practice

the effects of china s sloping land conversion program on agricultural households in the late 1990s china aimed to mitigate environmental degradation from agricultural production activities by introducing the world s largest payments for environmental services pes program the sloping land conversion program slcp in order to analyze its effects on agricultural households we develop a microeconomic agricultural household model ahm which can model the production consumption and non farm labor supply decisions of agricultural households in rural china in a theoretically consistent fashion based on this theoretical model we derive an empirical specification that we use to econometrically estimate the effects of the slcp and other exogenous factors using a large longitudinal farm household survey data set we estimate the empirical model with the hausman taylor estimation method the empirical results are generally consistent with the results of our theoretical comparative static analysis e g that the slcp significantly decreases agricultural production while the slcp increases non farm labor supply and total consumption in the yellow river basin these effects could not be observed in the yangtze river basin the recent reduction of the slcp compensation payment rates has had some notable but generally small effects

the wider impacts of high technology employment evidence from u s cities abstract innovative high technology industries are commonly described as drivers of regional development tech workers earn high wages but they are also said to generate knock on effects throughout the local economies that host them spurring growth in jobs and wages in nontradable activities at the same time in iconic high tech agglomerations like the san francisco bay area the home of silicon valley the success of the tech industry creates tensions in part as living costs rise beyond the reach of many non tech workers across a large sample of u s cities this paper explores these issues systematically combining annual data on wages employment and prices from the quarterly census of employment and wages the department of housing and urban development and the consumer price index it estimates how growth in tradable tech employment affects the real living cost deflated wages of local workers in nontradable sectors results indicate that high technology employment has significant positive but modest effects on the real wages of workers in nontradable sectors these effects appear to be spread consistently across different kinds of nontradable activities in terms of substantive wider impacts tech appears benign though fairly ineffectual

moving toward markets labor allocation in rural china abstract china s economic reforms have brought rapid growth in rural off farm employment raising questions about the assumption that rural china is labor surplus and has poorly functioning factor markets we investigate this by testing for separability between household labor demand and supply using panel data we find that separability is rejected overall indicating that factor markets remain underdeveloped nonseparability however is associated with labor surplus in some areas and labor shortage in others moreover separability holds where substantial employment opportunities exist in the wider township suggesting that such employment promotes competitive allocation within villages as well as the inter village movement of resources

the impact of coupled and decoupled government subsidies on off farm labor participation of u s farm operators with the 1996 farm act the united states introduced payments that were designed to be decoupled labor allocation choices are likely to be affected by receipt of payments and income from off farm jobs has been the major source of income for most farm households for sometime this article examines whether the 1996 change has affected the off farm labor participation of farm households we conclude that the observed increase in off farm participation of farm operators who received payments was not the result of the 1996 policy change government payments whether coupled or decoupled have a negative effect on off farm labor participation

identifying human capital externalities theory with applications the identification of aggregate human capital externalities is still not fully understood the existing mincerian approach confounds positive externalities with wage changes due to a downward sloping demand curve for human capital as a result the mincerian approach yields positive externalities even when wages equal marginal social products we propose an approach that identifies human capital externalities whether or not aggregate demand for human capital slopes downward another advantage of our approach is that it does not require estimates of the individual return to human capital applications to u s cities and states between 1970 and 1990 yield no evidence of significant average schooling externalities copyright 2006 wiley blackwell

housing urban growth and inequalities the limits to deregulation and upzoning in reducing economic and spatial inequality urban economics and branches of mainstream economics what we call the housing as opportunity school of thought have been arguing that shortages of affordable housing in dense agglomerations r

cluster sample methods in applied econometrics inference methods that recognize the clustering of individual observations have been available for more than 25 years brent moulton 1990 caught the attention of economists when he demonstrated the serious biases that can result in estimating the effects of aggregate explanatory variables on individual specific response variables the source of the downward bias in the usual ordinary least squares ols standard errors is the presence of an unobserved state level effect in the error term more recently john pepper 2002 showed how accounting for multi level clustering can have dramatic effects on t statistics while adjusting for clustering is much more common than it was 10 years ago inference methods robust to cluster correlation are not used routinely across all relevant settings in this paper i provide an overview of applications of cluster sample methods both to cluster samples and to panel data sets

rural household income distribution and inequality in china effects of payments for ecosystem services policies and other factors in the late 1990s china initiated the conversion of croplands to forest program ccfp and the ecological welfare forest program ewfp based on the payments for ecosystem services pes principle positive socioeconomic outcomes of the programs are essential for the long term success of eco environment conservation however there is lack of understanding of their longer term over 10 years impacts on rural livelihoods in this paper we examine income distribution and inequality of rural households under ccfp and ewfp in rural anhui china after 12 years of program implementation results show that ccfp participating households have higher income inequality than non participants while the ewfp does not have an significant effect local off farm work and out migration with remittances are the two principal income sources and both add to inequality a regression based decomposition of inequality shows that the ccfp indirectly alters livelihoods by increasing out migration with remittances but it also adds to inequality from shifting livelihoods to non agricultural activities meanwhile ewfp payments positively affect agricultural incomes and contribute 16 to agricultural income inequality finally human capital natural capital and physical capital all play important roles in generating income and inequality but the factors affecting inequality from agricultural and non agricultural activities are different

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

spatial equilibrium with unemployment and wage bargaining theory and estimation abstract in this paper we present a spatial equilibrium model where search frictions hinder the immediate reallocation of workers both within and across local labor markets because of the frictions firms and workers find themselves in bilateral monopoly positions when determining wages although workers are not at each instant perfectly mobile across cities in the baseline model we assume that workers flows are sufficient to equate expected utility across markets we use the model to explore the joint determination of wages unemployment house prices and city size or migration a key role of the model is to clarify conditions under which this type of spatial equilibrium setup can be estimated we then use u s data over the period 1970 2007 to explore the fit and quantitative properties of the model our main goal is to highlight forces that influence spatial equilibria at 10 year intervals

land retirement and nonfarm labor market participation an analysis of china s sloping land conversion program summary china s sloping land conversion program pays more than 32 million households to plant trees on highly erodible cropland and has effected major land use changes farmers retire land indefinitely but receive time limited subsidies after which they in principle enter nonfarm employment we analyze annual data we collected on over 3 000 individuals and plots from 1998 2006 which contain variation in enrollment timing and alternative measures of enrollment and conclude enrollment has a small but significant and robust positive effect on nonfarm employment it arises not from alleviating constraints as recent papers have suggested but rather from simple farm to nonfarm labor substitution

immigration and inequality immigration is often viewed as a proximate cause of the rising wage gap between highand low skilled workers nevertheless there is controversy over the appropriate theoretical and empirical framework for measuring the presumed effect and over the precise magnitudes involved this paper offers an overview and synthesis of existing knowledge on the relationship between immigration and inequality focusing on evidence from cross city comparisons in the u s while some researchers have claimed that a cross city research design is inherently flawed i argue that the evidence from cross city comparisons is remarkably consistent with recent findings based on aggregate time series data in particular cross city and aggregate time series comparisons provide support for three key conclusions 1 workers with below high school education are perfect substitutes for those with a high school education 2 high school equivalent and college equivalent workers are imperfect substitutes with an elasticity of substitution on the order of 2 3 within education groups immigrants and natives are imperfect substitutes together these results imply that the average impacts of recent immigrant inflows on the relative wages of u s natives are small the effects on overall wage inequality including natives and immigrants are larger reflecting the concentration of immigrants in the tails of the skill distribution and higher residual inequality among immigrants than natives even so immigration accounts for a small share 5 of the increase in u s wage inequality between 1980 and 2000

history and the sizes of cities abstract we contrast evidence of urban path dependence with efforts to analyze calibrated models of city sizes recent evidence of persistent city sizes following the obsolescence of historical adv