housing market responses to transaction taxes evidence from notches and stimulus in the uk we investigate housing market responses to transaction taxes using administrative data on all property transactions in the u k from 2004 to 2012 combined with quasi experimental variation from tax notches and tax stimulus we present two main findings first transaction taxes are highly distortionary across a range of margins causing large distortions to the price volume and timing of property transactions secondly temporary transaction tax cuts are an enormously effective form of fiscal stimulus a temporary elimination of a 1 transaction tax increased housing market activity by 20 in the short run due to both timing and extensive responses and less than half of the stimulus effect was reversed after the tax was reintroduced due to re timing because of the complementarities between moving house and consumer spending these stimulus effects translate into extra spending per dollar of tax cut equal to about 1 we interpret our empirical findings in the context of a housing model with downpayment constraints in which leverage amplifies the effects of transaction taxes

e ztax tax salience and tax rates this paper examines whether the salience of a tax system affects equilibrium tax rates i analyze how tolls change after toll facilities adopt electronic toll collection etc drivers are substantially less aware of tolls paid electronically i estimate that in steady state tolls are 20 to 40 percent higher than they would have been without etc consistent with a salience based explanation for this toll increase i find that under etc driving becomes less elastic with respect to the toll and toll setting becomes less sensitive to the electoral calendar alternative explanations appear unlikely to be able to explain the findings

time deposits dimensions and fraud we stipulate arguendo that fractional reserve demand deposit banking is per se fraudulent we ask whether or not time deposit banking can also be illicit and answer in the positive if there is a mismatch between the time dimensions of deposits and loans to wit if an intermediary borrows short and lends long

are environmental fiscal incentives effective in inducing energy saving renovations an econometric evaluation of the french energy tax credit abstract fiscal incentives have been introduced to encourage households in many countries to undertake energy saving renovations this paper assesses the impact of an energy tax credit on i renovation rate and ii renovation expenditures using french data we exploit a sharp discontinuity corresponding to the introduction of the french tax credit in 2005 to identify the policy s effects results indicate that the tax credit has little effect on the decision to renovate increasing renovations by 1 09 ceteris paribus we find that the presence of free riding reduces the actual effect of fiscal measures however this fiscal policy does lead to an increase in renovation expenditures by 21 76 all things being equal this suggests that the energy tax credit induces households who are already determined to renovate to perform more substantial energy saving renovations we conduct a robustness check using the matching method which confirms our results

differentiated contracts heterogeneous borrowers and the mortgage choice decisions previous analyses of mortgage choice assume that adjustable rate mortagages are standard contracts and estimate bivariate models the authors estimate a multinomial logit model that explicitly treats mortgages as differentiated contracts and provides insights on several important issues the impact of price variables differs significantly across alternative mortgage contracts borrower heterogeneity particularly mobility influences the type of contract chosen and borrowers respond to market conditions as expected when choosing between alternative mortgage contracts copyright 1995 by ohio state university press

moving and housing expenditure transaction costs and disequilibrium abstract this paper specifies and estimates a model of rental housing expenditure that explicitly incorporates moving transaction costs parameter estimates reveal low income elasticities and substantial moving costs which vary considerably among families the model is employed to evaluate the effects of proposed subsidy schemes simulated responses indicate that high moving costs deter many families from adjusting current rental expenditure to higher levels in response to subsidies an additional dollar of unconstrained subsidy payment will on average increase rental expenditures by only 2 7 cents schemes with minimum rent requirements are also quite ineffective and involve substantial deadweight loss comparisons of the model predictions with estimated program effects based on experimental data are also included

the impact of transaction costs and the expected length of stay on homeownership abstract economic theory suggests that an increase in the expected length of stay in a dwelling increases the probability of a household choosing to own a house rather than rent this hypothesis is derived from recognition that there are substantial transaction costs associated with homeownership and increased expected time in the home reduces the annualized transaction cost using a military data set we confirm that expected length of stay in a dwelling and the transaction costs of selling are very important to the ownership decision our best estimate of the transaction costs of selling a home are the sum of 3 of house value and 4 of household earnings

an empirical test of credit rationing in the mortgage market abstract recent theoretical models of credit rationing suggest that mortgages are rationed with nonprice terms on the basis of default risk despite the development of secondary mortgage markets and the deregulation of deposit rates we test this hypothesis using aggregate time series data on fha and conventional mortgage originations fha loans are more expensive for borrowers but provide federal guarantees which protect lenders against default losses for this reason fha loans should be subject to easier credit constraints than conventional mortgages and the fha share of mortgage originations should increase with aggregate default risk default risk is proxied by a bond rate quality spread consistent with previous studies our results imply that default risk induced mortgage rationing persists in the post disintermediation era but that fha programs help offset the overall impact of rationing on housing markets

foreign direct investment heterogeneous workers and employment security evidence from germany we analyze how foreign direct investment fdi affects employment security using administrative microdata for german employees measuring fdi intensity at the industry level enables us to take into account the sum of direct effects at multinationals as well as indirect effects of fdi throughout the affected industry we find that both inward and outward fdi significantly reduce employment security this is particularly the case for inward fdi coming from the western part of the european union as well as for outward fdi going to central and eastern europe the effects are sizeable for older and low skilled workers

capitalization and the theory of local public finance the tiebout literature is incomplete this paper argues because it has not fully accounted for the capitalization of local fiscal variables into house values the paper explains why capitalization arises why it persists in long run equilibrium how it affects both residential location and the outcome of local voting and why it interferes with the efficiency of a system of local governments the analysis which is based on the main tiebout assumptions plus a property tax combines a model of household bids in a housing market with a median voter model of local public service determination

migration housing market and labor market responses to employment shocks abstract one reason for the united states economic success is the willingness of its residents to follow jobs households decisions to move depend not only on job prospects but also on the relative cost of housing i investigate how the housing market affects the flow of workers across cities this occurs through at least two channels the relative mobility of homeowners versus renters and the relative cost of housing across markets i use homeownership rates to measure the former and use an index that measures house prices across metropolitan statistical areas msas and the price elasticity of housing supply to capture the latter to show how variation in the these housing market factors not only affects cross city migration but also the housing and labor markets i estimate a var model of migration employment wages house prices and new housing supply using annual data from 277 us msas for 1990 2006 the response functions based on labor supply and demand shocks show substantial variation when evaluated at different values of the homeownership rate the price elasticity of housing supply and relative housing prices i also allow for spillover effects in the model that reflect the impact of a labor demand shock in the nearest city

toward a reconstruction of utility and welfare economics the phenomenon of an individual assessment of benefits is the cornerstone of economic theory the principal feature of which is that this theory does not deal with material objects things economic theory examines the logical properties of individual assessment and investigation of their existence of course the things are also elements of the picture since there can be no assessment of what is subject to evaluation however the essence and the driving force of human activity and hence the market economy as a specifically human phenomenon is rooted in the assessments of individuals the action is the result of a variety of options to choose from and this selection reflects the values that is an individual preference to any of them

the decision to move house and aggregate housing market dynamics using data on house sales and inventories this paper shows that housing market dynamics are driven mainly by listings and less so by transaction speed thus the decision to move house is key to understanding the housing market the paper builds a model where moving house is essentially an investment in match quality implying that moving depends on macroeconomic developments and housing market conditions the endogeneity of moving means there is a cleansing effect those at the bottom of the match quality distribution move first which generates overshooting in aggregate variables the model is applied to the 1995 2004 housingmarket boom

leaving teaching in the uk a duration analysis in this paper the authors analyze the decision by teachers to leave the profession their results affirm the importance of relative earnings in the tenure and turnover decisions of teachers the econometric modeling approach used yields important insights into the appropriateness of adopting a flexible semiparametric specification of the duration dependence structure and of the unobserved heterogeneity distribution in duration models copyright 1995 by royal economic society

replacement or additional purchase the impact of energy efficient appliances on household electricity saving under public pressures abstract this study examined the influence of additional and replacement purchases of energy efficient air conditioners on power savings we used a questionnaire survey and measured electricity use data from 339 japanese households collected from two city areas with different level of government requested electricity saving rates namely osaka 10 and matsuyama 5 the main findings of our study are as follows 1 households that purchased energy efficient air conditioners saved more electricity than those that did not 2 additional purchase households showed significant energy savings whereas replacement households did not the rebound effect may negate the energy saving effects of a new air conditioner 3 altruistic attitude is associated with more active participation in power saving 4 households in osaka saved more electricity than those in matsuyama probably because the government call to save electricity was more forceful

rejoinder to bagus and howden on borrowing short and lending long in barnett and block j bus ethics 88 4 711 716 2009a the present authors claim that borrowing short and lending long is fraudulent and thus ought to be prohibited on legal grounds bagus and howden j bus ethics 90 3 399 2009 take issue with our ethical analysis the present paper is our response to these authors it is an attempt to defend barnett and block j bus ethics 88 4 711 716 2009a against the very interesting and important although we believe erroneous criticisms of bagus and howden j bus ethics 90 3 399 2009

offshoring and outsourcing potentials evidence from german micro level data this paper provides two indicators that measure i offshoring potentials cross country geographical relocation and ii outsourcing potentials organisational relocation separately at the level of jobs occupations tasks and industries we use four waves of the bibb baua labour force survey in germany and apply principal component analysis based on a large set of potential determinants of offshoring and outsourcing derived from the literature our results show significant variation across these levels in the determinants of both dimensions we provide a comprehensive empirical classification of the determinants of how easily jobs can be offshored and outsourced this can serve as a basis for further research to investigate the economic effects of job offshoreability

the joint determination of union status and union wage effects some tests of alternative models the problems of estimation and interpretation of union wage differentials are examined the properties of cross section and longitudinal estimators are compared estimates are presented and those in the literature summarized conflicting results are obtained longitudinal estimators typically produce results smaller than those of ols while cross section methods instrumental variables or inverse mills ratio raise the estimate the paper offers a reconciliation of these results it supports a more optimistic conclusion than that reached in reviews by freeman and lewis who argued that little has been learned from attempts to deal with the endogeneity issue comparisons between estimators are used to throw light on the process governing union status and to suggest interpretations of union differentials consistent with the current evidence

mortgage terminations heterogeneity and the exercise of mortgage options as applied to the behavior of homeowners with mortgages option theoiy predicts that mortgage prepayment or default will be exercised if the call or put option is in the money by some specific amount our analysis tests the extent to which the option approach can explain default and prepayment behavior evaluates the practical importance of modeling both options simultaneouisly and models the unobserved heterogeneity of borrowers in the home mortgage market the paper presents a uinified model of the competing risks of mortgage termination by prepayment and default considering the two hazards as dependent competing risks that are estimated jointly it also accounts for the unobserved heterogeneity among borrowers and estimates the unobserved heterogeneity simultaneously with the parameters and baseline hazards associated with prepayment and default functions our results show that the option model in its most straightfolward version does a good job of explaininig default and prepayment but it is not enouigh by itself the simultaneity of the options is very important empirically in explaining behavior the results also show that there exists significant heterogeneity among mortgage borrowers ignoring this heterogeneity results in serious errors in estimating the prepayment behavior of homeowners

offshoring tasks and the skill wage pattern the paper investigates the relationship between offshoring wages and the occupational task profile using rich individual level panel data our main results suggest that when only considering within industry changes in offshoring we identify a moderate wage reduction due to offshoring for low skilled workers though wage effects in relation to the task profile of occupations are not estimated with sufficient precision however when allowing for cross industry effects of offshoring i e allowing for labor mobility across industries negative wage effects of offshoring are quite substantial and depend strongly on the task profile of workers occupations a higher degree of interactivity and in particular non routine content effectively shields workers against the negative wage impact of offshoring

interest rates income and home improvement decisions abstract the demand for additional housing is modeled demonstrating that higher interest rates make home improvements more attractive relative to moving when homeowners hold fixed rate mortgages technological constraints on home improvements make improving less attractive relative to moving when incomes have risen empirical evidence using cross sectional data is presented suggesting that the probability of making home improvements is positively related to increases in the current interest rate and negatively related to increases in income an explanation is offered for the recent rise in home improvement expenditures in the face of slower economic growth and higher mortgage interest rates

home ownership and unemployment in the us in this paper we scrutinise oswald s evidence that home ownership and unemployment are correlated across the us states in order to abstract from state fixed effects in levels we analyse the cross sectional variation in changes in home ownership and unemployment rates between 1970 and 1990 after duplicating nearly oswald s result we illustrate the importance of weighting the state observations by the fraction of total us households in 1970 that resided in the respective states and of abstracting from the ageing of the population between 1970 and 1990 this causes oswald s correlation to to disappear secondly we estimate the relationship for six different age classes and for household heads and total population we find that the relationship is non existent for both young households and old households but exists for middle aged households young households have accumulated little wealth and have had less time to become attached to the geographical area than middle aged households and thus are more

interest rate variations mortgage prepayments and household mobility the volatility of interest rates and the deregulation of the mortgage lending sector have meant that many homeowners also own mortgages at terms more favorable than current interest rates this paper presents a model of residential mobility decisions and an empirical analysis that evaluates the importance of the ownership of these mortgages upon the mobility of homeowners the results based upon proportional and nonproportional hazard models indicate that these effects are quite large the empirical analysis distinguishes between different regulatory regimes that govern the assumption of existing mortgages and indicates the implications of these findings for the pricing and valuation of mortgage backed securities copyright 1987 by mit press

credit rationing race and the mortgage market abstract this study applies microdata from the 1983 survey of consumer finances to evaluate the effects of borrower race and default risk in mortgage lending the empirical analysis is based on a probit model of whether borrowers obtain fha or conventional mortgages the former are fully insured and are characterized by easier downpayment constraints but are typically more expensive hence households borrowing through the fha will tend to be credit constrained in the conventional market results of the analysis indicate that variables which proxy lender concerns about default risk and cost have an important effect on the type of loan borrowers obtain empirical estimates also suggest that minority households are significantly less likely to obtain conventional financing than whites even after controlling for various proxies of default risk these results suggest that race effects in mortgage lending may persist for reasons unrelated to borrower default risk

who is credit constrained in the u s economy an important assumption of the life cycle model of consumption is the postulate of perfect capital markets this hypothesis has recently been challenged by substantial empirical evidence hall and mishkin 1982 using the panel study of income dynamics estimate that 20 percent of united states families are liquidity constrained mariger 1986 derives a life cycle model with endogenous liquidity constraints and using a cross section estimates this fraction to be 19 4 percent hubbard and judd 1986 simulate a model with a constraint on net worth which shows that with reasonable assumptions about preferences 19 0 percent of united states consumers are liquidity constrained the emerging consensus points therefore to a fraction of approximately 20 percent of the population behaving in a manner that is inconsistent with the pure life cycle model in addition hayashi 1985 and zeldes 1989 investigate the correlation among consumption wealth and income for various population groups and infer that liquidity constraints are more important for younger families with low levels of wealth and saving the main limitation of these studies is that in their data sets constrained consumers are not observable and have to be identified via indirect evidence thus there is as yet little firm evidence about the characteristics of the consumers who are likely to be credit constrained this paper adopts an approach that differs from previous tests for liquidity constraints because it makes use of data where constrained consumers are observable and explicitly links their existence to credit market imperfections and personal characteristics the data drawn from the 1983 survey of consumer finances scf and described in section ii provide information on individuals whose request for credit has been rejected by financial intermediaries in section iii a model is developed in which consumers and lenders behavior jointly determines the probability that a consumer is rationed in the credit market this probability is then

the legitimacy of loan maturity mismatching a risky but not fraudulent undertaking barnett and block journal of business ethics 2009 attack the heart of modern banking by claiming that the practice of borrowing short and lending long is illicit while their claim of illegitimacy concerning fractional reserve banking can be defended their justification lacks substance their claim is herein strengthened by a legal analysis of deposits and loans based on huerta de soto money bank credit and economic cycles 2006 a combined legal and economic analysis shows that while lending deposits can be regarded as illicit the maturity mismatching of loans is legitimate contrary to barnett and block s claim no over issuance of property rights is involved with this practice once the distinction between present and future goods is taken into account however while the practice is not illicit per se it is greatly assisted and developed through the presence of a fractional reserve banking system and can sometimes breed detrimental effects

optimal tax salience abstract recent empirical work finds that consumers under account for commodity taxes when the after tax price is not prominent i investigate how policymakers may utilize such low salience taxes to promote welfare the optimal combination of high and low salience taxes balances two competing effects low salience taxes dampen distortionary substitution but cause consumers to misallocate their budgets using a stylized model i show the availability of taxes with differing salience provides an extra degree of freedom that can be used to implement the first best welfare outcome i characterize the optimal policy and derive a formula for incremental adjustments when the first best is unattainable

services offshoring and its impact on productivity and employment evidence from germany 1995 2006 economists have recently recognised services offshoring as an important influence on domestic labour market outcomes services are of particular interest since their significance has grown in terms of both quantity and quality only one and a half decades ago most services were considered non tradable but the emergence and development of new information and communication technologies has made many services internationally tradable the liberalisation of international trade in services trade has further accelerated the volume of services trade our econometric estimations focus on services offshoring by german manufacturing sectors we use revised input output data from 1995 to 2006 we first estimate the impact of services offshoring on labour productivity we then measure the effects of services offshoring on labour demand the results show that services offshoring increased sectoral labour productivity but reduced german manufacturing employment the overall results suggest that labour demand decreased over 1995 2006 because labour reducing productivity and substitution effects dominated labour augmenting scale effects from services offshoring

fixed rate mortgages labor markets and efficiency the paper studies the effects of mortgage choices between fixed rate mortgages frms and adjustable rate mortgages arms on labor market efficiency frms provide insurance for risk averse borrowers in the sense that they pay the same rate over time and are not subject to uncertain spot market rates frms however discourage borrowers from moving to other regions despite better employment opportunities as they terminate the frm contracts in order to move and their new loan interests may be higher as frm borrowers do not move to other regions due to the interest lock ins entrepreneurs in other regions lose the potential surpluses from productive matches that would have occurred between borrowers workers and entrepreneurs borrowers ignore this negative externality they impose on the entrepreneurs when choosing their mortgages and too many borrowers choose frms relative to the efficient level if frms are eliminated and arm insurance that protects arm borrowers against uncertain adjustable interest rates is created it will improve efficiency the paper also assesses quantitatively the welfare effects of eliminating frms and providing arm insurance

the econometrics of piecewise linear budget constraints a survey and exposition of the maximum likelihood method in this article maximum likelihood techniques for estimating consumer demand functions when budget constraints are piecewise linear are exposited and surveyed consumer demand functions are formally derived under such constraints and it is shown that the functions are themselves nonlinear as a result the econometric problems in estimating such functions are exposited and the importance of the stochastic specification is stressed in particular the specification of both unobserved heterogeneity of preferences and measurement error econometric issues in estimation and testing are discussed and the results of the studies that have been conducted to date are surveyed

shrouded attributes consumer myopia and information suppression in competitive markets bayesian consumers infer that hidden add on prices e g the cost of ink for a printer are likely to be high prices if consumers are bayesian firms will not shroud information in equilibrium however shrouding may occur in an economy with some myopic or unaware consumers such shrouding creates an inefficiency which firms may have an incentive to eliminate by educating their competitors customers however if add ons have close substitutes a curse of debiasing arises and firms will not be able to profitably debias consumers by unshrouding add ons in equilibrium two kinds of exploitation coexist optimizing firms exploit myopic consumers through marketing schemes that shroud high priced add ons in turn sophisticated consumers exploit these marketing schemes it is not possible to profitably drive away the business of sophisticates it is also not possible to profitably lure either myopes or sophisticates to nonexploitative firms we show that informational shrouding flourishes even in highly competitive markets even in markets with costless advertising and even when the shrouding generates allocational inefficiencies

entrepreneurial error does not equal market failure barnett and block 2015 claim that bagus and howden 2012b support indirectly the concept of market failure in this paper we show that maturity mismatching in an unhampered market may imply entrepreneurial error but cannot be considered a market failure we demonstrate why fractional reserve banking leads to business cycles even if there is no central bank and why maturity mismatching does not per se lead to clusters of errors in a free market finally in contrast to the examples provided by barnett and block we assure that maturity mismatching does not imply the creation of two incompatible contracts due to the fungible nature of money

optimal mortgage refinancing a closed form solution we derive the first closed form optimal refinancing rule refinance when the current mortgage interest rate falls below the original rate by at least in this formula w is the principal branch of the lambert w function where is the real discount rate is the expected real rate of exogenous mortgage repayment is the standard deviation of the mortgage rate is the ratio of the tax adjusted refinancing cost and the remaining mortgage value and is the marginal tax rate this expression is derived by solving a tractable class of refinancing problems our quantitative results closely match those reported by researchers using numerical methods

quota prices as indicators of comparative advantage in supply managed industries the canadian farm products agencies act 2012 requires that comparative advantage be used to guide the allocation of new quota under supply management this requirement however has not been met in practice agricultural economists have proposed several ways of making this legal requirement operational we review and evaluate these proposed approaches and find that quota prices are the only direct measure of comparative advantage in supply managed industries we develop an agent based general equilibrium model of quota exchange to illustrate the use of quota prices as indicators of comparative advantage our approach complements the proposal by meilke 2009 to use quota prices as indicators of comparative advantage in supply managed industries and also addresses the concerns of larue and gervais 2008 that quota prices may not be theoretically consistent with comparative advantage we also discuss potential practical challenges of using quota prices as indicators of comparative advantage in the canadian supply managed industries finally we provide an example of calculating provincial shares of new quota using recent quota price data according to two prototype decision rules this abstract was borrowed from another version of this item

understanding gentrification an empirical analysis of the determinants of urban housing renovation abstract the back to the city phenomenon presented an unpredicted countercurrent in the prevalent tide of suburbanization and this process of upper income resettlement in the inner city has been thoroughly analyzed in the urban economic literature housing renovation a process that always accompanies gentrification and constitutes a significant portion of residential housing investment has been studied much less contrary to the expectation that location matters the existing empirical studies have concluded that most neighborhood amenities and structural attributes are insignificant as determinants of renovation using a detailed parcel level data set that documents all residential renovation activity in chicago between 1995 and 2000 this paper establishes that the characteristics of a building and its neighborhood do indeed influence the likelihood that it will be renovated

economic and social status in household decision making evidence relating to extended family mobility summary models of the allocation of household resources use as a decision rule either the maximisation of a household utility function or the solution to a nash bargaining game the literature on residential mobility has exclusively used the former to analyse the household s decision to change location this is despite the strong empirical evidence that allocations in other areas are more consistent with the bargaining model in this paper micro data from taipei taiwan are used to determine which approach is most appropriate for studying housing mobility decisions the mobility decisions of nuclear and different types of extended family household are compared to test whether the social and economic roles of different generations affect the household decision process as is consistent with the bargaining approach thus household mobility is analysed with a richer description of household structure than is found in the current literature which implicitly treats households as either a nuclear family or some smaller unit the results support the bargaining model of household decision making conditional probabilities differ between nuclear and extended families when a member of the eldest generation in an extended household is the household head and when a member of the eldest generation contributes to household earnings of these it is found that economic status is paramount to social status

taxpayer confusion evidence from the child tax credit we develop an empirical test for whether households understand or misperceive their marginal tax rate our identifying variation comes from the loss of the child tax credit when a child turns 17 using this age discontinuity we find that despite this tax liability increase being lump sum and predictable households reduce their reported wage income upon discovering they have lost the credit this finding suggests that households misinterpret at least part of this tax liability change as an increase in their marginal tax rate this evidence supports the hypothesis that tax complexity can cause confusion and leads to unintended behavioral responses jel d12 d14 h24 h31

house price responses to a national property tax reform abstract we show that house prices in general did not respond to a substantial cut in the national property tax in sweden the estimates are based on rich register data covering more than 100 000 sales over a time period of two and a half years because the swedish property tax is national and thus unrelated to local public goods our setting is ideal for causal identification of the property tax on house prices we observe price increases only in a small segment of the market containing properties with very high tax values we discuss but can admittedly not empirically discriminate between several potential explanations for why we find no evidence of capitalization except for the top segment of the market

the continuing continuum problem of deposits and loans barnett and block j bus ethics 18 2 179 194 2011 argue that one cannot distinguish between deposits and loans due to the continuum problem of maturities and because future goods do not exist both essential characteristics that distinguish deposit from loan contracts in a similar way but leading to opposite conclusions cachanosky forthcoming maintains that both maturity mismatching and fractional reserve banking are ethically justified as these contracts are equivalent we argue herein that the economic and legal differences between genuine deposit and loan contracts are clear this implies different legal obligations for these contracts a necessary step in assessing the ethics of both fractional reserve banking and maturity mismatching while the former is economically legally and perhaps most importantly ethically problematic there are no such troubles with the latter

you can take it with you proposition 13 tax benefits residential mobility and willingness to pay for housing amenities abstract the endogeneity of prices has long been recognized as the main identification problem in the estimation of marginal willingness to pay mwtp for the characteristics of a given product this issue is particularly important in the housing market since a number of housing and neighborhood features are unobserved by the econometrician this paper proposes the use of a well defined type of transaction costs moving costs generated by property tax laws to deal with this type of omitted variable bias california s proposition 13 property tax law is the source of variation in transaction costs used in the empirical analysis beyond its fiscal consequences proposition 13 created a lock in effect on housing choice because of the implicit tax break enjoyed by homeowners living in the same house for a long time its importance to homeowners is estimated from a natural experiment created by two amendments that allow households headed by an individual over the age of 55 to transfer the implicit tax benefit to a new home indeed 55 year old homeowners have 25 higher moving rates than those of comparable 54 year olds these transaction costs from the property tax laws are then incorporated into a household sorting model the key insight is that because of the property tax laws different potential buyers may have different user costs for the same house the exogenous property tax component of this user cost is then used as an instrumental variable i find that mwtp estimates for housing characteristics are approximately 100 upward biased when the choice model does not account for the price endogeneity

moving and improving strategies for attaining housing equilibrium the concept of equilibrium consumption is central to much housing market analysis yet analysts must contend with the likelihood that many housing consumers are not at an exact equilibrium level of

liquidity constraints and imperfect information in subprime lending ditions for precisely the population that is most likely to have a difficult time obtaining credit those with low incomes and poor credit histories these consumers who typically cannot qualify for regular bank loans comprise the so called subprime market because the company we study originates subprime loans its loan applications and transaction records provide an unusual win dow into the consumption and borrowing behavior of households that are rationed in primary credit markets moreover we track loan repayments allowing us to analyze the difficulties in lending to the subprime population we begin by documenting the importance of short term liquidity constraints for individuals in our sample we present two pieces of evidence both are based on purchasing behavior and indicate a high sensitivity to cash on hand first we document a dramatic degree of demand seasonality associated with tax rebates overall demand is almost 50 percent higher during tax rebate season than during other parts of the year this seasonal effect varies with household

the social and private micro level consequences of homeownership abstract this paper reviews the literature that describes the micro level economic and social consequences of homeownership we adopt an interdisciplinary approach and include studies from economics sociology geography political science psychology and other disciplines our focus is on the set of consequences of homeownership in developed countries our list of potential outcomes of homeownership includes the impact on household wealth and portfolio choice mobility labor force participation urban structure and segregation home maintenance political and social activities health demographics self esteem and child outcomes there is substantial evidence that homeownership has important effects on some household behaviors and outcomes however we find that much of the past 30 year s literature on consequences of homeowning is deficient from a theoretical or econometric perspective we suggest solutions and identify research gaps present in the literature

praxeology value judgments and public policy ethics is a discipline or as we say in classical philosophy the science of what purpose people d lzhno and what not d lzhno pursue all people have a system of values and makes a positive or negative value judgments about things people or events ethics a discipline that defines the criteria for a moral critique of value judgments in the end or such discipline exists causing the possibility of a rational or objective ethical system or value judgments of each individual are purely arbitrary and based on personal preferences i ought not to try to solve here is one of the fundamental questions of philosophy but even if you believe as i believe i have in the existence of ethics as an objective science and even if you go ahead and attribute ethical judgments to the competence of the historian or social scientist one thing is certain praxeology economic theory may not in itself sln live basis for ethical suzh tions for praxeology deals with the very fact of acting men not the content of their actions sick praxeology is not based any value judgments nakakih practitioner praxeology poskolkuon deals exclusively with the analysis of the fact that people in general have no value but does not discuss their own value judgments

whose job goes abroad international outsourcing and individual job separations this paper focuses on the adjustment costs of globalisation by studying the effects of international outsourcing on individual transitions out of jobs in the danish manufacturing sector for the period 1990 2003 a competing risks duration model that distinguishes between jobto job and job to unemployment transitions is estimated outsourcing is found to increase the unemployment risk of low skilled workers but the quantitative impact is modest outsourcing is also found to reduce the job change hazard rate for all education groups thus the paper provides evidence for small adjustment costs of globalisation

property tax capitalization in a model with tax deferred assets standard deductions and the taxation of nominal interest previous property tax capitalization studies assume that families itemize that they save in taxable assets and that real interest income is taxed however many families do not itemize many families invest in tax deferred assets and nominal interest income is taxed as a consequence prior studies likely misspecify the property tax capitalization equation for roughly ninety percent of their samples taking federal tax provisions into account increases the precision of our estimated capitalization rate in addition our results suggest that biases in prior studies likely contribute to the variety of capitalization estimates in the literature

unemployment insurance and unemployment spells this paper tests the effects of the level and length of unemployment insurance benefits on unemployment durations the paper particularly studies individual behavior during the weeks just prior to when benefits lapse higher unemployment insurance benefits are found to have a strong negative effect on the probability of leaving unemployment however the probability of leaving unemployment rises dramatically just prior to when benefits lapse individual data are used with accurate information of spell durations and the level and length of benefits the semiparametric estimation techniques used in the paper yield more plausible estimates than conventional approaches and provide useful diagnostics copyright 1990 by the econometric society

maturity mismatching and market failure the present article is a continuation of the debate two sets of authors bagus and howden vs barnett and block have been engaging in regarding one type of maturity mismatching borrowing short and lending long bsll all four authors had agreed that this practice can set up the austrian business cycle the present author denies that bsll would be a legitimate commercial interaction in the free society bagus and howden continue to maintain that it would be licit our main criticism of bagus and howden is a reductio ad absurdum that this opens them up to the charge of embracing the doctrine of market failure this is something highly problematic for the two of them since all four contributors to this debate are well known supporters of laissez faire capitalism

occupational specificity of human capital we find that returns to occupational tenure are substantial everything else being constant 5 years of occupational tenure are associated with an increase in wages of 12 20 moreover when occupational experience is taken into account tenure with an industry or employer has relatively little importance in accounting for the wage one receives this finding is consistent with human capital being occupation specific

globalization outsourcing and wage inequality there is considerable debate over whether international trade has contributed to the declining economic fortunes of less skilled workers one issue that has become lost in the current discussion is how firms respond to import competition and how these responses in turn are transmitted to the labor market in previous work we have argued that outsourcing by which we mean the import of intermediate inputs by domestic firms has contributed to an increase in the relative demand for skilled labor in the united states if firms respond to import competition from low wage countries by moving non skill intensive activities abroad then trade will shift employment towards skilled workers within industries in this paper we extend our previous work by combining new import data from the revised nber trade database with disaggregated data on input purchases from the census of manufactures we construct industry by industry estimates of outsourcing for the period 1972 1990 and reexamine whether outsourcing has contributed to an increase in relative demand for skilled labor our main finding is that outsourcing can account for 31 51 of the increase in the relative demand for skilled labor that occurred in u s manufacturing industries during the 1980s compared to our previous estimate of 15 33 this abstract was borrowed from another version of this item

a european cross country comparison of the impact of homeownership and transaction costs on job tenure de graaff t and van leuvensteijn m a european cross country comparison of the impact of homeownership and transaction costs on job tenure regional studies this paper looks at the impacts across european countries of homeownership and transaction costs on job tenure the analysis is based on a representative household sample of fourteen european countries covering the period 1994 2001 these data are merged with country specific transaction tax data and aggregate homeownership rates similar to previous microeconomic studies the results indicate that homeownership reduces job mobility as well as the probability of becoming unemployed or economically inactive it is found however that this effect is severely mitigated by two factors first it decreases when aggregate homeownership rates are higher thus homeowners have larger job tenures but more so in countries with low homeownership rates second transaction costs on the housing market are positively associated with the probability of becoming

winners and losers a micro level analysis of international outsourcing and wages our paper investigates the link between international outsourcing and wages utilizing a large household panel and combining it with industry level information on industries outsourcing activities from input output tables this approach avoids prob lems such as aggregation bias potential endogeneity bias and poor skill definitions that commonly hamper industry level studies we find that outsourcing has had a marked impact on wages applying two alternative skill classifications we find evidence that a 1 percentage point increase in outsourcing reduced the wage for workers in the lowest skill categories by up to 1 5 while it increased wages for high skilled workers by up to 2 6 this result is robust to a number of different specifications jel classification f16 j31 gagnants et perdants une analyse micro economique de la sous traitance internationale et des salaires ce memoire etudie le lien entre la sous traitance internationale et les salaires a l aide de donnees d un grand panel de menages qu on combine avec des donnees au niveau des industries sur les activites de sous traitance de celles qui en font obtenues des tableaux interindustriels cette approche evite les problemes qui habituellement polluent les etudes au niveau de l industrie biais d agregation biais d endogeneite potentielle mauvaises definitions des habiletes on decouvre que la sous traitance a un effet sur les salaires a l aide de differentes formes de classification des habiletes il appert qu un point de pourcentage d augmentation dans la sous traitance reduit les salaires des travailleurs dans les categories d habilete les plus basses de 1 5 alors qu il accroit les salaires de travailleurs specialises de 2 6 ce resultat est robuste et avere meme quand on utilise diverses specifications

the returns to computer use revisited have pencils changed the wage structure too are the large measured wage differentials for on the job computer use a true return to computer skills or do they just reflect that higher wage workers use computers on their jobs we examine this issue with three large cross sectional surveys from germany first we confirm that the estimated wage differential associated with computer use in germany is very similar to the u s differential second we also measure large differentials for on the job use of calculators telephones pens or pencils or for those who work while sitting down we argue that these findings cast some doubt on the literal interpretation of the computer use wage differential as reflecting true returns to computer use or skill

a comment on barnett and block on time deposit and bagus and howden on loan maturity mismatching in time deposits dimension and fraud 2009 william barnett and walter block argue that by borrowing short and lending long there is an over issuance of property rights their article however does not fully extend the consequences of their contribution once this is done it becomes clearer that their argument suits a great impediment to banking becoming a possible reason to support rather than to oppose fractional reserve banking bagus and howden j bus ethics 90 3 399 406 2009 comment on barnett and block j bus ethics 88 4 711 716 2009 the authors claim that while maintaining the illegitimacy of fractional reserve deposits borrowing short and lending long it is actually not illegitimate an extension on bagus and howden 2009 will show that their line of argumentation can be applied as a defense of fractional reserve banking as well

speculating on home improvements we develop a speculation based theory of home improvements housing services are produced from a mix of land and structures homeowners have an option to increase their structures i e make improvements holding xed their land speculative improvements arise because overcondent homeowners mistakenly believe they can add to structures for a lower cost than a competitive construction industry improvements are increasing and convex in home prices there is excessive home remodeling in equilibrium and the change in the recoup ratio the ratio of resale value of improvements to construction costs is negatively correlated with construction cost growth controlling for home price appreciation we provide evidence consistent with our theory using data on the costs and recoup values of remodeling projects across u s cities

service offshoring and productivity evidence from the us the practice of sourcing service inputs from overseas suppliers has been growing in response to new technologies that have made it possible to trade in some business and computing services that were previously considered non tradable this paper estimates the effects of offshoring on productivity in us manufacturing industries between 1992 and 2000 it finds that service offshoring has a significant positive effect on productivity in the united states accounting for around 10 per cent of labour productivity growth during this period offshoring material inputs also have a positive effect on productivity but the magnitude is smaller accounting for approximately 5 per cent of productivity growth

defaults on mortgage obligations and capital requirements for u s savings institutions abstract this paper analyzes credit risk for residential mortgages estimates of the hazard of mortgage default are presented based upon a large sample of conventional loans issued in the late 1970s mean returns are estimated together with variances and covariances for various loan to value ltv ratios and geographic groups these results are then used to analyze capital requirements for institutions holding mortgages we ask for a given bankruptcy risk how should capital requirements vary by ltv and geographical diversification the empirical results indicate that both factors have powerful effects upon bankruptcy risk thus capital requirements should vary substantially along these dimensions

home is where the equity is mortgage refinancing and household consumption applying a permanent income model with exogenous liquidity constraints and mortgage behavior household refinancing when mortgage interest rates are historically high and rising a persistent empirical puzzle is explained using data from the panel study of income dynamics households experiencing an unemployment shock and having limited initial liquid assets to draw upon are shown to have been 25 more likely to refinance 1991 94 on average such liquidity constrained households converted over two thirds of every dollar of equity they removed into current consumption as mortgage rates plummeted 1991 94 producing an estimated expenditure stimulus of at least 28 billion

nominal loss aversion housing equity constraints and household mobility evidence from the united states abstract this paper exploits the recent variation in us house prices to examine the effect of equity constraints and nominal loss aversion on household mobility detailed data from the 1985 1996 national longitudinal survey of youth nlsy79 were matched with house price data from 149 metropolitan areas to estimate instrumental variables linear probability and semi parametric proportional hazard models of intra metropolitan mobility household mobility is significantly influenced by nominal loss aversion there is little evidence that low equity because of fallen house prices constrains mobility

inattention to deferred increases in tax bases how michigan home buyers are paying for assessment limits abstract michigan s implementation of assessment limits gives rise to a wide variation in taxable basis across comparable homes exploiting the fact that the resulting differences in property tax liability are temporarily inherited by new homebuyers i estimate the degree of capitalization of these largely idiosyncratic tax differences to evaluate whether homebuyers understand the tax implications of their home purchases consistent with anecdotal evidence but in stark contrast to the traditional view of rational consumer behavior i find that homebuyers are woefully inattentive to the temporary nature of their initial tax obligations resulting in an overpayment of nearly 10 000 for the average home

offshoring the nature of tasks and occupational stability empirical evidence for germany using a large administrative data set of individual employment histories for germany this paper studies the relationship between offshoring and the individual risk of leaving the occupation moreover a rich data set on tasks performed in occupations is used to better characterise the sources of worker vulnerability both material and service offshoring are on average not associated with an increase in occupational outflow rates however this association depends on the nature of tasks performed in the occupation higher intensities of interactive and in particular non routine tasks are associated with a larger decrease or a smaller increase in the occupational hazard rate

property taxes mobility and home ownership abstract in contrast with the conventional property tax which is based on current market value the acquisition value property tax is based on the market value of the property at the time it was purchased a switch to an acquisition value tax i decreases household mobility ii increases the likelihood of home ownership among infrequent movers at the expense of frequent movers and iii attracts infrequent movers and repels frequent movers we use a simple simulation model to compute the excess burden of the acquisition value tax with a tax rate of 3 the excess burden is about 4 5 of tax revenue the transfer tax has much larger distortionary effects