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Working Paper
Immigration and the neighborhood
What impact does immigration have on neighborhood dynamics? Within metropolitan areas, the authors find that housing values have grown relatively more slowly in neighborhoods of immigrant settlement. They propose three nonexclusive explanations: changes in housing quality, reverse causality, or the hypothesis that natives find immigrant neighbors relatively less attractive (native flight). To instrument for the actual number of new immigrants, the authors deploy a geographic diffusion model that predicts the number of new immigrants in a neighborhood using lagged densities of the foreign-born ...
Working Paper
Democracy to the road: the political economy of potholes
Are dictatorships more prone to build and maintain roads? This paper identifies a puzzling fact: countries that are more democratic tend to have roads in worse conditions than less democratic countries. Using lagged values of a democracy index to instrument for democracy in 1980 yields higher estimates of the magnitude of the association between democracy and bad roads. Instruments based on climate, population, and education yield similar results. The evidence points to a negative causal relationship from democracy to road quality. The author also finds that changes to a more democratic ...
Journal Article
The impact of immigration on American cities: an introduction to the issues
In "The Impact of Immigration on American Cities: An Introduction to the Issues," Albert Saiz discusses immigration's impact on a receiving country's labor and housing markets, fiscal systems, and social interactions.
Working Paper
Owning versus leasing: do courts matter?
The authors develop a legal contract enforcement theory of the own versus lease decision. The allocation of ownership rights will minimize enforcement costs when the legal system is inefficient. In particular, when legal enforcement of contracts is costly, there will be a shift from arrangements that rely on such enforcement (such as a rental agreement) toward other forms that do not (such as direct ownership). The authors then test this prediction and show that costly enforcement of rental contracts hampers the development of the rental housing market in a cross-section of countries. They ...
Working Paper
The rise of the skilled city
For more than a century, educated cities have grown more quickly than comparable cities with less human capital. This fact survives a battery of other control variables, metropolitan area fixed effects, and tests for reverse causality. The authors also find that skilled cities are growing because they are becoming more economically productive (relative to less skilled cities), not because these cities are becoming more attractive places to live. Most surprisingly, the authors find evidence suggesting that the skills-city growth connection occurs mainly in declining areas and occurs in large ...
Working Paper
Urban decline and housing reinvestment: the role of construction costs and the supply side
Negative demand shocks have afflicted many American cities in the 20th century and are the main explanation for their decaying housing markets. But what is the role of housing supply? Rational entrepreneurs should not invest in new buildings and renovation when home values are below replacement cost. Households with an investment motive should behave similarly. Empirically, the authors find that construction costs are not very sensitive to building activity but do vary with local income, unionization rates in the construction sector, the level of local regulation, and region. They also ...
Working Paper
The returns to speaking a second language
Does speaking a foreign language have an impact on earnings? The authors use a variety of empirical strategies to address this issue for a representative sample of U.S. college graduates. OLS regressions with a complete set of controls to minimize concerns about omitted variable biases, propensity score methods, and panel data techniques all lead to similar conclusions. The hourly earnings of those who speak a foreign language are more than 2 percent higher than the earnings of those who do not. The authors obtain higher and more imprecise point estimates using state high school graduation ...
Working Paper
City Beautiful
The City Beautiful movement, which in the early 20th century advocated city beautification as a way to improve the living conditions and civic virtues of the urban dweller, had languished by the Great Depression. Today, new urban economic theorists and policymakers are coming to see the provision of consumer leisure amenities as a way to attract population, especially the highly skilled and their employers. However, past studies have provided only indirect evidence of the importance of leisure amenities for urban development. In this paper we propose and validate the number of leisure trips ...
Working Paper
Immigration and housing rents in American cities
Is there a local economic impact of immigration? Immigration pushes up rents and housing values in destination cities. The positive association of rent growth and immigrant inflows is pervasive in time series for all metropolitan areas. The author uses instrumental variables based on a "shift-share" of national levels of immigration into metropolitan areas. Conditioning on other variables, an immigration inflow equal to 1 percent of the city population is associated with increases in rents and housing values of about 1 percent. The results suggest an economic impact that is an order of ...