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Topics in International Real Estate

Paper Session

Saturday, Jan. 6, 2018 8:00 AM - 10:00 AM

Loews Philadelphia, Washington B
Hosted By: American Real Estate and Urban Economics Association
  • Chair: Benjamin J. Keys, University of Pennsylvania

The Cost Of Traffic: Evidence From the London Congestion Charge

Cheng Keat Tang
,
London School of Economics

Abstract

This study exploits the introduction of the London Congestion Charge (CC) that induces sharp variation in traffic conditions within Central London to provide new estimates of the cost of traffic for homeowners. The Congestion Charge restricts traffic into the cordoned area by imposing a flat fee on drivers whenever they enter during charging periods. Traffic flow is on average 9.41% to 10.37% lower in the Congestion Charge Zone (CCZ) and 3.31% to 5.90% lower in the Western Extension Zone (WEZ) after the charge is introduced. Restricting the analysis to transactions just in and out the CC boundary to further reduce unobserved neighborhood differences between houses in and out the zone, I find that homeowners pay 2.65% to 4.27% (between £11,574 and £18,230) more for their homes in the CCZ and 2.23% to 4.70% (between £18,829 and £40,938) more for their homes in the WEZ. These estimates are robust to many changes in specifications, suggesting that new homeowners moving into the CCZ/WEZ pay more to avoid traffic to reduce commuting time, to enjoy better air quality and less traffic noise, and to travel on safer roads.

Local Labor Markets in Canada and the United States

David Yves Albouy
,
University of Illinois
Chandler Lutz
,
University of California-Los Angeles
Casey Warman
,
Dalhousie University

Abstract

This paper examines and compares local labor market in the United States and Canada. Employment varies more in Canada, while wages and skill levels vary less, suggesting weaker agglomeration economies and skill sorting. Majority non-English communities (Francophone and Hispanophone) in each country display distinct wage levels, skills, and inequality. We also examine patterns in labor market institutions and skill prices. Shifts in labor demand have much weaker effects on employment and wages in Canada, although greater effects on unemployment. We find no conclusive evidence of differential effects of immigration.

Risk Avoidance and Environmental Hazards--Effects of the Transboundary Haze Pollution in Singapore

Yang (Zoe) Yang
,
National University of Singapore
Sumit Agarwal
,
Georgetown University
Tien Foo Sing
,
National University of Singapore

Abstract

This paper examines the risk-avoidance behaviors of households in response to environmental hazards using the transboundary haze caused by forest fires in Indonesia as an exogenous shock. Using a unique panel dataset of hourly water consumption at the household level, monthly electricity consumption at the building level, and daily hotel performance indices obtained from multiple sources, this study finds significant positive responses in household utilities consumptions and economic losses in the hotel industry when transboundary haze occurs in Singapore. This study offers three key findings. First, we find evidence from the within-the-day variations and between the weekday to weekend variations in household water consumption that confirms the risk-avoidance responses of households during haze periods. People stay indoors to minimize their exposure to the possible health risks caused by the haze pollutants. These findings are robust to numerous specification checks as well as to when the perceived risk measures obtained from social media are used. Second, we find the long-term persistence of household responses via the high electricity consumption during the two-month haze period; however, electricity consumption responses revert to normal after the haze dissipates. Third, the hotel industry suffers significant losses during the haze period, which is evidence that could suggest the risk-avoidance of foreign visitors, who are informed of the transboundary haze alerts.

Do Rewards Work? Evidence From the Randomization of Public Works

Paul Ernesto Carrillo
,
George Washington University
Edgar Castro
,
Inter-American Development Bank
Carlos Scartascini
,
Inter-American Development Bank

Abstract

Positive inducements and rewards are becoming an instrument widely used by policymakers to generate good behavior. Our paper evaluates the effect of positive inducements by exploiting a natural experiment in which a Municipality of Argentina randomly selected 400 individuals among more than 72,000 taxpayers who had complied with the payment of their property tax. These individuals were publicly recognized and awarded the construction of a sidewalk. Results indicate that: (i) being selected in the lottery and publicly recognized by the government for past compliance has a positive but not persistent effect on future compliance; (ii) receiving the sidewalk has a large positive and persistent effect; (iii) there are high and persistent spillover effects: some of the neighbors of those who receive the reward comply more too and these effects can be even larger than the direct effects; (iv) there is no financial motive effect (people don’t pay their due taxes just to participate in the lottery). Our results suggest that recognition serves only as a short term incentive for those selected but the provision of a durable and visible good has more persistent and broader effect by crowding in intrinsic motivations (through reciprocity and peer-effects). These findings have relevant implications for the literature and for policymakers as they provide evidence about the features that make a positive inducement more successful, be that for property tax compliance or for other policy purposes.
Discussant(s)
Nicholas Sanders
,
Cornell University
Barbara Petrongolo
,
Queen Mary University of London
Joseph S. Shapiro
,
Yale University
Pedro Rey Biel
,
Autonomous University of Barcelona
JEL Classifications
  • Q5 - Environmental Economics
  • R1 - General Regional Economics