19th/20th September 2019

in Essen, Germany

1st FDZ RuhrRegional Disparity Workshop

Programme

Thursday, September 19

12.00 - 12.30 Welcome Reception (with lunch)

12.30 -12.40 Welcome Address Thomas K. Bauer RWI - Leibniz Institute for Economic Research

12.40 - 13.00 Introduction to the data of the FDZ Ruhr Sandra Schaffner RWI - Leibniz Institute for Economic Research

13.00 - 14.00 Keynote 1: Ignoring Fat Tails and Spatial Dependence in the Disturbances Makes Black Swans Appear Grey

R. Kelley Pace Louisiana State University

14.00 - 14.35 Small Area Estimation –a Tool for Providing Regional Indicators

Ralf Münnich Universität Trier

14.35 - 14.50 One-minute Poster Pitch

14.50 - 15.00 Coffee

15.00 - 16.00 Young Researcher Poster Session

Commuting and the gender pay gap Malte Borghorst Technical University of Denmark

The Effectiveness of Rent Control: For which Apartments does it reduce Rental Prices?

Lea Eilers RWI - Leibniz Institute for Economic Research

The Spatial Decay of Knowledge Spillovers. A Functional Regression Approach with Precise Geo-Referenced Data

Johann Eppelsheimer Insitute for Employment Research

What explains the Urban Wage Premium – Sorting, Matching or Learning?

Rebecca Fehn RWI - Leibniz Institute for Economic Research

The Fall of the Labour Share and the Rise of the Super-star Region? Earnings and labour share in UK regions

Carolin Ioramashvili London School of Economics

Can A Tax on Empty Homes Alleviate a Housing Crisis? Enrico Miglino University College London

Estimating the impact of energy efficiency on property values in German residential housing markets: Does regional disparity matter?

Lisa Taruttis University Duisburg-Essen

16.00 - 16.10 Coffee & Group Photo

16.10 - 17.00 Spatial Inequality: Measurement, Causes and Consequences

Christian Leßmann Technische Universität Braunschweig

17.10 - 17.45 Spatial Tax Enforcement Spillovers: Evidence from South Africa

Nadine Riedel Ruhr-Universität Bochum

17.45 - 18.20 Feedback Session for young researcher with special discussant and coffee

18.30 - 22.00 Dinner, Ponistra, Rüttenscheider Str. 18

Friday, September 20

9.00 - 9.35 Continuation of Air Services at Berlin-Tegel and its Effects on Housing Prices

Philipp Breidenbach RWI - Leibniz Institute for Economic Research

9.35 - 10.10 Short-term rentals and the housing market: Quasi-expe-rimental evidence from Airbnb in Los Angeles

Jos van Ommeren Vrije Universiteit Amsterdam

10.10 - 10.45 Regional Convergence at the County Level: The Role of Commuters

Melanie Krause Universität Hamburg

10.45 - 11.00 Coffee

11.00 - 12.00 Keynote 2: The spatial equilibrium with migration costs Gabriel Ahlfeldt London School of Economics and Political Science

12.00 - 12.35 The Regional Effects of a Place Based Policy - Causal evidence from Germany

Mirko Titze IWH Halle

12.35 - 13.10 Rush Hours and Urbanization Tobias Seidel Universität Duisburg-Essen

13.10 - 14.10 Lunch

14.10 Farewell

Programme

1st FDZ RuhrRegional Disparity Workshop

Detailed Programme

Thursday, September 19th

12.30 Welcome Address

Thomas K. Bauer (RWI)

The RWI - Leibniz Institute for Economic Research is a leading centre for economic research and evidence-based policy advice in Germany. The research work of RWI ranges from the individual to the world economy and is structured along four areas: "Labor Markets, Education, Populati-on”, “Health Economics”, “Environment and Resources” and “Macroeco-nomics and Public Finance”. The “FDZ Ruhr” thereby acts as an interface between a research unit and a service unit providing (regional) data. The Regional Disparity workshop brings together young and experienced researchers in the field of regional and spatial economics and offers the opportunity for national and international cooperation. This workshop is a great possibility to discuss recent scientific developments in this very vibrant research field. Thomas Bauer is the Vice-president of the RWI.

12.40 Introduction to the data of the FDZ Ruhr

Sandra Schaffner (RWI)

This introduction gives an overview about the FDZ Ruhr, especially about the provided data and the research. The aim of the FDZ Ruhr is to make small-scale regional data for Germany accessible to scientists. The RWI-GEO-GRID data comprises, for example, information on the building structure, population, assets and ethnic groups on a one-square-kilome-tre grid. In addition, RWI-GEO-RED provides data on housing with regard to the offered rent or purchase price as well as equipment. These data form the basis for analyses of housing prices in Germany.

13.00 Keynote 1: Ignoring Fat Tails and Spatial Dependence in the Disturbances Makes Black Swans Appear Grey

R. Kelley Pace (LSU)

If the distribution of the underlying disturbances in the spatial DGP has fat tails, ignoring spatial and temporal dependence in the regression model can make regression residuals appear more normally distributed than the true disturbances. We show, via theory and simulation, that the kurtosis of the distribution of the OLS residuals decreases relative to the kurtosis of the underlying disturbances in the spatial-temporal DGP. This suggests that better modeling may lead to more non-normal residuals if the underlying disturbances are non-normal. To illustrate this, we pro-vide an empirical example using US housing prices where we show an almost perfect linear relation between the kurtosis of the residuals and the goodness-of-fit in spatial and spatial-temporal models. As the good-ness-of-fit rises, the average prediction error falls, but becomes more fat tailed. Such distributions impede quantification of the risk of individual assets as well as associated debts. This has important implications for modeling rare events or black swans.

14.00 Small Area Estimation –a Tool for Providing Regional Indicators

Ralf Münnich (Uni Trier)

The aim of the presentation is to provide an overview of recent small area estimation methods. These include classical design-based methods as well as modern model-based methods. The impact of survey and other data on small area estimates will be discussed. Further, applica-tions in regional poverty measurement will be provided.

14.35 One-minute Poster Pitch

14.15 Coffee

15.00 Young Researcher Poster Session

Malte Borghorst (DTU): Commuting and the gender pay gap

Advisor: Jos van Ommeren

Using administrative register panel data for the full working population in Denmark over the 2003-2013 period, we study to what extent gender differences in commuting patterns explain the persistent gender wage gap. We show that the contribution of commuting also is important for understanding of gender pay gap because in situations when women are locally restricted, only few employers in a reasonable distance exist and the local labor market appears thin. The thinness of the local labor market leads to monopsony power and lower realized wages. Applying the event study methodology - the birth of the first child - we find that women and men commuting distances follow the same trend before the birth of the first child, but after the childbirth, the women's commuting distance stagnates while the men's commuting distance uninterruptedly follows the trend from before the childbirth. The event of the childbirth increases the difference in compensation for commuting, translating to a contribution of 3.0 percentage points to the discriminatory part of the gender pay gap.

Lea Eilers (RWI): The Effectiveness of Rent Control: For which Apartments does it reduce Rental Prices?

Advisor: Gabriel Ahlfeldt

This paper evaluates the rent control policy implemented in Germany in 2015. Like in many countries, German cities and metropolitan areas have experienced a strong increase in rental prices during the last decade. In response, the rent control was introduced to dampen the rise in rental prices by limiting the landlords’ freedom to increase rents for new cont-racts. To evaluate the effectiveness of the rent control with respect to ren-tal prices, we take advantage of its restricted scope of application. First, it is applied only in a selected number of municipalities, thereby genera-ting regional variation. Second, the condition of rental objects generates an additional dimension of variation since new and modernised objects are exempt from rent control. Based on data for rental offers in Germany, we apply a triple-difference framework that combines region-specific price trends with object-specific price trends. Our estimates indicate that the German rent control dampens rental prices by 2.5 %. This effect varies across object characteristics with larger effects for lower-quality dwellings in the lower price segment. In contrast, the variation across different characteristics of the object’s neighborhood is smaller. Focusing on the temporal dynamics, an event-study indicates that the effects of the rent control are not persistent over time.

Johann Eppelsheimer (IAB): The Spatial Decay of Knowledge Spillovers. A Functional Regression Approach with Precise Geo-Referenced Data

Advisor: Tobias Seidel

This paper analyzes knowledge spillovers from high-skilled workers by applying functional regression to precise geo-coded register data. Func-tional regression enables us to describe the concentration of high-skilled workers around workplaces as continuous curves and to estimate a spillover function that depends on distance. Furthermore, our rich panel data allows us to address sorting of workers and to disentanglement spillover from supply effects with an extensive set of time-varying fixed effects. Our estimates reveal that knowledge spillovers attenuate with distance and disappear after 15 kilometers. Spillovers from the immedi-ate neighborhood are twice as large as spillovers from surroundings ten kilometers away.

Rebecca Fehn (RWI): What explains the Urban Wage Premium – Sorting, Matching or Learning?

Advisor: Nadine Riedel

A well-established literature suggests that workers in cities earn higher wages than workers in rural areas. Using linked employer-employee data for Germany, we decompose wages into worker, firm and match effects and examine by which factors the urban wage premium can be explained. More explicitly, we investigate whether sorting of high-wa-ge workers and high-wage firms, more productive matches or higher human capital accumulation drive the existence of the urban wage pre-mium.

Carolin Ioramashvili (LSE): The Fall of the Labour Share and the Rise of the Superstar Region? Earnings and labour share in UK regions

Advisor: Christian Leßmann

Autor, Dorn, Katz, Patterson, and van Reenen (2017) show a falling labour share in conjunction with rising industry concentration in the US. There is a concern that low labour shares will contribute to rising inequality, as less income goes to workers and more to the owners of capital. I show that the labour share among the regions of the UK diver-ged since 2010, particularly between London and the rest of the country. Moreover, a lower labour share is increasingly associated with higher average earnings. The decline of the labour share has occurred mostly within industries, and industries with falling labour shares are growing faster. I present a simple model to outline possible explanations of the fall in the labour share.

Enrico Miglino (UCL): Can A Tax on Empty Homes Alleviate a Housing Crisis?

Advisor: R. Kelley Pace

More than 11 million homes lie empty in Europe, a number that exceeds several times the number of homeless people living in the continent.

High concentration of empty homes has been associated with market inefficiencies and negative externalities, such as violent crime. Several countries have recently introduced taxes on vacant properties, but their effects remain widely unknown. My paper provides the first empirical evidence that empty property taxes can ease the tightness of housing markets. Using administrative data and a quasi-experimental strategy that exploits tax variations across local councils over ten years, I study the impact of a large tax increase on long-term empty properties in Eng-land. I find that doubling taxes on long-term empty homes significantly decreases the average price of residential properties by 4.5% and rents by 1.4%. Moreover, in councils with high vacancy rates, I observe that the empty properties tax significantly reduces the number of homeless people.

Lisa Taruttis (UDE): Estimating the impact of energy efficiency on property values in German residential housing markets: Does regional disparity matter?

Advisor: Colin Vance

We investigate whether energy efficiency is reflected in the property value of single-family houses in Germany and, additionally, whether there are heterogeneous effects among different regional types. With 383,620 individual observations on a 1km²-grid-level for the period 2014 to 2017, this study adds to the literature 1) by examining the effect of energy efficiency on housing values for Germany on a more small-sca-le level and 2) by specifically investigating regional disparities in this context. Applying a hedonic regression, we find a negative relationship between energy consumption and asking prices per square meter, which implies that energy efficiency (which results in less energy consump-tion) has positive effects on property values. We also find evidence for regional disparities: comparing West and East Germany, the effect is only slightly higher in the western parts of the country, but looking at differences between administrative district types, we find a significantly weaker effect in large cities compared to other urban areas, whereas the effect in rural areas is much stronger.

16.00 Coffee & Group Photo

16.10 Spatial Inequality: Measurement, Causes and Consequences

Christian Leßmann (TUB)

Spatial inequalities within countries are a threat for political stability and long-run economic development. The economic backwardness of parti-cular regions in Great Britain has played a significant role in the Brexit votum. Donald Trump would not have been elected without frustrated voters in lagging regions. A strong part of the AfD support in Germany comes from the relatively poor East German Länder. The talk focuses on the fundamental determinants of regional economic activity and how they shape the spatial income distribution. It also investigates the feed-back on national development.

17.10 Spatial Tax Enforcement Spillovers: Evidence from South Africa

Nadine Riedel (RUB)

The purpose of this paper is to test for spatial enforcement spillovers. Empirical testing ground is the enforcement of business taxes in South Africa. The analysis relies on the population of business tax returns for the years 2009 to 2014 and data on all business taxpayer audits by the South African Revenue Services during that time period. The results suggest that audits significantly raise the tax reporting of non-audited neighboring _rms. While the observed spillovers decline in geographic distance to the audited entity and are short-run in nature, the implied aggregate revenue gains are nonnegligible. Additional analysis shows that the effect is driven by audit cases, where audited firms do not expe-rience an upward revision in their tax owed in the course of the audit. This suggests that the observed effect roots in communication among taxpayers and is not driven by audit-related cost shocks to business part-ners.

17:45 to 18:20 Feedback Session for young researcher with advisor and coffee

18.30 Dinner

Friday, September, 20th

09.00 Continuation of Air Services at Berlin-Tegel and its Effects on Housing Prices

Philipp Breidenbach (RWI)

Berlin-Brandenburg airport has become well-known far beyond German borders due to substantial mis-planning and heavy delays in opening. Planned to be opened in March 2012 and to take over all air-transport services from Germany’s capital city, construction work is still ongoing. Four weeks before the expected opening of the airport, the opening was suddenly delayed by several months. This unexpected delay was an exo-geneous shock for residents surrounding the existing airport, Berlin-Te-gel, which is expected to close upon the opening of Berlin-Brandenburg. A series of additional delay announcements were also exogenous shocks for residents. We analyze the effect of airport noise and proximity to the airport on housing rental prices. Our identification strategy is based on the expectations regarding the closing of Berlin-Tegel airport. The results suggest that there is a negative effect of noise on housing rental prices while there are positive effects of proximity to Berlin-Tegel.

09.35 Short-term rentals and the housing market: Quasi-experimental evidence from Airbnb in Los Angeles

Jos van Ommeren (VUA)

Online short-term rental (STR) platforms such as Airbnb have grown spectacularly. We study the effects of STR-platforms on the housing mar-ket using a quasi-experimental research design. 18 out of 88 cities in Los Angeles County have severely restricted short-term rentals by adopting Home Sharing Ordinances. We apply a panel regression-discontinuity design around the cities' borders. Ordinances reduced listings by 50 percent and housing prices by 2 percent. Additional difference-in-diffe-

rences estimates show that ordinances reduced rents also by 2 percent. These estimates imply large effects of Airbnb on property values in areas attractive to tourists (e.g. an increase of 15 percent within 2.5km of Hol-lywood's Walk of Fame).

10.10 Regional Convergence at the County Level: The Role of Commuters

Melanie Krause (U Hamburg)

Commuters spend a substantial portion of their income in a different place from where they earn it, thereby constituting an important channel for cross-regional economic dependencies. In this paper, we analyze their role for economic convergence. Commuter flows are inherently asymmetric which implies a stronger shock propagation from large eco-nomic centers to rural regions than in the opposite direction. This is in contrast to the symmetric network structure implied by the conventional geographic weights in spatial econometric models that are based on contiguity or geographical distance measures. Motivated on the grounds of the neoclassical growth model, extended for spatial spillover effects, we use German county-level data from 2002 to 2014 to estimate a panel data model that is dynamic both across time and space. We find that the speed of convergence is substantially overestimated when ignoring spati-al spillover effects, irrespective of the choice of the spatial weights ma-trix. The estimates of the spillover effects themselves are smaller using commuter weights than geographical measures due to the restricted feedback to large economic centers.

10.45 Coffee

11.00 Keynote 2: The spatial equilibrium with migration costs

Gabriel Ahlfeldt (LSE)

We develop a quantitative spatial model with migration cost. The model provides the micro foundations for a gravity equation of migration in which bilateral migration flows depend on bilateral differences in migra-tion costs as well as origin and destination fixed effects that capture labour market, housing market, and amenity related push and pull fac-tors. We estimate the structural parameters of the model exploiting wage

differences between the formerly divided parts of Germany that initially persisted after unification. Our results imply that worker utility declines non-linearly in geographic as well as cultural distance from the origin, varying significantly across gender-age-skill groups. We use the structure of the model to evaluate how heterogeneity in migration costs determi-nes the incidence of benefits and costs of globalization, in scenarios with and without migration costs.

12.00 The Regional Effects of a Place Based Policy - Causal evidence from Germany

Mirko Titze (IWH)

analyzes job referral effects that are based on residential location. We use georeferenced record data for the entire working population (liable to social security) and the corresponding establishments in the Rhi-ne-Ruhr metropolitan area, which is Germany’s largest (and EU’s second largest) metropolitan area. We estimate the propensity of two persons to work at the same place when residing in the same neighborhood

12.35 Rush Hours and Urbanization

Tobial Seidel (UDE)

We use a spatial general equilibrium model with potential commuting of workers between their place of work and their place of residence to analyze the effects of rush hours on the spatial allocation of employment and population, average labor productivity and the housing market. Abolishing traffic congestion during rush hours leads to a more urbani-zed economy as households move from the low-density countryside to the commuter belts of cities rather than from the city centers to the peri-phery. Employment, however, becomes more agglomerated in high-den-sity large cities. This adjustment implies an increase of average labor productivity of 7.2 percent and higher inequality of housing costs.

13.10 Lunch

14.10 Farewell

List of participants

Gabriel Ahlfeldt LSE G.Ahlfeldt@lse.ac.uk

Thomas Bauer RWI thomas.bauer@rwi-essen.de

Malte Borghorst dtu Denmark malbor@dtu.dk

Philipp Breidenbach RWI philipp.breidenbach@rwi-essen.de

Lea Eilers RWI lea.eilers@rwi-essen.de

Johann Eppelsheimer IAB Johann.Eppelsheimer@iab.de

Rebecca Fehn RWI rebecca.fehn@rwi-essen.de

Carolin Ioramashvili LSE UK C.A.Ioramashvili@lse.ac.uk

Larissa Klick RWI larissa.klick@rwi-essen.de

Melanie Krause University of Hamburg Melanie.Krause@uni-hamburg.de

Christian Leßmann TU Braunschweig c.lessmann@tu-braunschweig.de

Enrico Miglino UCL UK enrico.miglino.16@ucl.ac.uk

Ralf Münnich University of Trier muennich@uni-trier.de

Uwe Neumann RWI uwe.neumann@rwi-essen.de

Jos van Ommeren VU Amsterdam j.n.van.ommeren@vu.nl

R. Kelley Pace LSU kelley@spatial.us

Nadine Riedel RUB nadine.riedel@rub.de

Sandra Schaffner RWI sandra.schaffner@rwi-essen.de

Tobias Seidel DUE tobias.seidel@uni-due.de

Lisa Taruttis UDE Lisa.Taruttis@uni-due.de

Mirko Titze IWH Mirko.Titze@iwh-halle.de

Colin Vance RWI colin.vance@rwi-essen.de

Participants

LocationDirections for Workshop Participants

The RWI is located in the heart of Essen and can be reached conveniently via public transport. Trains go regularly to Essen main station (Essen HBF) from all over Germany. There is a direct connection to Düsseldorf airport. For more information on getting to Essen main station see: http://www.deutschebahn.com/en/start.html. We strongly advise participants to arrive by public transport, as parking slots are extremely limited around RWI.

Address for navigation systems:

Hohenzollernstraße 1-3, 45128 Essen

From Essen Central Station to RWI

From Essen main station, it will take approximately 10-15 minutes to get to RWI. You can either walk or use public transport.

If you prefer to use public transport, take the tram (line 107 or 108 direction “Bredeney”) or metro (line U11 direction “Messe”) from Essen central station, platform 2 for trams and plat-form 4 directly opposite for metro, to the next station “Philharmonie”. All three lines run every 10 minutes.

Leave the station at exit B, go straight ahead and follow the “Huyssenallee” until you get to the “Hohenzollernstraße” (first traffic light) where you turn left. After 40 meters you will find the RWI building on the left.

You can also walk from the central station to the RWI building. Exit the main station at the back entry (exit “Freiheit”) and follow the “Huyssenallee” until you reach “Hohenzol-lernstraße” where you turn left. The RWI is at your left after 40m. If you get lost, ask for “Philharmonie” and then follow the directions above for tram-takers. The walk will take about 15 minutes.

From Central Station to your hotel … … Rheinischer Hof

You can walk from the central station to the “Hotel Rheinischer Hof”. Exit the main station at the back entry (exit “Freiheit”) and follow the “Huyssenallee”. Continue straight ahead on “Rüttenscheider Straße“ until you reach the metro station “Rüttenscheider Stern” where you turn left on “Klarastraße”. After 100m, turn right on “Rüttenscheider Platz” and continue straight ahead on “Hedwigstraße”. Your hotel is at your left after 100m.

If you prefer to use public transport, take the metro (line U11 direction “Messe”) or the tram (line 107/108 to “Bredeney”) and leave the metro or tram at “Rüttenscheider Stern”. Then use the same way explained above.

Public transport from Essen central station to “Rüttenscheider Stern”:

Till 19:00 every 10 minutes

19:00 – 21:00 every 15 minutes

21:00 – 23:00 every 30 minutes

… IBIS

From Essen main station, you can easily walk to the IBIS hotel. It will take approximately 5 minutes. For directions, refer to the map below. Exit the main station at the front entry (exit “City/Kettwiger Straße”).

From the station, turn right towards Hollestraße. Walk straight ahead on Hollestraße for about 300 meters. Your hotel is located on the right hand side in Hollestraße No. 50.

From RWI to “Ponistra” (conference dinner)

Head northwest on “Hohenzollernstraße” towards “Rüttenscheider Straße”. Turn left onto “Rüttenscheider Straße” Your destinati-on will be on the right after 200 meters.

From “Ponistra” to your hotel…

If you are staying at the IBIS Hotel, it is best to walk or use the public transport (at “Philhar-monie” station) to the main station and follow the route described above to your hotel.

The way from the restaurant to the “Philharmonie” station is just straight up the street. When leaving the restaurant turn left and walk 350m.

Public transport from “Philharmonie” to Essen central station:

Till 19:00 every 10 minutes

19:00 – 21:00 every 15 minutes

21:00 – 23:00 every 30 minutes

If you are staying at “Hotel Rheinischer Hof”, you can easily walk to the hotel. It will take approximately 10 minutes. When leaving the restaurant turn right and walk to “Rüttenschei-der Stern” and take the same way explained above (see map below)

Notes

FDZ Ruhr am RWIHohenzollernstraße 1-345128 Essen

fdz@rwi-essen.de

www.rwi-essen.de\fdz