Policies for mixed communities: faith-based displacement activity?

The belief that it is fairer if communities are ``mixed'' can be traced at least to the late nineteenth century and the founders of the Garden City Movement. The idea is now firmly established in Organization for Economic Cooperation and Development (OECD) and national policies. This article reviews the evidence and argues that this is essentially a faith-based policy because there is scant real evidence that making communities more mixed makes the life chances of the poor any better. There is overwhelming evidence that the attributes that make neighborhoods attractive are capitalized into house prices/rents. The result is that poor people cannot afford to buy into nicer neighborhoods, which anyway have amenities of no value to them. Moreover, ``specialized neighborhoods'' are an important element in agglomeration economies and seem to be welfare enhancing. Thus, policies for mixed neighborhoods treat the symptoms rather than the causes of poverty. Efforts to improve social equity would be more effectively directed toward people themselves rather than moving people around to mix neighborhoods

Urban policy - helping people or helping places? New evidence from London on social exclusion and the spatial articulation of the distribution of income

That local job creation within a large urban labour market does not have a significant long term influence on the unemployment rates of local residents has long been documented (for example in Cheshire, 1979; Burridge & Gordon 1981; Gordon & Lamont, 1982). Urban ?regeneration policy? continues, nevertheless, to be targeted at small areas within large cities. This has been a continuing element in British urban policy, for example, since the Innner Urban Areas Act of 1978. An explicit aim of such urban policy has been to ?regenerate local economies and provide jobs for local people?. Increasingly European regional policy has also attempted to intervene on the basis of smaller areas within large urbanised regions. In the literature two mechanisms have been explored to explain the failure of local job creation to influence the unemployment rates of local residents. The operation of housing markets and social housing systems and the way that these generate social segregation means that the source of unemployment differentials across urban areas is primarily that poor neighbourhoods are where those with a higher propensity to be unemployed are concentrated. In addition it has been shown that interaction between local labour markets linked by significant commuting flows means that any differential opportunities that result from local job creation are quickly diffused throughout the set of interacting labour markets. Commuting flows adapt so that characteristic specific unemployment rates tend to equality throughout the urbanised region. This paper examines evidence relating to an additional mechanism: local migration. Data were collected for one area of regeneration in west London - Harlesden. This area was the recipient of a City Challenge grant of ?37.5 million running over 5 years from 1993. It is quite typical of disadvantaged neighbourhoods within large British cities. It grew up on the back of a successful industrial economy which has now been subject to 35 years of decline. It has a large concentration of ethnic minorities and - despite evidence of some success in local job creation - a relatively worsening unemployment rate over the 5 year regeneration period. Data for three samples of people of working age were collected: a sample of those who had lived within the area throughout the period of the regeneration; a sample of ?outmovers?; and a third of ?inmovers?. The samples were large enough for statistical analysis and the differing labour market experience of the samples over the five year period was compared. Differences were very substantial, with the out-movers having far the greatest labour market success. The results reinforce the important role of housing markets in articulating overall social inequality to generate the observed geographical patterns of poverty and social exclusion in urbanised regions. They also reinforce the need to distinguish between the goals of regenerating local economies within cities and that of improving the lives of the most disadvantaged. They also underline the need to think more carefully about what exactly is meant by the aim of providing jobs for local people. These and other implications for policy are explored. Burridge, P. and Gordon, I. (1981) Unemployment in the British Metropolitan Labour areas. Oxford Economic Papers, 33, 274-97. Cheshire, P.C. (1979) Inner areas as spatial labour markets: a critique of the inner area studies. Urban Studies, 16(2), 29-43. Gordon, I. and Lamont, D. (1982) A model of labour-market interdependencies in the London region. Environment and Planning A, 14, 238-64.

Taxes Versus Regulation: The Welfare Impacts of Policies for Containing Sprawl

Our central concern in this paper is to examine some alternative policies for physically containing the growth of urban areas. We undertake a microsimulation to provide a comparison between land use planning policies that enforce an urban growth boundary and policies that limit development at the periphery using taxes. We parameterise our microsimulation using the structure of demand and policy implemented in a rapidly growing city in the south of England. We make no judgment as to the optimality or otherwise of the existing degree of constraint: we take that as datum and analyse only the welfare costs, distributional impacts and effects on urban densities of alternative ways of achieving the currently observed degree of constraint. The methodology we deploy to address these issues could be turned to a wide range of other urban modeling purposes. It has the advantage of being clearly founded in microeconomic theory and applies observed behavioural relationships, estimated from the relevant economic data. We find that the use of a tax on land could produce the same limitation on growth as existing regulatory policies but provide higher equilibrium welfare levels. We find that the use of a tax on transport costs, however, while capable of producing a compact urban form, would not raise welfare when compared with regulatory approaches.Urban Sprawl, Property Tax, Land Use Regulation

Analysing Growth and Distribution Dynamics - Isolating Divergence Factors

This paper analyses the factors driving convergence and divergence processes in the growth dynamics of European urban regions over the period 1978 to 1994. To achieve this, we develop a two-stage procedure. First, viewing growth of real GDP per capita as a multivariate process, a fully specified growth model is estimated assessing growth dynamics and the role of a rich set of variables. In particular, as noted elsewhere (Cheshire and Magrini, 2005), evidence is found which is supportive of a spatial adaptation of the endogenous growth model, with human capital related variables having a highly significant role in explaining growth differences. The second stage then uses a ‘distribution dynamics’ approach to evaluate the contribution of individual growth factors to convergence dynamics. More specifically, regression results are used to simulate alternative end period incomes which, via the estimation of stochastic kernels, enable us to isolate the role of selected variables in shaping the dynamics of the cross-sectional distribution of per capita income. This analysis suggests that the most important factor determining the form of FUR growth and convergence dynamics observed from 1978 to 1994 was the differing distribution of human capital. These results are compared with the results using the Markov Chain approach and it is found both techniques lead to similar conclusions.

Population Growth in European Cities: weather matters – but only nationally

This paper investigates differences in the rate of growth of population across the large city-regions of the EU12 between 1980 and 2000. The US model which assumes perfect factor mobility does not seem well adapted to European conditions. There is evidence strongly suggesting that equilibrating migration flows between cities in different countries are highly constrained in the EU. However, quality of life motives do seem to be a significant and important feature of differential population growth rates if measured relative to national rather than EU12 values. Once other factors are allowed for, a systematic and highly significant factor determining rates of urban population growth is climatic variation. Cities with better weather than that of their countries have systematically tended to gain population over the past 20 years once other factors – including natural rates of increase in the areas of each country outside the major cities - are allowed for: there is no such effect for climate variables if expressed relative to the value of the EU12 as a whole. On the other hand, there is evidence that the systematic spatial gains from European integration are reflected in a city’s population growth. The results are tested for spatial dependence and remain robust.growth; cities; quality of life differences; mobility; migration

Capitalising the Value of Free Schools: The Impact of Supply Characteristics and Uncertainty

There has been a growing literature in both the US (for example Haurin and Brasington 1996, and Black 1999) and the UK (for example Gibbons & Machin, 2003) that estimates the way in which school quality is capitalised into house prices. Cheshire and Sheppard 1995 and 1999 estimated hedonic models in which the quality of the secondary school to which a household was assigned was a significant variable which provided evidence that secondary school quality was being capitalised into the price of houses. In contrast Gibbons and Machin concluded that primary schools were more significant. Each of these analyses is predicated on the assumption that the value of local schools should be reflected in the value of houses. We argue here that this is rather too simple. We should expect variation in the capitalised price of a given school quality at either primary or secondary level according to the elasticity of supply of 'school quality' in the local market, the certainty with which that quality can be expected to be maintained over time and the suitability of the dwelling to accommodate children. These factors will vary systematically between and perhaps within cities. This paper explores the sources and the impact of such variations as well as the impact of model specification. The results provide new evidence on the complex and subtle ways in which housing markets capitalise the value of local public goods such as school quality and perhaps most importantly suggest that this is highly non-linear: houses in the catchment areas of only the best state schools command substantial premiums but such capitalised values can be very substantial indeed.House values, hedonic models, public schools

The Welfare Economics of Land Use Planning

This paper presents an empirical methodology for the evaluation of the beneÞts and costs of land use planning. The technique is applied in the context of the Town and Country Planning System of the UK, and examines the gross and net beneÞts of land use regulation and their distribution across income groups. The results show that the welfare and distributional impacts can be large.

Urban Growth Drivers and Spatial Inequalities: Europe - a case with geographically sticky people

We try to combine theory with empirical analysis to investigate the drivers of spatial growth processes, welfare and disparities in a context in which people are markedly immobile. Drawing on two of our recent papers (Cheshire and Magrini, 2006 and 2008), we review the evidence on the drivers of differential urban growth in the EU both in terms of population and output growth. The main conclusion from our findings is that one cannot reasonably maintain the assumption of full spatial equilibrium in a European context. This has a number of wider implications. It suggests that i. differences in real incomes in Europe - and more generally where populations are relatively immobile - are likely to persist and indicate real differences in welfare; ii. there is no evidence of a unified European urban system but rather of a set of national systems; iii. there are significant but theoretically consistent, differences in the drivers of population compared to economic growth.Growth, urban system, spatial equilibrium

European Urban Growth: Now for Some Problems of Spaceless and Weightless Econometrics

This paper investigates growth differences in the urban system of the EU12 between the means of 1978/80 and 1992/94 for a data set relating to Functional Urban Regions rather than the more normal NUTS regions comparing the results of ‘artisanal’ methods of model selection with those generated using general to specific model selection (using PcGets). The artisanal approach tests hypotheses relating to the role of human capital, EU integration and fragmentation of urban government. The paper also explores issues of spatial dependence and mechanisms of spatial interaction. Using PcGets as suggested by Hendry and Krolzig (2004) to optimise model selection yields a model virtually identical to the artisanal approach if mechanisms of spatial interaction are ignored. Testing, however, reveals problems of spatial dependence. We interpret this as indicating that significant variables reflecting mechanisms of spatial economic adjustment have been omitted. Including such variables in the set available to PcGets leads to the inclusion of two measures of spatial adjustment. Further testing shows that problems of spatial dependence are now eliminated. We interpret this result as evidence that while PcGets provides a powerful tool for model selection when applied to cross sectional data, caution is necessary to ensure that variables relating to spatial adjustment processes are included and spatial dependence is avoided. Not only do the final results provide consistent estimates of parameters but they also support relevant theoretical insights. Moreover careful testing for spatial dependence reveals that national borders are still significant barriers to adjustment within the EU.

Capitalising the Value of Free Schools: The Impact of Supply Constraints and Uncertainty

There has been a growing literature in both the US (for example Haurin and Brasington 1996, and Black 1999) and the UK (for example Gibbons & Machin, 2001) that estimates the way in which school quality is capitalised into house prices. Cheshire and Sheppard 1995 and 1999 have estimated hedonic models in which the quality of the secondary school to which a household was assigned was a significant variable. This provided evidence that the value of secondary school quality was being capitalised into the price of houses. In contrast Gibbons and Machin concluded that primary schools had an identifiable and significant price associated with their quality but that secondary schools did not. Their study did not have data for individual houses but used post-code sector data and then various techniques to standardised for all but one variable: either the notional primary school catchment area or the notional secondary school catchment area. Each of these analyses is predicated on the assumption that the value of local schools should be reflected in the value of houses. We expect variation in the capitalised price of a given school quality at either primary or secondary level according to the elasticity of supply of ‘school quality’ in the local market. This will vary systematically between and perhaps within cities and this paper explores the sources and the impact of such variations as well as the impact of model specification. Using an hedonic model and data from 1999-2000, we estimate values attached to both secondary school and primary school quality. The results support the conclusion that both secondary and primary school quality is capitalised into the market price of houses and that the capitalisation of school quality is discounted within the context of an urban area that is tightly constrained by land use planning in areas where new construction is concentrated. We also find evidence that appropriate model specification is imperative since bias is evident both when key neighbourhood characteristics are omitted and if the actual allocation of addresses to schools is not included. JEL: D12; H4; I2; R5