This paper estimates the Urban Wage Premium for the Chilean case, but proposing three contributio... more This paper estimates the Urban Wage Premium for the Chilean case, but proposing three contributions to the literature. First, the geographical space is reconfigured using functional regions instead administrative regions. This process is carried out using techniques from the spatial econometric literature. Second, we exploit the use of micro data. We estimate the wage equation using a survey at individual level that avoids problems associated with regional aggregated specifications. Finally, we set the comparability among observations using matching comparison. Thus, we isolate the urban effect from other alternative sources. Our results suggest a Urban Wage Premium between 4 and 21%.
This article describes a methodology to calculate a Spatial Cost of Living (SCOL) index using the... more This article describes a methodology to calculate a Spatial Cost of Living (SCOL) index using the Colombian data for 2006 that considers the microeconomic behaviour of households. Estimating an Almost Ideal Demand System (AIDS) to recover the expenditure function of the 23 main Colombian cities, the index is compared to the fixed basket approach and to an alternative methodology proposed by Romero (2005). This comparison suggests that the index is biased when the substitution effects are not considered, and this bias increases when the difference in expenditure levels between cities increases. According to our calculations, Bogota is still the most expensive city in the country.
The New Economic Geography (NEG) has been tested to explain the spatial concentration of wages in... more The New Economic Geography (NEG) has been tested to explain the spatial concentration of wages in developed countries, but it has not been evaluated for developing countries where the excessive spatial concentration seems to be related with negative consequences on the economic development. This paper covers this gap in the literature estimating by first time a NEG model for a developing country such as Chile, pursuing two research questions : 1) Can the NEG explain the spatial distribution of wages in a developing country as Chile?, and 2) How can the NEG be used to infer information about the future level of spatial concentration of wages in Chile? The results suggest that the case of Chile is poorly explained by the NEG and even higher level of spatial concentration should be expected in the future. These results indicate that the empirical application of NEG is not trivial for developing countries, and some considerations such as inclusion of the first nature or analysis at micro data level must be incorporated by future researches.
Documentos de Trabajo en Ciencia Regional, Jan 1, 2010
The New Economic Geography (NEG) has been tested to explain the spatial concentration of wages in... more The New Economic Geography (NEG) has been tested to explain the spatial concentration of wages in developed countries, but it has not been evaluated for developingcountries where the excessive spatial concentration seems to be related with negative consequences on the ...
Documentos de Trabajo en Ciencia Regional, Jan 1, 2010
... Please update your bookmarks. The Role of Regional Price Index in New Economic Geography Mode... more ... Please update your bookmarks. The Role of Regional Price Index in New Economic Geography Models. Dusan Paredes (). No 7, Documentos de Trabajo en Ciencia Regional from Universidad Catolica del Norte, Chile, Department of Economics. ...
En este trabajo se estimó el sesgo de sustitución como la diferencia entre el índice de precio y ... more En este trabajo se estimó el sesgo de sustitución como la diferencia entre el índice de precio y el verdadero costo de vida. El sesgo de sustitución se estimó para diferentes escalas geográficas, utilizando distintas canastas de base y a través de diferentes cuartiles de gasto. Los resultados muestran que el sesgo de sustitución es significativo para la menor escala espacial. La elección de la canasta base es relevante para la estimación del sesgo de sustitución. Finalmente, el sesgo de sustitución es mayor para los mayores cuartiles de gasto debido a la heterogeneidad en las características de viviendas consumidas. Este ejercicio muestra como la dimensión espacial modifica la construcción de un índice de precios. Más aún, el enfoque de canasta fija (enfoque axiomático) debe ser tomado con precaución en la estimación de los diferenciales de precios a través del espacio.
The aim of this article is to develop a methodology for a spatial or regional cost index of housi... more The aim of this article is to develop a methodology for a spatial or regional cost index of housing that considers spatial differentials across regions. Using microdata from the Chilean survey CASEN 2003, it is showed that a spatial or regional housing price index based on the weighted mean or the estimators of hedonic price equations might lead to biased results due to spatial heterogeneity. The potential bias is reduced by matching the houses in a region with a clone in the Metropolitan Region, according to own and neighbors' characteristics using propensity scores. As a result a very different pattern of spatial cost of housing arises. Finally, using a Fisher ideal price index, the paper proposes a spatial or regional cost index of housing that shows price differences for homogeneous houses across regions. JEL: R21, C43, C25
This paper proposes a methodology for a spatial cost index of housing that considers spatial hete... more This paper proposes a methodology for a spatial cost index of housing that considers spatial heterogeneity in properties across regions. The index is built by combining three different techniques to reduce the spatial heterogeneity in housing: Quasi-experimental methods, hedonic prices and Fisher spatial price index. Using microdata from the Chilean survey CASEN 2006, it is shown that the quasi-experimental method called Mahalanobis metric within propensity score calipers (MMWPS) leads to a significant reduction in the potential bias. The technique matches dwellings of a particular region with other properties of similar characteristics in the benchmark region (Metropolitan region). Once the houses are matched, a hedonic price model is computed, and a regional housing price matrix is created using Fisher spatial price indices. The paper concludes the existence of price differentials for homogeneous houses across regions in Chile.
This paper estimates the Urban Wage Premium for the Chilean case, but proposing three contributio... more This paper estimates the Urban Wage Premium for the Chilean case, but proposing three contributions to the literature. First, the geographical space is reconfigured using functional regions instead administrative regions. This process is carried out using techniques from the spatial econometric literature. Second, we exploit the use of micro data. We estimate the wage equation using a survey at individual level that avoids problems associated with regional aggregated specifications. Finally, we set the comparability among observations using matching comparison. Thus, we isolate the urban effect from other alternative sources. Our results suggest a Urban Wage Premium between 4 and 21%.
This article describes a methodology to calculate a Spatial Cost of Living (SCOL) index using the... more This article describes a methodology to calculate a Spatial Cost of Living (SCOL) index using the Colombian data for 2006 that considers the microeconomic behaviour of households. Estimating an Almost Ideal Demand System (AIDS) to recover the expenditure function of the 23 main Colombian cities, the index is compared to the fixed basket approach and to an alternative methodology proposed by Romero (2005). This comparison suggests that the index is biased when the substitution effects are not considered, and this bias increases when the difference in expenditure levels between cities increases. According to our calculations, Bogota is still the most expensive city in the country.
The New Economic Geography (NEG) has been tested to explain the spatial concentration of wages in... more The New Economic Geography (NEG) has been tested to explain the spatial concentration of wages in developed countries, but it has not been evaluated for developing countries where the excessive spatial concentration seems to be related with negative consequences on the economic development. This paper covers this gap in the literature estimating by first time a NEG model for a developing country such as Chile, pursuing two research questions : 1) Can the NEG explain the spatial distribution of wages in a developing country as Chile?, and 2) How can the NEG be used to infer information about the future level of spatial concentration of wages in Chile? The results suggest that the case of Chile is poorly explained by the NEG and even higher level of spatial concentration should be expected in the future. These results indicate that the empirical application of NEG is not trivial for developing countries, and some considerations such as inclusion of the first nature or analysis at micro data level must be incorporated by future researches.
Documentos de Trabajo en Ciencia Regional, Jan 1, 2010
The New Economic Geography (NEG) has been tested to explain the spatial concentration of wages in... more The New Economic Geography (NEG) has been tested to explain the spatial concentration of wages in developed countries, but it has not been evaluated for developingcountries where the excessive spatial concentration seems to be related with negative consequences on the ...
Documentos de Trabajo en Ciencia Regional, Jan 1, 2010
... Please update your bookmarks. The Role of Regional Price Index in New Economic Geography Mode... more ... Please update your bookmarks. The Role of Regional Price Index in New Economic Geography Models. Dusan Paredes (). No 7, Documentos de Trabajo en Ciencia Regional from Universidad Catolica del Norte, Chile, Department of Economics. ...
En este trabajo se estimó el sesgo de sustitución como la diferencia entre el índice de precio y ... more En este trabajo se estimó el sesgo de sustitución como la diferencia entre el índice de precio y el verdadero costo de vida. El sesgo de sustitución se estimó para diferentes escalas geográficas, utilizando distintas canastas de base y a través de diferentes cuartiles de gasto. Los resultados muestran que el sesgo de sustitución es significativo para la menor escala espacial. La elección de la canasta base es relevante para la estimación del sesgo de sustitución. Finalmente, el sesgo de sustitución es mayor para los mayores cuartiles de gasto debido a la heterogeneidad en las características de viviendas consumidas. Este ejercicio muestra como la dimensión espacial modifica la construcción de un índice de precios. Más aún, el enfoque de canasta fija (enfoque axiomático) debe ser tomado con precaución en la estimación de los diferenciales de precios a través del espacio.
The aim of this article is to develop a methodology for a spatial or regional cost index of housi... more The aim of this article is to develop a methodology for a spatial or regional cost index of housing that considers spatial differentials across regions. Using microdata from the Chilean survey CASEN 2003, it is showed that a spatial or regional housing price index based on the weighted mean or the estimators of hedonic price equations might lead to biased results due to spatial heterogeneity. The potential bias is reduced by matching the houses in a region with a clone in the Metropolitan Region, according to own and neighbors' characteristics using propensity scores. As a result a very different pattern of spatial cost of housing arises. Finally, using a Fisher ideal price index, the paper proposes a spatial or regional cost index of housing that shows price differences for homogeneous houses across regions. JEL: R21, C43, C25
This paper proposes a methodology for a spatial cost index of housing that considers spatial hete... more This paper proposes a methodology for a spatial cost index of housing that considers spatial heterogeneity in properties across regions. The index is built by combining three different techniques to reduce the spatial heterogeneity in housing: Quasi-experimental methods, hedonic prices and Fisher spatial price index. Using microdata from the Chilean survey CASEN 2006, it is shown that the quasi-experimental method called Mahalanobis metric within propensity score calipers (MMWPS) leads to a significant reduction in the potential bias. The technique matches dwellings of a particular region with other properties of similar characteristics in the benchmark region (Metropolitan region). Once the houses are matched, a hedonic price model is computed, and a regional housing price matrix is created using Fisher spatial price indices. The paper concludes the existence of price differentials for homogeneous houses across regions in Chile.
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