Neighborhood information and home mortgage lending

Article Abstract:

Theoretical models argue that home purchase lenders engage in redlining, which involves the downgrading of the creditworthiness of a loan application due to the neighborhood where the property is located. According to these models, economies of scale in the collection of information regarding neighborhood traits influence house values. The existence of these economies of scale is tested using mortgage application data gathered in 1990 and 1991. Findings revealed the presence of major economies of scale in neighborhood lending related to the scale of operation of individual lenders in a neighborhood. However, negative externalities were found associated with the scale of activity of other lenders in the neighborhood. This study estimates that at most 25% of the higher denial rates in low-income and minority communities may be due to the inability of individual lenders to achieve the minimum scale of operation in the neighborhood required to wholly take advantage of the economies of scale.

Mortgages, Neighborhood, Neighborhoods, House buying, Home buying, Economies of scale

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Amenities and regional differences in returns to worker characteristics

Article Abstract:

Regional variations in returns to worker characteristics were studied. The demand-based explanation was not used to explain the regional differences in wage structures. The explanation was based on regional variations in the supply of worker characteristics. A theoretical model was developed based on the assumptions of perfectly mobile capital and labor and perfect information. The model showed that the existence of equilibrium differences in returns to worker characteristics depended on the condition of having the characteristics affect the demand for housing relative to amenities. Differences in returns to schooling were explained by variations in amenities and industry mix.

Demographic aspects, Wages, Wages and salaries, Labor supply, Labor force, Working class

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Sources of the decline of manufacturing in large metropolitan areas

Article Abstract:

Lower capital accumulation rates was the primary cause of the relative decline of manufacturing value added in large standard metropolitan statistical areas (SMSA) during the period 1959-1978. Differences in the relative rate of growth of large SMSAs were related to changes in the growth rates of productivity and labor during the period. Consequently, the effect of relative wage rates on capital accumulation is an important explanation for manufacturing's decline. Unlike other regions, the total deterioration of the productivity growth advantage and a decline in labor growth caused the decline of large SMSAs in the manufacturing belt.

Manufacturing industry, Manufacturing industries, Metropolitan areas, Economic stagnation

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