Publications

2007
Evaluating Local Job Creation: A 'Job Chains' Perspective
D., Felsenstein, and Persky J. 2007. “Evaluating Local Job Creation: A 'Job Chains' Perspective”. Journal of the American Planning Association 73 (1):23-34. Publisher's VersionAbstract

This article introduces economic development planners to a new approach to evaluating local job creation efforts, an approach that explicitly considers the chains of employment vacancies that open up when new jobs are created. This “job chains” model is an analytic framework for assessing the employment impacts associated with economic development programs and the social value of those impacts. The approach focuses on measuring the wage gains to job changers and placing realistic values on jobs for those not previously employed in the area. It explicitly considers both efficiency and distributional effects of job creation. We discuss the simple mechanics of the technique and present an example relating to the establishment of a large auto plant in a major Midwestern city. We conclude with practical ground rules for planners carrying out a job chains analysis of an economic development effort.

Mobility and Mean Reversion in the Dynamics of Regional Inequality
M., Beenstock, and Felsenstein D. 2007. “Mobility and Mean Reversion in the Dynamics of Regional Inequality”. International Regional Science Review 30 (4):335-361. Publisher's VersionAbstract

The literature on regional growth convergence and economic disparities has tended to confound four interwoven measurement phenomena: 1) mean reversion (so-called beta convergence)—richer regions move towards the average from above and poorer regions from below; 2) diminishing inequality (so called sigma convergence)—the horizontal or spatial distribution of income becomes more equal; 3) mobility—the rank of a region in the overall distribution of income changes either upwards or downwards; and 4) leveling—the richer regions become poorer (leveling-down) or the poorer regions become richer (leveling-up). We use a new statistical methodology that treats these four phenomena on an integrated basis. The methodology is applied to Israeli regional earnings. We show that regional earnings are Gini divergent, but after adjusting earnings for regional cost-of-living differential, this picture is reversed. In the absence of genuine cost-of-living data, a simple and practical method is proposed, whereby regional house price data are used to proxy regional cost-of-living differentials.

Spatial Vector Autoregressions
M., Beenstock, and Felsenstein D. 2007. “Spatial Vector Autoregressions”. Spatial Economic Analysis 2 (2):167-196. Publisher's VersionAbstract

A spatial vector autoregressive model (SpVAR) is defined as a VAR which includes spatial as well as temporal lags among a vector of stationary state variables. SpVARs may contain disturbances that are spatially as well as temporally correlated. Although the structural parameters are not fully identified in SpVARs, contemporaneous spatial lag coefficients may be identified by weakly exogenous state variables. Dynamic spatial panel data econometrics is used to estimate SpVARs. The incidental parameter problem is handled by bias correction rather than more popular alternatives such as generalised methods of moments (GMM). The interaction between temporal and spatial stationarity is discussed. The impulse responses for SpVARs are derived, which naturally depend upon the temporal and spatial dynamics of the model. We provide an empirical illustration using annual spatial panel data for Israel. The estimated SpVAR is used to calculate impulse responses between variables, over time, and across space. Finally, weakly exogenous instrumental variables are used to identify contemporaneous spatial lag coefficients.

Terror, Fear and Behavior in the Jerusalem Housing Market
S., Hazam, and Felsenstein D. 2007. “Terror, Fear and Behavior in the Jerusalem Housing Market”. Urban Studies 44 (13):2529-2546. Publisher's VersionAbstract

This paper tests the hypothesis that fear is a central factor in understanding human behaviour in the face of terror. This claim is addressed in the context of behaviour in the Jerusalem housing market over the terror-stricken years in the city, 1999—2004. Using a unique data source and the tools of spatial data analysis, the paper provides support for this hypothesis in three respects. First, patterns of terror in the city are shown to be increasingly deconcentrated over the period studied. Secondly, the types of terror having the sharpest effect on residential property prices are those most associated with randomness. Thirdly, the effect of terror is less on purchasing prices than on rental prices. The former represent revealed long-term behaviour less affected by fear and the latter, short-term behaviour more likely to be influenced by such disutility. The paper concludes with some of the policy implications arising from these findings.

2006
Felsenstein, Daniel. 2006.“Computer Models in Israeli Planning (Special Issue)”. in Tichnun - Journal of the Israeli Planning Association (Hebrew).
Linking Supply and Demand in Local Labor Markets (Special Issue)
Felsenstein, Daniel, and Ron McQuaid. 2006.“Linking Supply and Demand in Local Labor Markets (Special Issue)”. in Annals of Regional Science, vol. 40 (2). Publisher's Version
Examining the Economic Effects of Development Projetcts: The Use of a Multi-Regional Input-Output (MRIO) Model for Planning Purposes
D., Felsenstein, and Freeman D. 2006. “Examining the Economic Effects of Development Projetcts: The Use of a Multi-Regional Input-Output (MRIO) Model for Planning Purposes”. Tichnun 3 (1):178-198 (Hebrew).
Predicting the Impacts of Development Plans: Application of the UrbanSim Model to the Tel Aviv Metropolis
E., Ashbel, Felsenstein D., and Ben Nun A. 2006. “Predicting the Impacts of Development Plans: Application of the UrbanSim Model to the Tel Aviv Metropolis”. Tichnun 3 (1):142-162 (Hebrew).
Restricting Access in a Job Chains Model of Local Employment Creation
J., Persky, and Felsenstein D. 2006. “Restricting Access in a Job Chains Model of Local Employment Creation”. Annals of Regional Science 40 (2):423-435. Publisher's VersionAbstract

The job chains model of local labor market change is a demand-driven analytic device for estimating the effects of new job creation. This paper explores the effects of restricting supply, i.e., limiting job access, on the model’s primary outcomes: vacancy chain multipliers, welfare effects, and distributional impacts. Major sources of labor supply are the local unemployed, out of the labor force and in-migrants. Three simulations are reported relating to (1) restricting new jobs to current local residents (i.e., no in-migrants), (2) restricting new jobs to current residents in the first round of hiring only, and (3) restricting hiring to local unemployed/out of labor force on the first round alone. The results are compared to the basic model that assumes no supply-side restrictions. In terms of chain length, welfare effects, distributional impacts, and policy palatability, first-round restrictions on in-migrants would seem to be the most plausible option. However, as an economic development strategy, well-targeted demand-side initiatives would still seem to be preferable.

2005
Entries on 'Export Base Theory', 'Economies of Scale', 'Tiebout Hypothesis','Science Parks', 'Technopoles'
D., Felsenstein. 2005.“Entries on 'Export Base Theory', 'Economies of Scale', 'Tiebout Hypothesis','Science Parks', 'Technopoles'”. in Caves R.W (ed), Encyclopedia of the City. London, UK: Routledge. Publisher's Version
Translating Employment Concentration into Land Consumption: Some Results from the Chicago Metropolitan Area
D., Felsenstein. 2005.“Translating Employment Concentration into Land Consumption: Some Results from the Chicago Metropolitan Area”. Pp. 79-96 in Atzema O., Rietveld P. and Shefer D. (eds), Regions, Land Consumption and Sustainable Growth: Assessing the Impact of the Public and Private Sectors. Cheltenham UK: Edward Elgar. Publisher's Version
The Liability of Smallness; Can We Expect Less Regional Disparities in Small Countries?
D., Felsenstein., and Portnov B. 2005.“The Liability of Smallness; Can We Expect Less Regional Disparities in Small Countries?”. Pp. 15-24 in Felsenstein D. and Portnov B (eds), Regional Disparities in Small Countries. Heidelberg: Springer. Publisher's Version
Measures of Regional Inequality for Small Countries
B., Portnov, and Felsenstein D. 2005.“Measures of Regional Inequality for Small Countries”. Pp. 47-62 in Felsenstein D. and Portnov B. (eds) Regional Disparities in Small Countries. Heidelberg: Springer. Publisher's Version
Regional Disparities in Small Countries
D., Felsenstein, and Portnov B. 2005.Regional Disparities in Small Countries. Heidelberg: Springer. Publisher's Version
Understanding Regional Inequalities in Small Countries
D., Felsenstein, and Portnov B. 2005. “Understanding Regional Inequalities in Small Countries”. Regional Studies 39 (5):647-658. Publisher's VersionAbstract

This paper revisits the commonly held view that small countries do not exhibit significant regional disparities. The issue is framed as one in which the attributes of small size (land area, population and the magnitude of the economy) are mediated by a series of spatial and non‐spatial factors such as distance, density, factor mobility, natural resources, land supply, social cohesion and governance structure. Given the existence of these mediators, the magnitude of regional disparities in small countries is not as surprising as it may seem at first glance.

2004
J., Persky, and Felsenstein D. 2004.“Evaluating the Welfare Outcomes of Local Economic Development: A Job Chains Approach”. Pp. 130-144 in Reese L. and Fasenfest D. (eds), Critical Perspectives in Local Economic Development. Detroit MI: Wayne State University Press.
Short-Run Output and Employment Effects Arising from Assistance to Tourism SME’s: Evidence from Israel
A., Fleischer, and Felsenstein D. 2004.“Short-Run Output and Employment Effects Arising from Assistance to Tourism SME’s: Evidence from Israel”. Pp. 71-81 in Thomas R (ed), Small Firms in Tourism: International Perspectives. Holland: Elsevier. Publisher's Version
Does 'Trickle-Down' Work? Economic Development Strategies and Job Chains in Local Labor Markets
J., Persky, Felsenstein D., and Carlson V. 2004.Does 'Trickle-Down' Work? Economic Development Strategies and Job Chains in Local Labor Markets. Kalamazoo, MI: Upjohn Institute of Employment Research. Publisher's VersionAbstract

These are basic questions that, because of difficulties in evaluating the effects of state and local economic incentives, are often left unanswered. This book, however, offers a solution to this problem. Persky, Felsenstein, and Carlson explore a new framework for evaluating state and local economic development efforts. They propose a method, referred to as the ""job-chains approach,"" that they say clarifies the potential justifications for economic development subsidies as well as the limitations surrounding these efforts. This innovative approach addresses not only the number of job vacancies created as a result of a subsidized business investment or expansion, but also the extent to which gains are achieved by the unemployed and the underemployed, whether skilled or unskilled.

Application of the authors' job-chains model leads to novel insights into local economic development evaluation and strategy. First, where standard employment multipliers focus exclusively on horizontal multipliers—increasing demand for locally produced products and services—the job-chains model identifies the existence of vertical multipliers, or links that work through job vacancies created by job changers. Second, using the job-chains model allows the authors to develop a technique for evaluating the welfare value of employment creation. The mechanics of job chains result in this value spreading more broadly across the local population than the original new jobs that created the chains. And third, the job chains perspective affords new insights into labor market dynamics by introducing individual preferences and behavioral probabilities into job choice.

Face-to-Face or Cyberspace? Choosing the Internet as an Intermediary in the Israeli Travel Market
A., Fleischer, and Felsenstein D. 2004. “Face-to-Face or Cyberspace? Choosing the Internet as an Intermediary in the Israeli Travel Market”. Tourism Economics 10 (3):345-359. Publisher's VersionAbstract

Existing studies of the trend towards electronic provision of travel services tend to be highly bifurcated. They focus either on the supply-side characteristics of this change (new technologies and mediation platforms) or on the demand-side attributes, such as the socio-economic profile of the Internet user and attitudes towards electronic purchasing in the travel market. The latter approach, however, can lead to sample selectivity bias and misleading parameter estimates. It fails to recognize that actual Internet travel purchases are observable only for individuals who have made the prior decision to use the Internet as a market intermediary. This paper addresses this drawback by modelling the decision to purchase travel products on the Internet in a bivariate probit framework. The choice of travel service intermediary, travel agent (face-to-face) or Internet (cyberspace), is determined by the joint probabilities of general Internet purchasing and specific Internet travel purchasing. Using unique survey evidence of actual Internet transactions, the discrepancies between preferences for Internet travel purchasing and actual travel purchases are highlighted. The results suggest that demand for the latter is more closely related to previous Internet purchasing experience than to the socio-economic attributes of the purchaser.

2003
Local Festivals and Tourism Promotion: The Role of Public Assistance and Visitor Expenditure
D., Felsenstein, and Fleischer A. 2003. “Local Festivals and Tourism Promotion: The Role of Public Assistance and Visitor Expenditure”. Journal of Travel Research 41 (4):385-392. Publisher's VersionAbstract

Local festivals are increasingly being used as instruments for promoting tourism and boosting the regional economy. This is often reflected in the level of public assistance made available to them. However, it is difficult to assess the extent of the contribution of the festival to local economic growth, and most studies do not examine this issue beyond standard multiplier impacts. This study looks at two local festivals that take place annually in northern Israel. On the basis of detailed data on public assistance and visitor expenditure patterns, it goes beyond the basic impact analysis framework. A method is presented that accounts for net local income increase induced by the festival. The results show modest but positive local growth, suggesting some justification for public assistance for local festivals as a tourism strategy. Policy implications related to increasing the volume of visitors and their spending are discussed.

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