Urban Economics ECP 4613 Second Set of Sample Test Questions Dr Ihlanfeldt 1 Define the following terms AND explain their significance to urban economics 1 exclusionary zoning Designed to keep undesirables out of community o Minimum Lot Size Zoning making it difficult impossible for lower income individuals from purchasing property o Designate small amounts of zoning if any for multi family housing Contributes to racially segregated schools do not perform as well as integrated schools Contributes to Urban Sprawl 2 index of dissimilarity measure of housing segregation ranging from 0 1 If they can t find housing near job they can t have that job o 0 perfect integration 1 perfect segregation o Need to measure it in order to deal with it Increasing decreasing where it s bad where it s not Decreasing in most areas o 6 hyper segregation 3 fiscal zoning Not prejudice it is economics o Free riders cost of providing public services to lower income individuals exceeds taxes they generate source of fiscal deficit Higher income individuals will pay higher property taxes Same problems as above but more legitimate reasons Implemented in same ways as exclusionary Harder to implement in central cities have to live somewhere 4 development impact fees accessed to developer in order to get building permit o Designed to cover cost of public infrastructure needed by that development so you don t have to use existing tax base for new ones If fees are not accessed Market Failure Result higher property taxes 2 Zoning 3 types Externality Exclusionary Fiscal What rationale can be given for the use of zoning within urban areas o To address market failure and eliminate externalities higher taxes Do you believe this rationale is valid Why or why not o No problem is often times it becomes exclusionary and does not necessarily address market failure State and evaluate at least two of the arguments that have been made for eliminating zoning o Atlanta Houston study Houston has no zoning Atlanta does same look o Ripe for corruption relationship between developer and gov officials 3 Carefully state the following hypotheses and indicate their testable implications The redlining hypothesis Stay away No loans depreciating property value o Redlining is not exclusionary they are just not good investments The price discrimination hypothesis white seller has taste o Less integrated communities Urban Sprawl Supply restriction exclusion hypothesis conspiracy that supply of housing is discriminatory minorities out would be higher o Banks real estate agents apartment managers work together to keep o If true home ownership would be lower for minorities and home price True before 1960 s not anymore discriminatory behavior has been heavily addresssed 4 Segregation List and carefully explain three reasons why urban economists consider housing segregation between whites and blacks a major social problem o Segregation root of all social problems Segregation in schools is increasing in Florida Spatial mismatch in labor market White Flight as neighborhood begins to turn whites leave What polices would you propose for reducing segregation within America s cities Defend your choices o Significantly increase penalties in discrimination o Implement more discriminatory testing to better detect 5 Sprawl Why is urban sprawl considered to be a problem by urban economists o Related to three market failures Underprice roads negative externality of cost of delays Underprice fringe development Impact fees not fully accessed Open space externality Actual amount of farmland is not optimal amount people like farmland but may not be economical Gov buys up land and keeps it farms Easements farmers can t sell to developer What policies do urban planners advocate for reducing sprawl Evaluate these polices drawing upon urban economic theory and or empirical evidence o Impact Fees in context of jacking up cost of development o Growth Boundaries make sprawl illegal What polices do urban economists like Jan Brueckner propose for dealing with sprawl o Impact fees in context of market failure o Let market decide preferences not public policy Can t legislate preferences List and explain three government policies that allegedly have made sprawl worse o Minimum lot size zoning o Multi family house zoning o Impact fees that don t fully access cost of public infrastructure 6 Evaluate each of the following proposals for relieving automobile congestion Would Do these policies work If they do not work explain why not If they do work explain why they work Also discuss any drawbacks that these policies might have in addition to their effects on automobile congestion 1 An increase in the gasoline tax disincentive to drive automobiles a Second Class Solution i Evidence shows people are unresponsive to out of pocket costs in mode choice more sensitive to time cost ii Gas tax is not marginal cost pricing 1 Increases cost of driving for all times of the day on all roadways not just congested ones 2 The use of HOV lanes a Works as long as it is done right i Build a brand new lane instead of cutting into existing ones 1 Buses can get off SOV lanes ii Access to lane should have its own entrance and exit ramp 1 Diminish heavy lane switching to get to HOV 3 Federal government subsidies to mass transit a Has minimal effect Money is not allocated to right places i Money needs to go to Buses and not Rail 1 Line haul time is not main concern of transit users getting to train station and waiting for train to get there is 7 Public transit is not succeeding within America s cities costs greatly exceed revenues ridership has been declining and the transportation needs of the poor are not being met Propose and defend a set of policies which you believe would improve public transit Make your program for improvement fiscally practical in light of present day budgeting limitations 1 Allocate public funds to buses rather than rail lines a Rail is much more expensive than buses and little affect on automobile congestion i 150 million for each mile of rail 2 Raise Prices of Mass Transit a Increase in revenues will allow you address reasons people don t use it Distribution Collection Times Increase Ridership b Subsidize for poor because they are transportation disadvantaged 3 Transportation Orientation Development a Focus residential and commercial development around these MT stations Proximity to station Comfortability when you get there 4 Allow for Private Sector to contribute some or