Daniel P. Mcmillen

Daniel P. Mcmillen
University of Illinois, Urbana-Champaign | UIUC · Department of Economics

About

124
Publications
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7,064
Citations
Citations since 2016
10 Research Items
2691 Citations
20162017201820192020202120220100200300400
20162017201820192020202120220100200300400
20162017201820192020202120220100200300400
20162017201820192020202120220100200300400

Publications

Publications (124)
Article
Teardowns provide direct information on land values in fully developed urban areas because such properties are valued only for their land and location rather than for the characteristics of the structure. We use two approaches to estimate land values. The first approach is a Stein-like procedure that uses teardown properties and makes efficient use...
Article
Full-text available
Homestead exemptions typically produce a moderately progressive statutory incidence for the property tax in the US when progressivity is measured using the ratio of a household’s tax to the sale price of a home. However, the tax is levied on the assessed value of a home rather than the sale. A stylized fact from the assessment literature is that as...
Article
Chicago's Safe Passage program attempts to ensure the safety of student traveling to and from schools by placing civilian guards along specified routes. The program was launched during the 2009-2010 school year and was expanded to 140 schools by 2015-16. We use data from more than 10 years of geocoded Chicago police reports and school level data to...
Article
Using a unique dataset and a nonparametric decomposition, we determine whether immigrants with native names, immigrants with foreign names, and natives have different outcomes in Spain’s housing market. Results suggest that immigrants with native names achieve greater discounts relative to immigrants with non-Spanish names. As a robustness check, w...
Article
A unique data source is used to analyze the effect of the fair market rent (FMR) on the distribution of apartment rents in Los Angeles for 2007–2015. The data set includes the results of semi-annual surveys of rents in Los Angeles since 2007. The surveys include information on location, characteristics of the property, and a rating of the overall q...
Article
Despite unprecedented vertical growth in large cities, the economics of skyscrapers remain understudied. We combine data on tall buildings with a panel of land prices covering 140 years to analyze the determinants of urban heights. We provide estimates of the land price elasticity of height, the height elasticity of construction cost, and the elast...
Article
Although the literature suggests that nursing home location is instrumental to the efficient functioning of the long-term care industry, there has been little research directly focused on the spatial distribution of nursing homes. We discuss factors that may influence nursing home location choice, emphasizing agglomeration economies around hospital...
Article
Conditionally parametric (CPAR) Probit models are used to estimate the probability that a demolition permit was issued for residential properties in Chicago for 2000–2014. The approach has significant advantages when analyzing demolition permits because the coefficients vary across locations where demolition is followed by construction of a new bui...
Article
We examine the degree to which assessment practices in the City of Detroit have created substantial inequities in property tax payments across residential properties. Two key contributions of this article include: (1) inequities created by assessment practices are examined in a collapsed real estate market, and (2) quantile regression techniques ar...
Article
We examine the degree to which assessment practices in the City of Detroit have created substantial inequities in property tax payments across residential properties. Two key contributions of this article include: (1) inequities created by assessment practices are examined in a collapsed real estate market, and (2) quantile regression techniques ar...
Article
This paper demonstrates that a conditionally parametric version of a quantile regression estimator is well suited to analyzing spatial data. The conditionally parametric quantile model accounts for local spatial effects by allowing coefficients to vary smoothly over space. The approach is illustrated using a new data set with land values for over 3...
Article
Motor vehicle and motor vehicle parts production tend to exhibit a strong degree of agglomeration. We estimate a location model utilizing detailed plant-level data for over 1,700 European locations of the largest motor vehicle parts suppliers, as well as the location of all light vehicle assembly plants operational in 2010. This unique data set all...
Article
Differences in property tax rates and sales tax distribution formulas can give suburban municipalities strong incentives to attract commercial and industrial firms to their jurisdictions. If these land uses generate negative externalities for local residents, suburban governments may form concentrations of non-residential land use at the borders of...
Article
Spatial data sets pose challenges for discrete choice models because the data are unlikely to be independently and identically distributed. A conditionally parametric spatial probit model is amenable to very large data sets while imposing far less structure on the data than conventional parametric models. We illustrate the approach using data on 47...
Article
The introduction of uncertainty over the future price of structural capital into a model of teardowns implies a value to delaying the demolition vs. preservation decision, and that the market price of a redeveloped property may increase with its quantity of structural capital. Using data from an active teardown market, we test the model’s predictio...
Article
Full-text available
In this paper we examine the degree to which Michigan’s property value assessment growth cap has eroded the tax base and created substantial differences in effective tax rates among residential properties within the City of Detroit. While the analysis focuses on a specific city with significant tax base erosion challenges, it is relevant to other c...
Article
We use a matching procedure to construct three commercial real estate indices (office, shop and multiple-user factory) in Singapore using transaction sales from 1995Q1 to 2010Q4. The matching approach is less restrictive than the repeat sales estimator, which is restricted to properties sold at least twice during the sample period. The matching app...
Article
Motor vehicle and motor vehicle parts production plants tend to exhibit a strong degree of agglomeration. This paper estimates a spatial model utilizing detailed plant-level data that is pooled across seven countries in Europe. The paper makes several contributions. First, we assemble a set of nearly 1,800 European plant locations of the largest mo...
Chapter
Quantile regression estimates can be presented in tables alongside linear regression estimates. A possible advantage of this approach to presenting quantile regression results is that it is easy to compare the values of the coefficients and standard errors with OLS estimates and across quantiles. As we have seen, quantile estimates actually contain...
Book
1 Quantile Regression: An Overview. 2 Linear and Nonparametric Quantile Regression.- 3 A Quantile Regression Analysis of Assessment Regressivity.-4 Quantile Version of the Spatial AR Model.- 5 . Conditionally Parametric Quantile Regression.- 6 Guide to Further Reading.- References.
Article
ABSTRACT Though standard spatial econometric models may be useful for specification testing, they rely heavily on a parametric structure that is highly sensitive to model misspecification. The commonly used spatial AR model is a form of spatial smoothing with a structure that closely resembles a semiparametric model. Nonparametric and semiparametri...
Article
Full-text available
The zoning movement in the United States began in the early twentieth century. Zoning is a form of regulation of the use of land that typically is an ordinance adopted by a municipal government. The zoning ordinance includes text and a zoning map that specifies the allowable uses of all parcels of land in the municipality. As such zoning is a topic...
Article
The most common approaches for constructing house price indices – hedonic price functions and the repeat sales estimator – focus on changes over time in mean prices. Though the hedonic approach is less wasteful of data than the repeat sales estimator, it relies on an accurate specification of the underlying econometric model. I suggest using a matc...
Article
A variety of nonparametric methods - locally weighted regression, nonparametric quantile regression, and conditional density function - is used to evaluate the effect of appeals on the assessment uniformity. Unlike previous studies, the focus is on the full distribution of assessment ratios rather than on central moments. Data for single-family hom...
Article
We use a matching procedure to construct samples of private residential sales in Singapore for January 1995 to May 2010. Though the matching approach is similar to a repeat sales estimator in pairing each sale with the sale of a comparable property, sample sizes are much larger because the matched properties are not constrained to be identical in e...
Article
In contrast to the rigid structure of standard parametric hedonic analysis, nonparametric estimators control for misspecified spatial effects while using highly flexible functional forms. Despite these advantages, nonparametric procedures are still not used extensively for spatial data analysis due to perceived difficulties associated with estimati...
Article
Prior work uses a parametric approach to study the distributional effects of school finance reform and finds evidence that reform yields greater equality of school expenditures by lowering spending in high-spending districts (leveling down) or increasing spending in low-spending districts (leveling up). We develop a kernel density difference-in-dif...
Article
Appeal processes provide important opportunities to challenge administrative decisions, but adjudicators often lack access to information relevant to the disputed claim. This article examines the motivations for property tax assessment appeals as well as the factors that influence the decision to grant or deny these appeals. We ask whether and how...
Article
Misspecified functional forms tend to produce biased estimates and spatially correlated errors. Imposing less structure than standard spatial lag models while being more amenable to large datasets, nonparametric and semiparametric methods offer significant advantages for spatial modeling. Fixed effect estimators have significant advantages when spa...
Article
Full-text available
When property tax assessment ratios vary, the costs of public services are unevenly redistributed. More sales in a census tract should help to improve assessment uniformity while providing homeowners with a stronger basis for appeals. Using data from Chicago to estimate a multinomial logit model that characterizes the distribution of assessment rat...
Article
Quantile hedonic house price function estimates imply that appreciation rates were higher between 1995 and 2005 for high-priced homes in Chicago. Decompositions of temporal changes in the house price distribution suggest that the types of homes sold and their location do not account for the change in the price distribution. Rather, higher appreciat...
Article
A linearized logit version of Pinkse and Slade's spatial GMM estimator reduces estimation to two steps—standard logit followed by two-stage least squares. Linearization produces a model that can be estimated using large datasets. Monte Carlo experiments suggest that the linearized model accurately identifies the presence of spatial effects and is...
Article
In 1957 Chicago enacted a Comprehensive Amendment to the Chicago Zoning Ordiance of 1923. In contrast to the hierarchical zoning of the 1923 ordinance, the 1957 ordinance made each zoning category exclusive and mandated the removal of non-conforming uses. This study examines land parcels at the borders between residential and non-residential (comme...
Article
The simultaneous estimation of vintage, age and time of sale effects in hedonic models is generally thought to be impossible without some restriction on functional form. This is not the case. We extend and employ the method of McKenzie (McKenzie, D., 2006. Disentangling age, cohort and time effects in the additive model. Oxford Bulletin of Economic...
Article
We document a substantial and accelerating increase in the distance between small business borrowers and their lenders during the 1990s, based on a large random sample of U.S. Small Business Administration loans. Importantly, this increase was disproportionately large for borrowers located in low-income and minority neighborhoods. These phenomena a...
Article
Full-text available
Teardowns provide direct information on land values in fully developed urban areas because such properties are valued only for their land and location rather than for the characteristics of the structure. Stein-like procedures make efficient use of limited data when a group of variables – the structural characteristics – are expected beforehand to...
Article
Using nonparametric descriptive tools developed by Duranton and Overman (2005, "Review of Economic Studies", 72, 1077-1106), we show that both new and old auto supplier plants are highly concentrated in the eastern United States. Conditional logit models imply that much of this concentration can be explained parametrically by distance from Detroit,...
Book
A Companion to Urban Economics provides a state-of-the-art overview of this field, communicating its intellectual richness through a diverse portfolio of authors and topics. Unique in both its rigor and international treatment. An ideal supplementary textbook in upper-level undergraduate urban economics courses, or in master's level and professiona...
Article
"This article provides the first evidence that universities compete directly on price, and that the market for students depends on the proximity of competitors. Exploiting detailed data from private U.S. universities, price competition is tested by introducing geographic proximity into a spatial-autoregressive tuition model. Standard spatial models...
Article
We study recent changes in the geographic distances between small businesses and their bank lenders, using a large random sample of loans guaranteed by the Small Business Administration. Consistent with extant research, we find that small borrower-lender distances generally increased between 1984 and 2001, with a rapid acceleration in distance begi...
Article
Estimating price indexes for different quantiles shows how prices vary for homes that are in different stages of the filtering process. The paper describes a filtering model and its implication for the dynamic interaction of housing prices at these various stages. A time-series analysis of quantile price indexes for three municipalities near Chicag...
Article
Full-text available
In this paper, a hedonic pairing process is modeled in which some workers may be overeducated or undereducated as an equilibrium outcome of a dynamic labor market. Undereducated workers are those whose abilities and training permit them to move into a job with higher qualifications, whereas overeducated workers are highly qualified workers who sele...
Article
An empirical model of residential housing demolitions and the redevelopment process in the Chicago metropolitan area supports the theoretical prediction that the sales price of teardown property is approximately equal to its land value. We control for sample selection bias associated with non-random demolition permit applications using a probit mod...
Article
Despite well-documented shortcomings, hedonic and repeat sales estimators remain the most widely used methods for constructing quality controlled house price indexes and for assessing housing attribute capitalization into dwelling prices. Nonparametric estimators overcome many of the problems associated with these approaches by controlling for miss...
Article
The problem of spatial autocorrelation has been ignored in selection-bias models estimated with spatial data. Spatial autocorrelation is a serious problem in these models because the heteroskedasticity with which it commonly is associated causes inconsistent parameter estimates in models with discrete dependent variables. This paper proposes estima...
Article
Commonly-employed spatial autocorrelation models imply heteroskedastic errors, but heteroskedasticity causes probit to be inconsistent. This paper proposes and illustrates the use of two categories of estimators for probit models with spatial autocorrelation. One category is based on the EM algorithm, and requires repeated application of a maximum-...
Article
A median-based quantile estimator suffers less bias from positive outliers, such as unobserved renovations, than a standard mean-based estimator. Quantile repeat-sales estimates for single-family homes in the city of Chicago show nominal price appreciation of 68.9% between 1993 and 2002, substantially smaller than the standard approach's estimate o...
Article
Full-text available
The authors examine changes in the footprint of the auto industry in the United States, starting in 1980 and tracking them through 2003. Their formal analysis of assembly and supplier plant locations traces the reorientation of the auto region from one that extends east–west to one that stretches north–south over this period. To accommodate the lar...
Article
Full-text available
The authors examine changes in the footprint of the auto industry in the United States, starting in 1980 and tracking them through 2003. Their formal analysis of assembly and supplier plant locations traces the reorientation of the auto region from one that extends east–west to one that stretches north–south over this period. To accommodate the lar...
Article
We present two notions of "no arbitrage" in urban economic models and show that there is no model satisfying both. The standard hedonic housing model of urban economics and its generalizations are consistent with the first of these, but inconsistent with the second. We present a model consistent with the second notion of "no arbitrage" and a contin...
Article
Full-text available
In 1991, a property tax limitation measure was imposed in five Illinois counties. Dye and McGuire (1997) studied its short-term impact. With the limit now in effect for over a decade and extended to many more counties, we assess its long-term impact. Because jurisdictions brought under the limitation since 1997 have done so after a county-option re...
Article
The size and number of employment subcenters have increased in large metropolitan areas as the spatial distribution of jobs has become increasingly decentralized. Although employment decentralization is not a new phenomenon, only recently have concentrations of employment outside the central city begun to rival the traditional central business dist...
Article
The paper adds to the empirical literature by providing up-to-date estimates of the effect of airport noise on property values around one of the world's busiest airports, Chicago O'Hare. The results indicate that home values were about 9% lower within a 65 dB noise contour band of O'Hare in 1997. Opponents of airport expansions argue that increased...
Article
The benefits of nature-based tourism to biodiversity conservation are often presumed but rarely quantified. The relative value placed on attributes of nature parks is unknown, as is the contribution of biodiversity to tourists willingness to visit a particular protected area. We surveyed tourists and foreign residents in Uganda to determine how pre...
Article
In addition to land-use zoning, development controls in the suburban municipalities of metropolitan Chicago include architectural reviews, appearance regulations, historical preservation areas, enterprise zones, tax-increment financing districts, development impact fees and regulations pertaining to group homes, mobile homes, factory-assembled home...
Article
This study examines the effect of the new rapid transit line from downtown Chicago to Midway Airport on single-family house prices before and after the opening of the line. The results show that the housing market anticipated the opening of the line. House prices were being affected by proximity to the stations in the late 1980s and early 1990s-aft...
Article
Quieter aircraft are causing the 65-db noise contour band around O'Hare Airport to shrink over time, even in the event that air traffic increases by nearly 60 percent after the proposed expansion of the airport. Forecasts imply that home prices will increase by nearly $280 million (in 1997 dollars) between 1997 and the time after the expansion of t...
Article
Plant locations in the U.S. auto industry have been moving southward for some time now. This paper utilizes a comprehensive dataset of the U.S. auto industry and focuses on plant location decisions of auto supplier plants that were opened less than 15 years ago in the U.S. We find that agglomeration continues to matter: suppliers want to be close t...
Article
The U.S. commercial banking industry provides a unique laboratory for studying the effects of regulatory and technological change on the geography of urban economic activity. We explore whether and how three fundamental facets of banking geography changed during the 1990s: bank headquarters locations, bank branch office locations, and bank deposito...
Article
Full-text available
. This article presents a collection of regional science books that long-standing members of the Regional Science Association International (RSAI) identified as path-breaking books. The most frequently nominated books include the “classics” by Isard, the seminal books in urban economics by Alonso, Muth and Mills, methods books by Miernyk, Wilson, A...
Chapter
Even small cities have complicated spatial patterns that are difficult to model adequately with a small number of explanatory variables. Shopping centers, parks, lakes, and the like have local effects on variables such as housing prices, land values, and population density. Proximity to such sites can be included as explanatory variables, but the n...
Article
Full-text available
Prior work suggests coordination failure between labour and education markets leads some workers to have educational qualifications in excess of those specified for the job (overeducation) and others to have less (undereducation). This paper empirically models and tests the hypothesis that overeducation and undereducation arise out of a hedonic mat...
Article
We review and test Fujita and Ogawa's [Regional Science and Urban Economic 12 (1982) 161–196] model of urban spatial structure. The central theoretical prediction is that the number of employment subcenters rises with population and commuting costs. Simple Poisson regressions for a sample of 62 large American urban areas provide strong support for...
Article
Distance gradients for the unit price of housing can only be estimated accurately from a simple hedonic house value function if data are available on all housing characteristics. A simple extension of the repeat sales estimator makes it possible to identify changes in the distance gradient over time. The estimates suggest a dramatic return of centr...
Article
A Monte Carlo experiment illustrates one of the pitfalls of spatial modeling. Specification tests indicate spatial autocorrelation when functional form misspecification is actually the only problem with the model. Incorrect functional forms and omitted variables that are correlated over space produce spurious spatial autocorrelation.
Article
A variant of the average derivative estimator is developed to construct an index measuring the effects of a copper smelter on house prices in Tacoma, Washington. The estimated average derivative index is smooth and has lower standard errors than regression coefficients estimated separately across discrete time periods. The dataset spans the time of...
Article
The number of subcenters identified for the Chicago metropolitan area rises from nine in 1970 to a forecasted 24 in 2020. Existing subcenters are becoming larger, and are particularly likely to expand along major expressways. OLS and semiparametric estimates suggest that employment density rises whereas population density falls near subcenters.
Article
A variant of the average derivative estimator is developed to construct an index measuring the effects of a copper smelter on house prices in Tacoma, Washington. The estimated average derivative index is smooth and has lower standard errors than regression coefficients estimated separately across discrete time periods. The dataset spans the time of...
Article
Full-text available
The number of subcenters in the Chicago metropolitan area rose from 13 in 1980 to 32 in 2000. Whereas manufacturing jobs dominated subcenters in the past, the industry mix now closely resembles that of the overall metropolitan area.
Article
House price indexes are estimated for 851 census tracts in the City of Chicago using a Fourier repeat sales estimator. Locally weighted regression allows price indexes to be estimated for submarkets with small numbers of sales. Annual appreciation rates are higher between 1990 and 1996 in neighborhoods close to the city center with large minority p...
Article
This article presents a survey of standard microeconomic models that are designed to be used in the cost-benefit analysis of local land use decisions at the individual parcel or block level. The models connect these policy decisions to outcomes in the urban land and labor markets so that costs and benefits can be measured.
Article
This paper presents a simple algorithm for identifying sub-centres using standard properties of contiguity matrices to simplify the identification procedure. Sub-centres are identified for Atlanta, Baltimore-Washington, Boston, New York and Philadelphia. A sub-centre is defined to be a set of contiguous tracts that each have significantly positive...
Article
Nonparametric estimation procedures offer distinct advantages in modeling polycentric cities because they are flexible enough to account for functional form misspecification and incorrect subcenter sites. This paper presents locally weighted (LW) regression estimates of employment density in suburban Chicago. LW regression estimates are more accura...
Article
The introduction of a new zoning ordinance to Chicago in 1923 offers a natural experiment that allows us to determine the effects of zoning on relative land-value growth rates. Policymakers claimed at the time that land-use zoning would raise aggregate land values by reducing negative externalities associated with mixed land use. After controlling...
Article
Full-text available
After a long period during which house prices were not affected by distance from Chicago's central business district, values now decline by more than 8 percent per mile. Annual appreciation rates in house prices are higher in neighborhoods close to the city center with large minority populations, high concentrations of poverty, and many vacant home...
Article
A two-stage procedure is proposed for identifying urban employment subcenters. The first stage identifies candidate subcenters as significant positive residuals in a smoothed employment density function. Subcenters are those sites that provide significant explanatory power in the second-stage, semiparametric employment density function estimation....
Article
Time periods are typically highly aggregated for repeat sales estimators because of the small number of observations available in some periods. We use a flexible Fourier expansion to account for time, which we treat as a continuous variable. Our estimator saves degrees of freedom and enables us to estimate the price index efficiently even for times...
Article
Full-text available
The author finds that Milwaukee has one employment subcenter, located at the western edge of the city. The subcenter has significant but highly localized effects on both employment and population densities in the Milwaukee area.
Article
Full-text available
This study examines suburban real estate developments in the industrial, commercial, and residential sectors for metropolitan Chicago that were completed in 1990–1996. Industrial and commercial developments follow expected patterns in that, for example, they were attracted to locations nearer to O'Hare Airport and highway interchanges. Residential...
Article
Full-text available
This paper presents simple empirical models of residential building permits for urban counties in the United States for the period 1990–1997. Building permits, as a percentage of the housing stock, are greater the larger are population growth, the proportion of units that are old (built before 1940), and the proportion of units that are new. A high...
Article
We use a semiparametric estimator to construct house price indices, which cover the time period 1977 through 1993, at half-mile intervals from a contaminated industrial site. The site, the former Asarco smelter in Tacoma, Washington, was designated a Superfund site in November 1991. Results of studies of contamination were released to the public pr...
Article
This chapter reviews the theoretical and empirical literature on agglomeration economies and urban public infrastructure. Theory links the two concepts by positing that agglomeration economies exist when firms in an urban area share a public good as an input to production. One type of shareable input is the close proximity of businesses and labor,...
Article
Attempting to mitigate the negative externalities associated with mixed land use, most major US cities passed comprehensive zoning ordinances in the 1920's. Modern analysts suggest that more exclusionary motives account for zoning's widespread popularity. We document the extent to which land use was mixed before Chicago adopted its first zoning ord...
Article
Bid-rent theory suggests that the dependent variable of a population density function is unobserved (or population equals zero) if land values are relatively low in residential use. If the errors of density and bid-rent function errors are correlated, bid-rent theory implies that OLS population density estimates are subject to selection bias. Combi...
Article
A detailed data set covering every quarter section in suburban Chicago is used to identify employment subcenters and to determine their influence on employment density. Proximity to the 20 identified subcenters is used to explain employment density in 1980 and 1990. We argue that density functions are subject to selection bias, and we find signific...
Article
This article examines whether the pattern of urban land use should have been regulated by local government in the 1920s, the decade in which many cities adopted their first zoning ordinances. The study is based on the assumption that land values are influenced by the mix of land use on the block. Conditions for land-value maximization are derived,...

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