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ECONOMIC DEVELOPMENT Interest rates for small and medium sized middle market borrowers increased by about one percent after Fleet Bank and BankBoston merged in 1999, according to this study which examined whether the merger, which created one large bank in the region, resulted in monopoly rents for the new combined entity. Before the merger, Fleet and BankBoston charged unusually low loan interest rates, reflecting their ability to realize economies of scope and scale. After the merger, those cost savings were no longer passed on to medium-sized middle-market borrowers, which resulted in an increase in the average interest rate credit spreads to those borrowers of roughly one percent. In contrast, small-sized middle-market borrowers (which continued to enjoy the advantage of loan market competition from remaining small banks) maintained their low spreads. The authors contend the results suggest that when evaluating mergers and structuring appropriate divestiture requirements regulators may want to consider the whether the mergers will result in concentration in both deposit and lending markets. U.S. Cities in the ‘World City Network’Greater Boston ranks eighth among American cities for global connectivity, according to this study, which examines the global distribution of 100 leading advanced services firms, to determine urban region’s economic connectedness to other major world cities and the global patterns of these linkages. New York, Chicago, and Los Angeles are the U.S. leaders in global connectivity; San Francisco, Miami, Atlanta, and Washington are also important nodes in the world city network; and a mixture of regional capitals—such as Boston and Seattle—and specialist cities—such as Houston, are found in the next tier. However, even the most globally connected U.S. cities are far more locally oriented than counterpart cities in the European Union. Boston, for example, ranks 60th among all world cities. The authors point out that less global connectivity does not necessarily mean slower growth, but it implies greater vulnerability to domestic economic downturns. Job Sprawl and the Spatial Mismatch between Blacks and Jobs Compared to other large metropolitan areas, Greater Boston has a slightly higher level of mismatch between black residents and the location of jobs, according to this study, which compares census data on residential housing patterns with U.S. Department of Commerce data on zip code business patterns in the country’s largest metropolitan areas. In general, blacks (but not whites) are more isolated from jobs in metropolitan areas where more of the region’s employment is located more than five miles from the region’s Central Business District (CBD). In Greater Boston 62 percent of jobs are located more than five miles from the CBD, a little less than the 71 percent average for all metropolitan areas with more than 500,000 residents. Even so, 60.2 percent of blacks in Boston reside in areas different from areas in which jobs are located. In contrast, only 56.5 percent of blacks in all large metropolitan regions live in areas different from areas where jobs are located. PUBLIC HEALTH Massachusetts’ state-wide smoking ban greatly improved air quality without hurting business in restaurants and bars, according to this study, which examined 27 establishments in five communities that had weak or nonexistent smoking policies before the statewide law went into effect in July 2004. After the ban, levels of respirable suspended particle pollution in the 27 establishments were 93 percent lower than before the ban was imposed. The researchers also reported that they observed lit cigarettes in 25 of the 27 establishments before the ban but only saw lit cigarettes in one establishment after the ban. Moreover, other data— including patron counts, employment, and tax collections—suggest the smoking ban had no significant financial effects on restaurants and bars. SOCIAL SERVICES, INEQUALITY, AND POVERTYListening to Parents: Overcoming Barriers to the Adoption of Children from Foster Care Although many people are interested in adopting children, relatively few non-relatives adopt from long lists of foster children in large measure because foster-care agencies do a poor job of handling initial inquiries from those potential parents, according to this study which is based on case studies in Boston, Miami, and San Jose, federal adoption data, and a survey of state adoption directors. Only 1-in-28 people who inquire at a child welfare agency ultimately adopt a child from foster care. Although initial contacts are critical, foster-care agencies rarely prioritize the handling of initial calls and instead leave that task to a haphazard system of untrained call takers or overburdened caseworkers. In addition, many potential parents are driven away because foster-care agencies fail to separate recruitment and screening processes. Socioeconomic Status and Mental Illness: Tests of the Social Causation and Selection Hypothesis The stresses associated with low socioeconomic status lead to higher mental illness, according to this analysis of anonymous data on 34,112 individuals hospitalized twice or more in Massachusetts for acute psychiatric problems between 1994 and 2000. Using patients’ address at the time of first admission, the study develops a rate of acute psychiatric hospitalization for each zip code within Massachusetts and compares that rate with data on the socioeconomic status of residents in each zip code. It concludes that higher unemployment, poverty, and lack of housing affordability in poorer communities account for more than half of community differences in psychiatric hospitalization rates. Moreover, except for people with particularly acute psychiatric conditions, people are unlikely to move to lower-status zip codes between their first and last hospitalizations, which suggests that adverse social conditions tend to contribute to mental illness rather than visa versa. ENVIRONMENT Despite ample rainfall, green forests, and extensive wetlands, many parts of New England—including the rapidly growing Route 495 corridor and areas on Greater Boston’s North Shore—face potentially severe water shortages. Factors contributing to the problem include a spatial mismatch between economic growth and water availability and the fact that most parts of New England have small, shallow, porous aquifers. While no single solution to potential water shortages is clearly superior, the authors conclude that conservation should be an important component of any strategy to cope with the problem. CIVIC LEADERSHIP Mayoral leadership on education issues helps foster consensus around education reform, according to this study of 11 major cities, including Boston. Researchers interviewed education stakeholders in each city about: decisionmakers, challenges, strategies and mayors’ role in education reform efforts. According to the interviews, Boston had the strongest mayoral leadership on education issues and trailed only Baltimore in achieving consensus about the key problems that need to be addressed. Boston also was one of only three cities — all of them marked by strong mayoral leadership on education issues — where media accounts of education challenges and solutions generally matched those identified by stakeholders. Despite high levels of agreement, stakeholders in Boston also had the lowest level of agreement about how to address the city’s education problems.
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Vol. 2, Number 2 | June 8, 2005In This IssueECONOMIC DEVELOPMENT
PUBLIC HEALTH SOCIAL SERVICES, INEQUALITY & POVERTY
Rappaport Institute for Greater BostonThe Rappaport Institute for Greater Boston aims to improve the governance of Greater Boston by fostering better connections between scholars, policy-makers, and civic leaders. More information about the Institute is available at http://www.ksg.harvard.edu/rappaport. Previous issues of Rappaport Institute Policy Notes can be viewed in pdf form at http://www.ksg.harvard.edu/rappaport/information/policynotes.htm Rappaport Institute for Greater Boston |