Income Taxes, Sorting, and the Costs of Housing: Evidence from Municipal Boundaries in Switzerland

Basten, Christoph; von Ehrlich, Maximilian; Lassmann, Andrea (2017). Income Taxes, Sorting, and the Costs of Housing: Evidence from Municipal Boundaries in Switzerland. The economic journal, 127(601), pp. 653-687. Wiley 10.1111/ecoj.12489

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We provide novel evidence on the role of income taxes for housing rents and spatial sorting. Drawing on comprehensive micro-level data, we estimate the responsiveness of households to tax differentials across municipal boundaries. Correcting for unobservable location characteristics and isolating the residential sorting component, we identify an income tax elasticity of rents of about −0.27 to −0.35. In line with non-homothetic preferences, we find that the marginal willingness to pay for lower taxes increases with income. Counterfactual calculations show how an homogenisation of taxes across jurisdictions and an increase in variation of taxes affect rents and income stratification across space.

Item Type:

Journal Article (Original Article)

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics
03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics > Economic Policy and Regional Economics
03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics
03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics > Public Economics
11 Centers of Competence > Center for Regional Economic Development (CRED)

UniBE Contributor:

von Ehrlich, Maximilian

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

ISSN:

0013-0133

Publisher:

Wiley

Language:

English

Submitter:

Melanie Moser

Date Deposited:

26 Apr 2018 07:55

Last Modified:

26 Apr 2018 07:55

Publisher DOI:

10.1111/ecoj.12489

BORIS DOI:

10.7892/boris.109283

URI:

https://boris.unibe.ch/id/eprint/109283

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