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

Basten, Christoph; Lassmann, Andrea; von Ehrlich, Maximilian (July 2014). Income Taxes, Sorting, and the Costs of Housing: Evidence from Municipal Boundaries in Switzerland (CRED Research Paper 5). Bern: CRED - Center for Regional Economic Development

[img]
Preview
Text
CRED Research Paper No. 5.pdf - Published Version
Available under License Creative Commons: Attribution (CC-BY).

Download (2MB) | Preview

This paper provides novel evidence on the role of income taxes for residential rents and spatial sorting. Drawing on comprehensive apartment-level data, we identify the effects of tax differentials across municipal boundaries in Switzerland. The boundary discontinuity design (BDD) corrects for unobservable location characteristics such as environmental amenities or the access to public goods and thereby reduces the estimated response of housing prices by one half compared to conventional estimates: we identify an income tax elasticity of rents of about 0.26. We complement this approach with census data on local sociodemographic characteristics and show that about one third of this effect can be traced back to a sorting of high-income households into low-tax municipalities. These findings are robust to a matching approach (MBDD) which compares identical residences on opposite sides of the boundary and a number of further sensitivity checks.

Item Type:

Working Paper

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:

v. Ehrlich, Maximilian

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

Series:

CRED Research Paper

Publisher:

CRED - Center for Regional Economic Development

Language:

English

Submitter:

Melanie Moser

Date Deposited:

28 Apr 2020 13:41

Last Modified:

12 Oct 2020 12:06

BORIS DOI:

10.7892/boris.143545

URI:

https://boris.unibe.ch/id/eprint/143545

Actions (login required)

Edit item Edit item
Provide Feedback