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Local Income Taxation and Migration: Estimating the Effect of Local Income Tax Rates on Migration in a Tiebout Setting

Ingelström, Jenny LU (2014) NEKN01 20141
Department of Economics
Abstract (Swedish)
This study examines the impact of local income taxation on migration by using the Tiebout hypothesis. By studying the municipalities in the old Malmöhus region during 1992-2012 it is found that the level of a local income tax rate does not deter migrants, while a high tax rate relative to the average in the area does. The study identifies that the tax rate of neighbouring municipalities affects migration. Smaller municipalities are negatively affected by an increase in the tax rate of a larger neighbour. The results suggest that smaller municipalities are more sensitive to tax competition. The impact of local expenditures is less conclusive. By modifying the specification from expenditures per capita to per user, the results from the tobit... (More)
This study examines the impact of local income taxation on migration by using the Tiebout hypothesis. By studying the municipalities in the old Malmöhus region during 1992-2012 it is found that the level of a local income tax rate does not deter migrants, while a high tax rate relative to the average in the area does. The study identifies that the tax rate of neighbouring municipalities affects migration. Smaller municipalities are negatively affected by an increase in the tax rate of a larger neighbour. The results suggest that smaller municipalities are more sensitive to tax competition. The impact of local expenditures is less conclusive. By modifying the specification from expenditures per capita to per user, the results from the tobit estimation show that local expenditures on child care do have a positive impact on migration, which confirms earlier findings. (Less)
Please use this url to cite or link to this publication:
author
Ingelström, Jenny LU
supervisor
organization
course
NEKN01 20141
year
type
H1 - Master's Degree (One Year)
subject
keywords
Tiebout, local income taxation, local public goods, migration, municipality
language
English
id
4456960
date added to LUP
2014-06-23 10:43:49
date last changed
2014-06-23 10:43:49
@misc{4456960,
  abstract     = {{This study examines the impact of local income taxation on migration by using the Tiebout hypothesis. By studying the municipalities in the old Malmöhus region during 1992-2012 it is found that the level of a local income tax rate does not deter migrants, while a high tax rate relative to the average in the area does. The study identifies that the tax rate of neighbouring municipalities affects migration. Smaller municipalities are negatively affected by an increase in the tax rate of a larger neighbour. The results suggest that smaller municipalities are more sensitive to tax competition. The impact of local expenditures is less conclusive. By modifying the specification from expenditures per capita to per user, the results from the tobit estimation show that local expenditures on child care do have a positive impact on migration, which confirms earlier findings.}},
  author       = {{Ingelström, Jenny}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Local Income Taxation and Migration: Estimating the Effect of Local Income Tax Rates on Migration in a Tiebout Setting}},
  year         = {{2014}},
}