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New Evidence of the Effect of Transaction Costs on Residential Mobility

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  • Jos Van Ommeren
  • Michiel Van Leuvensteijn

Abstract

. Transaction costs have attracted considerable attention in the theoretical literature on residential mobility. Transaction costs are thought to cause suboptimal consumption of housing but may also negatively affect labor market outcomes. In the current paper, we demonstrate empirically for the Netherlands that transaction costs have a strong negative effect on the owners' probability of moving. Under a range of different specifications, it appears that a 1 percent‐point increase in the value of transaction costs—as a percentage of the value of the residence—decreases residential mobility rates by (at least) 8 percent. The estimates imply that ownership to ownership mobility rates would be substantially higher in the absence of the current 6 percent ad valorem buyer transaction tax. Our estimates are consistent with the observation that in the Netherlands ad valorem transaction costs mainly consist of buyer transaction costs.

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  • Jos Van Ommeren & Michiel Van Leuvensteijn, 2005. "New Evidence of the Effect of Transaction Costs on Residential Mobility," Journal of Regional Science, Wiley Blackwell, vol. 45(4), pages 681-702, November.
    • Handle: RePEc:bla:jregsc:v:45:y:2005:i:4:p:681-702
    DOI: 10.1111/j.0022-4146.2005.00389.x
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    More about this item

    JEL classification:

    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • D19 - Microeconomics - - Household Behavior - - - Other

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