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Property taxes and elderly mobility

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  • Shan, Hui
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Abstract

The 2000-2005 housing market boom in the U.S. has caused sharp increases in residential property taxes. Housing-rich but income-poor elderly homeowners often complain about rising tax burdens, and anecdotal evidence suggests that some move to reduce their tax burden. There has been little systematic analysis, however, of the link between property tax levels and the mobility rate of elderly homeowners. This paper investigates this link using household-level panel data from the Health and Retirement Study (HRS) and a newly collected data set on state-provided property tax relief programs. These relief programs generate variation in effective property tax burdens that is not due solely to arguably endogenous local community choices about taxes and expenditure programs. The findings provide evidence suggesting that higher property taxes raise mobility among elderly homeowners. The point estimates from instrumental variable estimation using relief programs to generate instruments suggest that a $100 increase in annual property taxes is associated with a 0.73 percentage point increase in the 2-year mobility rate for homeowners over the age of 50. This is an 8 percent increase from the baseline 2-year mobility rate of 9 percent. These results are robust to alternative specifications.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 67 (2010)
Issue (Month): 2 (March)
Pages: 194-205

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Handle: RePEc:eee:juecon:v:67:y:2010:i:2:p:194-205

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Web page: http://www.elsevier.com/locate/inca/622905

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Keywords: Property tax Elderly mobility Property tax relief program;

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References

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Cited by:
  1. David Albouy & Andrew Hanson, 2014. "Tax Benefits to Housing and Inefficiencies in Location and Consumption," NBER Working Papers 19815, National Bureau of Economic Research, Inc.
  2. Kelly Haverstick & Natalia A. Zhivan, 2009. "Older Americans On The Go: How Often, Where, and Why?," Issues in Brief, Center for Retirement Research ib2009-9-18, Center for Retirement Research, revised Sep 2009.
  3. Esteban Calvo & Kelly Haverstick & Natalia A. Zhivan, 2009. "Determinants and Consequences of Moving Decisions for Older Homeowners," Working Papers, Center for Retirement Research at Boston College, Center for Retirement Research wp2009-16, Center for Retirement Research, revised Aug 2009.
  4. Johnson, Erik & Walsh, Randall, 2013. "The effect of property taxes on vacation home growth rates: Evidence from Michigan," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 43(5), pages 740-750.
  5. Hui Shan, 2008. "Property taxes and elderly labor supply," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2008-51, Board of Governors of the Federal Reserve System (U.S.).
  6. David Albouy & Andrew Hanson, 2013. "Are Houses Too Big or In the Wrong Place? Tax Benefits to Housing and Inefficiencies in Location and Consumption," NBER Chapters, National Bureau of Economic Research, Inc, in: Tax Policy and the Economy, Volume 28 National Bureau of Economic Research, Inc.

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