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Elderly Migration, State Taxes, and What They Reveal

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Author Info
Onder, Ali Sina () (Uppsala Center for Fiscal Studies)
Schlunk, Herwig () (Vanderbilt University Law School)
Abstract

Empirical results obtained from the 2000 Census elderly migration data using a general gravity model of migration flows confirm earlier findings of the ‘same sign problem’ in the literature, which means that the elderly both migrate from and to states where taxes are higher. The same sign problem is mainly an aggregation problem, and it can be attributed to the heterogeneity in public policies across states that attract the most migrants as well as across states that lose the most migrants. We propose that in a state-level aggregated dataset, it is possible to control for heterogeneity in states’ public policies by controlling for some characteristics of either the origin or the destination state. In a gravity equation estimation for elderly migration, when controlled for heterogeneity, the same sign problem fades away, and the gravity equation shows clearer patterns for elderly migration. In particular, local amenities, tax exemptions, and low inheritance taxes are shown to be significant variables in attracting the elderly into a state.

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Publisher Info
Paper provided by Uppsala University, Department of Economics in its series Working Paper Series, Center for Fiscal Studies with number 2009:12.

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Length: 26 pages
Date of creation: 18 Sep 2009
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Handle: RePEc:hhs:uufswp:2009_012

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Postal: Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden
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Related research
Keywords: Tiebout Hypothesis; Migration; Taxation; State Taxes; Amenities;

Find related papers by JEL classification:
H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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This page was last updated on 2009-11-30.

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