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Elderly Migration, State Taxes, and What They Reveal

Author

Listed:
  • 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.

Suggested Citation

  • Onder, Ali Sina & Schlunk, Herwig, 2009. "Elderly Migration, State Taxes, and What They Reveal," Working Paper Series, Center for Fiscal Studies 2009:12, Uppsala University, Department of Economics.
    • Handle: RePEc:hhs:uufswp:2009_012
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    More about this item

    Keywords

    Tiebout Hypothesis; Migration; Taxation; State Taxes; Amenities;
    All these keywords.

    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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