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The Effect of the UK Stamp Duty Land Tax on Household Mobility

  • Christian A. L. Hilber
  • Teemu Lyytikäinen

We estimate the effect of the UK Stamp Duty Land Tax on household mobility using micro data. Exploiting a discontinuity in the tax schedule as a quasi-experimental setting, we isolate the impact of the stamp duty from other determinants of mobility. Our empirical strategy essentially compares similar households with self-assessed house values on either sides of a cut-off value where the tax rate increases from 1 to 3 percent. We find that a higher stamp duty strongly negatively affects a household's propensity to move: the 2 percentage-point increase in the stamp duty may reduce mobility of homeowners by around 40 percent. This adverse effect is mainly confined to short-distance and non-job related moves.

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File URL: http://www.spatialeconomics.ac.uk/textonly/SERC/publications/download/sercdp0115.pdf
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Paper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0115.

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Date of creation: Jul 2012
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Handle: RePEc:cep:sercdp:0115
Contact details of provider: Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp

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  4. Christian A. L. Hilber & Teemu Lyytikäinen & Wouter Vermeulen, 2010. "Capitalization of central government grants into local house prices: panel data evidence from England," Working Papers 2010/32, Institut d'Economia de Barcelona (IEB).
  5. Benjamin Dachis, 2012. "Stuck in Place: The Effect of Land Transfer Taxes on Housing Transactions," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 364, October.
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  18. Michiel van Leuvensteijn & J. van Ommeren, 2003. "New evidence of the effect of transaction costs on residential mobility," CPB Discussion Paper 18, CPB Netherlands Bureau for Economic Policy Analysis.
  19. (IFS), Institute for Fiscal Studies & Mirrlees, James (ed.), 2011. "Tax By Design: The Mirrlees Review," OUP Catalogue, Oxford University Press, number 9780199553747, March.
  20. Munch, Jakob Roland & Rosholm, Michael & Svarer, Michael, . "Are Home Owners Really More Unemployed?," Economics Working Papers 2003-15, School of Economics and Management, University of Aarhus.
  21. Oswald Andrew J., 1996. "A Conjecture on the Explanation for High Unemployment in the Industrialized Nations : Part I," The Warwick Economics Research Paper Series (TWERPS) 475, University of Warwick, Department of Economics.
  22. Henrik J. Kleven & Mazhar Waseem, 2013. "Using Notches to Uncover Optimization Frictions and Structural Elasticities: Theory and Evidence from Pakistan," The Quarterly Journal of Economics, Oxford University Press, vol. 128(2), pages 669-723.
  23. David S. Lee & David Card, 2006. "Regression Discontinuity Inference with Specification Error," NBER Technical Working Papers 0322, National Bureau of Economic Research, Inc.
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