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Transfer taxes and household mobility: distortion on the housing or labor market?

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  • Hilber, Christian A. L.
  • Lyytikainen, Teemu

Abstract

We estimate the effect of the UK Stamp Duty Land Tax (SDLT) – a transfer tax on the purchase price of property or land – on different types of household mobility using micro data. Exploiting a discontinuity in the tax schedule, we isolate the impact of the tax from other determinants of mobility. We compare homeowners with self-assessed house values on either sides of a cut-off value where the tax rate jumps from 1 to 3 percent. We find that a higher SDLT has a strong negative impact on housing-related and short distance moves but does not adversely affect job-induced or long distance mobility. Overall, our results suggest that transfer taxes may mainly distort housing rather than labor markets.

Suggested Citation

  • Hilber, Christian A. L. & Lyytikainen, Teemu, 2017. "Transfer taxes and household mobility: distortion on the housing or labor market?," LSE Research Online Documents on Economics 83639, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:83639
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    More about this item

    Keywords

    transfer taxes; stamp duty; transaction costs; homeownership; household mobility;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • G3 - Financial Economics - - Corporate Finance and Governance

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