Revisiting the Effects of Housing Transfer Taxes

Essi Eerola, Oskari Harjunen, Teemu Lyytikäinen, Tuukka Saarimaa

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Abstract

Housing transfer taxes are fiscally important in many countries despite evidence of substantial welfare costs. We argue that the welfare costs are larger than previously thought because previous studies ignore spillovers between treatment and control groups. We analyze the effect of transfer taxes on household mobility using a quasi-experiment arising from a tax reform. To account for spillovers between treatment and control groups, we use a housing market model calibrated to match the mobility rates in our micro data and our quasi-experimental mobility effect estimate. Ignoring the spillovers leads to a 20% underestimation of the negative mobility effect.
Original languageEnglish
Article number103367
Number of pages11
JournalJOURNAL OF URBAN ECONOMICS
Volume124
Early online date17 Jun 2021
DOIs
Publication statusPublished - Jul 2021
MoE publication typeA1 Journal article-refereed

Keywords

  • Household mobility
  • spillover
  • transfer tax
  • welfare cost

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