State fiscal institutions and empty-nest migration: Are Tiebout voters hobbled?

Farnham, Martin; Sevak, Purvi

doi:10.1016/j.jpubeco.2005.07.005

Cited by 41 publications

(28 citation statements)

References 10 publications

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“…The studies closest to this paper are Farnham and Sevak (2006) and Seslen (2005). The former study is a test of a life-cycle Tiebout model using the 1992–2000 HRS data and local fiscal data.…”

Section: Background and Previous Researchmentioning

confidence: 88%

“…It finds that cross-state, empty-nest movers experience reduced exposure to local school spending and property taxes. Although their study examines both property taxes and elderly mobility, Farnham and Sevak (2006) address the question from a different angle than the current study. Their study focuses on testing whether property tax payments decline after an elderly homeowner makes a move, whereas my study asks whether rising property taxes induce elderly homeowners to move.…”

Section: Background and Previous Researchmentioning

confidence: 90%

“…Although Seslen (2005) employs sophisticated econometric tools, the data she studies were collected about 30 years ago, and they may not bear relevance on the current situation. Moreover, both Seslen (2005) and Farnham and Sevak (2006) ignore the potential endogeneity problem where some unobserved factor may drive both property tax payments and mobility decisions.…”

Section: Background and Previous Researchmentioning

confidence: 99%

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Property taxes and elderly mobility

Shan

2010

Journal of Urban Economics

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The 2000–05 housing market boom in the U.S. has caused sharp increases in residential property taxes. Housing-rich but income-poor elderly homeowners often complain about rising tax burdens, and anecdotal evidence suggests that some move to reduce their tax burden. There has been little systematic analysis, however, of the link between property tax levels and the mobility rate of elderly homeowners. This paper investigates this link using household-level panel data from the Health and Retirement Study (HRS) and a newly collected data set on state-provided property tax relief programs. These relief programs generate variation in effective property tax burdens that is not due solely to arguably endogenous local community choices about taxes and expenditure programs. The findings provide evidence suggesting that higher property taxes raise mobility among elderly homeowners. The point estimates from instrumental variable estimation using relief programs to generate instruments suggest that a $100 increase in annual property taxes is associated with a 0.73 percentage point increase in the two-year mobility rate for homeowners over the age of 50. This is an eight percent increase from the baseline two-year mobility rate of nine percent. These results are robust to alternative specifications.

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Section: Background and Previous Researchmentioning

confidence: 88%

Section: Background and Previous Researchmentioning

confidence: 90%

Section: Background and Previous Researchmentioning

confidence: 99%

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Property taxes and elderly mobility

Shan

2010

Journal of Urban Economics

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“…Empty-nest households that do relocate often have to cross state lines to find desirable housing with lower effective tax rates (Farnham and Sevak 2006), and some households may not wish to make long-distance moves. Across U.S. school districts during the year 2000, the fraction of households containing children under the age of 18 ranged from 23% at the 5th percentile district to 47% at the 95th percentile district.…”

Section: Introductionmentioning

confidence: 99%

Buying Their Votes? A Study of Local Tax‐price Discrimination

Reback

2014

Economic Inquiry

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A population's demographic composition may affect political support for various public services. This article examines whether the aging-in-place of local residents decreases financial support for public schools in the United States. I expand on previous empirical work by examining whether tax-price reductions offered to elderly homeowners moderate their effect on local school revenues. The results reveal that an aging population structure substantially decreases school revenues, unless elderly homeowners receive state-financed reductions in their local tax-prices. Sizable differences hold even when comparing school districts located near each other but on opposite sides of state borders. Given the imminent aging of the population structure in the United States and many other developed countries, governments' targeted tax reduction policies could have important effects on equilibrium school revenues. (JEL I22, J14, H71)

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“…Some researchers consider a move decision as a well-planned action, such as a move to warm climate areas (Hays and Longino, 2002) or a move in response to fiscal policies, such as local spending on education or property tax rates (Shan, 2008;Farnham and Sevak, 2006). Others consider a move as a response to some negative shock; for example, a move closer to relatives to be taken care of or to help take care of somebody else, such as parents or grandchildren (Walters, 2002); or a move in response to a spouse's entry into a nursing home or a spouse's death Wise, 2002, 2004).…”

Section: Introductionmentioning

confidence: 99%

Determinants and Consequences of Moving Decisions for Older Americans

2009

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The lore on whether older Americans move is mixed. While the familiar stereotype is that retirees flock to Florida or Arizona, prior studies have found that their home equity rises modestly over time, suggesting that they tend to stay put. This paper examines moving trends, determinants, and consequences using the original cohort of the Health and Retirement Study (HRS). We find that a full 30 percent of homeowners in the HRS cohort move over the 1992-2004 period, but most moves occur close to home. Overall, two types of movers emerge from the analysis -those who affirmatively plan to move and those who react to changing circumstances. As proxies for these two types, this study uses the presence or absence of a negative shock, such as death of a spouse or entry into a nursing home. Our results show that the factors that help determine a move are similar for both groups, while the consequences of a move vary. Homeowners with shocks are more likely to discontinue homeownership and reduce net equity, supporting the hypothesis that households may view housing wealth as insurance against catastrophic events. Finally, while movers in both groups of homeowners experience improvements in psychological well-being, movers with shocks are impacted most by the shocks themselves.

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State fiscal institutions and empty-nest migration: Are Tiebout voters hobbled?

Cited by 41 publications

References 10 publications

Property taxes and elderly mobility

Property taxes and elderly mobility

Buying Their Votes? A Study of Local Tax‐price Discrimination

Determinants and Consequences of Moving Decisions for Older Americans

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