Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/102975
Authors: 
Basten, Christoph Carl
von Ehrlich, Maximilian
Lassmann, Andrea
Year of Publication: 
2014
Series/Report no.: 
KOF Working Papers, KOF Swiss Economic Institute, ETH Zurich 362
Abstract: 
This paper provides novel evidence on the role of income taxes for residential rents and spatial sorting. Drawing on comprehensive apartment-level data, we identify the eff ects of tax diff erentials across municipal boundaries in Switzerland. The boundary discontinuity design (BDD) corrects for unobservable location characteristics such as environmental amenities or the access to public goods and thereby reduces the estimated response of housing prices by one half compared to conventional estimates: we identify an income tax elasticity of rents of about 0.26. We complement this approach with census data on local sociodemographic characteristics and show that about one third of this eff ect can be traced back to a sorting of high-income households into low-tax municipalities. These findings are robust to a matching approach (MBDD) which compares identical residences on opposite sides of the boundary and a number of further sensitivity checks.
Subjects: 
Local taxation
income taxation
housing prices
income sorting
boundary discontinuity design
spatial differencing
JEL: 
H71
H24
R21
R38
C14
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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