Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/201976 
Year of Publication: 
2019
Series/Report no.: 
CESifo Working Paper No. 7750
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Housing transfer taxes are fiscally important in many countries despite evidence of substantial welfare losses found in several quasi-experimental studies. Research designs used in this prior literature are prone to attenuation bias due to spillovers from mobility or trading across control and treatment groups. We account for these spillovers by combining quasi-experimental empirical analysis with a one-sided housing market model where households act as both buyers and sellers. Using a Finnish tax reform and total population register data, we find that an increase in the transfer tax has a significant negative effect on household mobility. We calibrate our theoretical model to match the mobility rates in our data and our quasi-experimental estimate. In our setting, relying only on the quasi-experiment and ignoring the spillovers would lead to a 20% underestimation of the effect. We argue that the welfare costs of transfer taxes are larger than previously thought.
Subjects: 
household mobility
spillover
transfer tax
welfare cost
JEL: 
H21
R21
R23
Document Type: 
Working Paper
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