Income segregation and local progressive taxation: Empirical evidence from Switzerland

Schmidheiny, Kurt. (2006) Income segregation and local progressive taxation: Empirical evidence from Switzerland. Journal of public economics, 90 (3). pp. 429-458.

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Official URL: http://edoc.unibas.ch/46219/

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This study investigates spatial income segregation in fiscally decentralized urban areas. The theoretical part proposes the progressivity of local income taxes as a new theoretical explanation for income segregation. The empirical part studies how income tax differentials across municipalities affect the households' location decisions. I use data from the Swiss metropolitan area of Basel that contains tax information on all moving households in 1997. The location choice of the households is investigated within the framework of the random utility maximization model. Different econometric specifications of the error term structure, such as conditional logit, nested logit and multinomial probit, are compared. The empirical results show that rich households are significantly and substantially more likely to move to low-tax municipalities than poor households. This result holds after controlling for alternative explanations of segregation. Social interactions and distance from the central business district are established as other major factors for income segregation. Households in general tend to choose locations close to other households like themselves.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Angewandte ├ľkonometrie (Schmidheiny)
UniBasel Contributors:Schmidheiny, Kurt
Item Type:Article, refereed
Article Subtype:Research Article
Publisher:North Holland Publ.
Note:Publication type according to Uni Basel Research Database: Journal article
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Last Modified:07 Apr 2017 08:41
Deposited On:07 Apr 2017 08:41

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