State Fiscal Institutions and Empty-Nest Migration: Are Tiebout voters hobbled?

Using the Health and Retirement Study and a national panel of local fiscal data, we test a lifecycle model of Tiebout sorting. On average, cross-state, empty-nest movers-presumed to be out of fiscal equilibrium-experience large fiscal gains in the form of reduced exposure to local school spending and property taxes, while local empty-nest movers experience no fiscal adjustment. We find evidence that within-state fiscal adjustment is constrained by state institutions that limit local discretion. Empty-nest households moving within states with school finance equalization do not engage in Tiebout-consistent fiscal adjustment, while those moving within states lacking school finance equalization adjust substantially. (c) 2005 Elsevier B.V. All rights reserved.

Article English

Tiebout hypothesis/taxation/migration/state and local government

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