Bulletin n. 1/2006 | ||
May 2006 | ||
Farnhama Martin , Sevak Purvi |
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State fiscal institutions and empty-nest migration: Are Tiebout voters hobbled? | ||
in Journal of Public Economics , Volume 90, Issues 3 , 2006 , 407-427 | ||
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. | ||