Elderly Migration, State Taxes, and What They Reveal
Working Paper No. 09-WG01
Ali Sina Onder and Herwig Schlunk
ABSTRACT [article]
Empirical results obtained from the 2000 Census elderly
migration data using a general gravity model of migration flows confirm
earlier findings of the `same sign problem' in the literature, which means
that the elderly both migrate from and to states where taxes are higher.
The same sign problem can be attributed to the heterogeneity of in- and
out-migrating groups. We propose that it is possible to control for
heterogeneity of migrating groups by controlling for some characteristics
of either the origin or the destination state. In a gravity equation
estimation for elderly migration, when controlled for heterogeneity of
migrants, the same sign problem fades away, and the gravity equation shows
clearer patterns for elderly migration. In particular, local amenities,
tax exemptions, and low inheritance taxes are shown to be significant
variables in attracting the elderly into a state.
Keywords and Phrases: Tiebout hypothesis, migration, maxation, mtate maxes, amenities
JEL Clasification Numbers: H24, H25, H31, H7