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Stamp duty and household mobility: regression discontinuity evidence from the UK

Hilber, Christian and Lyytikainen, Teemu (2012) Stamp duty and household mobility: regression discontinuity evidence from the UK. London School of Economics and Political Science. (Unpublished)

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Abstract

We estimate the effect of the UK real estate transfer tax on household mobility using household level panel data. We exploit a discontinuity in the tax schedule as a quasiexperimental setting which allows us to isolate the impact of the stamp duty from other determinants of mobility. Our empirical strategy compares households with self-assessed house values on either sides of a cut-off value where stamp duty liabilities jump sharply while controlling for flexible but smooth functions of house values. We find that a higher stamp duty negatively affects a household’s propensity to move and the expectation that a move is imminent. Our results suggest that a £5,000 increase in the stamp duty reduces mobility by roughly 30 percent. We conclude that the UK stamp duty adversely affects the functioning of housing- and labor markets.

Item Type: Monograph (Working Paper)
Additional Information: © 2012 The Authors
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
Sets: Departments > Geography and Environment
Research centres and groups > Spatial Economics Research Centre
Collections > Economists Online
Date Deposited: 09 Jul 2012 13:16
Last Modified: 09 Jul 2012 13:16
URI: http://eprints.lse.ac.uk/id/eprint/44686

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