The effect of income taxes on interstate migration: an analysis by age and race

Abstract

The topic of interstate migration and the effects of taxes on migration have been extensively studied. Prior research has examined not only many possible determinants of migration but also the migrations of various populations, including the elderly, African-Americans, and the college educated. The present study will attempt to differentiate itself from this prior research by looking at the effect of income taxes on the interstate migration of both whites and African-Americans at various ages. Another distinguishing feature of the present study is that it will use data from the NLSY-Geocode, a data set not used previously for this type of study. Results of the present study are similar to the results of prior works; income taxes have an effect on migration for most races and age groups. Individuals move from states with high income taxes to states with low income taxes; these results corroborate the results obtained from the use of aggregate, state-level data. In addition, results of the present study suggest that non-economic factors, such as ties to a particular state and changes in employment status, are also important factors in an individual's migration decision.JEL Classification H2 · R2

U.S. State and Local Fiscal Policy and Economic Activity: Do We Know More Now?

“…Felix () examined the effect of the top marginal corporate income tax rate, the marginal state individual income tax rate, and the sales tax rate on individual wages. Gius () assessed how the state personal income tax affected migration between states. Young and Varner (, ), Varner and Young (), and Cohen et al .…”

“…Felix (2009) examined the effect of the top marginal corporate income tax rate, the marginal state individual income tax rate, and the sales tax rate on individual wages. Gius (2011) assessed how the state personal income tax affected migration between states. Varner (2011, 2015), Varner and Young (2012), and Cohen et al (2015) examined the influence of increasing the top marginal personal income tax rate on the migration of high-income earners.…”

Migration and regional science: opportunities and challenges in a changing environment

“…Knapp and White (1992) used the National Longitudinal Survey of Youth (NLSY) to examine the linkage between household location decisions and county-level public sector attributes in the United States, and White and Wolaver (2006) examined the relationship between migration and occupational change by race. Guis (2010) uses the same data file (NLSY-Geocode) to evaluate the effect of tax on interstate migration, and Chan (1996) utilized mortgage application data to build a housing duration model. One bright spot on the data front may come from central governments: As they increasingly monitor who enters and leaves their borders, data on international movements may become increasingly available and fruitful.…”

The Direct and Indirect (Spillover) Effects of Productive Government Spending on State Economic Growth

“…Gentry and Hubbard (2004) indicate that the likelihood that the head of a household moves to a new job in a state decreases with higher tax rates and increased tax progressivity. Gius (2011) argues that the migration of productive work force out of a state jurisdiction increases with rising individual income tax.…”